Document:

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                         UNITED STATES BANKRUPTCY COURT
                              DISTRICT OF DELAWARE

In re:          Chapter 11

The FINOVA Group Inc.,                  Case Nos. 01-0697 (PJW) through
FINOVA Capital Corporation,             01-0705 (PJW)
FINOVA (Canada) Capital
Corporation,
FINOVA Capital plc,                     Jointly Administered
FINOVA Loan Administration Inc.,        Case No. 01-0697 (PJW)
FINOVA Mezzanine Capital Inc.,
FINOVA Portfolio Services, Inc.,
FINOVA Technology Finance, Inc., and
FINOVA Finance Trust,

Debtors.

                THIRD AMENDED AND RESTATED DISCLOSURE STATEMENT
                WITH RESPECT TO JOINT PLAN OF REORGANIZATION OF
                DEBTORS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

RICHARDS, LAYTON & FINGER, P.A.         GIBSON, DUNN & CRUTCHER LLP

Mark D. Collins (No.2981)               Jonathan M. Landers
Daniel J. DeFranceschi (No. 2732)       Janet M. Weiss
Deborah E. Spivack (No.3220)            M. Natasha Labovitz
One Rodney Square                       Thayer H. Thompson
P. O. Box 551                           200 Park Avenue
Wilmington, Delaware 19899              New York, New York 10166-0193

Telephone:(302) 658-6541                Telephone: (212) 351-4000
Facsimile:(302) 658-6548                Facsimile: (212) 351-4035

                              Counsel for Debtors
                             Dated: June 13, 2001
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                               TABLE OF CONTENTS

<TABLE>
<S>                                                                         <C>
I. INTRODUCTION............................................................   1

II. NOTICE TO HOLDERS OF CLAIMS AND EQUITY INTERESTS.......................   2
  A. Purpose of Disclosure Statement.......................................   2
  B. Voting on the Plan....................................................   3
  C. Confirmation of the Plan..............................................   6
  D. Limitations...........................................................   6

III. OVERVIEW OF THE PLAN..................................................   6

IV. BACKGROUND CONCERNING THE DEBTORS......................................  19
  A. General Background....................................................  19
  B. Supplemental or Updated Information...................................  19
    1.  Legal Proceedings..................................................  19
    2.  Taxation...........................................................  19
    3.  Equity Ownership...................................................  20
    4.  Debt Structure.....................................................  20
    5.  Management.........................................................  21
    6.  Related Party Transactions.........................................  23

V. THE DEBTORS' CHAPTER 11 CASES...........................................  24
  A. Events Preceding the Filing of the Chapter 11 Cases...................  24
  B. The Commencement of the Chapter 11 Cases..............................  24
  C. Significant Parties in Interest.......................................  25
    1.  Creditors' Committee...............................................  25
    2.  Equity Committee...................................................  26
  D. Events During Chapter 11 Cases........................................  26

VI. DESCRIPTION OF THE PLAN OF REORGANIZATION..............................  26
  A. Overview and Restructuring Transactions...............................  26
  B. Classification and Treatment of Claims and Interests..................  27
  C. Implementation and Other Provisions of the Plan.......................  27
    1.  Assumption or Rejection of Executory Contracts and Unexpired
     Leases................................................................  27
    2.  Issuance of New Debt and Equity Securities.........................  27
    3.  Corporate Governance Matters.......................................  28
    4.  Plan Distribution Entitlement; Dispute Provisions..................  28
    5.  Distribution Procedures............................................  29
    6.  Retention of Causes of Action......................................  29
    7.  Effect of Confirmation of Plan.....................................  30
    8.  Implementing Documents and Transactions; No Transfer Taxes.........  31
    9.  Amendment of Plan; Severability; Revocation........................  32
    10.  Retention of Jurisdiction.........................................  32
  D. Treatment of Securities Litigation....................................  32
  E.  Conditions to Confirmation and Effective Date of the Plan............  32
    1.  Conditions to Confirmation.........................................  32
    2.  Conditions to the Effective Date...................................  33

VII. SPECIAL PROVISIONS RELATING TO SECURITIES ISSUED OR OUTSTANDING UNDER
    THE PLAN...............................................................  33
  A. New Senior Notes, Additional Group Common Stock, New Group Preferred
     Stock and Additional Mezzanine Common Stock...........................  33
  B. Common Stock..........................................................  34
  C. Post-Confirmation Business Plan.......................................  34
</TABLE>

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<TABLE>
<S>                                                                         <C>
    1.  Business Plan--General.............................................  34
    2.  Asset Sales........................................................  35
    3.  New Business Opportunities.........................................  35
  D. Certain Factors to be Considered......................................  36
    1.  Portfolio Maximization.............................................  36
    2.  Leverage...........................................................  37
    3.  Potential Limitations on or Inability to Repay Debt or Make
     Contingent Payments...................................................  37
    4.  Potential Insufficiency of Collateral for New Senior Notes; Value
     of Collateral.........................................................  38
    5.  Interest Spread; Interest Rate Matching............................  38
    6.  Leveraged Leases...................................................  39
    7.  Aircraft Residual Risk.............................................  39
    8.  Projections........................................................  40
    9.  Competition........................................................  40
    10. Dependence on Key Personnel; Management Agreement..................  40
    11. Termination of Berkadia's Commitment to Make the Berkadia Loan.....  40
    12. Lack of Established Market for New Senior Notes, New Group
       Preferred Stock, and Additional Mezzanine Common Stock..............  41
    13. Special Risks for Equity Holders...................................  41

VIII. VOTING PROCEDURES....................................................  43
  A. Parties Entitled to Vote on the Plan..................................  43
  B. Ballot................................................................  43
  C. General Procedures and Deadlines for Casting Votes....................  44
  D. Special Procedures Applicable to Voting of Debt Securities Claims and
   Equity Interests........................................................  45

IX. CONFIRMATION OF THE PLAN...............................................  45
  A. Classification of Claims and Interests................................  47
  B. Best Interests of Unsecured Creditors.................................  47
  C. Feasibility...........................................................  48
  D. Acceptance............................................................  48
  E. Confirmation Without Acceptance by All Impaired Classes...............  49

X. ALTERNATIVES TO THE PLAN................................................  49

XI. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN....................  50
  A. Consequences to the Debtors...........................................  51
    1.  Cancellation of Debt...............................................  51
    2.  Limitation on NOL Carryforwards and Other Tax Attributes...........  51
    3.  Alternative Minimum Tax............................................  53
    4.  Issuance of the New Senior Notes...................................  54
  B. Consequences to Holders of Certain Claims.............................  54
    1.  Consequences to Holders of Allowed Convenience Claims..............  54
    2.  Consequences to Holders of Allowed General Unsecured Claims (other
       than Allowed Convenience Claims) against FNV Capital................  55
    3.  Consequences to Holders of Debt Securities (S) 510(b) Claims and
       Equity Securities (S) 510(b) Claims.................................  57
    4.  Withholding........................................................  57
  C. Consequences to Holders of Allowed Interests..........................  58
    1.  Holders of Interests in FNV Group..................................  58
    2.  Holders of Allowed TOPrS Interests.................................  58

XII. CONCLUSION............................................................  61
</TABLE>

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 Exhibit A  --The Plan
 Exhibit B  --Order of the Bankruptcy Court
 Exhibit C  --Second Amended and Restated Management Services Agreement
 Exhibit D  --Commitment Letter
 Exhibit E  --Letter Agreement Related to the Tender Offer
 Exhibit F  --Financial Projections
 Exhibit G  --Liquidation Analysis
 Exhibit H  --Corporate Structure of the Debtors
 Exhibit I  --Term Sheet for New Group Preferred Stock
 Exhibit J  --FNV Group Annual Report on Form 10-K/A
 Exhibit K  --FNV Group Quarterly Report on Form 10-Q
 Exhibit L  --Unaudited Balance Sheets for each Debtor, dated as of
              March 7, 2001 and March 31, 2001

                                      iii
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                                      I.

                                 INTRODUCTION

   This Third Amended and Restated Disclosure Statement amends and restates in
its entirety that certain Second Amended and Restated Disclosure Statement,
dated as of June 11, 2001 (as amended and restated, this "Disclosure
Statement"). This Disclosure Statement has been prepared by The FINOVA Group
Inc. ("FNV Group"), a Delaware corporation, and eight of its direct and
indirect subsidiaries, including FINOVA Capital Corporation ("FNV Capital"),
also a Delaware corporation (collectively, the "Debtors"). The Debtors are
debtors in possession in the above-captioned jointly administered chapter 11
cases (the "Chapter 11 Cases"). The Debtors have filed in their Chapter 11
Cases a Third Amended and Restated Joint Plan of Reorganization of Debtors
Under Chapter 11 of the Bankruptcy Code (the "Plan"), a copy of which is
attached hereto as Exhibit A. Unless otherwise defined in this Disclosure
Statement, capitalized terms used, and not otherwise defined, will have the
same meanings given to them in the Plan.

   This Disclosure Statement applies only to the Plan and should not be relied
upon if the Plan is revoked. The terms and conditions upon which the Plan may
be revoked are set forth in the letter agreement dated as of June 10, 2001,
and as modified by letter agreement dated as of June 13, 2001, annexed hereto
as part of Exhibit D.

   The Plan contemplates implementation of a comprehensive restructuring
transaction with Berkadia LLC ("Berkadia"), a joint venture of Berkshire
Hathaway Inc. ("Berkshire") and Leucadia National Corporation ("Leucadia"),
that was first announced on February 27, 2001, and revised on May 2, 2001, May
30, 2000, June 10, 2001 and June 13, 2001. As described more fully herein,
Berkadia will make a $6,000,000,000 loan (the "Berkadia Loan") to FNV Capital
that, together with the Debtors' cash on hand and the issuance by FNV Group of
approximately $3,260,000,000 aggregate principal amount of New Senior Notes,
will enable the Debtors to restructure their debt. As soon as reasonably
practicable after the Effective Date, Berkshire will commence a tender offer
(the "Tender Offer") for up to $500,000,000 in aggregate principal amount of
New Senior Notes, at a cash purchase price of 70% of par ($700 per $1,000
principal amount).

   The Debtors expect to emerge from chapter 11 on or before August 31, 2001.
Pursuant to a Management Services Agreement, which was entered into prior to
these Chapter 11 Cases, and which was amended and restated on April 3, 2001
and further amended and restated on June 10, 2001, Leucadia is providing
advice and assistance during the bankruptcy cases related to the restructuring
and the Debtors' asset portfolio, subject to oversight by the FNV Group Board
of Directors and a special committee of the Board, and will provide management
functions to the Reorganized Debtors upon the effectiveness of the Plan.

   The Plan constitutes separate plans of reorganization for each of the nine
Debtors. After implementation of the Plan, each Debtor, other than FINOVA
Finance Trust ("FNV Trust"), will emerge from chapter 11 as a separate
corporate entity. Under the Plan, FNV Trust will dissolve. As more fully
described herein, the Plan contemplates that all creditors of each of the
Debtors, other than general unsecured creditors of FNV Capital, holders of
TOPrS Interests and the related Group Subordinated Debentures, and holders of
Securities Litigation Claims, will receive either reinstatement of their
Claims or payment in Cash on the Effective Date of the Plan, unless they agree
with the Debtors to alternate treatment. With respect to creditors with
secured Claims, the Plan also permits the Debtors to surrender the asset
securing the Claim. The Plan further contemplates that general unsecured
creditors of FNV Capital and holders of TOPrS Interests will receive the
proceeds of the Berkadia Loan, the New Senior Notes and Cash in satisfaction
of their Claims.

   Under the Plan, equity Interest holders in each of the Debtors, other than
FNV Trust, will retain their Interests in the applicable Reorganized Debtor.
Under the Plan, the holders of preferred equity Interests in FNV Trust, also
called TOPrS, will receive a distribution of Cash and New Senior Notes in the
aggregate amount of 75% of the liquidation preference attributable to such
Interests, as more fully described herein. The Group Subordinated Debentures
related to the TOPrS will be cancelled. The Plan further provides for the
treatment of claimants in various Securities Litigation actions now pending
against the Debtors and others. Specifically, the

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Plan contemplates the issuance of Preferred Stock of FNV Group to satisfy any
final judgments against FNV Capital arising from an existing class action
Securities Litigation against FNV Capital and the issuance of Additional
Mezzanine Common Stock to satisfy any final judgments against FINOVA Mezzanine
Capital Inc. ("FNV Mezzanine") arising from an existing class action
Securities Litigation against FNV Mezzanine. Finally, the Plan contemplates
the issuance of Additional Group Common Stock, (i) to the Berkadia Parties, in
an amount that will constitute 51%, or a lesser amount as may be agreed by the
Berkadia Parties, of the outstanding equity of FNV Group on a Fully Diluted
Basis as of the Effective Date and (ii) to satisfy any final judgment against
FNV Group arising from an existing Securities Litigation against FNV Group.
For all issuances of stock in connection with the Securities Litigation
described in this paragraph, holders of Allowed Claims shall receive stock
having a value as determined by Final Order equal to the amount of such Claims
that is not covered by applicable insurance policies. In the event that any
Additional Group Common Stock is issued after the Effective Date, the Berkadia
Parties shall contemporaneously receive additional FNV Group common stock in
the amount that they would have received if such issuances had occurred before
the Effective Date.

   THE DEBTORS BELIEVE THAT THE PLAN WILL ENABLE THE DEBTORS TO REORGANIZE
SUCCESSFULLY AND ACCOMPLISH THE OBJECTIVES OF CHAPTER 11 AND THAT ACCEPTANCE
OF THE PLAN IS IN THE BEST INTERESTS OF THE DEBTORS AND THEIR CREDITORS AND
INTEREST HOLDERS. ALL CREDITORS AND INTEREST HOLDERS ARE URGED TO VOTE IN
FAVOR OF THE PLAN BY NO LATER THAN 5:00 P.M. MOUNTAIN STANDARD TIME ON AUGUST
1, 2001 (THE "VOTING DEADLINE").

                                      II.

               NOTICE TO HOLDERS OF CLAIMS AND EQUITY INTERESTS

A. Purpose of Disclosure Statement

   The purpose of this Disclosure Statement is to enable you, as a creditor
whose Claim is impaired or as an equity Interest holder whose equity Interest
is impaired under the Plan, to make an informed decision in exercising your
right to accept or reject the Plan. It also sets forth information regarding
the history of the Debtors, their businesses, the filing of the Chapter 11
Cases, the Plan and alternatives to the Plan. Finally, this Disclosure
Statement enables the Bankruptcy Court to make an informed decision whether
the Plan complies with the requirements of the Bankruptcy Code.

   EACH CREDITOR AND INTEREST HOLDER SHOULD READ THIS DISCLOSURE STATEMENT,
THE PLAN AND THE EXHIBITS IN THEIR ENTIRETY BEFORE VOTING ON THE PLAN. No
person has been authorized to use any information concerning the Debtors or
their businesses other than this information for the purpose of solicitation.
For convenience, the terms of the Plan are summarized in this Disclosure
Statement, but all summaries are qualified by the Plan itself, which is
controlling in the event of any inconsistency.

   For your convenience, copies of the following documents are attached as
Exhibits to this Disclosure Statement:

  . The Plan (Exhibit A);

  . Order of the Bankruptcy Court, dated June 14, 2001 (the "Disclosure
    Statement Order"), which, among other things, approves the Disclosure
    Statement and establishes certain procedures for the solicitation and
    tabulation of votes to accept or reject the Plan (Exhibit B);

  . Second Amended and Restated Management Services Agreement among FNV
    Group, Leucadia and Leucadia International Corporation, dated June 10,
    2001 (Exhibit C);

  . Commitment Letter among Berkshire, Leucadia, Berkadia, FNV Group and FNV
    Capital, dated February 26, 2001, and letter agreement among Berkshire,
    Leucadia, Berkadia, FNV Group and FNV Capital, dated as of May 2, 2001,
    which annexes the term sheet for the Berkadia Loan and the term sheet

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   for the New Senior Notes, as modified by letter agreement among Berkadia,
   Berkshire, Leucadia, FNV Group and FNV Capital, dated May 30, 2001, and as
   further modified by letter agreement among Berkadia, Berkshire, Leucadia,
   FNV Group and FNV Capital, dated June 10, 2001, which also annexes the
   term sheet for the Intercompany Note, and as further modified by letter
   agreement among Berkadia, Berkshire, Leucadia, FNV Group and FNV Capital,
   dated June 13, 2001 (Exhibit D);

  . Letter Agreement among Berkshire, FNV Group and FNV Capital, dated June
    13, 2001, related to the Tender Offer (Exhibit E);

  . FNV Group, et al. financial projections (Exhibit F);

  . FNV Group, et al. liquidation analysis (Exhibit G);

  . Chart of corporate structure of the Debtors (Exhibit H);

  . Summary of Terms of New Group Preferred Stock (Exhibit I);

  . FNV Group Annual Report on Form 10-K for the year ended December 31,
    2000, filed with the Securities and Exchange Commission on April 17,
    2001, as amended by Form 10-K/A, filed with the Securities and Exchange
    Commission on April 26, 2001 (the "10-K/A"), which, among other things,
    contains detailed information on the Debtors and their subsidiaries,
    their assets and businesses and audited consolidated financial statements
    for FNV Group for the year ended December 31, 2000 (Exhibit J);

  . FNV Group Quarterly Report on Form 10-Q for the quarter ended March 31,
    2001, filed with the Securities and Exchange Commission on May 15, 2001
    (the "10-Q") (Exhibit K); and

  . Unaudited balance sheets, dated as of March 7, 2001 and March 31, 2001,
    for each Debtor (Exhibit L).

   At a hearing held on June 13, 2001, after notice, the Bankruptcy Court
approved this Disclosure Statement, including the Exhibits, pursuant to
section 1125 of the Bankruptcy Code as containing information of a kind, and
in sufficient detail, adequate to enable a hypothetical, reasonable investor
typical of the solicited classes of Claims or equity Interests of the Debtors
to make an informed judgment with respect to the acceptance or rejection of
the Plan. APPROVAL OF THIS DISCLOSURE STATEMENT BY THE BANKRUPTCY COURT IS NOT
A DETERMINATION BY THE BANKRUPTCY COURT EITHER OF THE FAIRNESS AND MERITS OF
THE PLAN OR THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED IN THIS
DISCLOSURE STATEMENT.

   The statements contained in this Disclosure Statement are made as of the
date on the front cover unless otherwise specified, and the statements on
Exhibits are made as of the date thereof. Neither the delivery of this
Disclosure Statement nor any exchange of rights made in connection with it
shall, under any circumstances, imply that there has been no change in the
facts since that date. The information contained in this Disclosure Statement
has been prepared by the Debtors in good faith, based on information available
to the Debtors. THE INFORMATION SET FORTH IN THIS DISCLOSURE STATEMENT
CONCERNING THE PLAN HAS NOT BEEN SUBJECT TO AN AUDIT. THIS DISCLOSURE
STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE
STATEMENTS CONTAINED HEREIN. All financial information was compiled from the
records of the Debtors. The Debtors believe that this Disclosure Statement
complies with the requirements of the Bankruptcy Code.

B. Voting on the Plan

   After carefully reviewing this Disclosure Statement, including the attached
Exhibits, please indicate your acceptance or rejection of the Plan by voting
in favor of or against the Plan on the enclosed ballot and return it in the
postage-paid envelope provided. Although the Plan is one document, it is
structured as a separate plan of reorganization for each of the nine Debtors.
You may vote to accept or reject only the Plan of the Debtor or Debtors
against which you have a Claim or in which you have an Interest. You may
receive a voting ballot with

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respect to the Plan of one or more of the Debtors. Mark and return only the
ballot or ballots with respect to the Debtors in which you hold a Claim or
equity Interest. In addition, your Claims or equity Interests may be
classified in multiple classes. DETAILED INSTRUCTIONS REGARDING VOTING,
INCLUDING THE NAMES AND ADDRESSES OF THE PERSONS YOU MAY CONTACT IF YOU HAVE
QUESTIONS REGARDING THE VOTING PROCEDURES, ARE INCLUDED IN SECTION VIII OF
THIS DISCLOSURE STATEMENT ("VOTING PROCEDURES"). PLEASE REVIEW THE
INSTRUCTIONS SET FORTH IN THAT SECTION IN DETAIL.

   It is important that creditors and equity security holders exercise their
right to vote to accept or reject the Plan. Even if you do not vote to accept
the Plan, you may be bound by the Plan, if it is accepted by the requisite
holders of Claims or equity Interests.

   Pursuant to the provisions of the Bankruptcy Code, only holders of Claims
and Interests in the following Classes, as defined in the Plan, (the "Voting
Classes") are impaired and entitled to vote on the Plan (section references
below are references to the Plan):

              FNV Group:                            FNV Capital:
Section 3.1(c)--(Group Subordinated      Section 3.2(c)--(General Unsecured
         Debenture Claims)                             Claims)
  Section 3.1(d)--(General Unsecured    Section 3.2(d)--(Convenience Claims)
                Claims)                 Section 3.2(e)--(Debt Securities (S)
 Section 3.1(e)--(Convenience Claims)              510(b) Claims)
      Section 3.1(f)--(Interests)
Section 3.1(g)--(Equity Securities (S)
            510(b) Claims)

              FNV Canada:                              FNV UK:
                 None                                   None

               FNV Loan:                           FNV Mezzanine:
  Section 3.5(c)--(General Unsecured     Section 3.6(c)--(General Unsecured
                Claims)                                Claims)
 Section 3.5(d)--(Convenience Claims)   Section 3.6(d)--(Convenience Claims)
                                             Section 3.6(e)--(Interests)
                                       Section 3.6(f)--(Equity Securities (S)
                                                   510(b) Claims)

            FNV Portfolio:                         FNV Technology:
  Section 3.7(c)--(General Unsecured     Section 3.8(c)--(General Unsecured
                Claims)                                Claims)
 Section 3.7(d)--(Convenience Claims)   Section 3.8(d)--(Convenience Claims)

                                  FNV Trust:
                  Section 3.9(c)--(General Unsecured Claims)
                     Section 3.9(d)--(Convenience Claims)
                       Section 3.9(e)--(TOPrS Interests)
                          Section 3.9(f)--(Interests)

     Holders of Claims and Interests in the following Classes are not entitled
to vote on the Plan and are deemed to have accepted the Plan because their
Claims are not impaired by the Plan:

              FNV Group:                            FNV Capital:
   Section 3.1(a)--(Secured Claims)       Section 3.2(a)--(Secured Claims)
    Section 3.1(b)--(Other Priority        Section 3.2(b)--(Other Priority
                Claims)                                Claims)
                                             Section 3.2(f)--(Interests)

              FNV Canada:                              FNV UK:
   Section 3.3(a)--(Secured Claims)       Section 3.4(a)--(Secured Claims)
    Section 3.3(b)--(Other Priority        Section 3.4(b)--(Other Priority
                Claims)                                Claims)
  Section 3.3(c)--(General Unsecured     Section 3.4(c)--(General Unsecured
                Claims)                                Claims)
      Section 3.3(d)--(Interests)           Section 3.4(d)--(FNV Capital
                                                 Intercompany Loan)
                                             Section 3.4(e)--(Interests)

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               FNV Loan:                           FNV Mezzanine:
   Section 3.5(a)--(Secured Claims)       Section 3.6(a)--(Secured Claims)
    Section 3.5(b)--(Other Priority        Section 3.6(b)--(Other Priority
                Claims)                                Claims)
      Section 3.5(e)--(Interests)

            FNV Portfolio:                         FNV Technology:
   Section 3.7(a)--(Secured Claims)       Section 3.8(a)--(Secured Claims)
    Section 3.7(b)--(Other Priority        Section 3.8(b)--(Other Priority
                Claims)                                Claims)
      Section 3.7(e)--(Interests)            Section 3.8(e)--(Interests)

                                  FNV Trust:
                       Section 3.9(a)--(Secured Claims)
                    Section 3.9(b)--(Other Priority Claims)

   Notwithstanding the foregoing, only holders of Allowed Claims or Allowed
Interests in the Voting Classes are entitled to vote on the Plan. A Disputed
Claim (as defined in the Plan) or Interest that is not Allowed (as defined in
the Plan) is not entitled to vote unless and until either (i) the dispute with
respect to the Claim or Interest is determined, resolved or adjudicated in the
Bankruptcy Court or another court of competent jurisdiction or pursuant to
agreement with the Debtors or (ii) the Bankruptcy Court deems the Disputed
Claim or Interest to be an Allowed Claim or Allowed Interest on a provisional
basis, for purposes of voting on the Plan. Therefore, even if there is a
ballot enclosed with this Disclosure Statement, the votes cast by the holders
of any Claim or Interest that is not Allowed as of the Voting Deadline will
not be counted unless the Bankruptcy Court provisionally allows those Claims
or Interests for purposes of voting on the Plan. If your Claim or Interest not
Allowed, it is your obligation to obtain an order provisionally allowing your
Claim or Interest.

   Holders of Claims and Interests in the voting classes may vote on the Plan
only if they are holders as of the Voting Record Date. The "Voting Record
Date" is June 13, 2001.

   A ballot to be used for voting to accept or reject the Plan, together with
a postage-prepaid envelope, is enclosed with copies of this Disclosure
Statement that are mailed to creditors and stockholders entitled to vote on
the Plan. If there is no ballot enclosed, or if you have any questions
concerning voting procedures, you may contact the voting agent as follows:

                             The FINOVA Group Inc.
                      c/o Claudia King & Associates, Inc.
                                 P.O. BOX 2742
                            Carefree, AZ 85377-2742
                                (by U.S. Mail)

                                      and

                             The FINOVA Group Inc.
                      c/o Claudia King & Associates, Inc.
                      7301 E. Sundance Trail--Suite D-201
                              Carefree, AZ 85377
                           (by delivery or courier)

   To be counted, your vote must be received, on the ballot provided, by the
voting agent at the address set forth above, before the voting deadline of
5:00 p.m. Mountain Standard Time on August 1, 2001. FURTHER VOTING
INSTRUCTIONS ARE SET FORTH ON THE BALLOT AND IN SECTION VIII OF THIS
DISCLOSURE STATEMENT ("VOTING PROCEDURES"). PLEASE REVIEW THOSE INSTRUCTIONS
IN DETAIL.

   BALLOTS MUST BE RECEIVED BY 5:00 P.M. MOUNTAIN STANDARD TIME, ON AUGUST 1,
2001, TO BE CONSIDERED IN DETERMINING WHETHER THE PLAN HAS BEEN ACCEPTED OR
REJECTED. FAXED BALLOTS WILL NOT BE ACCEPTED.

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   BALLOTS THAT ARE RECEIVED BUT NOT SIGNED OR THAT DO NOT SPECIFY WHETHER THE
HOLDER ACCEPTS OR REJECTS THE PLAN WILL NOT BE COUNTED. THE DEBTORS RECOMMEND
A VOTE IN FAVOR OF THE PLAN.

   THE DEBTORS URGE ALL CREDITORS AND STOCKHOLDERS ENTITLED TO VOTE TO
EXERCISE THEIR RIGHT BY COMPLETING THEIR BALLOTS AND RETURNING THEM BY THE
DEADLINE.

C. Confirmation of the Plan

   The requirements for Confirmation, including the vote of creditors to
accept the Plan and certain of the statutory findings that must be made by the
Bankruptcy Court, are set forth in Section IX of this Disclosure Statement
("CONFIRMATION OF THE PLAN"). The Plan constitutes a separate plan of
reorganization for each of the nine Debtors. Accordingly, the voting and other
Confirmation requirements must be satisfied with respect to the Plan for each
of the Debtors, and separate ballots and other voting materials will be
furnished as to each of the nine Debtors. Confirmation of the Plan and the
occurrence of the Effective Date are subject to a number of significant
provisions, which are summarized in Section VI-E of this Disclosure Statement
("Conditions to Confirmation and Effective Date of the Plan"). There can be no
assurance that these conditions will be satisfied. If not all conditions are
satisfied for all Plans, the Debtors reserve the right to amend or withdraw
any or all of the Plans, all as described more fully in Section VI-E.

   Pursuant to section 1128 of the Bankruptcy Code, the Bankruptcy Court has
scheduled a hearing to consider confirmation of the Plan (the "Confirmation
Hearing"), on August 10, 2001 at 9:30 a.m., Eastern Daylight Time, in
Courtroom 2 at 824 Market Street, 6th Floor, Wilmington, Delaware 19801 or
such other location as the Bankruptcy Court may announce. The hearing may be
adjourned from time to time without notice beyond that given in open court.
The Bankruptcy Court has directed that objections, if any, to Confirmation of
the Plan be filed and served on or before August 3, 2001, in the manner
described in Section IX of this Disclosure Statement ("CONFIRMATION OF THE
PLAN").

D. Limitations

   NO SOLICITATION OF VOTES ON THE PLAN MAY BE MADE EXCEPT PURSUANT TO THIS
DISCLOSURE STATEMENT AND SECTION 1125 OF THE BANKRUPTCY CODE. IN VOTING ON THE
PLAN, CREDITORS AND INTEREST HOLDERS SHOULD NOT RELY ON ANY INFORMATION
RELATING TO THE DEBTORS AND THEIR BUSINESSES OTHER THAN THAT CONTAINED IN THIS
DISCLOSURE STATEMENT, THE PLAN AND ALL EXHIBITS TO EITHER.

   THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE AS OF THE
DATE ON THE FRONT COVER UNLESS OTHERWISE NOTED, AND STATEMENTS CONTAINED IN
THE EXHIBITS ARE MADE AS OF THE DATE THEREOF. THE DELIVERY OF THIS DISCLOSURE
STATEMENT DOES NOT IMPLY THAT THERE HAS BEEN NO CHANGE IN THIS INFORMATION
SINCE THOSE DATES. THIS DISCLOSURE STATEMENT HAS BEEN PREPARED BY THE DEBTORS.
CREDITORS AND INTEREST HOLDERS ENTITLED TO VOTE SHOULD READ IT CAREFULLY AND
IN ITS ENTIRETY, AND WHERE POSSIBLE CONSULT WITH COUNSEL, PRIOR TO VOTING.

                                     III.

                             OVERVIEW OF THE PLAN

   The following is a brief overview of the provisions of the Plan. This
overview is qualified in its entirety by reference to the provisions of the
Plan, a copy of which is attached hereto as Exhibit A, and the Plan
Supplement. For a more detailed description of the terms and provisions of the
Plan, see Section VI of this Disclosure Statement ("DESCRIPTION OF THE PLAN OF
REORGANIZATION").

                                       6
<PAGE>

   The Plan contemplates the restructuring and payment of the bank, bond and
other debt of the Debtors through Berkadia's extension of a $6,000,000,000
loan to FNV Capital that, together with the Debtors' cash on hand and the
issuance by FNV Group of approximately $3,260,000,000 aggregate principal
amount of New Senior Notes, will enable the Debtors to restructure their debt.
Holders of unsecured Claims against FNV Capital will receive (i) a Cash
payment equal to 70% of the general unsecured Claims against FNV Capital (not
including prepetition or postpetition interest), (ii) a Cash payment equal to
the amount of accrued and unpaid prepetition and postpetition interest on such
general unsecured Claims (the Debtors estimate the aggregate amount of pre-
petition interest payments to be approximately $155 million and, assuming an
Effective Date of August 31, 2001 and assuming an interest rate of 6.037% per
annum(/1/), the aggregate amount of post-petition interest payments to be
approximately $345 million) and (iii) New Senior Notes having an aggregate
principal amount equal to 30% of such general unsecured Claims (not including
prepetition and postpetition interest). Holders of TOPrS Interests with
respect to FNV Group will receive (i) a Cash payment equal to 52.5% of the
liquidation preference attributable to such Interests (not including
prepetition or postpetition dividends), (ii) a Cash payment equal to 75% of
each of accrued and unpaid prepetition and postpetition dividends attributable
to such Interests (the Debtors estimate the aggregate amount of accrued and
unpaid prepetition dividends to be approximately $900,000 and, assuming an
Effective Date of August 31, 2001, the aggregate amount of accrued post-
petition dividends to be approximately $2.3 million) and (iii) New Senior
Notes having an aggregate principal amount equal to 22.5% of the liquidation
preference attributable to such Interests (not including prepetition and
postpetition dividends). The Group Subordinated Debentures related to the
TOPrS Interests will be cancelled. For complete descriptions of the Berkadia
Loan and the New Senior Notes, see the Commitment Letter (attached hereto as
Exhibit D) and the term sheets for the Berkadia Loan and New Senior Notes
annexed as exhibits to the Plan. The term sheets annexed to the Plan set forth
all terms as modified by the letter agreements dated May 2, 2001, May 30,
2001, June 10, 2001 and June 13, 2001.

   Berkshire has guaranteed 90% of Berkadia's commitment to make the Berkadia
Loan; Leucadia has guaranteed 10% of Berkadia's commitment to make the
Berkadia Loan; and Berkshire has secondarily guaranteed the 10% of Berkadia's
commitment to make the Berkadia Loan that is guaranteed by Leucadia. FNV Group
and all of its direct and indirect subsidiaries (other than (x) FNV Capital,
and (y) any special purpose subsidiary that is contractually prohibited (as of
February 26, 2001) from acting as a guarantor) (the "Guarantors") will
guarantee repayment by FNV Capital of the Berkadia Loan. The guarantees
described in the preceding sentence shall be secured by substantially all of
the Guarantors' assets.

   The New Senior Notes (i) will be issued by FNV Group, (ii) will mature
eight (8) years after the Effective Date, and (iii) will bear interest,
payable semi-annually out of "available cash" (as defined in the New Senior
Notes Indenture), at a fixed rate of seven and one-half percent (7.5%) per
annum. FNV Group's obligations with respect to the payment of interest (but
not Contingent Interest) and principal under the New Senior Notes will be
secured by a second-priority security interest in (x) all of the capital stock
of FNV Capital and (y) a promissory note of FNV Capital issued to FNV Group in
the principal amount of the aggregate amount of New Senior Notes (the
"Intercompany Note"), which will be secured by a second priority lien on the
assets of FNV Capital pledged to secure the Berkadia Loan. The holders of the
New Senior Notes will have no right to enforce their security interests until
the Berkadia Loan is paid in full.

   Under the New Senior Notes, "available cash," after paying or funding a
reserve to pay accrued interest on the Berkadia Loan, paying or funding taxes,
operating and other corporate expenses (including interest on and principal of
certain permitted indebtedness (as defined in the New Senior Notes Indenture))
and reasonable reserves, will be used to pay accrued interest on the New
Senior Notes. No payments of principal will be made on the New Senior Notes
until the Berkadia Loan is paid in full; provided that FNV Group may, with the
prior consent of Berkadia if the Berkadia Loan is still outstanding,
repurchase New Senior Notes at a price not to exceed par plus accrued and
unpaid interest thereon, through tender offers, open market purchases and/or
privately negotiated transactions or otherwise. As long as the Berkadia Loan
is outstanding, such repurchases shall not exceed $1.5 billion in the
aggregate, and at such time when the Berkadia Loan is no longer outstanding,
such repurchases shall not exceed $150 million per calendar year. In the event
that FNV Group elects to make such repurchases, the board of directors of
Reorganized FNV Group will adopt procedures in connection with repurchases of
New Senior Notes neither to prefer nor to discriminate against Berkshire.
--------
(1) The actual interest rate will be calculated as set forth in Section
    5.11(a) of the Plan and will depend upon the applicable LIBO rates during
    the period from and including the Petition Date to but excluding the
    Distribution Date.

                                       7
<PAGE>

   In connection with the Plan, Berkshire has agreed that if the Berkadia Loan
is funded and the New Senior Notes are issued as contemplated in the Plan,
then as soon as reasonably practicable thereafter, Berkshire or a direct or
indirect subsidiary of Berkshire will commence a Tender Offer, as more fully
described in Exhibit E, for up to $500 million in aggregate principal amount
of New Senior Notes at a cash purchase price of 70% of par ($700 per $1,000
principal amount of New Senior Notes). Berkshire has advised the Debtors that
the Tender Offer will be subject to conditions to be specified in the Tender
Offer documents which will be customary, but will not be subject to any
financing condition. The Tender Offer will be made in compliance with all
applicable securities laws and will remain open for the longer of twenty
Business Days or thirty days. Berkshire (or its subsidiary) will purchase any
and all New Senior Notes validly tendered, up to the $500 million aggregate
principal amount limit, and will pro rate among tendering holders if the
Tender Offer is oversubscribed.

   Berkshire, together with its direct and indirect subsidiaries, has agreed
to retain ownership of all New Senior Notes received by Berkshire pursuant to
the Plan or purchased through the Berkshire Tender Offer for a period of four
years from the Effective Date of the Plan. If Berkshire acquires New Senior
Notes in addition to those received by it on the Effective Date of the Plan or
purchased through the Tender Offer, Berkshire may sell or otherwise dispose of
any New Senior Notes it owns so long as at all times during the four (4) years
after the Effective Date it owns not less than the aggregate principal amount
of New Senior Notes that it received on the Effective Date pursuant to the
Plan and purchased through the Tender Offer. Berkshire's agreement does not
restrict Berkshire or any of its direct and indirect subsidiaries from
transferring New Senior Notes among or between themselves.

   After payment in full of the Berkadia Loan, making payments or funding
reserves required prior to making an interest payment on the New Senior Notes
(as described above), paying accrued interest on the New Senior Notes and
optional purchases of New Senior Notes in permitted amounts, ninety-five
percent (95%) of the remaining "available cash" will be used to make semi-
annual prepayments of principal on the New Senior Notes and five percent (5%)
will be used for distributions to and/or repurchases of stock from FNV Group
stockholders. The board of directors of Reorganized FNV Group will adopt
procedures in connection with any non-pro rata purchase of FNV Group common
stock neither to prefer nor to discriminate against the Berkadia Parties in
any such purchases.

   After payment in full of the outstanding principal of the New Senior Notes,
optional purchases of New Senior Notes in permitted amounts, and payments to
FNV Group common stockholders in an aggregate amount equal to 5.263% of the
aggregate principal amount of New Senior Notes issued pursuant to the Plan,
ninety-five percent (95%) of any "available cash" will be used to pay
Contingent Interest to holders of New Senior Notes in an aggregate amount of
up to $100 million (as such amount may be reduced to reflect a decrease in the
principal amount of New Senior Notes outstanding as a result of repurchases
(but not prepayments or repayments) by FNV Group) and five percent (5%) of
such remaining "available cash" will be used for distributions to and/or
repurchase of stock from FNV Group stockholders. Contingent Interest payments
will terminate fifteen (15) years after the Effective Date.

   The Plan proposes either reinstatement, surrender of collateral or Cash
payment, with postpetition interest, for all secured Claims. The Plan proposes
either reinstatement or payment of Cash for all unsecured Claims against any
of the Debtors, other than general unsecured Claims against FNV Capital and
holders of TOPrS Interests and the related Group Subordinated Debentures.

   Under the Plan, all existing equity Interests of Debtors other than FNV
Trust will be Reinstated and will be retained by the existing holders, subject
to dilution in certain cases as described herein. Under the Plan, FNV Trust
will be dissolved, the holders of TOPrS will receive cash and New Senior Notes
as described above, and common equity Interests in FNV Trust will be cancelled
and FNV Group, as the holder thereof, will receive and retain nothing on
account of its Interests. The Plan contemplates that all existing common stock
of FNV Mezzanine will be retained by FNV Capital as the existing holder, but
that Additional Mezzanine Common Stock may be issued to satisfy final
judgments, if any, for plaintiffs in an existing Securities Litigation against
FNV Mezzanine. Further, the Plan contemplates that all existing common stock
of FNV Group will be retained by the existing holders thereof, but that New
Group Preferred Stock will be issued to satisfy final judgments, if any, for

                                       8
<PAGE>

plaintiffs in an existing Securities Litigation against FNV Capital and
Additional Group Common Stock will be issued (i) to the Berkadia Parties, in
an amount that will constitute 51% (or a lesser amount as may be agreed by the
Berkadia Parties) of the outstanding equity of FNV Group on a Fully Diluted
Basis as of the Effective Date after giving effect to any other issuances of
Additional Group Common Stock contemplated by the Plan and (ii) to satisfy
final judgments, if any, for plaintiffs in an existing Securities Litigation
against FNV Group. For all issuances of stock described in this paragraph
relating to the Securities Litigation, holders of Allowed Claims shall receive
stock having a value, as determined by Final Order, equal to the amount of
such Claims that is not covered by applicable insurance policies. In the event
that any Additional Group Common Stock is issued, the Berkadia Parties shall
contemporaneously receive additional FNV Group common stock in the amount that
they would have received if such issuances had occurred before the Effective
Date.

   In addition, the Plan contemplates that, upon the Effective Date, Berkadia
will designate a majority of the Board of Directors of Reorganized FNV Group
as of the Effective Date, that two members of the Board of Directors of
Reorganized FNV Group will be directors currently serving on FNV Group's Board
of Directors and that one member will be designated by the creditors. Finally,
the Plan contemplates that the Debtors' businesses will be operated after the
Effective Date under a Management Services Agreement with Leucadia, pursuant
to which Leucadia will designate its employees to act as Chairman of the Board
and President of Reorganized FNV Group. For a more detailed description of the
consideration to Berkadia and the Management Services Agreement, see the
Commitment Letter attached hereto as Exhibit D and the Management Services
Agreement attached hereto as Exhibit C.

   The steering committee composed of certain lenders to FNV Capital pursuant
to the Bank Credit Agreements contends that the calculation of postpetition
interest contained in Section 5.11(a) of the Plan should be calculated by
using the Base Rates as defined in the Bank Credit Agreements. The Debtors
disagree with this contention and the Plan provides otherwise.

   As described more fully below in Section VII-C of this Disclosure Statement
("Post-Confirmation Business Plan"), the Debtors' post-confirmation business
plan does not contemplate any new business activities related to new
customers. While other activities may be initiated or undertaken in the
future, the main objective of the Debtors' post-confirmation business plan is
to maximize the value of their portfolio through the orderly liquidation of
the portfolio over time.

   The Pension Benefit Guaranty Corporation ("PBGC") is the United States
government agency that administers the mandatory termination insurance program
for defined benefit pension plans under Title IV of the Employee Retirement
Income Security Act ("ERISA"), 29 U.S.C. (S)(S) 1301-1461 (1994 & Supp. IV
1998). A defined benefit pension plan is one that provides an employee, upon
retirement, a fixed, periodic payment as determined by the terms of the plan.
See 29 U.S.C. (S) 1002(35). The PBGC guarantees the payment of certain pension
benefits upon termination of a defined benefit pension plan. See 29
U.S.C. (S)(S) 1321, 1322.

   The Debtors established and maintain the Retirement Plan for certain of
their employees known as The FINOVA Group Inc. Pension Plan. The Retirement
Plan is covered by Title IV of ERISA. The Debtors understand that they and all
members of the controlled group are obligated to contribute to the Retirement
Plan the amounts necessary to satisfy ERISA's minimum funding standards, 29
U.S.C. (S) 1082; 26 U.S.C. (S) 412. In addition, in the event of a termination
of the Retirement Plan, the Debtors and all members of the controlled group
may be jointly and severally liable for the unfunded benefit liabilities of
the Retirement Plan. See 29 U.S.C. (S) 1362(a).

   The Debtors intend to continue their liability as either the contributing
sponsors or controlled group members to fund the Retirement Plan in accordance
with the minimum funding standards under ERISA, pay all required PBGC
insurance premiums, and comply with all applicable requirements of the
Retirement Plan and ERISA. The Debtors further understand that the Retirement
Plan may be terminated only if the statutory requirements of either sections
4041 or 4042 of ERISA are met. 29 U.S.C. (S)(S) 1341, 1342. In addition, the
Debtors' reorganization proceedings, and in particular the Plan, the
Confirmation Order and section 1141 of the Bankruptcy Code, shall not in any
way be construed as discharging, releasing or relieving the Debtors, or any
other party, in any capacity, from any liability with respect to the
Retirement Plan under any law, governmental policy or regulatory provision.
PBGC and the Retirement Plan shall not be enjoined or precluded from enforcing
such liability as a result of any of the provisions of the Plan or the Plan's
confirmation.

                                       9
<PAGE>

   The following table briefly summarizes the classification and treatment of
Claims and Interests under the Plan.

Administrative Claims......  Except as described in the next paragraph, each
                             holder of an Allowed Administrative Claim against
                             any Debtor shall receive on the Distribution
                             Date, at the sole option of the relevant Debtor,
                             (a) payment of Cash in an amount equal to the
                             unpaid portion of such Allowed Administrative
                             Claim or (b) such other treatment as to which the
                             relevant Debtor and such Claim holder shall have
                             agreed upon in writing; provided, however, that
                             Allowed Administrative Claims against a Debtor
                             representing liabilities incurred in the ordinary
                             course of business during the Chapter 11 Cases or
                             liabilities arising under loans or advances to or
                             other obligations incurred by the Debtors that
                             were authorized and approved by the Bankruptcy
                             Court shall be paid and performed by the
                             appropriate Reorganized Debtor in the ordinary
                             course of business in accordance with the terms
                             and conditions of any agreements relating
                             thereto.

                             Any Person seeking an award by the Bankruptcy
                             Court of an Allowed Administrative Claim on
                             account of Professional Fees, services rendered,
                             or reimbursement of expenses incurred through and
                             including the Effective Date under sections 327,
                             328, 330, 331, 503(b) and 1103 of the Bankruptcy
                             Code, shall file a final application for
                             allowance of compensation for services rendered
                             and reimbursement of expenses incurred through
                             the Confirmation Date no later than thirty days
                             after the Effective Date (except to the extent
                             that such Person is an Ordinary Course
                             Professional, in which case the procedures set
                             forth in the Ordinary Course Professional Order
                             shall be followed). Objections to final
                             applications for payment of Professional Fees
                             must be filed no later than 60 days after the
                             Confirmation Date. To the extent that such an
                             award is granted by the Bankruptcy Court or
                             allowed by the Ordinary Course Professional
                             Order, the requesting Person shall receive, (i)
                             payment on the Distribution Date of Cash in an
                             amount equal to the amount allowed by the
                             Bankruptcy Court or Ordinary Course Professional
                             Order, (ii) payment on such other terms as may be
                             mutually agreed upon by the holder of the Allowed
                             Administrative Claim and the applicable Debtor or
                             (iii) payment in accordance with the terms of any
                             applicable administrative procedures order
                             entered by the Bankruptcy Court. All Professional
                             Fees for services rendered in connection with the
                             Chapter 11 Cases and the Plan after the
                             Confirmation Date, including, without limitation,
                             those relating to the occurrence of the Effective
                             Date, the prosecution of causes of action
                             preserved hereunder and the resolution of
                             Disputed Claims, shall be paid by the applicable
                             Debtor upon receipt of an invoice therefor, or on
                             such other terms as such Debtor may agree to,
                             without the requirement of further Bankruptcy
                             Court authorization or entry of a Final Order.

Priority Tax Claims........  Each holder of an Allowed Priority Tax Claim
                             against a Debtor shall receive, at the sole
                             option of the relevant Debtor: (a) payment on the
                             Distribution Date of Cash in an amount equal to
                             the unpaid portion of such Allowed Priority Tax
                             Claim; (b) Cash payments over a period not

                                      10
<PAGE>

                             exceeding six years after the assessment of the
                             tax on which such Claim is based, totaling the
                             principal amount of such Claim plus simple
                             interest accruing from the Effective Date,
                             calculated at the effective interest rate for 90-
                             day securities obligations issued by the United
                             States Treasury on the Effective Date or, if no
                             such securities were issued on the Effective
                             Date, on the date of issuance immediately
                             preceding the Effective Date; (c) payment upon
                             such other terms determined by the Bankruptcy
                             Court to provide the holder of such Claim with
                             deferred Cash payments having a value, as of the
                             Effective Date, equal to such Claim; or (d) such
                             other treatment agreed to by the Allowed Priority
                             Tax Claim holder and the applicable Debtor.

FNV Group-1 (Secured
Claims)....................  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Group-1 shall receive
                             one of the following treatments, to be determined
                             at the sole option of FNV Group: (i)
                             Reinstatement of such Allowed Secured Claim, (ii)
                             payment of Cash in an amount equal to the unpaid
                             portion of such Allowed Secured Claim plus
                             postpetition interest, in which case the Lien
                             arising from such Allowed Secured Claim shall be
                             released upon payment, (iii) surrender by FNV
                             Group of the asset subject to the Lien of the
                             holder of the Allowed Secured Claim, or (iv) such
                             other treatment as to which FNV Group and such
                             holder shall have agreed upon in writing. At the
                             option of FNV Group, FNV Group may elect to
                             exercise a different option for each asset
                             subject to the Lien of the holder of an Allowed
                             Secured Claim.

FNV Group-2 (Other
Priority Claims)...........  On the Distribution Date, the Allowed Claims in
                             Class FNV Group-2 shall (i) be Reinstated,
                             provided, however, that such treatment shall be
                             no less favorable than that provided in section
                             1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii)
                             receive such other treatment as to which FNV
                             Group and such holder shall have agreed upon in
                             writing.

FNV Group-3 (Group
Subordinated Debenture
Claims)....................
                             On the Distribution Date, (i) the Allowed Claims
                             in Class FNV Group-3 shall be satisfied by the
                             treatment of the beneficial holders of claims in
                             Class FNV Trust-5 (TOPrS Interests), provided,
                             however, that Allowed Claims of the Indenture
                             Trustees (including, but not limited to,
                             prepetition and postpetition fees, costs,
                             expenses, indemnification, disbursements,
                             advances and reasonable compensation for the
                             Indenture Trustee's counsel) shall be paid in
                             full in Cash on the Distribution Date, and (ii)
                             the Group Subordinated Debentures shall be
                             cancelled.

FNV Group-4 (General
Unsecured Claims)..........  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Group-4 shall receive
                             one of the following treatments, to be determined
                             at the sole option of FNV Group: (i) payment of
                             Cash in an amount equal to the unpaid portion,
                             without postpetition interest, of such Allowed
                             General Unsecured Claim, (ii) Reinstatement of
                             such Allowed General Unsecured Claim, or (iii)
                             such other treatment as to which FNV Group and
                             such holder shall have agreed upon in writing.

                                      11
<PAGE>

FNV Group-5 (Convenience
Claims)....................  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Group-5 shall receive
                             payment in full, without postpetition interest,
                             in Cash, not to exceed $25,000, of such Allowed
                             Convenience Claim.

FNV Group-6 (Interests)....
                             On and after the Distribution Date, the legal,
                             equitable and contractual rights of holders of
                             Allowed Interests in Class FNV Group-6 shall
                             remain in effect, subject to the effects of (i)
                             the issuance of Additional Group Common Stock (x)
                             to the Berkadia Parties, and (y) to the holders
                             of Allowed Equity Securities (S) 510(b) Claims in
                             FNV Group-7, if any, (ii) the issuance of New
                             Group Preferred Stock to the holders of Allowed
                             Debt Securities (S) 510(b) Claims in Class FNV
                             Capital-5, if any, and (iii) the other terms and
                             conditions of the Plan, including cancellation of
                             certain options, warrants and rights, as more
                             fully described therein.

FNV Group-7 (Equity
Securities (S) 510(b)        On the Distribution Date, each holder of an
Claims)....................  Allowed Equity Securities (S) 510(b) Claim in
                             Class FNV Group-7, if any, shall receive a
                             distribution by Reorganized FNV Group of
                             Additional Group Common Stock having a value, as
                             determined by a Final Order, equal to the
                             holder's Pro Rata Share of the Excess Amount with
                             respect to all Allowed Equity Securities (S)
                             510(b) Claims in Class FNV Group-7.

FNV Capital-1 (Secured
Claims)....................  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Capital-1 shall
                             receive one of the following treatments, to be
                             determined at the sole option of FNV Capital: (i)
                             Reinstatement of such Allowed Secured Claim, (ii)
                             payment of Cash in an amount equal to the unpaid
                             portion of such Allowed Secured Claim plus
                             postpetition interest, in which case the Lien
                             arising from such Allowed Secured Claim shall be
                             released upon payment, (iii) surrender by FNV
                             Capital of the asset subject to the Lien of the
                             holder of the Allowed Secured Claim, or (iv) such
                             other treatment as to which FNV Capital and such
                             holder shall have agreed upon in writing. At the
                             option of FNV Capital, FNV Capital may elect to
                             exercise a different option for each asset
                             subject to the Lien of the holder of an Allowed
                             Secured Claim.

FNV Capital-2 (Other
Priority Claims)...........  On the Distribution Date, the Allowed Claims in
                             Class FNV Capital-2 shall (i) be Reinstated,
                             provided, however, that such treatment shall be
                             no less favorable than that provided in section
                             1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii)
                             receive such other treatment as to which FNV
                             Capital and such holder shall have agreed upon in
                             writing.

FNV Capital-3 (General
Unsecured Claims)..........  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Capital-3 shall
                             receive a distribution, equal to the full amount
                             of such General Unsecured Claim plus postpetition
                             interest, composed of (i) a Cash payment equal to
                             70% of the principal amount of that General
                             Unsecured Claim (not including prepetition or
                             postpetition

                                      12
<PAGE>

                             interest), (ii) a Cash payment equal to the
                             amount of accrued and unpaid prepetition and
                             postpetition interest on the General Unsecured
                             Claim, and (iii) New Senior Notes in the
                             principal amount of 30% of the principal amount
                             of that General Unsecured Claim (not including
                             prepetition or postpetition interest), provided,
                             however, that Allowed Claims of the Indenture
                             Trustees (including, but not limited to,
                             prepetition and postpetition fees, costs,
                             expenses, indemnification, disbursements,
                             advances and reasonable compensation for the
                             Indenture Trustee's counsel) shall be paid in
                             full in Cash on the Distribution Date.

FNV Capital-4 (Convenience
Claims)....................  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Capital-4 shall
                             receive payment in full, without postpetition
                             interest, in Cash, not to exceed $25,000, of such
                             Allowed Convenience Claim.

FNV Capital-5 (Debt
Securities (S) 510(b)        On the Distribution Date, each holder of an
Claims)....................  Allowed Debt Securities (S) 510(b) Claim in Class
                             FNV Capital-5, if any, shall receive a
                             distribution by Reorganized FNV Group of New
                             Group Preferred Stock having a value, as
                             determined by a Final Order, equal to the
                             holder's Pro Rata Share of the Excess Amount with
                             respect to all Allowed Debt Securities (S) 510(b)
                             Claims in Class FNV Capital-5.

FNV Capital-6
(Interests)................  On the Distribution Date, the legal, equitable
                             and contractual rights of holders of Allowed
                             Interests in Class FNV Capital-6 shall be
                             Reinstated.

FNV Canada-1 (Secured
Claims)....................  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Canada-1 shall receive
                             one of the following treatments, to be determined
                             at the sole option of FNV Canada: (i)
                             Reinstatement of such Allowed Secured Claim; (ii)
                             payment of Cash in an amount equal to the unpaid
                             portion of such Allowed Secured Claim plus
                             postpetition interest, in which case, the Lien
                             arising from such Allowed Secured Claim shall be
                             released upon payment; (iii) surrender by FNV
                             Canada of the asset subject to the Lien of the
                             holder of the Allowed Secured Claim, or (iv) such
                             other treatment as to which FNV Canada and such
                             holder shall have agreed upon in writing. At the
                             option of FNV Canada, FNV Canada may elect to
                             exercise a different option for each asset
                             subject to the Lien of the holder of an Allowed
                             Secured Claim.

FNV Canada-2 (Other
Priority Claims)...........  On the Distribution Date, the Allowed Claims in
                             Class FNV Canada-2 shall (i) be Reinstated,
                             provided, however, that such treatment shall be
                             no less favorable than that provided in section
                             1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii)
                             receive such other treatment as to which FNV
                             Canada and such holder shall have agreed upon in
                             writing.

FNV Canada-3 (General
Unsecured Claims)..........  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Canada-3 shall receive
                             one of the following treatments, to be determined
                             at the sole option of FNV Canada: (i) payment of
                             Cash in

                                      13
<PAGE>

                             an amount equal to the unpaid portion of such
                             Allowed General Unsecured Claim plus postpetition
                             interest, (ii) except in the case of Bank Claims
                             against FNV Canada, Reinstatement of such Allowed
                             General Unsecured Claim, or (iii) such other
                             treatment as to which FNV Canada and such holder
                             shall have agreed upon in writing.

FNV Canada-4 (Interests)...
                             On the Distribution Date, the legal, equitable
                             and contractual rights of holders of Allowed
                             Interests in Class FNV Canada-4 shall be
                             Reinstated.

FNV UK-1 (Secured
Claims)....................  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV UK-1 shall receive one
                             of the following treatments, to be determined at
                             the sole option of FNV UK: (i) Reinstatement of
                             such Allowed Secured Claim; (ii) payment of Cash
                             in an amount equal to the unpaid portion of such
                             Allowed Secured Claim plus postpetition interest,
                             in which case, the Lien arising from such Allowed
                             Secured Claim shall be released upon payment;
                             (iii) surrender by FNV UK of the asset subject to
                             the Lien of the holder of the Allowed Secured
                             Claim, or (iv) such other treatment as to which
                             FNV UK and such holder shall have agreed upon in
                             writing. At the option of FNV UK, FNV UK may
                             elect to exercise a different option for each
                             asset subject to the Lien of the holder of an
                             Allowed Secured Claim.

FNV UK-2 (Other Priority
Claims)....................  On the Distribution Date, the Allowed Claims in
                             Class FNV UK-2 shall (i) be Reinstated, provided,
                             however, that such treatment shall be no less
                             favorable than that provided in section
                             1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii)
                             receive such other treatment as to which FNV UK
                             and such holder shall have agreed upon in
                             writing.

FNV UK-3 (General
Unsecured Claims)..........  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV UK-3 shall receive one
                             of the following treatments, to be determined at
                             the sole option of FNV UK: (i) payment of Cash in
                             an amount equal to the unpaid portion of such
                             Allowed General Unsecured Claim plus postpetition
                             interest, (ii) except in the case of Bank Claims
                             against FNV UK, Reinstatement of such Allowed
                             General Unsecured Claim, or (iii) such other
                             treatment as to which FNV UK and such holder
                             shall have agreed upon in writing.

FNV UK-4 (FNV Capital
Intercompany Loan).........  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV UK-4 shall receive one
                             of the following treatments, to be determined at
                             the sole option of FNV UK: (i) payment of Cash in
                             an amount equal to the unpaid portion of the
                             Claim plus postpetition interest, or (ii)
                             Reinstatement of the Claim.

FNV UK-5 (Interests).......
                             On the Distribution Date, the legal, equitable
                             and contractual rights of holders of Allowed
                             Interests in Class FNV UK-5 shall be Reinstated.

                                      14
<PAGE>

FNV Loan-1 (Secured
Claims)....................  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Loan-1 shall receive
                             one of the following treatments, to be determined
                             at the sole option of FNV Loan: (i) Reinstatement
                             of such Allowed Secured Claim; (ii) payment of
                             Cash in an amount equal to the unpaid portion of
                             such Allowed Secured Claim plus postpetition
                             interest, in which case, the Lien arising from
                             such Allowed Secured Claim shall be released upon
                             payment; (iii) surrender by FNV Loan of the asset
                             subject to the Lien of the holder of the Allowed
                             Secured Claim or (iv) such other treatment as to
                             which FNV Loan and such holder shall have agreed
                             upon in writing. At the option of FNV Loan, FNV
                             Loan may elect to exercise a different option for
                             each asset subject to the Lien of the holder of
                             an Allowed Secured Claim.

FNV Loan-2 (Other Priority
Claims)....................  On the Distribution Date, the Allowed Claims in
                             Class FNV Loan-2 shall (i) be Reinstated,
                             provided, however, that such treatment shall be
                             no less favorable than that provided in section
                             1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii)
                             receive such other treatment as to which FNV Loan
                             and such holder shall have agreed upon in
                             writing.

FNV Loan-3 (General
Unsecured Claims)..........  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Loan-3 shall receive
                             one of the following treatments, to be determined
                             at the sole option of FNV Loan: (i) payment of
                             Cash in an amount equal to the unpaid portion,
                             without postpetition interest, of such Allowed
                             General Unsecured Claim, (ii) Reinstatement of
                             such Allowed General Unsecured Claim or (iii)
                             such other treatment as to which FNV Loan and
                             such holder shall have agreed upon in writing.

FNV Loan-4 (Convenience
Claims)....................  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Loan-4 shall receive
                             payment in full, without postpetition interest,
                             in Cash, not to exceed $25,000, of such Allowed
                             Convenience Claim.

FNV Loan-5 (Interests).....
                             On the Distribution Date, the legal, equitable
                             and contractual rights of holders of Allowed
                             Interests in Class FNV Loan-5 shall be
                             Reinstated.

FNV Mezzanine-1 (Secured
Claims)....................  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Mezzanine-1 shall
                             receive one of the following treatments, to be
                             determined at the sole option of FNV Mezzanine:
                             (i) Reinstatement of such Allowed Secured Claim;
                             (ii) payment of Cash in an amount equal to the
                             unpaid portion of such Allowed Secured Claim plus
                             postpetition interest, in which case, the Lien
                             arising from such Allowed Secured Claim shall be
                             released upon payment; (iii) surrender by FNV
                             Mezzanine of the asset subject to the Lien of the
                             holder of the Allowed Secured Claim or (iv) such
                             other treatment as to which FNV Mezzanine and
                             such holder shall have agreed upon in writing. At
                             the option of FNV Mezzanine, FNV Mezzanine may
                             elect to exercise a different option for each
                             asset subject to the Lien of the holder of an
                             Allowed Secured Claim.

                                      15
<PAGE>

FNV Mezzanine-2 (Other
Priority Claims)...........  On the Distribution Date, the Allowed Claims in
                             Class FNV Mezzanine-2 shall (i) be Reinstated,
                             provided, however, that such treatment shall be
                             no less favorable than that provided in section
                             1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii)
                             receive such other treatment as to which FNV
                             Mezzanine and such holder shall have agreed upon
                             in writing.

FNV Mezzanine-3 (General
Unsecured Claims)..........  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Mezzanine-3 shall
                             receive one of the following treatments, to be
                             determined at the sole option of FNV Mezzanine:
                             (i) payment of Cash in an amount equal to the
                             unpaid portion, without postpetition interest, of
                             such Allowed General Unsecured Claim; (ii)
                             Reinstatement of such Allowed General Unsecured
                             Claim or (iii) such other treatment as to which
                             FNV Mezzanine and such holder shall have agreed
                             upon in writing.

FNV Mezzanine-4
(Convenience Claims).......  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Mezzanine-4 shall
                             receive payment in full, without postpetition
                             interest, in Cash, not to exceed $25,000, of such
                             Allowed Convenience Claim.

FNV Mezzanine-5
(Interests)................  On the Distribution Date, the legal, equitable
                             and contractual rights of holders of Allowed
                             Interests in Class FNV Mezzanine-5 shall remain
                             in effect, subject to the effect of the issuance
                             of Additional Mezzanine Common Stock to holders
                             of Allowed Equity Securities (S) 510(b) Claims in
                             Class FNV Mezzanine-6, if any.

FNV Mezzanine-6 (Equity
Securities (S) 510(b)        On the Distribution Date, each holder of an
Claims)....................  Allowed Equity Securities (S) 510(b) Claim in
                             Class FNV Mezzanine-6, if any, shall receive a
                             distribution of Additional Mezzanine Common Stock
                             having a value, as determined by a Final Order,
                             equal to the holder's Pro Rata Share of the
                             Excess Amount with respect to all Allowed Equity
                             Securities (S) 510(b) Claims in Class FNV
                             Mezzanine-6.

FNV Portfolio-1 (Secured
Claims)....................  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Portfolio-1 shall
                             receive one of the following treatments, to be
                             determined at the sole option of FNV Portfolio:
                             (i) Reinstatement of such Allowed Secured Claim;
                             (ii) payment of Cash in an amount equal to the
                             unpaid portion of such Allowed Secured Claim plus
                             postpetition interest, in which case, the Lien
                             arising from such Allowed Secured Claim shall be
                             released upon payment; (iii) surrender by FNV
                             Portfolio of the asset subject to the Lien of the
                             holder of the Allowed Secured Claim or (iv) such
                             other treatment as to which FNV Portfolio and
                             such holder shall have agreed upon in writing. At
                             the option of FNV Portfolio, FNV Portfolio may
                             elect to exercise a different option for each
                             asset subject to the Lien of the holder of an
                             Allowed Secured Claim.

                                      16
<PAGE>

FNV Portfolio-2 (Other
Priority Claims)...........  On the Distribution Date, the Allowed Claims in
                             Class FNV Portfolio-2 shall (i) be Reinstated,
                             provided, however, that such treatment shall be
                             no less favorable than that provided in section
                             1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii)
                             receive such other treatment as to which FNV
                             Portfolio and such holder shall have agreed upon
                             in writing.

FNV Portfolio-3 (General
Unsecured Claims)..........  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Portfolio-3 shall
                             receive one of the following treatments, to be
                             determined at the sole option of FNV Portfolio:
                             (i) payment of Cash in an amount equal to the
                             unpaid portion, without postpetition interest, of
                             such Allowed General Unsecured Claim; (ii)
                             Reinstatement of such Allowed General Unsecured
                             Claim or (iii) such other treatment as to which
                             FNV Portfolio and such holder shall have agreed
                             upon in writing.

FNV Portfolio-4
(Convenience Claims).......  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Portfolio-4 shall
                             receive payment in full, without postpetition
                             interest, in Cash, not to exceed $25,000, of such
                             Allowed Convenience Claim.

FNV Portfolio-5
(Interests)................  On the Distribution Date, the legal, equitable
                             and contractual rights of holders of Allowed
                             Interests in Class FNV Portfolio-5 shall be
                             Reinstated.

FNV Technology-1 (Secured
Claims)....................  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Technology-1 shall
                             receive one of the following treatments, to be
                             determined at the sole option of FNV Technology:
                             (i) Reinstatement of such Allowed Secured Claim;
                             (ii) payment of Cash in an amount equal to the
                             unpaid portion of such Allowed Secured Claim plus
                             postpetition interest, in which case, the Lien
                             arising from such Allowed Secured Claim shall be
                             released upon payment; (iii) surrender by FNV
                             Technology of the asset subject to the Lien of
                             the holder of the Allowed Secured Claim or (iv)
                             such other treatment as to which FNV Technology
                             and such holder shall have agreed upon in
                             writing. At the option of FNV Technology, FNV
                             Technology may elect to exercise a different
                             option for each asset subject to the Lien of the
                             holder of an Allowed Secured Claim.

FNV Technology-2 (Other
Priority Claims)...........  On the Distribution Date, the Allowed Claims in
                             Class FNV Technology-2 shall (i) be Reinstated,
                             provided, however, that such treatment shall be
                             no less favorable than that provided in section
                             1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii)
                             receive such other treatment as to which FNV
                             Technology and such holder shall have agreed upon
                             in writing.

                                      17
<PAGE>

FNV Technology-3 (General
Unsecured Claims)..........  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Technology-3 shall
                             receive one of the following treatments, to be
                             determined at the sole option of FNV Technology:
                             (i) payment of Cash in an amount equal to the
                             unpaid portion, without postpetition interest, of
                             such Allowed General Unsecured Claim; (ii)
                             Reinstatement of such Allowed General Unsecured
                             Claim or (iii) such other treatment as to which
                             FNV Technology and such holder shall have agreed
                             upon in writing.

FNV Technology-4
(Convenience Claims).......  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Technology-4 shall
                             receive payment in full, without postpetition
                             interest, in Cash, not to exceed $25,000, of such
                             Allowed Convenience Claim.

FNV Technology-5
(Interests)................  On the Distribution Date, the legal, equitable
                             and contractual rights of holders of Allowed
                             Interests in Class FNV Technology-5 shall be
                             Reinstated.

FNV Trust-1 (Secured
Claims)....................  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Trust-1 shall receive
                             one of the following treatments, to be determined
                             at the sole option of FNV Trust: (i) payment of
                             Cash in an amount equal to the unpaid portion of
                             such Allowed Secured Claim plus postpetition
                             interest, in which case, the Lien arising from
                             such Allowed Secured Claim shall be released upon
                             payment; (ii) surrender by FNV Trust of the asset
                             subject to the Lien of the holder of the Allowed
                             Secured Claim or (iii) such other treatment as to
                             which FNV Trust and such holder shall have agreed
                             upon in writing. At the option of FNV Trust, FNV
                             Trust may elect to exercise a different option
                             for each asset subject to the Lien of the holder
                             of an Allowed Secured Claim.

FNV Trust-2 (Other
Priority Claims)...........  On the Distribution Date, the Allowed Claims in
                             Class FNV Trust-2 shall (i) be Reinstated,
                             provided, however, that such treatment shall be
                             no less favorable than that provided in section
                             1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii)
                             receive such other treatment as to which FNV
                             Trust and such holder shall have agreed upon in
                             writing.

FNV Trust-3 (General
Unsecured Claims)..........  On the Distribution Date, each holder of an
                             Allowed Claim in Class FNV Trust-3 shall receive
                             one of the following treatments, to be determined
                             at the sole option of FNV Trust: (i) payment of
                             Cash in an amount equal to the unpaid portion,
                             without postpetition interest, of such Allowed
                             General Unsecured Claim or (ii) such other
                             treatment as to which FNV Trust and such holder
                             shall have agreed upon in writing.

FNV Trust-4 (Convenience
Claims)....................  On the Distribution Date, holders of Allowed
                             Claims in Class FNV Trust-4 shall receive payment
                             in full, without postpetition interest, in Cash,
                             not to exceed $25,000, of such Allowed
                             Convenience Claim.

                                      18
<PAGE>

FNV Trust-5 (TOPrS
Interests).................  On the Distribution Date, each holder of an
                             Allowed Interest in Class FNV Trust-5 shall
                             receive a distribution composed of (i) a Cash
                             payment equal to 52.5% of the liquidation
                             preference attributable to such Allowed Interest
                             (not including prepetition or postpetition
                             dividends), (ii) a Cash payment equal to 75% of
                             the amount of accrued and unpaid prepetition and
                             postpetition dividends attributable to such
                             Allowed Interest and (iii) New Senior Notes in
                             the principal amount of 22.5% of the liquidation
                             preference attributable to such Allowed Interest
                             (not including prepetition or postpetition
                             dividends) provided, however, that Allowed Claims
                             of the Indenture Trustees (including, but not
                             limited to, prepetition and postpetition fees,
                             costs, expenses, indemnification, disbursements,
                             advances and reasonable compensation for the
                             Indenture Trustee's counsel) shall be paid in
                             full in Cash on the Distribution Date.

FNV Trust-6 (Interests)....
                             On the Distribution Date, the legal, equitable
                             and contractual rights of holders of Allowed
                             Interests in Class FNV Trust-6 shall be
                             cancelled. Holders of Allowed Interests in Class
                             FNV Trust-6 shall receive any property of the
                             Estate of FNV Trust remaining after payment of
                             all other classes of Claims against and TOPrS
                             Interests in FNV Trust; provided, however, that
                             any Group Subordinated Debentures that otherwise
                             would be distributed to FNV Group hereunder shall
                             be cancelled.

                                      IV.

                       BACKGROUND CONCERNING THE DEBTORS

A. General Background

   For general background regarding the Debtors, creditors and Interest
holders should read the attached 10-K/A and 10-Q. The 10-K/A and 10-Q contain
information concerning the Debtors, their assets and their businesses, audited
consolidated financial statements for the year ended December 31, 2000 and
unaudited consolidated financial statements for the quarter ended March 31,
2001, and certain other financial information. In addition, for your ease of
reference, a chart of the corporate structure of the Debtors is attached
hereto as Exhibit H.

B. Supplemental or Updated Information

 1. Legal Proceedings

   The Debtors are debtors in possession in the Chapter 11 Cases and are
involved in the related legal proceedings, as described in Section V of this
Disclosure Statement ("THE DEBTORS' CHAPTER 11 CASES").

   Prior to the commencement of the Chapter 11 Cases, the Debtors were parties
to certain other legal proceedings as more fully described in the attached 10-
K/A and 10-Q. Creditors and Interest holders are referred to Item 3, "Legal
Proceedings," of the 10-K/A and Part I, Item 1, Note H "Legal Proceedings," of
the 10-Q for information regarding those legal proceedings.

   As they continue to operate, but subject to the automatic stay during the
pendency of the Chapter 11 Cases, the Debtors may become involved in future
legal proceedings arising in the ordinary course of their business.

 2. Taxation

   For a discussion of the federal tax attributes of the Debtors and the
federal tax consequences of the Plan, see Section XI of this Disclosure
Statement ("CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN").

                                      19
<PAGE>

 3. Equity Ownership

   FNV Group is the ultimate parent company of the other Debtors. The common
stock of FNV Group is traded on the NYSE under the symbol "FNV." See "Market
Price Of And Dividends On The Registrant's Common Equity & Related Shareowner
Matters" in Item 5 of the 10-K/A for information regarding historic trading
information of the FNV Group Common Stock. Each share of common stock is
entitled to one vote per share.

   The following table sets forth information concerning the ownership of FNV
Group Common Stock by persons or groups owning in excess of 5% of the
outstanding stock, based on SEC filings made by those persons or groups. The
information is as of the date of those reports, which is indicated below.

<TABLE>
<CAPTION>
                                                         Number of  Percent of
                                                          Common   Total Voting
   Name of Beneficial Owner                               Shares      Power
   ------------------------                              --------- ------------
   <S>                                                   <C>       <C>
   Legg Mason Investment Trust, Inc. and affiliates (as
    of May 31, 2001)...................................  5,900,000     9.65%
   Barclays Global Investors and affiliates (as of June
    1, 2001)...........................................  4,125,000     6.74%
   James D. Bennett and affiliates (as of February 12,
    2001)..............................................  3,468,100     5.66%
</TABLE>

 4. Debt Structure

   A detailed description of the Debtors' debt structure is set forth in the
attached 10-K/A and March 31, 2001 Form 10-Q. As additional information, the
following table sets forth the actual consolidated capitalization of the
Debtors as of August 31, 2001 (the assumed Effective Date) and the pro forma
consolidated capitalization of the Debtors as of August 31, 2001 after giving
effect to the Plan. Dollar amounts are in thousands.

<TABLE>
<CAPTION>
                                                       August 31, 2001
                                                    -----------------------
                                        March 31,                Pro Forma
                                         2001(1)     Projected    (2) (3)
                                       -----------  -----------  ----------
<S>                                    <C>          <C>          <C>
Cash and cash equivalents............. $ 1,624,207  $ 2,481,252  $  100,000 (4)
                                       ===========  ===========  ==========
Long-Term Debt:
  Senior Debt(5)......................  11,191,207   11,485,404
  Berkadia Loan Agreement.............                            5,985,841
  New Senior Notes....................                            3,255,293
                                       -----------  -----------  ----------
Total Long-Term Debt..................  11,191,207   11,485,404   9,241,134
                                       -----------  -----------  ----------
TOPrS.................................     111,550      111,550
Shareowners' Equity:
  Common Stock, $.01 par, 64,849,000,
   64,849,000 and 128,568,000 issued,
   respectively.......................         648          648       1,286
  Additional Capital..................   1,113,064    1,103,642   1,103,004
  Retained (Deficit)..................    (359,181)    (277,709)   (282,241)
  Accumulated Other Comprehensive
   Loss...............................      (1,115)
  Common Stock in Treasury, 3,693,000,
   3,629,000 and 3,629,000 shares,
   respectively.......................    (172,496)    (169,739)   (169,739)
                                       -----------  -----------  ----------
Total Shareowners' Equity.............     580,920      656,842     652,310
                                       -----------  -----------  ----------
Total Capitalization.................. $11,883,677  $12,253,796  $9,893,444
                                       ===========  ===========  ==========
Secured Debt(6)....................... $ 1,515,650  $ 1,483,534  $1,483,534
                                       ===========  ===========  ==========
</TABLE>
--------
(1) Represents historical information as reported in the Debtors' attached
    Form 10-Q. The historic information is presented in conformity with
    generally accepted accounting principles.
(2) Adjustments have been made to the historical accounting basis of certain
    of the Debtors' assets and liabilities as of the Effective Date. These
    adjustments include the charge-off of all remaining goodwill

                                      20
<PAGE>

    ($43.3 million); the charge-off of unamortized deferred loan origination
    costs ($32.9 million); the charge-off of unamortized debt discounts and
    deferred debt issuance costs ($28.2 million); the recognition of deferred
    net gains from the termination of interest rate swap agreements ($74.0
    million); and a gain recognized on the discounted payment with respect to
    the TOPrS ($28.9 million). Amounts for long-term debt and TOPrS are
    reflected at face amounts or par. As a result of these adjustments and the
    manner in which the pro forma adjustments were reflected below, this
    presentation does not conform to generally accepted accounting principles.

(3) The pro forma capitalization amounts include adjustments of projected
    results for the transactions contemplated in the Plan. The par value of
    stock to be issued to the Berkadia Parties on the Effective Date
    (approximately 63.7 million shares) has been allocated from additional
    capital to common stock; no adjustments have been made to reflect the fair
    value of the stock issued. All debt amounts are reflected at face value.
    The amounts do not reflect the application of fresh start accounting
    procedures, which, if applicable, would generally require assets and
    liabilities to be stated at fair values and certain other adjustments.

(4) The pro forma information reflects payment of the funding fee of $60
    million to Berkadia, other estimated financing costs related to the
    Berkadia Loan of $20 million and payment of prepetition and postpetition
    interest and dividends of approximately $500 million.

(5) The historic and projected results reflect book value (net of unamortized
    discounts) of the outstanding debt plus accrued interest. The balances
    exclude all nonrecourse debt and various other payables and deposits
    totaling $96.5 million at August 31, 2001.

(6) The amounts presented in total capitalization exclude substantially all of
    the secured debt. Secured debt primarily consists of nonrecourse debt
    applicable to leveraged leases wherein the lender only has recourse to the
    assets being leased. For reporting purposes, the nonrecourse debt has been
    netted against the investment in leveraged leases on the consolidated
    balance sheet. This item does not include the Berkadia Loan or the New
    Senior Notes, which will be secured when issued.

 5. Management

   FNV Group, the ultimate parent of the other Debtors, is managed by its
executive officers, subject to the supervision of the Board of Directors. FNV
Group has entered into a Management Services Agreement with Leucadia, a copy
of which is attached hereto as Exhibit C. The Bankruptcy Court approved that
agreement on June 13, 2001. The agreement provides that, prior to the
Effective Date, Leucadia, on behalf of Berkadia, will provide advice and
assistance to the Debtors related to the restructuring and management of the
Debtors' asset portfolio, subject to oversight by FNV Group's Board and a
special committee of the Board. Following the Effective Date, Leucadia will
have management responsibility for FNV Group, subject to the authority of the
Board of Directors. Leucadia and Berkshire have agreed that Leucadia will
exercise its authority under the Management Services Agreement in a manner
mutually acceptable to Leucadia and Berkshire. The Plan provides that the
Berkadia Parties will be entitled to designate a majority of the Board of
Directors of Reorganized FNV Group at the Effective Date.

   The members of the current Board of Directors of FNV Group are:

  . G. Robert Durham. Chairman of the Board since March 2001, and Board
    member since 1992. Retired Chairman and Chief Executive Officer of Walter
    Industries, Inc. (a homebuilding and financing, building materials,
    natural resources and industrial manufacturing company) since 1996. He
    served as Chairman and Chief Executive Officer from 1991 to 1996. Former
    Chairman, President and Chief Executive Officer of Phelps Dodge
    Corporation (a mining company). Director of The MONY Group Inc. (formerly
    Mutual Life Insurance Company of New York), Amphenol Corp. and Earle M.
    Jorgensen Co. Age 72.

  . Robert H. Clark, Jr. Board member since 1997. Chairman since 1999, Chief
    Executive Officer since 1993, President since 1983 and a director since
    1968 of Case, Pomeroy & Company, Inc. (real estate, oil & gas and
    investment activities). Also a director of Homestake Mining Company. Age
    60.

                                      21
<PAGE>

  . Constance R. Curran. Board member since 1998. President of Cardinal
    Health Consulting Services since 2000. Previously was President and Chief
    Executive Officer of CurranCARE, Inc. (a nationwide healthcare management
    company) since 1995. Vice Chairman and National Director of APM, Patient
    Care Services from 1990-1995. Formerly Vice President of the American
    Hospital Association and Dean, the Medical College of Wisconsin. Editor
    of Nursing Economic$ since 1990. Age 53.

  . James L. Johnson. Board member since 1992. Chairman Emeritus of GTE
    Corporation (a diversified telecommunications company) since 1993. Before
    that he was its Chairman and Chief Executive Officer. Director of The
    MONY Group Inc. (formerly Mutual Life Insurance Company of New York),
    Harte/Hanks Communications Co., Inc., Cell Star Corporation, Valero
    Energy Corporation and Walter Industries, Inc. Age 73.

  . Kenneth R. Smith. Board member since 1992. Eller Distinguished Service
    Professor of Economics since 1980, Dean of the Karl Eller Graduate School
    of Management and the Eller College of Business and Public Administration
    from 1980 to 1995, and Vice Provost from 1992 to 1995 of The University
    of Arizona. Chairman since 1996 and director since 1990 of Apache
    Nitrogen Products, Inc. Chairman of GroupSystems.com, Inc. Former
    director of Southwest Gas Corporation. Age 58.

  . Shoshana B. Tancer. Board member since 1994. Professor Emeritus of
    International Studies since 2001 and a Professor for more than five years
    and Director of the North American Free Trade Agreement Center since 1993
    of Thunderbird, the American Graduate School of International Management.
    Formerly of-counsel to the law firm of Ryley, Carlock & Applewhite, P.A.
    since 1999. Previously of-counsel to O'Connor, Cavanagh, Anderson,
    Killingsworth & Beshears for more than five years. Former director of
    Mountain Bell (the predecessor of U.S. West, Inc.) and three subsidiaries
    of Merabank, a Federal Savings Bank. Age 65.

  . John W. Teets. Board member since 1992. Chairman and Chief Executive
    Officer of J.W. Teets Enterprises, L.L.C. since 1997. Before that he was
    the Chairman and Chief Executive Officer or similar positions of Viad
    Corp, formerly The Dial Corp, for more than 5 years. Age 67.

   The executive officers of FNV Group are:

  . William J. Hallinan. President and Chief Executive Officer, General
    Counsel and Secretary of FNV Group, and President, Chief Executive
    Officer and General Counsel of FNV Capital since March 2001. Previously,
    Senior Vice President-General Counsel and Secretary of FNV Group and FNV
    Capital for more than five years. Age 58.

  . Derek C. Bruns. Senior Vice President--Internal Audit of FNV Group and
    FNV Capital for more than five years. Age 41.

  . Jack Fields III. Executive Vice President or similar positions of FNV
    Capital for more than five years. Age 46.

  . Bruno A. Marszowski. Senior Vice President--Controller and Chief
    Financial Officer of FNV Group and FNV Capital for more than five years.
    Age 59.

  . William C. Roche. Senior Vice President--Human Resources & Facilities
    Planning of FNV Group and FNV Capital for more than five years. Age 47.

  . Stuart C. Tashlik. Senior Vice President--Planning & Communications of
    FNV Group since 1999. Previously, Senior Vice President or similar
    positions of FNV Capital for more than five years. Age 45.

   As of the Effective Date, the members of the Reorganized FNV Group Board of
Directors shall be:

  . Ian M. Cumming. A director and Chairman of the Board of Leucadia since
    June 1978. In addition, a director of Allcity Insurance Company
    ("Allcity") and MK Gold Company ("MK Gold"), two consolidated
    subsidiaries of Leucadia. Allcity is a property and casualty insurer and
    MK Gold is an international mining company. Also a director of Skywest,
    Inc., a Utah-based regional air carrier, and HomeFed Corporation
    ("HomeFed"), a publicly held real estate development company. Age 60.

                                      22
<PAGE>

  . Joseph S. Steinberg. A director of Leucadia since December 1978 and
    President of Leucadia since January 1979. Also, Chairman of the Board of
    HomeFed and Allcity and a director of MK Gold and Jordan Industries,
    Inc., a public company, approximately 10% of the common stock of which is
    beneficially owned by Leucadia, which owns and manages manufacturing
    companies. Age 57.

  . Lawrence S. Hershfield. An executive officer of subsidiaries of Leucadia
    since November 1995, with diverse managerial and business development
    responsibilities. From September 1993 to October 1995, he served as
    Executive Vice President of Leucadia. Age 44.

  . R. Gregory Morgan. A partner in the law firm of Munger, Tolles & Olson
    LLP, counsel to Berkshire, where he has practiced since 1981. Age 47.

  . G. Robert Durham. Chairman of the Board since March 2001, and Board
    member since 1992. Retired Chairman and Chief Executive Officer of Walter
    Industries, Inc. (a homebuilding and financing, building materials,
    natural resources and industrial manufacturing company) since 1996. He
    served as Chairman and Chief Executive Officer from 1991 to 1996. Former
    Chairman, President and Chief Executive Officer of Phelps Dodge
    Corporation (a mining company). Director of The MONY Group Inc. (formerly
    Mutual Life Insurance Company of New York), Amphenol Corp. and Earle M.
    Jorgensen Co. Age 72.

  . Kenneth R. Smith. Board member since 1992. Eller Distinguished Service
    Professor of Economics since 1980, Dean of the Karl Eller Graduate School
    of Management and the Eller College of Business and Public Administration
    from 1980 to 1995, and Vice Provost from 1992 to 1995 of The University
    of Arizona. Chairman since 1996 and director since 1990 of Apache
    Nitrogen Products, Inc. Chairman of GroupSystems.com, Inc. Former
    director of Southwest Gas Corporation. Age 58.

  . There shall be one additional member of the Reorganized FNV Group Board
    of Directors designated by the Creditors' Committee. The Plan Supplement
    shall set forth the identity of this director.

   Pursuant to the New Bylaws of FNV Group that will be adopted as of the
Effective Date, the Board of Directors will consist of no fewer than five
persons. The compensation of officers and directors of FNV Group who are
current insiders is set forth in the 10-K/A.

   As previously discussed, FNV Group is a holding company. The principal
operating subsidiary of FNV Group, FNV Capital, is primarily responsible for
the operation and management of the Debtors' business. The directors of FNV
Capital are Messrs. Durham and Smith, whose biographies are summarized above.
Pursuant to the New Bylaws of FNV Capital, the Board of Directors is to
consist of no fewer than five persons. As of the Effective Date, the members
of the Reorganized FNV Capital Board of Directors shall be the same seven
individuals who are members of the Reorganized FNV Group Board of Directors.

   The Post-Effective Date officers and directors of (i) FINOVA (Canada)
Capital Corporation ("FNV Canada"); (ii) FINOVA Capital plc ("FNV UK"); (iii)
FINOVA Loan Administration Inc. ("FNV Loan"); (iv) FNV Mezzanine; (v) FINOVA
Portfolio Services, Inc. ("FNV Portfolio"); and (vi) FINOVA Technology
Finance, Inc. ("FNV Technology") and the terms and compensation of officers
and directors of those Debtors and of FNV Capital who are current insiders
will be set forth in the Plan Supplement.

 6. Related Party Transactions

   For a description of the Debtors' transactions with related parties, see
the attached 10-K/A.

                                      23
<PAGE>

                                      V.

                         THE DEBTORS' CHAPTER 11 CASES

A. Events Preceding the Filing of the Chapter 11 Cases

   Reference is made to Annex A of the attached 10-K/A, in the section
entitled, "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Recent Developments and Business Outlook," for a
discussion of events preceding the filing of the Chapter 11 Cases.

   In an effort to maximize value to the creditors of the Debtors, FNV Group
and FNV Capital entered into a transaction with Berkadia that contemplates,
among other things, the restructuring of the Debtors' bank and bond debt in
these Chapter 11 Cases. For a brief description of this transaction, see
Article III of this Disclosure Statement ("OVERVIEW OF THE PLAN"). Reference
is further made to the Commitment Letter attached hereto as Exhibit D and to
the term sheets for the Berkadia Loan, New Senior Notes and the Intercompany
Note (the "Term Sheets"), each of which is attached as an exhibit to the Plan.
The description in Article III of this Disclosure Statement is qualified in
its entirety by the Plan and the Term Sheets, and the provisions of the Plan
and Term Sheets are controlling in the event of any inconsistency.

B. The Commencement of the Chapter 11 Cases

   The Debtors filed voluntary petitions commencing the Chapter 11 Cases on
March 7, 2001 (the "Petition Date"), to assure that the interests of
creditors, stockholders and other parties in interest would be protected and
treated fairly.

   Because of the interrelationships among the Debtors, and to avoid
duplication resulting from separate handling of their Chapter 11 Cases, the
Bankruptcy Court has ordered the joint administration of the Debtors' Chapter
11 Cases. Joint administration provides only procedural relief that allows the
Chapter 11 Cases to be administered as a single case. It does not affect the
substantive rights of the Debtors or their creditors and stockholders. The
assets and liabilities of the Debtors will remain separate and distinct,
unless otherwise ordered by the Bankruptcy Court.

   Except as otherwise provided in the Bankruptcy Code, the Debtors are
"debtors in possession" with full authority to continue to operate and manage
their businesses in the ordinary course, without prior approval of the
Bankruptcy Court. Generally, only transactions that are outside of the
ordinary course of business require prior approval.

   On the Petition Date, the Debtors sought and were granted certain relief
necessary to the continued operation of their businesses and an effective
reorganization. First, the Bankruptcy Court entered an order clarifying the
Debtors' authority to undertake all of their ordinary business functions,
including but not limited to (i) honoring, renewing, increasing and/or funding
prepetition commitments in the ordinary course of business, (ii) honoring
existing servicing obligations in the ordinary course of business, (iii)
selling or leasing repossessed, refurbished and leased assets in the ordinary
course of business, (iv) managing their loan portfolios in the ordinary course
of business, (v) making intercompany loans, payments and transfers in the
ordinary course of business, and (vi) paying third party obligations and
prepetition Claims to preserve, enhance and maximize the value of estate
assets and/or as necessary to the performance of the actions approved above.

   Second, the Bankruptcy Court entered orders authorizing (i) the payment of
the Debtors' prepetition tax and fee obligations owing to federal, state and
local governmental entities, both domestic and foreign, (ii) the payment, in
the ordinary course of business, as and when due, of any prepetition Claims
owing by the Debtors to certain foreign creditors, (iii) the payment of
prepetition employee and director compensation, benefits and expense
reimbursement owing by the Debtors to employees (including former and
temporary employees) and directors, and (iv) the continuation, in the ordinary
course of business, of all programs, policies and plans with respect to
employees, including retired and former employees, that were in effect as of
the Petition Date, including payments under the prepetition retention and
severance plans and obligations customarily associated with the delivery of
employee benefits, including, if necessary, any workers' compensation premiums
and deductibles that were owed in respect of prepetition injuries.

                                      24
<PAGE>

   Third, the Bankruptcy Court entered orders (i) authorizing the retention
and compensation of certain professionals utilized in the ordinary course of
the Debtors' businesses, within certain specified limits in place of the
normal restriction imposed by the Bankruptcy Code, (ii) authorizing the
Debtors' investment guidelines, and (iii) permitting the continued use of the
Debtors' existing bank accounts and cash management systems.

   In addition, the Debtors were authorized to retain the following
professionals to represent their interests in the Chapter 11 Cases:

<TABLE>
   <S>                                      <C>
   Gibson, Dunn & Crutcher LLP              The Debtors' Restructuring and Corporate
   The Met Life Building                    Counsel
   200 Park Avenue
   New York, New York 10166-0193

   Richards, Layton & Finger, P.A.          The Debtors' Delaware Restructuring
   One Rodney Square                        Counsel
   P.O. Box 551
   Wilmington, Delaware 19899

   Ernst & Young LLP                        The Debtors' Accountants
   40 North Centre Avenue
   Phoenix, Arizona 85004

   Rothschild, Inc.                         The Debtors' Financial Advisors(/2/)
   1251 Avenue of the Americas
   New York, New York 10020

   Secured Capital Corp.                    The Debtors' Broker in Connection with
   11150 Santa Monica Blvd Suite 1400       the Sale of Certain Assets
   Los Angeles, California 90025
</TABLE>

C. Significant Parties in Interest

 1. Creditors' Committee

   On March 20, 2001, the United States Trustee appointed an official
committee of creditors to represent the interests of creditors holding general
unsecured Claims. The Creditors' Committee is currently composed of:

    Angelo Gordon & Co., L.P.
    Pacific Investment Management Co., LLC
    Oaktree Capital Management, LLC
    Franklin Mutual Advisors, LLC
    Metropolitan West Asset Management
    Appaloosa Management, L.P.
    The Chase Manhattan Bank
    Citibank
    The Bank of New York
    Wilmington Trust Company
--------
(2)  A motion has been filed; however, an order approving such financial
advisor has not yet been entered.

                                      25
<PAGE>

 2. Equity Committee

   On or about April 27, 2001, the United States Trustee appointed an official
committee of equity holders to represent the interests of holders of equity
Interests (the "Equity Committee"). The Equity Committee is currently composed
of:

    Legg Mason Investment Trust, Inc.
    Bennett Management
    Greenlight Capital
    Dimensional Fund Advisors
    Samuel H. Park, M.D.
    Nicholas A. Rago
    Eugene Linden

D. Events During Chapter 11 Cases

   On March 6, 2001, the day before the Petition Date, a creditor's bankruptcy
petition was filed against FNV Canada in the Ontario Superior Court of Justice
in Bankruptcy by The Bank of Nova Scotia, as agent for FNV Canada's bank
lenders. Also on March 6, The Bank of Nova Scotia obtained an injunction from
the Ontario Superior Court of Justice (Commercial List), on an ex parte basis,
restricting the ability of FNV Canada from transferring its assets to or for
the benefit of FNV Capital or its other affiliates. In response to a motion
for an order granting relief from the automatic stay and a motion for a
preliminary injunction and temporary restraining order, filed in the
Bankruptcy Court by The Bank of Nova Scotia, the Debtors have entered into a
stipulation, and an extension of such stipulation, with The Bank of Nova
Scotia whereby the Debtors have permitted The Bank of Nova Scotia to apply for
an extension of the injunction issued by the Ontario Superior Court of Justice
through August 31, 2001, which extension has been granted.

   The Debtors have also entered into a stipulation with ABN AMRO Bank, N.V.
("ABN AMRO"), as agent for FNV UK's bank lenders, whereby the Debtors have
agreed to provide ABN AMRO with no less than 15 days' prior written notice
before transferring any of the assets of FNV UK to or for the benefit of the
other Debtors or their non-debtor affiliates. Upon receipt of such notice, ABN
AMRO may object to such a transfer and request a hearing before the Bankruptcy
Court.

   During the Chapter 11 Cases, certain parties in interest have filed motions
for relief from the automatic stay to allow such parties to pursue their
interests in the Debtors' property. The resolution of the majority of those
motions is currently pending. In addition, during the Chapter 11 Cases, the
Debtors have sought approval of the Bankruptcy Court to implement certain
incentive and retention plans regarding the Debtors' employees and to sell
certain of their loans outside the ordinary course of business as part of a
program to divest discontinued and other operations. Finally, during the
Chapter 11 Cases, the Debtors have filed a motion for an order clarifying that
no part of the trust estate under their Leveraged Leases (except the Debtors'
beneficial interest as owner participant thereunder) shall be included in, or
be subject to, any declaration or adjudication of, or proceedings with respect
to the Debtors' bankruptcy cases.

                                      VI.

                   DESCRIPTION OF THE PLAN OF REORGANIZATION

A. Overview and Restructuring Transactions

   For a brief description of certain material provisions of the Plan, see
Article III of this Disclosure Statement ("OVERVIEW OF THE PLAN"). Reference
is further made to the Commitment Letter and the Term Sheets for the Berkadia
Loan and New Senior Notes (attached as Exhibit D hereto). The description in
Article III of this Disclosure Statement is qualified in its entirety by the
Plan and the Term Sheets, and the provisions of the Plan and Term Sheets are
controlling in the event of any inconsistency.

                                      26
<PAGE>

B. Classification and Treatment of Claims and Interests

   The Plan consists of nine separate plans of reorganization, one for each
Debtor entity, which are as follows: FNV Group; FNV Capital; FNV Canada; FNV
UK; FNV Loan; FNV Mezzanine; FNV Portfolio; FNV Technology; and FNV Trust.

   Specific information regarding the treatment of Claims against and
Interests in each Debtor is set forth in Section III of this Disclosure
Statement ("OVERVIEW OF THE PLAN").

C. Implementation and Other Provisions of the Plan

 1. Assumption or Rejection of Executory Contracts and Unexpired Leases

   The Bankruptcy Code authorizes the Debtors, subject to the approval of the
Bankruptcy Court, to assume or reject executory contracts and unexpired
leases. The Debtors may assume or reject those contracts or leases during the
Chapter 11 Cases or pursuant to the Plan.

   The Plan provides that all executory contracts and unexpired leases that
exist between the Debtors and any person will be assumed as of the Effective
Date, including Leveraged Leases (to the extent deemed executory contracts of
the Debtors' estate), except for any contract or lease that has already been
rejected in the Chapter 11 Cases or that is listed on Exhibit 7.1 to the Plan
(as it may be amended from time to time).

   The Debtors are parties to the following agreements with Holiday
Hospitality Franchising, Inc. f/k/a Holiday Inns Franchising, Inc.
("Holiday"): (1) September 20, 1995, Comfort Letter from Holiday to FNV
Capital in connection with the Holiday Inn Hotel located at Lafayette, IN
#2811; (2) March 17, 1998 Comfort Letter from Holiday to FNV Capital,
successor in interest to Belgravia Capital Corporation, in connection with the
Holiday Inn Hotel located at Lauderdale by the Sea, FL #2898; (3) June 8,
1998, Comfort Letter from Holiday to FNV Capital, successor in interest to
Belgravia Capital Corporation, in connection with the Holiday Inn Hotel
located at Phoenix Old Town Scottsdale, AZ #4334; (4) October 28, 1999,
Comfort Letter from Holiday to FNV Capital in connection with the Holiday Inn
Sunspree Resort Hotel located at Great Smokies Asheville, NC #9549; and (5)
any other Comfort Letter between Holiday and the Debtors (the "Comfort
Letters"). Holiday contends that the Debtors may not assume and assign the
Comfort Letters pursuant to 11 U.S.C. (S) 365(c). The Debtors reserve their
rights to review the Comfort Letters and all other contracts to determine
whether they are executory. The Debtors' proposed treatment of contracts and
leases will be disclosed in the Plan Supplement.

   Under the Bankruptcy Code, as a condition to assuming executory contracts
and unexpired leases, the Debtors are required to cure any and all monetary
defaults under the contracts and leases, and to provide adequate assurance of
future performance thereunder. In the event of a dispute as to the existence
of a default, or the nature, extent or amount of any required cure or adequate
assurance will be determined by the Bankruptcy Court. The Debtors believe that
they are substantially current on their obligations under executory contracts
and unexpired leases. As a result, the Debtors do not expect to incur any
material cure costs in connection with assumed executory contracts and
unexpired leases.

   Non-debtor parties to executory contracts and unexpired leases that are
rejected by the Debtors pursuant to the Plan must assert any Claim arising out
of the rejection by filing a proof of Claim no later than thirty (30) days
after the date of service of the Confirmation Order. In the absence of a
timely filed proof of Claim, any such Claims will be forever barred and will
not be enforceable against the Debtors.

 2. Issuance of New Debt and Equity Securities

   The issuance by the appropriate Debtors of the New Senior Notes, the
Intercompany Note, the note to be issued pursuant to the Berkadia Loan, the
Additional Group Common Stock, the New Group Preferred Stock and the
Additional Mezzanine Common Stock, if any, and the execution of the
documentation relating to the Berkadia Loan and the New Senior Notes by the
Debtors on the terms previously described, will be deemed

                                      27
<PAGE>

authorized as of the Effective Date without further act or action by any
person, except as required by applicable law, regulation, order, or rule. All
documents evidencing those securities will be executed and delivered by the
Debtors as provided for in the Plan.

   After the issuance of Additional Group Common Stock pursuant to the
Restructuring Transactions, the beneficial owners (as such term is defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of more than
5% of the issued and outstanding common stock of Reorganized FNV Group are
projected to be as follows:

<TABLE>
<CAPTION>
                                                                     Percent of
                                                                    Total Voting
   Name of Beneficial Owner                                            Power
   ------------------------                                         ------------
   <S>                                                              <C>
   Berkshire Hathaway Inc.......................................... up to 25.5%
   Leucadia National Corporation................................... up to 25.5%
</TABLE>

  3. Corporate Governance Matters

   The Plan requires certain of the Debtors to amend and restate their
corporate governance documents (certificates of incorporation, formation or
registration, articles of incorporation or association, memoranda of
association, memoranda of continuance, charters, bylaws, or one or more
similar agreements, instruments or documents constituting the organization or
formation of each of the Debtors) to the extent necessary to, among other
things, (a) authorize the Restructuring Transactions, including but not
limited to the issuance of stock contemplated to be issued under the Plan, (b)
at the option of Berkadia, impose restrictions on the direct or indirect
transferability of the common stock or other equity of Reorganized FNV Group
such that (i) no Person (other than the Berkadia Parties) may acquire or
accumulate five percent or more (as determined under tax law principles
governing the application of Section 382 of the Tax Code) of the common stock
or other equity of Reorganized FNV Group and (ii) no Person (other than the
Berkadia Parties) owning directly or indirectly (as determined under such tax
law principles) on the Effective Date, after giving effect to the Plan, or
after any subsequent issuances of Additional Group Common Stock pursuant to
the Plan, five percent or more (as determined under such tax law principles)
of the common stock or other equity of Reorganized FNV Group, may acquire
additional shares of that common stock or other equity of Reorganized FNV
Group, subject to certain exceptions, (c) prohibit the issuance of non-voting
equity securities, (d) with respect to FNV Group, eliminate, among other
things, the provision relating to certain Business Combinations (as defined in
FNV Group's pre-Effective Date Certificate of Incorporation), and (e) with
respect to FNV Group, terminate the Rights Plan without any payment by FNV
Group and without the Rights thereunder having separated from the FNV Group
common stock or having become exercisable. Copies of the New Corporate
Documents will be filed with the Plan Supplement.

 4. Plan Distribution Entitlement; Dispute Provisions

   Distribution or retention of property as provided in the Plan is available
only for Allowed Claims and Allowed Interests. Claims and Interests that are
not Allowed as of the Effective Date but which ultimately become Allowed will
be entitled to the treatment provided in the Plan as if such Claims or
Interests had been Allowed on the Distribution Date, and such Claims or
Interests will receive distributions within 30 days after the Claim or
Interest becomes Allowed.

   Under the Plan, the Reorganized Debtors have the exclusive right to make
and file Objections to and settle, compromise or otherwise resolve Claims and
Interests, except that as to applications for allowances of compensation and
reimbursement of expenses under sections 330 and 503 of the Bankruptcy Code,
objections may be made in accordance with the applicable Bankruptcy Rules by
parties in interest in these Chapter 11 Cases. In addition, the Debtors may,
at any time, request that the Bankruptcy Court estimate any Disputed Claim or
Interest subject to estimation under section 502(c) of the Bankruptcy Code and
for which the Debtors may be liable under this Plan, including any Disputed
Claim for taxes, to the extent permitted by section 502(c) of the

                                      28
<PAGE>

Bankruptcy Code, regardless of whether any party in interest previously
objected to such Claim. In the event that the Bankruptcy Court estimates any
contingent or unliquidated Disputed Claim or Interest, that estimated amount
will constitute (at the Debtors' option, to be exercised at the commencement
of the estimation proceeding) either the Allowed amount of such Claim or
Interest or a maximum limitation on the Allowed amount of such Claim or
Interest, as determined by the Bankruptcy Court. If the estimated amount
constitutes a maximum limitation on the Allowed amount of such Claim or
Interest, the Debtors may elect to pursue any supplemental proceedings to
object to any ultimate allowance on such Claim or Interest. Furthermore, after
the Effective Date, the Reorganized Debtors may settle or compromise any
Disputed Claim or Interest without approval of the Bankruptcy Court.

 5. Distribution Procedures

   The Plan provides that all distributions of property to holders of Allowed
Claims or Allowed Interests shall be made by the applicable Disbursing Agent
on the later of the Effective Date or 30 days after the date that a particular
Claim or Interest becomes Allowed. Distributions will be made to holders of
Allowed Claims and Allowed Interests as of the Distribution Record Date, and
the Disbursing Agent shall not honor any transfers of Claims or Interests
occurring after the Distribution Record Date. However, no distribution under
the Plan shall be made to or on behalf of any holder of an Allowed Claim
evidenced by a note or other document unless and until such instruments,
securities or other documentation are surrendered to and received by the
Disbursing Agent.

   Any payment or distribution due on a day other than a Business Day shall be
made, without interest, on the next Business Day. Plan distributions that are
not claimed or are undeliverable for a period of one year following the
applicable Distribution Date shall revert to the applicable Reorganized
Debtor, free of any restrictions thereon, and any entitlement of any holder of
any Claim or Interest to such distributions shall be extinguished and forever
barred.

   All distributions under the Plan on account of Allowed Claims shall be made
by the Disbursing Agent to the holder of the Allowed Claim, as of the
Distribution Record Date, (a) if a proof of Claim is filed in respect of a
particular Claim, at the address of such holder set forth in the relevant
proof of Claim, as such address may have been updated pursuant to Bankruptcy
Rule 2002(g) or (b) if no proof of Claim is filed in respect of a particular
Claim, at the address set forth in the relevant Debtor's Schedules, as such
address may have been updated pursuant to Bankruptcy Rule 2002(g). All
distributions under the Plan on account of Allowed Interests shall be made by
the Disbursing Agent to the holder of the Allowed Interest, as of the
Distribution Record Date, at the address of such holder as listed in the
equity interest ledger maintained by or on behalf of the applicable Debtor as
of the Distribution Record Date. However, if the Debtors or the Reorganized
Debtors have been notified, no later than ten Business Days prior to the
Distribution Record Date, in writing of a change of address by such holder
that provides an address different from that specified in the preceding
sentences, then the distribution shall be made at the address contained in the
written notification. Nothing contained in the Plan will require any Debtor,
Reorganized Debtor or Disbursing Agent to attempt to locate any holder of an
Allowed Claim or Allowed Interest.

 6. Retention of Causes of Action

   With the exception of any claims, rights or causes of action against (i)
Berkadia, Leucadia, Berkshire and their respective Affiliates, and the
respective officers, directors, employees, members, managers, agents,
advisors, attorneys and representatives of each of Berkadia, Leucadia,
Berkshire and their respective Affiliates, and (ii) each of the Official
Committees, their current and former respective members (in their capacities
as members of such Official Committees), and their agents, advisors, attorneys
and representatives (in such capacities), which the Debtors will release
pursuant to the Commitment Letter and the Plan, the Debtors do not release or
abandon any claims, rights or causes of action held by them or their estates,
and the Reorganized Debtors may seek to assert such claims, rights and causes
of action against any persons at any time, subject to any applicable statutes
of limitation. Because of the significant recoveries for creditors provided
pursuant to the Plan, the Debtors do not believe that there will be any
material recovery on account of avoidance actions. Nevertheless, the Debtors
do not believe that it is in the best interest of their estates to abandon
these causes of action. Any recoveries

                                      29
<PAGE>

realized by the Reorganized Debtors from the assertion of any claims, rights
and causes of action will be the sole property of the Reorganized Debtors. To
the extent necessary, the Reorganized Debtors will be deemed representatives
of their former estates under section 1123(b) of the Bankruptcy Code.

 7. Effect of Confirmation of Plan

   The Plan as confirmed by the Bankruptcy Court is binding on and shall inure
to the benefit of the Debtors and all holders of Claims and Interests.

   On the Effective Date, the property of the Estates of each of the Debtors,
other than FNV Trust, will revest in the respective Reorganized Debtors, free
and clear of all Claims and Interests, unless otherwise provided in the Plan.
The Debtors will be free to operate their businesses and to use, acquire and
dispose of property without any restrictions arising from the Bankruptcy Code,
subject to any limitations imposed by the Plan.

   The treatment of Claims and Interests provided in the Plan is in exchange
for and in complete satisfaction, discharge and release of all Claims and
Interests of any nature whatsoever, including any interest accrued on any
Claims from and after the Petition Date, against the Debtors or any of their
assets or properties. Unless the Plan otherwise provides, the Debtors are
discharged from any and all Claims whether or not a proof of Claim, a proof of
Interest or request for payment of a Claim was filed and whether or not the
holder of a Claim voted on the Plan. Judgments and Liens obtained against the
Debtors on account of Claims that accrued prior to the Petition Date will be
discharged by the Plan. All persons are enjoined from commencing or continuing
any action, employing process, or taking any act to collect, recover or offset
any Claim or other debt against any Debtor that arose prior to the Petition
Date.

   On the Effective Date, in exchange for their receipt of distributions and
other treatment contemplated under this Plan, each holder of a Claim or
Interest shall release unconditionally and shall be deemed forever to release
unconditionally any and all claims, obligations, suits, judgments, damages,
rights, causes of action and liabilities whatsoever, whether liquidated or
unliquidated, fixed or contingent, matured or unmatured, known or unknown,
foreseen or unforeseen, against (i) any Debtor or Affiliate thereof and (ii)
Berkadia, Leucadia, Berkshire and their respective Affiliates, and the
respective officers, directors, employees, members, managers, agents,
advisors, attorneys and representatives of each of Berkadia, Leucadia,
Berkshire and their respective Affiliates, whether then existing or thereafter
arising, in law, equity or otherwise, that are based in whole or in part upon
any act or omission, transaction, event or other occurrence taking place on or
prior to the Effective Date in any way relating to the Debtors, the Chapter 11
Cases, the Plan or the Disclosure Statement, provided, however, that neither
any Debtor nor any entity that is an Affiliate of any Debtor prior to the
Effective Date shall be released from (a) the right to enforce the Debtors' or
the Reorganized Debtors' obligations under the Plan and the contracts,
instruments, releases and other agreements and documents delivered thereunder,
(b) any rights under assumed contracts, Loan Commitments, Leveraged Leases,
Retirement Agreements and other contracts that are not rejected or otherwise
extinguished by order of the Bankruptcy Court or pursuant to the Plan, or (c)
any rights, claims or interests that are Reinstated under the terms of the
Plan.

   In addition, on the Effective Date, each of the Debtors shall release
unconditionally, and shall be deemed forever to release unconditionally, (i)
Berkadia, Leucadia, Berkshire and their respective Affiliates and each of the
respective officers, directors, employees, members, managers, agents,
advisors, attorneys and representatives of Berkadia, Leucadia, Berkshire and
their respective Affiliates, and (ii) each of the Official Committees, their
current and former respective members (in their capacities as members of such
Official Committees), and their agents, advisors, attorneys and
representatives (in such capacities), from any and all claims, obligations,
suits, judgments, damages, rights, causes of action and liabilities whatsoever
(other than the right to enforce their respective obligations to the Debtors
or the Reorganized Debtors under the Plan and the contracts, instruments,
releases and other agreements and documents delivered thereunder), whether
liquidated or unliquidated, fixed or contingent, matured or unmatured, known
or unknown, foreseen or unforeseen, then existing or thereafter arising, in
law, equity or otherwise that are based in whole or in part upon any act or
omission, transaction, event or other occurrence taking place on or prior to
the Effective Date in any way relating to the Debtors, the Chapter 11 Cases,
the Plan or the Disclosure Statement.

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<PAGE>

   The Confirmation Order will constitute an injunction permanently enjoining
the commencement or prosecution by any Person, whether directly, derivatively
or otherwise, of any Claim, demand, debt, liability, cause of action, right or
Interest released and waived pursuant to the Plan against the released
parties.

   After the Effective Date, the Official Committees will cease to exist and
their members, employees and agents will have no further authority or duties
in connection with the applicable Official Committee, except with respect to
(i) all applications for Professional Fees, until such matters are finally
resolved, (ii) any post-Confirmation modifications to the Plan or Confirmation
Order, and (iii) any matters pending as of the Effective Date before the
Bankruptcy Court to which the applicable Official Committee is a party, until
such matters are finally resolved.

   The Debtors may employ and pay professionals, including any professionals
retained in the Chapter 11 Cases, with respect to services to be rendered
after the Effective Date, including services in connection with the
implementation and consummation of the Plan, without further order of the
Bankruptcy Court.

 8. Implementing Documents and Transactions; No Transfer Taxes

   All material documents necessary to effectuate the Plan will be provided in
the Plan Supplement, which will be filed by the Debtors with the Bankruptcy
Court no later than ten Business Days prior to the deadline for objections to
entry of the Confirmation Order. Among the documents to be included in the
Plan Supplement will be the Berkadia Loan Documents, the documentation for the
New Senior Notes, the New Corporate Documents, the New Group Preferred Stock,
the Intercompany Note and Exhibits to the Plan that are finalized after the
date hereof. Term sheets for the Berkadia Loan, the New Senior Notes and the
Intercompany Note are annexed as exhibits to the Plan which is annexed hereto
as Exhibit A. Upon its filing with the Court, the Plan Supplement may be
inspected in the office of the Clerk of the Bankruptcy Court during normal
court hours. Holders of Claims or Interests may obtain a copy of the Plan
Supplement upon written request to the Debtors' counsel. A copy of the Plan
Supplement will also be posted at www.finova.com.

   Appropriate officers, directors and trustees of each Debtor or Reorganized
Debtor, as further described in the Plan, will be authorized to execute
documents and take all other actions as may be necessary or appropriate to
effectuate and implement the terms and provisions of the Plan and the
transactions contemplated thereby.

   Pursuant to section 1146(c) of the Bankruptcy Code, no stamp, real estate
transfer, mortgage recording or other similar tax may be imposed upon the
issuance, transfer or exchange of notes or equity securities under the Plan,
including, without limitation, the New Senior Notes, the Intercompany Note,
the note issued to evidence the Berkadia Loan, including security interests to
be granted pursuant to the Berkadia Loan, the New Senior Notes or the
Intercompany Note, all other debt public and private or the New Group
Preferred Stock (if any is issued), the Additional Group Common Stock or the
Additional Mezzanine Common Stock (if any is issued), the creation of any
Lien, the making, assignment or surrender of any lease or sublease, the
creation of any mortgage, deed of trust or other security interest, the making
or delivery of any deed, bill of sale or other instrument of transfer under,
in furtherance of, or in connection with the Plan, whether involving real or
personal property, including, without limitation, any merger agreements or
agreements of amalgamation or consolidation, deeds, bills of sale or
assignments executed in connection with any of the transactions contemplated
under the Plan. All sale transactions (i) consummated by the Debtors and (ii)
either (A) approved by the Bankruptcy Court in the Ordinary Course of Business
Order, or (B) approved in the ordinary course of the Debtors' business by
separate order of the Bankruptcy Court on or after the Petition Date through
and including the Effective Date, involving the sale by the Debtors of owned
property in the ordinary course or pursuant to section 363(b) of the
Bankruptcy Code or otherwise and the assumption, assignment and sale by the
Debtors of unexpired leases of non-residential real property pursuant to
section 365(a) of the Bankruptcy Code, shall be deemed to have been made
under, in furtherance of and in connection with the Plan and, thus, shall not
be subject to any stamp tax, real estate transfer, mortgage recording or other
similar tax. If the Debtors pay or have paid any such tax, they will be
entitled to a refund thereof upon or after the Effective Date.

                                      31
<PAGE>

 9. Amendment of Plan; Severability; Revocation

   Alterations, amendments or modifications of the Plan may be proposed in
writing by the Debtors at any time prior to the Confirmation Date, if the
Plan, as altered, amended or modified, satisfies the conditions of sections
1122 and 1123 of the Bankruptcy Code, and the Debtors have complied with
section 1125 of the Bankruptcy Code. The Plan may be altered, amended or
modified at any time after the Confirmation Date and before the Effective
Date, provided that the Plan, as altered, amended or modified, satisfies the
requirements of sections 1122 and 1123 of the Bankruptcy Code, and the
Bankruptcy Court after notice and hearing confirms the Plan as altered,
amended or modified. A holder of a Claim or Interest that has accepted the
Plan shall be deemed to have accepted the Plan as altered, amended or modified
if the proposed alteration, amendment or modification does not materially and
adversely change the treatment of the Claim or Interest of the holder.
Otherwise, the Debtors may alter, amend or modify the treatment of Claims and
Interests provided for under the Plan only if the holders of Claims or
Interests affected thereby agree or consent to any such alteration, amendment
or modification. Berkadia will have no obligation to fund the Berkadia Loan if
the Plan as altered, amended or modified is not in form and substance
reasonably satisfactory to Berkadia.

   The Plan constitutes a separate plan of reorganization for each of the nine
Debtors. Accordingly, the confirmation requirements of section 1129 of the
Bankruptcy Code must be satisfied separately with respect to each Debtor.
Should any of such separate plans not be confirmed, the other Debtors may
elect to alter, amend, revoke or withdraw the other separate plans or to seek
Confirmation thereof. Should the Plan as altered, amended, revoked or
withdrawn not be reasonably satisfactory, in form and substance, to Berkadia,
or should any of the Debtors' separate plans of reorganization not be
confirmed and the Debtors elect to consummate any or all of the other separate
plans, Berkadia will have no obligation to fund the Berkadia Loan.

   The Debtors may revoke or withdraw the Plan at any time prior to the
Confirmation Date, in which event the Plan will be null and void and will have
no effect on, and will not constitute a waiver or release of, any claims or
rights of the Debtors, any other party in interest or any person in any
further proceedings involving the Debtors.

 10. Retention of Jurisdiction

   The Plan provides for the Bankruptcy Court to retain broad, exclusive
jurisdiction over all matters arising out of, and related to, the Chapter 11
Cases and the Plan.

D. Treatment of Securities Litigation

   The Plan provides that no distribution shall be made on account of any
Securities Litigation Claims unless and until such Claims are Allowed by Final
Order of a court having jurisdiction over the matter. In the event that any
Securities Litigation Claims become Allowed, they shall be treated as follows:
holders of Allowed Equity (S) 510(b) Claims against FNV Group shall receive
Additional Group Common Stock; holders of Allowed Debt (S) 510(b) Claims
against FNV Capital shall receive New Group Preferred Stock of FNV Group, the
terms of which are set forth on Exhibit I; and holders of Allowed Equity (S)
510(b) Claims against FNV Mezzanine shall receive Additional Mezzanine Common
Stock. For all issuances of stock in connection with the Securities Litigation
described in this paragraph, holders of Allowed Claims shall receive stock
having a value, as determined by Final Order, equal to the amount of such
Claims that is not covered by applicable insurance policies. In the event that
any Additional Group Common Stock is issued after the Effective Date, the
Berkadia Parties shall contemporaneously receive additional FNV Group common
stock in the amount that they would have received if such issuances had
occurred before the Effective Date.

E. Conditions to Confirmation and Effective Date of the Plan

 1. Conditions to Confirmation

   The following conditions shall be met prior to Confirmation of the Plan:
(i) the Bankruptcy Court shall have entered a Disclosure Statement Order no
later than July 6, 2001; (ii) the Bankruptcy Court shall have entered an Order
approving the Debtors' entry into the Commitment Letter, including with
respect to all fees set forth

                                      32
<PAGE>

therein, no later than the earlier of (x) the date of entry of the Disclosure
Statement Order, and (y) July 6, 2001; and (iii) the Bankruptcy Court shall
have entered an Order approving the Debtors' entry into the Management
Services Agreement no later than the earlier of (x) the date of entry of the
Disclosure Statement Order, and (y) July 6, 2001. Failure to satisfy any of
the foregoing conditions will permit Berkadia to terminate its commitment to
fund the Berkadia Loan. The Bankruptcy Court entered an Order on June 13, 2001
approving the Commitment Letter and the Management Services Agreement, and
entered an Order on June 14, 2001 approving this Disclosure Statement.

 2. Conditions to the Effective Date

   The following are conditions precedent to, or shall occur simultaneously
with, the Effective Date, each of which must be satisfied unless waived: (i) a
Confirmation Order, in form and substance reasonably acceptable to the parties
to the Restructuring Transactions, shall have been entered and become a Final
Order; (ii) the Additional Group Common Stock shall be duly authorized,
validly issued and outstanding; (iii) all necessary governmental approvals for
the Restructuring Transactions, including, but not limited to, approval under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the
Competition Act of Canada and the Competition Act of England, if required,
shall have been obtained; (iv) the Additional Group Common Stock to be issued
to the Berkadia Parties shall have been approved for listing upon official
notice of issuance on the New York Stock Exchange, if the FNV Group common
stock is listed on the New York Stock Exchange on the Effective Date; (v) all
conditions precedent to the Restructuring Transactions, as set forth herein
and in the Commitment Letter, the Management Services Agreement and other
relevant documentation, shall have been satisfied; (vi) no request for
revocation of the Confirmation Order under section 1144 of the Bankruptcy Code
shall be pending as of the Effective Date or, if such a request has been made,
then such request shall have been denied by a Final Order; (vii) the New
Corporate Documents shall have been adopted and, to the extent necessary under
applicable law, filed and shall be in full force and effect and the Rights
Plan shall have been amended to provide for the termination thereof and the
expiration of Rights thereunder in accordance with the terms of the Plan;
(viii) the New Senior Notes Indenture shall have been qualified under the
Trust Indenture Act of 1939, as amended; and (ix) all actions, other documents
and agreements necessary to implement the Plan shall have been effected or
executed and delivered.

   In the event that the conditions specified in the preceding paragraph have
not been satisfied or waived on or before August 31, 2001, then upon written
notification filed by the Debtors with the Bankruptcy Court and served upon
counsel for Berkadia, Berkshire, Leucadia and the Official Committees and the
Office of the United States Trustee, (a) the Confirmation Order shall be
vacated, (b) no distributions under the Plan shall be made, (c) the Debtors
and all holders of Claims and Interests shall be restored to their respective
status and positions as of the day immediately preceding the Confirmation Date
as though the Confirmation Date had never occurred, and (d) all the Debtors'
obligations with respect to the Claims and Interests shall remain unchanged
and nothing contained herein shall be deemed to constitute a waiver or release
of any claims by or against the Debtors or any other party in interest or to
prejudice in any manner the rights of the Debtors or any person in any further
proceedings involving the Debtors.

                                     VII.

                        SPECIAL PROVISIONS RELATING TO
                SECURITIES ISSUED OR OUTSTANDING UNDER THE PLAN

A. New Senior Notes, Additional Group Common Stock, New Group Preferred Stock
   and Additional Mezzanine Common Stock

   The New Senior Notes, any Additional Group Common Stock issued to holders
of FNV Group-7 Claims, any New Group Preferred Stock issued to holders of FNV
Capital-5 Claims and any Additional Mezzanine Common Stock issued to holders
of FNV Mezzanine-6 Claims will not be registered under the Securities Act of
1933, as amended (the "Securities Act"), or under any state or local
securities laws in reliance upon the exemption from registration contained in
section 1145 of the Bankruptcy Code.

                                      33
<PAGE>

   In general, unless a holder is an "underwriter," as that term is defined in
the Bankruptcy Code with respect to such securities, such securities may be
resold by such holder without registration under the Securities Act or under
state securities laws. An underwriter is defined by the Bankruptcy Code as a
person or entity who: (i) purchases a claim against or equity interest in the
debtor with a view to the distribution of such securities received on account
of such claim or equity interest; (ii) offers to sell such securities on
behalf of the holders thereof (except certain offers to sell fractional
interests); (iii) offers to buy such securities with a view to the
distribution thereof pursuant to an agreement made in connection with the
plan; or (iv) is a control person of the issuer (generally a person directly
or indirectly controlling or controlled by, or under direct or indirect common
control with, the issuer). In these cases, such securities may be sold,
disposed of or otherwise transferred only pursuant to an effective
registration statement covering such securities, in privately negotiated
transactions in which the transferee will be subject to restrictions on
transfer, or in accordance with Rule 144 under the Securities Act or other
applicable rules and regulations of the Securities and Exchange Commission,
and in compliance with applicable state and foreign securities laws.

   Persons who are underwriters may not sell, dispose of or otherwise transfer
such securities except pursuant to an effective registration statement under
federal securities laws or pursuant to an exemption from the registration or
qualification requirements of federal and state securities laws.

   THE DISCUSSION ABOVE IS A SUMMARY OF REGISTRATION REQUIREMENTS OF THE
SECURITIES LAWS ON ISSUANCE AND RESALE OF SECURITIES RECEIVED UNDER THE PLAN.
THE EFFECTS MAY VARY BASED ON YOUR INDIVIDUAL CIRCUMSTANCES. THE SECURITIES
AND EXCHANGE COMMISSION HAS NOT REVIEWED OR PASSED ON ANY ASPECT OF THESE
MATTERS. YOU ARE URGED TO CONSULT WITH YOUR ATTORNEYS ON FEDERAL, STATE AND
FOREIGN SECURITIES LAW REQUIREMENTS, INCLUDING BUT NOT LIMITED TO WHETHER OR
NOT YOU ARE AN UNDERWRITER AS DEFINED IN SECTION 1145(b) OF THE BANKRUPTCY
CODE (WHETHER BY VIRTUE OF BEING AN AFFILIATE OF THE ISSUER OR OTHERWISE) AND
THE EFFECT OF ANY APPLICABLE FEDERAL, STATE OR FOREIGN LAW RESTRICTIONS ON
RESALES OF SECURITIES.

B. Common Stock

   The issuance of the Additional Group Common Stock to the Berkadia Parties
will be issued pursuant to an exemption from the registration requirements of
the Securities Act under Section 4(2) thereof, and pursuant to exemptions
under applicable state and foreign securities laws. FNV Group will enter into
a registration rights agreement with the Berkadia Parties with respect to the
Additional Group Common Stock to be issued to them.

C. Post-Confirmation Business Plan

   The Debtors' post-confirmation business plan has been developed with the
intention of maximizing the value of the Debtors' assets for the benefit of
all of the Debtors' creditors and equityholders. Significant risks are
inherent in the Debtors' ability to accomplish successfully this business
plan. You should carefully consider the factors disclosed in Section VII-D of
this Disclosure Statement ("Certain Factors to be Considered").

 1. Business Plan--General

   The Debtors' business plan does not contemplate any new business activities
related to new customers, although it does provide for the ability to increase
lending limits to existing customers under certain conditions. The business
plan further envisions that all existing lending commitments will be
fulfilled. The Debtors expect to achieve their plan through the implementation
of numerous tactical and strategic initiatives, a number of which are already
underway, as follows:

  . Certain senior management changes have been made. The Debtors believe
    that the current team is highly focused on the main objective of
    portfolio recovery maximization.

                                      34
<PAGE>

  . The Debtors' business focus has been changed to eliminate the objective
    of generating new business and to substitute portfolio recovery
    maximization as the primary goal. This is being accomplished by
    eliminating all marketing positions and activities, changing the
    compensation structure and making company-wide communications on the
    subject.

  . A work-out group has been established at headquarters with the
    responsibility of overseeing and working with the lines of business
    ("LOBs") on all watch list and non-earning accounts. This group and LOB-
    level portfolio managers expect to take a heightened role in monitoring
    customers with the objective of predicting and mitigating problems as
    early as possible.

  . Detailed, periodic reviews of each LOB's portfolio with senior management
    have been conducted and are scheduled to continue. In addition, senior
    management is generally anticipated to be involved in negotiating
    resolution of the Debtors' largest problem accounts. Revised reporting
    procedures are being implemented by LOBs to assist senior management in
    tracking developments regarding problematic assets.

  . New guidelines have been implemented with respect to renewing, extending
    or modifying existing assets.

  . Significant reductions in overhead expense are being achieved. In
    addition to the elimination of personnel and other costs associated with
    new business generation, certain other organizational changes and
    reductions have been made. These changes will not only reduce expense
    levels, but are also designed to increase the Debtors' ability to focus
    on portfolio maximization.

 2. Asset Sales

   As described in Section VII-D ("Certain Factors to be Considered"), the
Debtors do not believe that a significant percentage of their assets are
capable of being sold at attractive prices, compared to the ultimate value to
be realized from holding these assets. There can be no assurance that any
assets will be sold, or if sold, that proceeds equal to or greater than their
carrying amounts will be received.

   Certain assets may be sold as follows:

  . The assets of the Realty Capital LOB, consisting of "bridge" loans to
    real estate owners and developers, have been priced and underwritten for
    sale from the time that the LOB was established. The Debtors believe that
    a sale of these assets is likely to result in proceeds that will exceed
    the ultimate value to be realized through the continued management and
    collection of these assets. Prior to its bankruptcy filing, the Debtors
    began working with Secured Capital Corp., an experienced broker retained
    to sell the assets of this LOB.

  . The Debtors are currently analyzing the financial and tax impact of a
    sale of some or all of their leveraged lease assets because, among other
    things, the Debtors believe that the tax deductions generated from
    these investments are not expected to provide a satisfactory return under
    the Debtors' new business plan. As of December 31, 2000, the carrying
    amounts of the Debtors' investment in leveraged leases was approximately
    $800 million of assets, net of non-recourse debt.

  . Within other LOBs, asset sales are expected to be evaluated on a case-by-
    case basis.

 3. New Business Opportunities

   Other than as set forth above with respect to potential increases in, or
renewals of, loans to existing customers, the Debtors' business plan does not
contemplate any new business activities, although it is possible that new
business opportunities may present themselves in the future. For example, the
Reorganized Debtors will be staffed with personnel having significant
expertise in the collection and work-out of difficult credits. It is possible
that, in the future, the Reorganized Debtors will manage such activities for
others (on a fee and/or a success basis). In this regard, it is noted that it
is possible that the Reorganized Debtors may accumulate substantial tax loss
carry forwards, and that new business opportunities may have enhanced value to
the Reorganized Debtors as a result. The projections included in this
Disclosure Statement do not include any income from these or any other
possible new business opportunities, and there can be no assurance that any
will arise, or if they do arise, that they will be successfully implemented.

                                      35
<PAGE>

D. Certain Factors to be Considered

   As stated above, the Debtors' business plan does not contemplate the
generation of any business activities related to new customers. Accordingly,
the overall feasibility of the Plan is predicated upon the maximization of the
Debtors' existing portfolio of assets for the benefit of all of their
creditors and equity Interest holders. To achieve this objective, the Debtors
have implemented and propose to implement a variety of tactical and strategic
initiatives, as described in Section VII-C of this Disclosure Statement
("Post-Confirmation Business Plan"). However, the potential recoveries by
creditors under the New Senior Notes, and by holders of existing FNV Group
common stock and holders of Additional Group Common Stock, New Group Preferred
Stock and Additional Mezzanine Common Stock, if any, issued to holders of FNV
Group-7 Claims, FNV Capital-5 Claims or FNV Mezzanine-6 Claims, respectively,
remain subject to a number of material risks, including those summarized
below. Prior to voting on the Plan, you should carefully consider the risk
factors summarized below as well as the Debtors' business plan description
contained elsewhere in this Disclosure Statement, and consult with your own
advisors in arriving at your own independent assessment of the Plan and
Disclosure Statement.

 1. Portfolio Maximization

   (a) Management's Strategic Initiatives. Although the Debtors' have
implemented numerous tactical and strategic initiatives with a view toward
ensuring that the portfolio will be managed for the maximum return to
creditors and equity Interest holders as described in Section VII-C of this
Disclosure Statement ("Post-Confirmation Business Plan"), there can be no
assurance that the Debtors' initiatives will, in fact, enhance the realizable
value of the portfolio. These initiatives depend, in part, on the continued
retention of experienced personnel to manage the portfolio, and their ability
to implement those new strategies.

   (b) Significant Factors Affecting Portfolio Value. As indicated in Section
VII-C of this Disclosure Statement ("Post-Confirmation Business Plan"), the
main objective of the Debtors' post-confirmation business plan is to maximize
the value of their portfolio through the orderly liquidation of the portfolio
over time. There are, however, substantial risks inherent in the Debtors'
ability to maximize the value of the portfolio.

   A significant portion of the Debtors' portfolio consists of assets that
cannot be quickly or easily converted to cash, for a number of reasons,
including:

  . The Debtors lent money to a number of their customers at higher advance
    rates (i.e., at higher loan to collateral ratios) than did many of their
    competitors.

  . The risk profiles of a number of the Debtors' customers are higher than
    those targeted by many of their competitors. That higher risk, in
    combination with the weakening U.S. economy, has resulted in increased
    problem accounts and corresponding decreased expected values for those
    assets.

  . The Debtors have a number of exposures in which the amount is lent to a
    group of related borrowers. Some of these borrowers are experiencing
    financial difficulties, and in such cases, the related loans or leases
    have been classified as impaired. Failure of one borrower may adversely
    impact the ability of others to repay their debt.

  . For these reasons, many of the Debtors' customers may not be able to
    refinance their obligations with a new lender unless the Debtors are
    willing to accept a discount, which may be significant. Likewise, the
    Debtors may not be able to sell many of these assets unless they are
    willing to accept discounts. Thus, the Debtors believe that there will be
    no quick conversion of their assets to cash.

   The Debtors recorded substantial write-downs and reserves in 2000, and
there can be no assurance that there will not be significant additional future
losses. At December 31, 2000, the Debtors had approximately $1.2 billion of
impaired, repossessed and non-accruing assets in their continuing operations
and had reserves of $579 million. There can be no assurance that losses from
impaired assets will not exceed the specific reserves allocated to these
assets or that losses from future impaired assets will not exceed the general
reserve. In addition, at such date there were approximately $490 million of
impaired, repossessed and non-accruing assets, which have been marked down to
estimated net realizable value, in the Debtors' discontinued operations. See
the audited financial statements and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in Item 7 of the 10-K/A and
Part II, Item 2 of the 10-Q.

                                      36
<PAGE>

   Consequently, the Debtors' business plan calls for the collection and
management of the portfolio over time with only limited asset sales. The
longer that it takes the Debtors to liquidate their assets, the greater is the
risk that unforeseen events will adversely affect the realizable value of
these assets.

 2. Leverage

   The Debtors are highly leveraged. Excluding leveraged leases and the
related non-recourse secured debt, at December 31, 2000 the Debtors had
consolidated assets of $12,089,086,000 and consolidated liabilities of
$11,419,602,000, including the $115,000,000 aggregate liquidation amount of
the TOPrS. Creditors and stockholders should be aware that the Plan does not
significantly reduce the Debtors' leverage. Notwithstanding this amount of
debt, the Debtors expect to be able to pay their debts as they fall due.

   The Debtors' highly leveraged financial position could pose substantial
risks to the holders of the New Senior Notes, the Additional Group Common
Stock, the existing FNV Group common stock and, if issued, the Additional
Mezzanine Common Stock and the New Group Preferred Stock, by having a material
adverse effect on the marketability, price and future value of such
securities. This highly leveraged position also is likely to affect the
Debtors' future operations, by: (i) impairing the Debtors' ability to obtain
replacement or additional financing (assuming such financing would otherwise
be available) for working capital, capital expenditures, debt service
requirements, or other general corporate purposes; (ii) requiring that a
substantial portion of the Debtors' operating cash flow be used to pay
principal and interest expense, thereby reducing funds available for
operations and other corporate purposes; (iii) limiting the Debtors' ability
to withstand competitive pressures or to adjust to changing market conditions;
and (iv) making the Debtors more vulnerable to the effects of a downturn in
their businesses or the economy in general.

 3. Potential Limitations on or Inability to Repay Debt or Make Contingent
Payments

   FNV Group has no business operations of its own and has no significant
assets other than the shares of FNV Capital. FNV Group will derive virtually
all of its cash flow from interest payments on the Intercompany Note,
dividends, other payments and intercompany loans from its direct and indirect
subsidiaries. A chart of the corporate structure of the Debtors is attached
hereto as Exhibit H.

   FNV Group's ability to pay the principal of, and interest on, the New
Senior Notes, to make distributions to holders of FNV Group common stock or
New Group Preferred Stock and to make payments of Contingent Interest (as
defined in the term sheet for the New Senior Notes) is dependent on the
generation of cash flow by its subsidiaries and the ability of the
subsidiaries to make cash available to FNV Group, by dividend, payment of the
Intercompany Note or otherwise. The ability of these subsidiaries to transfer
funds will be limited by the terms of the Berkadia Loan, the Intercompany Note
and the New Senior Notes and further may be affected by prevailing economic
conditions and financial, business and other factors, as well as the
subsidiaries' level of indebtedness from time to time. The ability of
subsidiaries to transfer funds to FNV Group may be further restricted by the
laws of the jurisdictions of their incorporation and applicable bankruptcy,
federal, state or foreign fraudulent conveyance or dividend restriction laws.

   Although semi-annual interest payment dates will be established under the
terms of the New Senior Notes, FNV Group will not be required to make any
interest payments or any principal prepayments on the New Senior Notes or make
any payments of Contingent Interest unless it has cash available for that
purpose as set forth in the Term Sheet for the New Senior Notes (which is
attached as an exhibit to the Plan annexed hereto as Exhibit A); except that
it is an event of default under the terms of the New Senior Notes if FNV Group
fails to pay interest in full on the New Senior Notes for two consecutive
interest payment dates. Furthermore, FNV Group will not be required to make
any payments in respect of Contingent Interest unless and until an amount
equal to 5.263% of the aggregate principal amount of the New Senior Notes
issued under the Plan (whether on or after the Effective Date) is paid to the
common stockholders of FNV Group. As reflected in the Debtors' projections
attached hereto as Exhibit F, the Debtors believe that payments in respect of
the New Senior Notes will be made on a semi-annual basis. Nevertheless, under
the terms of the New Senior Notes, it is possible that interest and principal
payments will not be paid in full until 2009, when the principal on the New
Senior Notes matures. It is also possible that no payments of Contingent
Interest will ever be made. Further detail is provided in the Term Sheet for
the New Senior Notes.

                                      37
<PAGE>

   Pro forma cash flows from operations for the first four full years after
the Effective Date are set forth in the Projections attached hereto as Exhibit
F. A portion of the cash flows will be dedicated to debt service on the
Berkadia Loan, the New Senior Notes and, at FNV Group's option, to use up to
$1.5 billion in the aggregate to make purchases of the New Senior Notes at a
price not to exceed par plus accrued and unpaid interest thereon, subject to
the consent of Berkadia, while the Berkadia Loan is outstanding, and up to
$150 million per calendar year for such purchases following the repayment in
full of the Berkadia Loan (as described in the term sheet for the New Senior
Notes, attached to Commitment Letter (which is attached hereto as Exhibit D)).
There can be no assurance that the Debtors' businesses will continue to
generate cash flow at levels sufficient to satisfy FNV Group's debt service
and operational requirements. Many factors that will affect the Debtors'
future cash flow are beyond their control, including the general level of
interest rates. Changes in the interest rate environment may further reduce
profit margins. Also, changes in government regulations, tax rates and similar
matters could significantly increase the cost of doing business. General
adverse economic conditions, as well as adverse conditions in particular
market segments, could cause the Debtors' borrowers to be unable to make
timely payments or payment in full on loans made by the Debtors, resulting in
a higher rate of non-collectible or non-earning assets. If, in the future, the
Debtors are unable to generate sufficient cash from their operations to enable
FNV Capital to make interest and principal payments on the Berkadia Loan and
to enable FNV Group to make interest and principal payments on, and purchases
of, the New Senior Notes, the Debtors will be required to take other measures,
such as refinancing or restructuring their indebtedness, selling assets,
deferring necessary capital expenditures or seeking to raise additional debt
or equity capital. There can be no assurance that any of these measures could
be effected on a timely basis or on satisfactory terms. Furthermore, there can
be no assurance as to the timing of any such transactions or the proceeds that
the Debtors could realize from any such sales or capital-raising transaction.
The Debtors' ability to sell assets also will be limited by the terms of the
Berkadia Loan and may be limited by the other terms of any financing
agreements.

 4. Potential Insufficiency of Collateral for New Senior Notes; Value of
Collateral

   The New Senior Notes will be secured by second priority security interests
in the capital stock (but not the assets) of FNV Capital and in the
Intercompany Note (which, in turn, will be secured by a second-priority lien
on the assets of FNV Capital pledged to Berkadia as security for the Berkadia
Loan) (the "Collateral"). These security interests will be junior to the
security interest in the Collateral held by Berkadia as security for FNV
Group's guarantee of the Berkadia Loan. Enforcement of the New Senior Notes'
security interest will not be allowed until the Berkadia Loan is paid in full.

   If FNV Group defaults on its obligations to make payments in respect of the
New Senior Notes (but not Contingent Interest), holders of the New Senior
Notes would be entitled to payment out of proceeds from the sale or other
liquidation of the Collateral prior in right to any general unsecured
creditors of FNV Group, but only after payment in full of the Berkadia Loan.
The ability of the holders of the New Senior Notes to realize such value upon
the sale of the Collateral will depend upon general market and economic
conditions, the market value of the Collateral, the results of operations of
FNV Capital and its subsidiaries and the availability of buyers and other
similar factors at the time of sale. It is unlikely that the value of the
Collateral in a "forced" or "fire" sale would be sufficient to satisfy payment
of the New Senior Notes. In addition, the value of the Collateral may decline
over time in response to fluctuations in interest rates or certain other
market fluctuations, and there can be no assurance that the future value of
the Collateral will not be considerably less than its current value.
Accordingly, the proceeds of any sale of the Collateral following an Event of
Default on the New Senior Notes may not be sufficient to satisfy payments due
on the New Senior Notes. If the proceeds from a sale of the Collateral are not
sufficient to satisfy payments due on the New Senior Notes, holders of the New
Senior Notes (to the extent not repaid from the proceeds of the sale of the
Collateral) will have unsecured Claims against the remaining assets of FNV
Group, which are not anticipated to have significant value.

 5. Interest Spread; Interest Rate Matching

   See "Annex A--Quantitative and Qualitative Disclosure About Market Risk" in
the 10-K/A and Part II, Item 3, "Quantitative and Qualitative Disclosure About
Market Risk" in the 10-Q for a discussion of risks associated with interest
rate spread and interest rate matching.

                                      38
<PAGE>

 6. Leveraged Leases

   The Debtors' investment in Leveraged Leases has a book value of
approximately $800 million, net of non-recourse debt, as of December 31, 2000,
consisting primarily of real estate and aircraft. At the time the Leveraged
Leases were entered into, a significant portion of the Debtors' projected
return on them was to have resulted from the tax benefits the Debtors expected
to receive through accelerated depreciation and interest expense deductions.
However, there can be no assurance that the Debtors will, in fact, have
sufficient taxable income to enable them to realize some or all of the
projected returns on these assets.

   It is the Debtors' position that only the Debtors' beneficial interest as
owner participant under their Leveraged Leases (not the trust estate) is
subject to the Debtors' bankruptcy cases and that the leases within the trust
estate are not subject to any declarations, adjudications or proceedings in
these cases.

 7. Aircraft Residual Risk

   The Debtors' largest line of business is Transportation Finance, which
primarily consists of various forms of financing of used aircraft. In
addition, the Debtors finance corporate and other types of aircraft through
the Commercial Equipment Finance line of business. Most of these financings
(excluding Leveraged Leases) are relatively short term (in many cases the sole
source of cash flow is a lease of less than five years). These lines of
business are highly dependent on market conditions for the releasing or
selling of the aircraft when leases terminate, a highly specialized activity.
The Debtors have estimated the "residual value" of each aircraft at lease
termination, i.e., the value to be recovered (usually through releasing but
occasionally from sale) upon the future termination of each lease. Residual
estimation is a highly subjective exercise, particularly for older aircraft,
and there can be no assurance that the values used by the Debtors and
reflected in the Debtors' projections included elsewhere herein will be
achieved. There also can be no assurance that aircraft returned to the Debtors
(or to their borrowers) at lease termination will not remain off-lease for
substantial periods of time.

   The decision as to whether or not to convert aircraft from passenger to
cargo service, as well as the management of these conversions, is a highly
specialized and important skill, since large amounts of money are involved (a
typical conversion costs between $4 and $20 million). Historically, the
Debtors have acquired a modest number of aircraft with the intention of
converting them to cargo service, and have financed customers who have
likewise engaged in such conversions, in both cases prior to having a lease in
place for the converted aircraft. The Debtors have in-process conversion
projects involving five DC10-30s and one B747-300. There can be no assurance
that converted aircraft will not remain off-lease or unsold for extended
periods.

   The Debtors historically have managed the releasing and conversions of
aircraft that they own (that is, aircraft leased directly by the Debtors to
operators), but have relied on their customers to manage these activities
where the aircraft is owned by the Debtors' customer and the customer is
borrowing funds from the Debtors. Because most of these loans are recourse
only to the collateral value of the aircraft securing the loans, and given the
current difficult market for releasing or selling used aircraft, the Debtors
believe that they will need to take a more active role in this process and
will need to increase significantly their expertise in this area to be
effective. The Debtors intend either to recruit additional personnel or to
enter into a joint venture or other co-management arrangement with an industry
expert. No assurance can be given, however, that the Debtors will be
successful in this endeavor.

   The Debtors' aircraft finance business is affected by developments at large
users in the industry. The Debtors (or their customers) are lessors to a
number of passenger and cargo airlines that have recently filed for protection
under the Bankruptcy Code. The bankruptcy of a large user often has a negative
impact on the industry wide lease rates that can be obtained for the affected
aircraft types, even in cases where the Debtors or their customers are not
themselves leasing to the carrier in bankruptcy. In addition, large contracts
can affect the entire industry: the recent decision of the United States
Postal Service to give its overnight shipping business to Federal Express has
caused a significant number of other carriers' 727s to become surplus. This
has had a significant impact both on the Debtor's existing 727 customers and
on the short-term leasing prospects for the Debtors' off-lease 727s.

                                      39
<PAGE>

   The aircraft owned and financed by the Debtors may be the subject of
changes in regulations, particularly new "air worthiness directives" issued by
the Federal Aviation Administration or other U.S. or foreign regulators. There
can be no assurance that no directives will be issued in the future or that,
if issued, such directives will not render certain aircraft economically
unviable.

 8. Projections

   The Plan is dependent upon the feasibility of the assumptions included in
the financial projections attached hereto as Exhibit F and the successful
implementation of the business plan described herein. The financial
projections reflect numerous assumptions, some of which involve factors
outside the control of the Debtors, as well as estimates of value that may
never be realized. In addition, unanticipated events and circumstances
occurring subsequent to the preparation of the projections may affect the
actual financial results of the Debtors, the actual results achieved
throughout the periods will vary (either positively or negatively) from the
results projected, and those variations may be material. Other potential
adverse factors beyond the Debtors' control that may affect such results are
described in Exhibit F. These events may cause the Debtors to fail to achieve
their projected levels of operating revenues, earnings and cash flow.

 9. Competition

   The Debtors do not expect to be competing for new customers. However, given
the highly competitive nature of the Debtors' industry, competition will be a
factor with respect to retention of existing customers. It is the Debtors'
plan to retain their best customers as long as they can do so at attractive
rates. However, it is likely that competitors will also solicit these
customers. Since almost all of the Debtors' competitors are in stronger
financial condition than the Debtors (and can thereby represent that they
offer a better financing "partner" for the customer), and since almost all of
these competitors have a lower cost of funding than the Debtors, the Debtors
may be unable to retain their best customers. Although in many cases there are
significant pre-payment or exit fees that a departing customer must incur,
there can be no assurance that customers will not choose to refinance with
competitors or that the effect of such competition will not force the Debtors
to reduce their rates to certain customers.

 10. Dependence on Key Personnel; Management Agreement

   As stated above, the Debtors' portfolio is highly leveraged and has a
substantial level of impaired assets. For these reasons, management expertise
and involvement is extremely important in order to maximize value. In
particular, many of the Debtors' assets are "story" assets, as to which
retention of individuals with knowledge as to the history of the assets is
very valuable. The Debtors have relied, and expect to continue to rely, upon
key individuals who have substantial familiarity and expertise in the Debtors'
continuing business operations. There can be no assurance that the Debtors
will be able to retain key employees, although the Debtors have implemented
employee incentive plans and are seeking Bankruptcy Court approval to
implement other such plans.

   FNV Group has entered into a ten-year management agreement with Leucadia,
pursuant to which Leucadia will provide management services to FNV Group and
its subsidiaries. However, if the Commitment Letter is terminated or a plan of
reorganization other than the Plan is confirmed by order of the Bankruptcy
Court, Leucadia or FNV Group would have the right to terminate the agreement.
If that were to occur, management services from Leucadia would terminate and
the Debtors would have to determine whether alternate management arrangements
would be necessary, which could include entering into a new management
agreement with a third party or enhancing the Debtors' existing management
team.

 11. Termination of Berkadia's Commitment to Make the Berkadia Loan

   Funding of the Plan is dependent upon FNV Capital's ability to borrow the
Berkadia Loan under the Berkadia Credit Agreement. Pursuant to the terms of
the Commitment Letter, Berkadia's commitment to fund the Berkadia Loan will
terminate on the first to occur of (x) August 31, 2001, unless the Berkadia
Credit

                                      40
<PAGE>

Agreement closes and funds on or before that date or (y) the earlier of the
date this Disclosure Statement is approved by the Bankruptcy Court or July 6,
2001, if the Bankruptcy Court has not approved the Commitment Letter and the
fees payable thereunder by that date. Berkadia's commitment to fund the
Berkadia Loan may be terminated earlier by Berkadia (i) if any event occurs or
information has become available that, in its reasonable judgment, results in,
or is likely to result in, the occurrence of any of the events referred to in
clause (vi) of the paragraph captioned "Conditions Precedent" in the
Commitment Letter or the failure of any other condition referred to under
"Conditions Precedent" in the Commitment Letter, or (ii) upon termination of
the Management Services Agreement. If any of the foregoing occur, there can be
no assurance of whether, or under what terms, Berkadia would extend the terms
of the commitment or would agree to waive its termination rights.

 12. Lack of Established Market for New Senior Notes, New Group Preferred
     Stock, and Additional Mezzanine Common Stock

   There is no existing market for the New Senior Notes, New Group Preferred
Stock, and Additional Mezzanine Common Stock. No assurance can be given that
an active market will develop in such securities or, if such a market
develops, that the market will develop or retain sufficient liquidity or a
constant value. A number of factors contribute to this uncertainty, including
the possible lack of broker-dealers willing to make a market in these
securities. It is possible that these securities will trade at less than par.
The price of such securities will be determined in the marketplace and may be
influenced by many factors, including:

  . the specific terms (including coupon rate, if applicable) of the
    security;

  . depth and liquidity of the market for the security;

  . developments affecting the Debtors' business generally;

  . investor perception of the Debtors' business; and

  . general economic and market conditions.

 13. Special Risks for Equity Holders

   (a) Dilution. Under the Plan, existing equity holders of FNV Group
(together with any other parties that have equity Interests) will retain their
existing shares of common stock of FNV Group. However, as a result of the
issuance to the Berkadia Parties of Additional Group Common Stock under the
Plan, the common stock currently outstanding may represent only 49% of the
shares of the FNV Group common stock to be outstanding following the Effective
Date. Therefore, existing equity Interests will experience material dilution,
without any material reduction in the outstanding consolidated debt of FNV
Group. Existing equity Interests of FNV Group may experience further dilution
if Additional Group Common Stock or New Group Preferred Stock is required to
be issued to claimants as a consequence of the existing Securities Litigation
against FNV Group. Under the Plan and the New Corporate Documents, there is no
limitation on the right of the Reorganized Debtors to issue preferred stock
that has rights prior to those of the New Group Preferred Stock or the
Additional Group Common Stock. Further, under the Plan and the New Corporate
Documents there is no limitation on the right of the Reorganized Debtors to
issue additional shares of FNV Group common stock or additional shares of FNV
Mezzanine common stock, which would result in a dilution of the holders of
Additional Group Common Stock and Additional Mezzanine Common Stock,
respectively.

   (b) Dividends. Post-confirmation equity holders will be precluded from
receiving dividends or other distributions from FNV Group until the Berkadia
Loan is repaid. If New Group Preferred Stock is issued, distributions to
common stockholders will not be permitted to be made unless a concurrent
distribution is made to holders of the New Group Preferred Stock. Subject to
applicable corporate law (which limits the circumstances in which corporations
may legally make distributions to stockholders), limited distributions to
stockholders will be permitted as the New Senior Notes are paid off, as
described in the next paragraph.

   The New Senior Notes will provide that after repayment in full of the
Berkadia Loan, 5% of the Debtors' cash available for this purpose (as defined
in the New Senior Notes Indenture) will be used to make distributions to
stockholders. Accordingly, unless principal payments are made on the New
Senior Notes, no distributions will

                                      41
<PAGE>

be made to stockholders. Further, such distributions will not be made if any
default exists under the New Senior Notes. If FNV Group does not have
sufficient funds ultimately to repay the New Senior Notes in full (together
with accrued interest thereon), it is likely that only limited distributions
would be made to stockholders. There can be no assurance that FNV Group will
make any distributions to its equityholders even if all contractual
prohibitions thereto have expired. Subject to meeting the legal requirements
permitting distributions to stockholders, and so long as the making of any
such distributions would not render FNV Group insolvent, FNV Group currently
intends to make distributions permitted under the terms of the New Senior
Notes as soon as practicable. It is likely that FNV Group will not fully repay
the New Senior Notes in fewer than eight years.

   (c) Transactions with Interested Stockholders. The new certificate of
incorporation of FNV Group will not include many of the provisions contained
in the current certificate of incorporation of FNV Group. One of these
provisions requires supermajority approval by the FNV Group stockholders for
the following specified transactions involving an "Interested Stockholder" or
its affiliates:

  . a merger or consolidation of FNV Group or any subsidiary with an
    Interested Stockholder or its affiliates;

  . any sale, lease, exchange or other disposition of assets of FNV Group or
    its subsidiaries with an aggregate fair market value of $10,000,000 or
    more to any Interested Stockholder or its affiliates;

  . the issuance to an Interested Stockholder or any of its affiliates of
    securities of FNV Group or any subsidiary for consideration having an
    aggregate fair market value of $10,000,000 or more;

  . the adoption of any plan or proposal for liquidation or dissolution of
    FNV Group proposed by or on behalf of any Interested Stockholder or its
    affiliates; and

  . any reclassification of securities, recapitalization of FNV Group, merger
    or consolidation of FNV Group with any of its subsidiaries or any other
    transaction (whether or not an Interested Stockholder is a party) which
    has the direct or indirect effect of increasing the proportionate share
    of equity or convertible securities of FNV Group or any subsidiary owned
    directly or indirectly by an Interested Stockholder or its affiliates.

   Any transaction that is subject to this provision must be approved by the
affirmative vote of holders of at least 66 2/3% of FNV Group's voting stock,
including the affirmative vote of holders of at least 66 2/3% of FNV Group's
voting stock not owned directly or indirectly by the Interested Stockholder or
its affiliates, unless the transaction either is approved by a majority of the
"Continuing Directors" (as defined in the certificate of incorporation) or
meets certain price and procedure requirements.

   An "Interested Stockholder" is any stockholder that (i) together with its
affiliates, beneficially owns more than 10% of the outstanding voting stock of
FNV Group, (ii) is an affiliate of FNV Group and within the two year period
preceding the date in question was, together with its affiliates, the
beneficial owner of more than 10% of the outstanding voting stock, or (iii)
has acquired, other than in a public offering, voting stock that was
beneficially owned by an Interested Stockholder within the two-year period
immediately before the date in question.

   A "Continuing Director" is any member of the FNV Group Board of Directors
who is unaffiliated with the Interested Stockholder and who either was a
member of the Board of Directors before the Interested Stockholder became an
Interested Stockholder or has been recommended for appointment or election to
the Board of Directors by a majority of the Continuing Directors then on the
Board.

   The new certificate of incorporation of FNV Group will not contain any
provision comparable to the foregoing. As a result, transactions of the type
described above with any of the Berkadia Parties (each of which would be
considered an Interested Stockholder under the existing certificate of
incorporation upon acquisition of 50% of FNV Group common stock) or their
affiliates will not, under the new certificate of incorporation, be subject to
any supermajority or unaffiliated holder approval requirements.

                                      42
<PAGE>

                                     VIII.

                               VOTING PROCEDURES

A. Parties Entitled to Vote on the Plan

   Pursuant to section 1126 of the Bankruptcy Code, each class of "impaired"
Claims or Equity Interests that is not deemed to reject the Plan is entitled
to vote on acceptance or rejection of the Plan. A class is impaired unless
that class is to have its legal, equitable and contractual rights left
unaltered by the reorganization. A list of classes entitled to vote on the
Plan is set forth in Section II-B of this Disclosure Statement ("Voting on the
Plan").

   Notwithstanding the foregoing, only holders of Allowed Claims or Allowed
Interests in the Voting Classes are entitled to vote on the Plan. A Disputed
Claim (as defined in the Plan) or Interest that is not Allowed (as defined in
the Plan) is not entitled to vote unless and until either (i) the dispute with
respect to the Claim or Interest is determined, resolved or adjudicated in the
Bankruptcy Court or another court of competent jurisdiction or pursuant to
agreement with the Debtors or (ii) the Bankruptcy Court deems the Disputed
Claim or Interest to be an Allowed Claim or Allowed Interest on a provisional
basis, for purposes of voting on the Plan. Therefore, even if there is a
ballot enclosed with this Disclosure Statement, the votes cast by the holders
of any Claim or Interest that is not Allowed as of the Voting Deadline will
not be counted unless the Bankruptcy Court provisionally allows those Claims
or Interests for purposes of voting on the Plan. If your Claim or Interest is
not Allowed, it is your obligation to obtain an order provisionally allowing
your Claim or Interest.

   Holders of Claims and Interests in the voting classes may vote on the Plan
only if they are holders as of the Voting Record Date. The Voting Record Date
is June 13, 2001.

B. Ballot

   A ballot to be used for voting to accept or reject the Plan, together with
a postage-prepaid return envelope, is enclosed with copies of this Disclosure
Statement that are mailed to creditors and stockholders entitled to vote on
the Plan.

   After carefully reviewing this Disclosure Statement and the Plan, creditors
and stockholders entitled to vote should indicate their acceptance or
rejection of the Plan by completing the enclosed ballot. All ballots should be
returned to the Debtors as directed below.

   If you do not receive a ballot for a certain Claim that you believe you
hold and that is in a class that is entitled to vote, or if your ballot has
been damaged or lost, or if you have any questions regarding the procedures
for voting on the Plan please contact the voting agent as follows:

                             The FINOVA Group Inc.
                         c/o Claudia King & Associates
                                 P.O. Box 2742
                            Carefree, AZ 85377-2742
                                (by U.S. Mail)

                                      and

                             The FINOVA Group Inc.
                      c/o Claudia King & Associates, Inc.
                      7301 E. Sundance Trail--Suite D-201
                              Carefree, AZ 85377
                           (by delivery or courier)

                                      43
<PAGE>

C. General Procedures and Deadlines for Casting Votes

   The following information is qualified in all respects by the instructions
that will accompany your ballot. Please review those instructions carefully
before completing your ballot.

   All creditors and stockholders entitled to vote may cast their votes by
completing, dating and signing the ballot that accompanies this Disclosure
Statement, and by returning the ballot once it has been completed, dated and
signed in the enclosed postage-prepaid envelope, by first class mail. To be
counted, your vote must be received, pursuant to the following instructions,
by the voting agent at the following address, before the voting deadline of
5:00 p.m. Mountain Standard Time on August 1, 2001.

                             The FINOVA Group Inc.
                         c/o Claudia King & Associates
                                 P.O. Box 2742
                            Carefree, AZ 85377-2742
                                (by U.S. Mail)

                                      and

                             The FINOVA Group Inc.
                      c/o Claudia King & Associates, Inc.
                      7301 E. Sundance Trail--Suite D-201
                              Carefree, AZ 85377
                           (by delivery or courier)

   To be counted, all ballots must be completed and signed, and must be
returned in time to be actually received by the Debtors at the above address
by 5:00 p.m. Mountain Standard Time, on August 1, 2001. Since mail delays may
occur, it is important that your ballot be mailed or delivered well in advance
of the specified date.

   Any ballot received after 5:00 p.m. Mountain Standard Time on August 1,
2001 will not be counted or otherwise included in any calculations to
determine whether the Plan has been accepted or rejected.

   If a ballot is signed and returned without casting a vote or providing
other instruction as to acceptance or rejection of the Plan, the signed ballot
will not be counted or otherwise included in any calculations to determine
whether the Plan has been accepted or rejected. The Debtors, in their
discretion, may request that the voting agent attempt to contact voters to
cure any defects in the ballots.

   When a ballot is returned indicating acceptance or rejection of the Plan,
but such ballot is unsigned, the ballot will not be counted or otherwise
included in any calculations to determine whether the Plan has been accepted
or rejected.

   Any voter that has delivered a valid ballot may withdraw its vote by
delivering a written notice of withdrawal to the voting agent before the
voting deadline. To be valid, the notice of withdrawal must (a) be signed by
the party who signed the ballot to be revoked, and (b) be received by the
voting agent before the voting deadline. The Debtors may contest the validity
of any withdrawals.

   Any holder that has delivered a valid ballot may change its vote by
delivering to the voting agent a properly completed subsequent ballot so as to
be received before the voting deadline. In the case where more than one
timely, properly completed ballot is received, only the ballot that bears the
latest date will be counted.

                                      44
<PAGE>

D. Special Procedures Applicable to Voting of Debt Securities Claims and
Equity Interests

   IF YOU ARE, AS OF THE JUNE 13, 2001 RECORD DATE, THE BENEFICIAL OWNER OF A
NOTE OR SHARES:

  If the Notes or Shares are registered in your own name: Please complete the
  information requested on the ballot; sign, date, and indicate your vote on
  the ballot; and return the ballot in the enclosed, pre-addressed, postage-
  paid envelope so that it is actually received by the voting agent before
  the voting deadline.

   If the Notes or Shares are registered in "street name":

  If your ballot has already been signed (or "prevalidated") by your nominee
  (your broker, bank, other nominee or their agent): Please complete the
  information requested on the ballot, indicate your vote on the ballot, and
  return your completed ballot in the enclosed pre-addressed postage-paid
  envelope so that it is actually received by the voting agent before the
  voting deadline; or

  If your ballot has NOT been signed (or "prevalidated") by your nominee
  (your broker, bank, other nominee, or their agent): Please complete the
  information requested on the ballot; sign, date and indicate your vote on
  the ballot; and return the ballot to your nominee in sufficient time for
  your nominee to then forward your vote to the voting agent so that it is
  actually received by the voting agent before the voting deadline.

   IF YOU ARE THE NOMINEE FOR A BENEFICIAL OWNER, AS OF THE JUNE 13, 2001
RECORD DATE, OF THE NOTES OR SHARES: Please forward a copy of this Disclosure
Statement and the appropriate ballot to each beneficial owner, AND:

  All ballots that you have signed (or "prevalidated") should be completed by
  the beneficial owners and returned by the beneficial owners directly to the
  voting agent so that the voting agent receives such ballots before the
  voting deadline.

   All ballots that you have NOT signed (or "prevalidated") must be collected
by you, and you should complete the "master ballot," and deliver the completed
master ballot to the voting agent so that it is actually received by the
voting agent before the voting deadline.

   IF YOU ARE A SECURITIES CLEARING AGENCY: Please arrange for your respective
participants to vote by executing an omnibus proxy in their favor.

   THE DEBTORS ARE NOT AT THIS TIME REQUESTING THE DELIVERY OF, AND NEITHER
THE DEBTORS NOR THE VOTING AGENT WILL ACCEPT, CERTIFICATES REPRESENTING ANY OF
THE NOTES. IN CONNECTION WITH THE EFFECTIVE DATE, THE DEBTORS WILL FURNISH ALL
HOLDERS OF NOTES WITH APPROPRIATE LETTERS OF TRANSMITTAL TO BE USED TO REMIT
THOSE CERTIFICATES IN EXCHANGE FOR THE DISTRIBUTION UNDER THE PLAN.
INFORMATION REGARDING THE REMITTANCE PROCEDURE (TOGETHER WITH ALL APPROPRIATE
MATERIALS) WILL BE DISTRIBUTED BY THE DEBTORS AFTER CONFIRMATION OF THE PLAN.

                                      IX.

                           CONFIRMATION OF THE PLAN

   The Bankruptcy Court has scheduled a hearing to consider confirmation of
the Plan to commence on August 10, 2001, at 9:30 a.m. Eastern Daylight Time.
That hearing will be held at the United States Bankruptcy Court for the
District of Delaware, at in Courtroom 2 at 824 Market Street, 6th Floor,
Wilmington, Delaware 19801, or such other location as designated by the
Bankruptcy Court, before the Honorable Peter J. Walsh.

                                      45
<PAGE>

   Parties in interest have the right to object to confirmation of the Plan.
Any objections to confirmation of the Plan must be in writing and filed with
the Bankruptcy Court by no later than August 3, 2001, at 4 o'clock p.m.
Eastern Daylight Time. In addition, copies of such objections must be received
no later than August 3, 2001, at 4 o'clock p.m. Eastern Daylight Time by the
following persons:

      Jonathan M. Landers
      Janet M. Weiss
      M. Natasha Labovitz
      GIBSON, DUNN & CRUTCHER LLP
      200 Park Avenue
      New York, New York 10166-0193
      Telephone: (212) 351-4000
      Facsimile: (212) 351-4035
      Co-Counsel for the Debtors

      Mark D. Collins
      Daniel J. DeFranceschi
      Deborah E. Spivack
      RICHARDS, LAYTON & FINGER, P.A.
      One Rodney Square
      P.O. Box 551
      Wilmington, Delaware 19899
      Telephone: (212) 658-6541
      Facsimile: (212) 658-6548
      Co-Counsel for the Debtors

      Chaim J. Fortgang
      WACHTELL, LIPTON, ROSEN & KATZ
      51 West 52nd Street
      New York, NY 10019
      Telephone: (212) 403-1000
      Facsimile: (212) 403-2000
      Counsel for Creditors' Committee

      Andrew Rahl
      ANDERSON KILL & OLICK, P.C.
      1251 Avenue of the Americas
      New York, New York 10020-1182
      Telephone: (212) 278-1000
      Facsimile: (212) 278-1733
      Counsel for Equity Committee

   Rule 9014 of the Federal Rules of Bankruptcy Procedure governs objections
to confirmation of the Plan. Unless an objection to confirmation is timely
filed and served, it may not be considered by the Bankruptcy Court.

   At the confirmation hearing, the Bankruptcy Court will consider whether the
Plan satisfies the various requirements of the Bankruptcy Code, including
whether (i) the Plan has classified Allowed Claims and Allowed Interests in a
permissible manner, (ii) the contents of the Plan comply with the technical
requirements of the Bankruptcy Code, (iii) the Debtors have proposed the Plan
in good faith, and (iv) the Debtors' disclosures concerning the Plan have been
adequate and have included information concerning all payments made or
promised in connection with the Plan and the Chapter 11 Cases, as well as the
identity, affiliations and compensation to be paid to all officers, directors
and other insiders. The Debtors believe that the Plan satisfies all of the
requisites for confirmation and will present such evidence and argument as may
be necessary or appropriate at or prior to the hearing on confirmation.

                                      46
<PAGE>

   As further described herein, the Bankruptcy Code also requires that the
Plan be accepted by requisite votes of creditors and stockholders (except to
the extent provided in Section 1129(b) of the Bankruptcy Code), that the Plan
be feasible, and that confirmation be in the "best interests" of all creditors
and stockholders. To confirm the Plan, the Bankruptcy Court must find that all
of these conditions are met. Thus, even if the creditors and stockholders of
the Debtors accept the Plan by the requisite votes, the Bankruptcy Court must
make independent findings respecting the Plan's feasibility and whether it is
in the best interests of the Debtors' creditors and stockholders before it may
confirm the Plan.

A. Classification of Claims and Interests

   The Bankruptcy Code requires that each claim and equity interest in a class
be "substantially similar" to the other claims and equity interests in such
class. The Debtors believes that the Claims and Interests in each class under
the Plan are substantially similar and that the classification proposed in the
Plan is appropriate under the Bankruptcy Code.

B. Best Interests of Unsecured Creditors

   The Debtors believe that the Plan affords creditors and stockholders the
potential for the greatest recovery from the assets of the Debtors. The
Debtors have considered alternatives to the Plan, such as the liquidation of
the Estates, the possibility of alternative business plans, substantively
consolidating the Debtors or, with respect to FNV Canada and FNV UK, separate
insolvency proceedings in the courts of the countries in which they are
incorporated. In the view of the Debtors, the Plan is the best alternative
available to maximize the value of the assets of the Debtors and their Estates
and, therefore, the Plan is in the best interests of all parties.

   Notwithstanding acceptance of the Plan by each impaired class, to confirm
the Plan, the Bankruptcy Court must determine that the Plan is in the best
interest of the holders of Claims or Interests in each class. In order to
satisfy the "best interests" requirement, the Debtors must establish, to the
satisfaction of the Bankruptcy Court, that the Plan provide each creditor and
each stockholder in each class with property that has a value, as of the
Effective Date of the Plan, at least equal to the value of the distribution
that such creditor or stockholder would receive if the Debtors were liquidated
under chapter 7 of the Bankruptcy Code under then prevailing market
conditions.

   To estimate the distribution that the creditors and stockholders in each
impaired class would receive if the Debtors were liquidated under chapter 7 of
the Bankruptcy Code, the Bankruptcy Court must first determine the aggregate
dollar amount that would be available for distribution if the Chapter 11 Cases
were converted to cases under chapter 7 of the Bankruptcy Code and the assets
of the Debtors were liquidated by a chapter 7 trustee (the "Liquidation
Value").

   The Liquidation Value of the Debtors would consist of the net proceeds
available from the disposition of the assets of the Debtors, increased by the
Cash held by the Debtors and decreased by, among other things, the Allowed
Claims of secured creditors, to the extent of the value of their collateral,
the costs, fees and expenses incurred in the administration of the chapter 7
cases, including the liquidation and any unpaid administrative expenses
arising out of the Chapter 11 Cases.

   The primary assets of the Debtors consist of their investments in financing
transactions and other investments. The Debtors believe that any sale or
liquidation of those assets will provide less value to unsecured creditors and
stockholders of the Debtors than the reorganization proposed under the Plan.
The current market conditions in the Debtors' business and the economy
generally, the limited credit available to potential purchasers, and a variety
of other factors all would adversely and materially affect the ability of a
chapter 7 trustee to liquidate the Debtors' assets within a reasonable period
or at a reasonable price.

   In addition, the liquidation itself could materially reduce the Liquidation
Value and increase the Claims against the Debtors, further reducing proceeds
to unsecured creditors and stockholders. For example, additional tax
liabilities could be incurred or accelerated. The costs of liquidation in a
chapter 7 case also would include

                                      47
<PAGE>

the compensation of a chapter 7 trustee, as well as that of counsel and other
professionals employed by such a trustee, asset disposition expenses,
applicable taxes, and litigation costs. The Debtors believe that liquidation
could also generate a significant increase in unsecured Claims (such as, for
example, Claims arising from the rejection of executory contracts that are
otherwise assumed under the Plan).

   On the basis of this analysis, the Debtors firmly believe that Debtors'
creditors and stockholders will receive greater value as of the Effective Date
under the Plan than such creditors or stockholders would receive in a chapter
7 liquidation.

C. Feasibility

   As a condition to confirmation, the Debtors must establish that
confirmation is not likely to be followed by their liquidation or the need for
further financial reorganization. For purposes of determining whether the Plan
meets this "feasibility" standard, the Debtors have prepared the financial
projections attached as Exhibit F to this Disclosure Statement relating to the
performance models that can be reasonably anticipated from the Debtors'
operations. The projections illustrate the ability of the Debtors to meet
their obligations under the Plan while retaining a sufficient amount of cash
to carry on their operations.

   The financial projections set forth herein include a projected consolidated
balance sheet, showing the pro forma effect of the reorganization of the
Debtors pursuant to the Plan, and projected consolidated statements of
operations and statements of cash flow for several years thereafter. The
projected financial statements are based on the assumption that the Bankruptcy
Court will confirm the Plan and that the Effective Date will be August 31,
2001.

   The Debtors caution that although these projected financial statements have
been derived in part from the Debtors' audited financial statements for the
fiscal year ended December 31, 2000, no assurance can be given that the
Debtors will achieve the results projected. Many of the assumptions upon which
these projections are based are subject to uncertainties. Some assumptions
inevitably may not materialize and unanticipated events and circumstances
could occur which would affect the actual financial results. Therefore, the
actual results achieved by the Debtors may vary, either positively or
negatively, from the projected results and the variations may be material.

   Based on the financial projections, the Debtors believe that the Plan
complies with the financial feasibility standard for confirmation. The Debtors
believe that the assumptions are reasonable, that the projections are
attainable on an operational basis and that they will have sufficient funds
available to meet their obligations under the Plan.

D. Acceptance

   As a condition to confirmation, the Bankruptcy Code requires that each
impaired class of claims or equity interests accept a plan, with the
exceptions described in the following section. The Bankruptcy Code defines
acceptance of a plan by a class of claims as acceptance by holders of two-
thirds in dollar amount and a majority in number of the claims of that class,
but for that purpose counts only the vote of those creditors who actually vote
to accept or to reject the plan. The Bankruptcy Code defines acceptance of a
plan by a class of equity interests as acceptance by two-thirds of the number
of shares, but for this purpose counts only shares actually voted. Holders of
claims or equity interests who fail to vote are not counted as either
accepting or rejecting the plan.

   Classes of claims and equity interests that are not "impaired" under a plan
are deemed as a matter of law to have accepted the plan and therefore are not
permitted to vote on the plan. Classes of claims and equity interests that
receive no distributions under a plan are deemed as a matter of law to have
rejected the plan, so that it is unnecessary to solicit their votes. The
Debtors are soliciting acceptances of the Plan only from those persons who
hold Claims or Interests that are impaired under the Plan and who are to
receive distributions or retain property on account of their Allowed Claims or
Allowed Interests.

                                      48
<PAGE>

   A class of claims or equity interests is "impaired" if the legal,
equitable, or contractual rights attaching to the claims or equity interests
of that class are modified in any manner other than those specifically
permitted under the Bankruptcy Code. A list of impaired Classes is set forth
in Section II-B of this Disclosure Statement ("Voting on the Plan").

E. Confirmation Without Acceptance by All Impaired Classes

   Section 1129(b) of the Bankruptcy Code sets forth the requirements for
confirming a plan of reorganization where one or more impaired classes have
not voted to accept the plan. If a plan is not accepted by an impaired class,
including nonacceptance by means of deemed rejection, the plan may still be
confirmed, provided that the plan has been accepted by at least one impaired
class of claims and the other requirements for confirmation (except the
requirement that the plan be accepted by all impaired classes) are met.

   If a class of secured claims rejects a plan, the plan may still be
confirmed so long as the Plan does not discriminate unfairly as to a class and
is "fair and equitable" to that class under Section 1129(b) of the Bankruptcy
Code and applicable case law. The "fair and equitable" standard requires,
among other things, that the plan provides that (i) the lien securing the
claims of each member of the class is preserved and the plan provides for
deferred cash payments with a present value equal to the lesser of the allowed
amount of their claims or the value of the collateral securing their claims,
(ii) the collateral securing the claim be sold free of the lien with the lien
attaching to the proceeds and with the lien on the proceeds being treated
under one of the two other standards described in this paragraph, or (iii) the
claim receives treatment that is the "indubitable equivalent" of the claim.

   If a class of unsecured claims rejects a plan, the plan may still be
confirmed so long as the plan provides that (i) each holder of a claim
included in the rejecting class receives or retains on account of the claim,
property that has a value, as of the effective date, equal to the allowed
amount of the claim, or (ii) the holder of any claim or interest that is
junior to the claims of that class will not receive or retain any property on
account of the junior claim or interest.

   If a class of equity interests rejects a plan, the plan may still be
confirmed so long as the plan provides that (i) each holder of an equity
interest included in the rejecting class receives or retains, on account of
that equity interest, property that has a value, as of the effective date,
equal to the greatest allowed amount of any fixed liquidation preference to
which the holder is entitled, any fixed redemption price to which the holder
is entitled, or the value of that equity interest, or (ii) the holder of any
equity interest that is junior to the interests of that class will not receive
or retain any property on account of that junior interest.

   If one or more classes of impaired Claims or equity Interests rejects the
Plan in these Chapter 11 Cases, the Bankruptcy Court will determine at the
Confirmation Hearing whether the Plan is fair and equitable with respect to,
and does not discriminate against, any rejecting impaired class. The Debtors
reserve the right (a) to undertake to have the Bankruptcy Court confirm the
Plan under section 1129(b) of the Bankruptcy Code, (b) to reallocate
distribution of assets to Claims and Interests if necessary to obtain entry of
the Confirmation Order, and (c) to amend the Plan to the extent necessary to
obtain entry of the Confirmation Order.

                                      X.

                           ALTERNATIVES TO THE PLAN

   The Debtors believe that the Plan provides the Debtors' creditors and
equity security holders with the earliest and greatest possible value that can
be realized on their respective Claims and Interests. As discussed below, the
alternatives to confirmation of the Plan are the submission of an alternative
plan or plans of reorganization by any other party in interest or the
liquidation of the Debtors under the Bankruptcy Code and/or, with respect to
FNV Canada and FNV UK, the institution of insolvency proceedings in the
foreign countries in which each of the Debtors are incorporated.

                                      49
<PAGE>

   If the Plan is not accepted, other persons may have an opportunity to file
another plan of reorganization. The Debtors believe that no alternative plan
would result in distribution of greater value to creditors and stockholders
than that contemplated under the Plan, because any alternative plan would
involve greater feasibility risks, delay in confirmation, or litigation costs
than the Plan proposed at this time. Alternatively, a liquidation of the
Debtors could be conducted as described in Section IX.B of this Disclosure
Statement ("Best Interests of Unsecured Creditors"). For the reasons described
therein, the Debtors believe that the distributions to each impaired class of
creditors and stockholders under the Plan will be greater than the
distributions that might be received after a chapter 7 liquidation of the
Debtors.

   The Debtors believe that confirmation of the Plan is preferable to any
alternative mentioned above because the Plan maximizes the distributions to
all classes of creditors and stockholders and because any alternative to
confirmation will result in reduced recoveries and substantial delays in the
distribution of any recoveries available under such alternative.

                                      XI.

              CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN

   The following discussion summarizes certain federal income tax consequences
of the implementation of the Plan to the Debtors and certain holders of Claims
and Interests. The following summary does not address the federal income tax
consequences to holders whose Claims or Interests are entitled to
reinstatement or payment in full in Cash under the Plan, such as holders of
Allowed Administrative Claims, Allowed Professional Compensation and Expense
Reimbursement Claims, Allowed Other Priority Claims, Allowed Secured Claims,
Allowed General Unsecured Claims against the Debtors other than FNV Capital,
Allowed FNV Capital Intercompany Loans Claims and Allowed Interests (other
than Interests in FNV Group and FNV Trust).

   The following summary is based on the Tax Code, Treasury Regulations
promulgated thereunder, judicial decisions, and published administrative rules
and pronouncements of the IRS as in effect on the date hereof. Changes in such
rules or new interpretations thereof may have retroactive effect and could
significantly affect the federal income tax consequences described below.

   The federal income tax consequences of the Plan are complex and are subject
to significant uncertainties. The Debtors have not requested a ruling from the
IRS or an opinion of counsel with respect to any of the tax aspects of the
Plan. Thus, no assurance can be given as to the interpretation that the IRS
will adopt concerning any issue discussed herein. In addition, this summary
does not address foreign, state or local tax consequences of the Plan, nor
does it purport to address the federal income tax consequences of the Plan to
special classes of taxpayers (such as foreign taxpayers, broker-dealers,
banks, mutual funds, insurance companies, financial institutions, small
business investment companies, regulated investment companies, tax-exempt
organizations, and investors in pass-through entities).

   This discussion assumes that the various debt and other arrangements to
which the Debtors are a party will be respected for federal income tax
purposes in accordance with their form. For example, it is assumed for
purposes hereof that the New Senior Notes will be respected as debt, and not
treated as equity, for federal income tax purposes. There is no assurance,
however, that the IRS will not take contrary positions to those described
herein or upon which this summary is based.

   Accordingly, the following summary of certain federal income tax
consequences is for informational purposes only and is not a substitute for
careful tax planning and advice based upon the individual circumstances
pertaining to a holder of a Claim or Interest. All holders of Claims and
Interests are urged to consult their own tax advisors for the federal, state,
local and other tax consequences applicable under the Plan.

                                      50
<PAGE>

A. Consequences to the Debtors

   FNV Group files a consolidated federal income tax return with the
affiliated group of corporations of which it is the common parent (the "FNV
Tax Group," and on and after the Effective Date, the "Reorganized FNV Tax
Group"), the members of which include all of the Debtors other than FNV Trust,
FNV UK and FNV Canada. The FNV Tax Group has reported a consolidated net
operating loss ("NOL") carryforward for federal income tax purposes of
approximately $220 million for the taxable year ended December 31, 1999, and
expects to report additional NOLs of approximately $250 million for the
taxable year ended December 31, 2000. Approximately $48 million of these NOL
carryforwards are subject to existing limitations under the Tax Code and
Treasury Regulations as a result of prior ownership changes. In addition, the
amount of such NOL carryforwards remains subject to adjustment by the IRS.

   As discussed below, the NOL carryforwards, and possibly certain other tax
attributes, of the FNV Tax Group may be significantly reduced or eliminated or
otherwise restricted upon the implementation of the Plan.

 1. Cancellation of Debt

   The Tax Code provides that a debtor in a bankruptcy case must reduce
certain of its tax attributes--such as NOL carryforwards, current year NOLs,
tax credits and tax basis in assets--by the amount of any cancellation of debt
("COD"). COD is the amount by which the indebtedness discharged exceeds any
consideration given in exchange therefor, subject to certain statutory or
judicial exceptions that can apply to limit the amount of COD (such as where
the payment of the cancelled debt would have given rise to a tax deduction).
To the extent the amount of COD exceeds the tax attributes available for
reduction, the excess COD is simply forgiven. Although existing authorities
appear to support the position that any reduction in tax attributes generally
should occur on a separate company basis, even though the respective debtors
file a consolidated federal income tax return, the IRS has, in certain cases,
asserted the contrary position. Consequently, if the Debtors choose to apply
the attribute reduction on a separate company basis, there is no assurance
that the IRS would not challenge such position.

   As a result of the Plan's treatment of Allowed General Unsecured Claims
against FNV Capital as well as the Plan's treatment of Allowed TOPrS
Interests, the Reorganized FNV Tax Group is expected to realize significant
COD. The extent of such COD and resulting tax attribute reduction will depend,
in part, on the amount of Cash and the "issue price" of the New Senior Notes
(as determined for federal income tax purposes) distributed in exchange for
such Claims and Interests.

   It is possible that the Reorganized FNV Tax Group may incur COD in excess
of any consolidated NOL carryforwards and other credit and loss carryforwards
attributable on a separate company basis to Reorganized FNV Capital; as a
consequence, Reorganized FNV Capital's tax basis in its assets, effective as
of the beginning of the taxable year following the taxable year in which the
Effective Date occurs, would be reduced. If advantageous, the Reorganized FNV
Tax Group could elect to reduce the basis of depreciable property prior to any
reduction in NOL carryforwards. In addition, as discussed above, the
Reorganized FNV Tax Group may take the position (or may be required to report)
that tax attributes, such as NOLs and credits, are reduced on a consolidated
(rather than separate company) basis. In any event, however, it is expected
that the COD generated by the Plan may significantly reduce (or, possibly,
eliminate) the Reorganized FNV Tax Group's NOLs and credit carryovers, and it
is possible that there could also be a reduction in the tax basis of
Reorganized FNV Capital's assets.

 2. Limitation on NOL Carryforwards and Other Tax Attributes

   If, following the implementation of the Plan, the Reorganized FNV Tax Group
retains consolidated NOLs (and carryforwards thereof) and/or certain other tax
attributes, in either case allocable to periods prior to the Effective Date,
the use of those attributes will be subject to the application of Section 382
of the Tax Code unless the special bankruptcy exception discussed below
applies.

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<PAGE>

   Under Section 382, if a corporation undergoes an "ownership change" and the
corporation does not qualify for (or elects out of) the special bankruptcy
exception discussed below, the amount of its pre-change losses that may be
utilized to offset future taxable income is, in general, subject to an annual
limitation. Such limitation also may apply to certain losses or deductions
which are "built-in" (i.e., economically accrued but unrecognized for tax
purposes) as of the date of the ownership change that are subsequently
recognized. In general, an "ownership change" is a more than 50 percentage
point cumulative change in ownership during the relevant testing period (not
to exceed three years). The Debtors currently anticipate that the issuance of
the Additional Group Common Stock to the Berkadia Parties pursuant to the Plan
will constitute an ownership change of the FNV Tax Group, and the Plan has
been fashioned in a manner intended to permit qualification under the special
bankruptcy exception if the Debtors determine such qualification to be
advisable or prudent.

   (a) General Section 382 Limitation. The amount of the annual limitation to
which a loss corporation may be subject (i) depends, in part, on whether the
corporation is in bankruptcy and the ownership change occurs pursuant to a
plan of reorganization confirmed by the bankruptcy court, and (ii) within the
context of an affiliated group of corporations that file a consolidated
federal income tax return, generally applies on a consolidated basis. As
discussed below, under a special bankruptcy exception, a corporation in
bankruptcy may also be able to avoid any annual limitation.

   In general, the amount of the annual limitation to which a corporation (or
consolidated group) would be subject would be equal to the product of (i) the
fair market value of the stock of the corporation (or, in the case of a
consolidated group, the common parent) immediately before the ownership change
(with certain adjustments) multiplied by (ii) the "long-term tax-exempt rate"
in effect for the month in which the ownership change occurs (4.96% for
ownership changes occurring in June 2001). If a corporation (or, presumably,
as in the case of the FNV Tax Group, its common parent) is in bankruptcy, and
the corporation undergoes the ownership change pursuant to a confirmed plan,
the fair market value of the corporation's (or its common parent's) stock
generally is determined immediately after (rather than before) the ownership
change. The Tax Code provides for the reduction of such value in certain
circumstances, including, for example, where the corporation has substantial
non-business assets.

   Any unused limitation may be carried forward, thereby increasing the annual
limitation in the subsequent taxable year. However, if the corporation (or
consolidated group) does not continue its historic business or use a
significant portion of its assets in a new business for two years after the
ownership change, the annual limitation resulting from the ownership change is
zero.

   (b) Built-In Gains and Losses. If a loss corporation (or consolidated
group) has a net unrealized built-in gain at the time of an ownership change
(determined by taking into account most assets and all items of "built-in"
income and deductions), any built-in gains recognized during the following
five years (up to the amount of the original net built-in gain) generally will
increase the annual limitation in the year recognized, such that the loss
corporation (or consolidated group) would be permitted to use its pre-change
losses against such built-in gain income in addition to its regular annual
allowance.

   On the other hand, if the loss corporation (or consolidated group) has a
net unrealized built-in loss at the time of an ownership change, then any
built-in losses--meaning losses that are built-in at the time of the ownership
change--that are recognized during the following five years (up to the amount
of the original net built-in loss) generally will be treated as a pre-change
loss and will be subject to the annual limitation in the same fashion as a
pre-change NOL carryforward. In addition, although this net built-in loss rule
generally applies to consolidated groups on a consolidated basis, any
corporation that joined the consolidated group within the preceding five years
may have to be excluded from the group computation and tested for a net built-
in loss on a separate company basis. Accordingly, even though a consolidated
group of corporations may not have a net unrealized built-in loss on an
overall group basis, the group may have a net unrealized built-in loss if
certain members of the group are required to be excluded. Additionally, if the
excluded member has a net built in loss when tested on a separate company
basis, any subsequently recognized built-in losses of such corporation may be
subject to a more restrictive annual limitation based on the separate value of
such member.

                                      52
<PAGE>

   A loss corporation's (or consolidated group's) net unrealized built-in gain
or loss generally will be deemed to be zero unless it is greater than the
lesser of (i) $10 million or (ii) 15% of the fair market value of its gross
assets (with certain adjustments) immediately before the ownership change.

   At this time, the Debtors do not expect that the FNV Tax Group will emerge
from the Plan with a net unrealized built-in loss, although it is possible
that the FNV Tax Group will, in fact, emerge with an unrealized built-in loss
and/or that one or more members of the FNV Tax Group which joined such group
within the last five years may emerge with a net unrealized built-in loss as a
result of being tested on a separate company basis, as described above. If the
FNV Tax Group emerges from the Plan with little or no unrealized built-in
loss, or no NOLs, the Section 382 limitation on NOLs and net unrealized built-
in losses would be largely irrelevant. However, given that, prior to the
Effective Date, the Debtors cannot be certain of these conclusions, due in
part to the inability to anticipate the amount of COD attributable to the Plan
and the difficulties inherent in attempting to estimate the fair market value
of the FNV Tax Group's assets as of a date in the future, the Plan has been
fashioned in a manner intended to permit qualification under the following
special bankruptcy exception if the Debtors determine such qualification to be
advisable or prudent.

   (c) Special Bankruptcy Exception. An exception to the general annual
limitation described above (including the built-in gain and loss rules)
applies where the stockholders and/or qualified creditors of a debtor retain
or receive (other than for new value) at least 50% of the vote and value of
the stock of the reorganized debtor pursuant to a confirmed bankruptcy plan.
Under this exception, a debtor's pre-change losses are not limited on an
annual basis (although they are subject to reduction in certain circumstances
not expected to be relevant here). However, if this exception applies, any
further ownership change of the debtor within a two-year period will preclude
the debtor's utilization of any pre-change losses at the time of the
subsequent ownership change against future taxable income.

   The Debtors intend that, if determined by the Debtors to be advisable or
prudent, the Plan will be adjusted to permit qualification for this exception.
The statute does not address whether this exception can be applied on a
consolidated basis or only on a separate company basis. Accordingly, it is
possible that only any pre-change losses attributable to FNV Group itself
(rather than to the other members of the FNV Tax Group) may be able to benefit
from this exception. If the exception were applicable only to FNV Group
itself, it appears that the pre-change losses--i.e., NOLs and net unrealized
built-in losses, if any--attributable to the other members of the FNV Tax
Group would be subject to the annual limitation rules described above,
determined as if FNV Group had not qualified for this exception.

 3. Alternative Minimum Tax

   In general, an alternative minimum tax ("AMT") is imposed on a
corporation's alternative minimum taxable income at a 20% rate to the extent
that such tax exceeds the corporation's regular federal income tax. For
purposes of computing taxable income for AMT purposes, certain tax deductions
and other beneficial allowances are modified or eliminated. In particular,
even though a corporation otherwise might be able to offset all of its taxable
income for regular tax purposes by available NOL carryforwards, only 90% of a
corporation's taxable income for AMT purposes may be offset by available NOL
carryforwards (as computed for AMT purposes).

   In addition, if a corporation (or consolidated group) undergoes an
"ownership change" within the meaning of Section 382 and is in a net
unrealized built-in loss position on the date of the ownership change, the
corporation's (or group's) aggregate tax basis in its assets would be reduced
for certain AMT purposes to reflect the fair market value of such assets as of
the change date. The application of this provision is unaffected by whether
the special bankruptcy exception to the annual limitation (and built-in gain
and loss) rules of Section 382 applies.

   Any AMT that a corporation pays generally will be allowed as a
nonrefundable credit against its regular federal income tax liability in
future taxable years when the corporation is no longer subject to the AMT.

                                      53
<PAGE>

 4. Issuance of the New Senior Notes

   It is expected that the New Senior Notes will be treated as issued with
original issue discount ("OID"). See "Consequences to Holders of Certain
Claims--Ownership and Disposition of the New Senior Notes," below. Any such
OID should be amortizable by Reorganized FNV Group utilizing the constant
interest method, and deductible as interest, subject, among other things, to
the application of any special limitations on interest deductibility, such as
the applicable high-yield discount obligation ("AHYDO") rules of Section
163(e)(5) of the Tax Code.

   The New Senior Notes will be treated as AHYDOs if, among other
requirements, their yield to maturity is at least five percentage points over
the applicable federal rate in effect for the calendar month in which such
notes are issued (4.96% compounded semiannually for the month of June 2001)
and the notes have significant OID (in general, where there is unamortized OID
as of the end of the fifth year after issuance that exceeds the amount of one
year's interest, both actual and imputed). The FNV Group will not be able to
determine whether the New Senior Notes will be treated as AHYDOs until after
they have been issued, at which time their issue price can be established.

   If the New Senior Notes are treated as AHYDOs, a portion of the interest
deduction otherwise allowable as OID would be disallowed, and the balance of
such deduction would be deferred until actually paid in cash. The disallowed
portion of any interest deduction otherwise allowable as OID on an AHYDO is
that portion, if any, of the total OID multiplied by a fraction, the numerator
of which is equal to the "disqualified yield" (i.e., the excess of the yield
to maturity of the notes over the sum of the applicable federal rate for the
calendar month in which the notes are issued plus six percentage points) and
the denominator of which is equal to the total yield to maturity of the notes.

B. Consequences to Holders of Certain Claims

 1. Consequences to Holders of Allowed Convenience Claims

   Pursuant to the Plan, a holder of an Allowed Convenience Claim will receive
payment in full in Cash, not to exceed $25,000, in satisfaction of its Claim.

   In general, each holder of such an Allowed Convenience Claim will recognize
gain or loss in an amount equal to the difference between (i) the amount of
Cash received by such holder in satisfaction of its Claim (other than any
Claim for accrued but unpaid interest) and (ii) the holder's adjusted tax
basis in its Claim (other than any Claim for accrued but unpaid interest).

   Where gain or loss is recognized by a holder, the character of such gain or
loss as long-term or short-term capital gain or loss or as ordinary income or
loss will be determined by a number of factors, including the tax status of
the holder, whether the Claim constitutes a capital asset in the hands of the
holder and how long it has been held, whether the Claim was acquired at a
market discount, and whether and to what extent the holder previously had
claimed a bad debt deduction.

   In general, to the extent that any amount of Cash received by a holder of
an Allowed Convenience Claim is received in satisfaction of accrued interest
during its holding period, such amount will be taxable to the holder as
interest income (if not previously included in the holder's gross income).
Conversely, a holder generally recognizes a deductible loss to the extent any
accrued interest or OID was previously included in its gross income and is not
paid in full. Pursuant to the Plan, all distributions in respect of a Claim
will be allocated first to the principal amount of such Claim, as determined
for federal income tax purposes, and thereafter, to the remaining portion of
such Claim, if any. However, there is no assurance that such allocation would
be respected by the IRS for federal income tax purposes. Each holder of an
Allowed Convenience Claim is urged to consult its tax advisor regarding the
allocation of consideration and the deductibility of accrued but unpaid
interest or OID for tax purposes.

                                      54
<PAGE>

 2. Consequences to Holders of Allowed General Unsecured Claims (other than
    Allowed Convenience Claims) against FNV Capital

   Pursuant to the Plan, holders of Allowed General Unsecured Claims (other
than Allowed Convenience Claims) against FNV Capital will be entitled to
receive Cash and New Senior Notes in satisfaction of their Claims.

   The following discussion assumes, as is likely the case, that, with respect
to holders of Allowed Claims who are also holders of Allowed Secondary
Liability Claims in respect of the same underlying obligation, amounts
received in respect of each Claim will be treated, for federal income tax
purposes, as payment on a single obligation represented by the underlying
Claim. Accordingly, no specific reference will be made hereafter to Secondary
Liability Claims.

   (a) Gain or Loss. In general, each holder of an Allowed General Unsecured
Claim (other than an Allowed Convenience Claim) against FNV Capital should
recognize gain or loss in an amount equal to the difference between (x) the
"amount realized" by the holder in satisfaction of its Claim (exclusive of any
Claim for accrued but unpaid interest) and (y) the holder's adjusted tax basis
in its Claim (exclusive of any Claim for accrued but unpaid interest). The
"amount realized" by a holder of such an Allowed General Unsecured Claim will
equal the sum of the amount of any Cash and the "issue price" of any New
Senior Notes received for such Claim. See "Treatment of Interest and Original
Issue Discount," below. For a discussion of the tax consequences relating to
Claims for accrued interest, see "Distribution in Discharge of Accrued
Interest," below.

   Where gain or loss is recognized by a holder, the character of such gain or
loss as long-term or short-term capital gain or loss or as ordinary income or
loss will be determined by a number of factors, including the tax status of
the holder, whether the Claim constitutes a capital asset in the hands of the
holder and how long it has been held, whether the Claim was acquired at a
market discount, and whether and to what extent the holder previously had
claimed a bad debt deduction.

   The tax basis in a New Senior Note received by the holder of an Allowed
General Unsecured Claim against FNV Capital will equal the "issue price" of
such note. The holding period for such New Senior Note generally will begin
the day following the issuance of such note.

   (b) Distribution in Discharge of Accrued Interest. Pursuant to the Plan,
all distributions in respect of a Claim (other than the distribution of
interest on Allowed General Unsecured Claims (other than Allowed Convenience
Claims) against FNV Capital) will be allocated first to the principal amount
of such Claim, as determined for federal income tax purposes, and thereafter,
to the remaining portion of such Claim, if any. However, there is no assurance
that such allocation would be respected by the IRS for federal income tax
purposes. In general, to the extent that any amount received (whether stock,
cash, or other property) by a holder of a debt is received in satisfaction of
accrued interest during its holding period, such amount will be taxable to the
holder as interest income (if not previously included in the holder's gross
income). Conversely, a holder generally recognizes a deductible loss to the
extent any accrued interest or OID was previously included in its gross income
and is not paid in full. Each holder of a Claim is urged to consult its tax
advisor regarding the allocation of consideration and the deductibility of
accrued but unpaid interest or OID for tax purposes.

   (c) Ownership and Disposition of the New Senior Notes. Pursuant to the
Plan, the New Senior Notes will bear stated interest annually at a rate of
7.5%, and the stated principal and interest on such notes will be payable in
full in 8 years to the extent not paid earlier. Payments of stated principal
and interest will be made semi-annually if and to the extent that Reorganized
FNV Group has available cash for such purposes under the terms of the New
Senior Notes. In addition, the New Senior Notes will provide for payments of
Contingent Interest (over and above the amount of stated principal and
interest) if and to the extent that FNV Group has available cash for such
purposes under the terms of the New Senior Notes at the requisite payment
dates (not to exceed 15 years from the Effective Date).

                                      55
<PAGE>

   (i) Treatment of Interest and Original Issue Discount. The New Senior Notes
should be treated as issued with OID to the extent projected payments provided
for under the New Senior Notes (as described below) exceed the "issue price"
of the New Senior Notes. In general, the "issue price" of the New Senior Notes
will be equal to their fair market value at the time of issuance. Thus, for
federal income tax purposes, the stated interest and Contingent Interest on
the New Senior Notes will be treated as components of the OID, and will not be
recognized as income separately.

   Because mandatory pre-payments of both stated interest and principal are
contingent upon cash flow, and payments of Contingent Interest beyond such
amounts (up to $100 million) may also be made depending upon cash flow, the
New Senior Notes will be governed by the Treasury Regulations applicable to
contingent payment debt instruments. In general, under such Treasury
Regulations, each holder of a New Senior Note will be required to accrue the
OID in respect of its New Senior Note under the noncontingent bond method, and
include such amount in its gross income as interest, over the term of the note
based on the constant interest method and the yield to maturity of the note,
as described below. Accordingly, each holder generally will be required to
include amounts in gross income in advance of the payment of Cash in respect
of such income.

   Under the Treasury Regulations, the yield to maturity will be the
comparable yield at which Reorganized FNV Group would issue a comparable fixed
rate debt instrument with terms and conditions similar to those of the New
Senior Notes, including the level of subordination, term, timing of payments
and general market conditions. No adjustment is made for the riskiness of the
contingencies or the liquidity of the debt instrument. The comparable yield
must be determined in good faith to be a reasonable yield for Reorganized FNV
Group.

   In addition, Reorganized FNV Group must determine a projected payment
schedule based on the reasonably expected value of the contingent payments as
of the issue date but adjusted to the extent necessary to produce the
comparable yield, taking into account the issue price and the terms of the New
Senior Notes. Further adjustments may be required to the projected payment
schedule if and when a payment becomes fixed more than six months prior to the
projected payment date.

   The adjusted issue price of each New Senior Note at the beginning of each
annual accrual period will be multiplied by the New Senior Note's comparable
yield and the daily portions of the amount so determined will constitute the
interest to be included in the holder's income for the days in the period
during which the New Senior Note was held.

   If, during any taxable year, a holder of a New Senior Note receives actual
payments with respect to such note for that taxable year that in the aggregate
exceed the total amount of projected payments for that taxable year, such
holder will have additional interest income for the taxable year equal to such
excess. If actual payments for the taxable year are in the aggregate less than
the amount of projected payments for that taxable year, such holder will first
reduce its interest income (i.e., its accrual of the OID) on the New Senior
Note for that taxable year and then, in the event such reduction would produce
a "negative" amount for the year, such negative amount will be (i) currently
deductible as an ordinary loss to the extent of any prior interest included in
income with respect to the note (which was not previously reversed by similar
negative amounts in prior years), and (ii) otherwise carried forward and taken
into account in determining the next year's adjustment.

   If, upon sale, exchange or retirement of a New Senior Note, after taking
into account the determination of any interest accrual for such year, the
above adjustment would produce a "negative" amount, such amount will reduce
such holder's amount realized on such sale, exchange or retirement. See "Sale,
Exchange or Redemption of the New Senior Notes," below.

   A holder's tax basis in a New Senior Note generally will be increased by
the interest previously accrued thereon based on the comparable yield and
decreased by the projected amount of any contingent payments previously made
on such New Senior Note to the holder, whether denominated as interest or
principal.

   The Debtors will be required to provide the projected payment schedule to
the holders of New Senior Notes in accordance with the Treasury Regulations.
Such projected payment schedule will be binding upon each holder

                                      56
<PAGE>

of a New Senior Note, unless such schedule is unreasonable and a holder
determines its own projected payment schedule and explicitly discloses to the
IRS such determination and the reason therefor in its federal income tax
return for the taxable year that includes the acquisition date of the New
Senior Notes. In addition, the Debtors will also provide a Form 1099 to
holders of New Senior Notes reflecting OID accruals, as required by law.

   If the comparable yield as determined by Reorganized FNV Group is
successfully challenged by the IRS, the redetermined yield could be materially
greater or less than the comparable yield provided by the company. Moreover,
in such event, the projected payment schedule could differ materially from
that previously determined.

   The comparable yield and the schedule of projected payments are not
determined for any purpose other than for the determination of a holder's
interest (OID) accruals and adjustments thereof in respect of the New Senior
Notes for federal income tax purposes, and do not constitute a projection or
representation regarding the actual amounts payable on the New Senior Notes.

   (ii) High-Yield Discount Obligation Rules. As discussed above (see
"Consequences to the Debtors--Issuance of the New Senior Notes," above),
certain debt obligations that are issued with substantial OID and have a
maturity of over five years are treated as applicable high yield discount
obligations (AHYDOs) within the meaning of the Tax Code. With respect to such
obligations, a portion of a corporate holder's income with respect to such
accrued OID may be treated as a dividend for purposes of the dividend-
received-deduction to the extent such amount would be so treated if it had
been a distribution made by the issuer with respect to its stock (that is, to
the extent the issuer has sufficient earnings and profits such that a
distribution in respect of stock would constitute a dividend for federal
income tax purposes and, presumably, subject to certain holding period and
taxable income requirements and other limitations on the dividend-received-
deduction).

   (iii) Sale, Exchange or Redemption of the New Senior Notes. In general, any
gain realized upon the disposition of a New Senior Note will be treated as
interest income, while any loss will be treated as ordinary or capital
depending upon the circumstances. See "Treatment of Interest and Original
Issue Discount," above. Each holder of an Allowed General Unsecured Claim
(other than a Convenience Claim) against FNV Capital is urged to consult its
own tax advisors regarding the tax consequences of the disposition of a New
Senior Note.

 3. Consequences to Holders of Debt Securities (S) 510(b) Claims and Equity
Securities (S) 510(b) Claims

   Pursuant to the Plan, holders of Allowed Debt Securities (S) 510(b) Claims
against FNV Capital, Allowed Debt Securities (S) 510(b) Claims against FNV
Mezzanine and Allowed Equity Securities (S) 510(b) Claims against FNV Group
will be entitled to receive New Group Preferred Stock, Additional Mezzanine
Common Stock, and Additional Group Common Stock, respectively, in satisfaction
of their Claims.

   The federal income tax consequences of the treatment of Allowed Debt
Securities (S) 510(b) Claims and Allowed Equity Securities (S) 510(b) Claims
are complex and depend, in part, upon whether the holder continues to hold the
debt or equity underlying such holder's securities' law Claim and whether the
holder of such Claim is the original holder thereof. Each holder of a Debt
Securities (S) 510(b) Claim or Equity Securities (S) 510(b) Claim is urged to
consult its tax advisor regarding the tax consequences of the treatment of its
Claim, including whether the receipt of consideration pursuant to the Plan
will be treated as a taxable or tax-free exchange, and the tax consequences of
the ownership and disposition of any New Group Preferred Stock, Additional
Mezzanine Common Stock, and Additional Group Common Stock received.

 4. Withholding

   All distributions to holders of Claims under the Plan are subject to any
applicable withholding (including employment tax withholding). Under federal
income tax law, interest, dividends, and other reportable payments may, under
certain circumstances, be subject to "backup withholding" at a rate of 31%.
Backup withholding generally applies if the holder (a) fails to furnish its
social security number or other taxpayer identification number ("TIN"), (b)
furnishes an incorrect TIN, (c) fails properly to report interest or
dividends, or (d) under

                                      57
<PAGE>

certain circumstances, fails to provide a certified statement, signed under
penalty of perjury, that the TIN provided is its correct number and that it is
not subject to backup withholding. Backup withholding is not an additional
tax, but merely an advance payment, which may be refunded to the extent it
results in an overpayment of tax. Certain persons are exempt from backup
withholding, including, in certain circumstances, corporations and financial
institutions.

C. Consequences to Holders of Allowed Interests

 1. Holders of Interests in FNV Group

   Pursuant to the Plan, holders of Allowed Interests in FNV Group will retain
their Interests subject to certain modifications to the charter provisions
with respect to such Interests. The changes to the charter provisions may
constitute a "recapitalization" for federal income tax purposes. Whether or
not so treated, the holder of an Allowed Interest in FNV Group generally
should not recognize gain or loss as a result of such charter modifications
and should retain its aggregate tax basis and holding period in its Interest.

 2. Holders of Allowed TOPrS Interests

   Pursuant to the Plan, holders of Allowed TOPrS Interests will receive Cash
and New Senior Notes in exchange for their Interests. For federal income tax
purposes, FNV Trust has been treated as a disregarded entity and the holders
of the Allowed TOPrS Interests have been treated as owning a pro rata share of
the Group Subordinated Debentures held by FNV Trust. Accordingly, for federal
income tax purposes, holders of Allowed TOPrS Interests will be treated as
exchanging their proportionate share of the Group Subordinated Debentures in
exchange for Cash and New Senior Notes.

   The federal income tax consequences of the Plan to holders of Allowed TOPrS
Interests depend, in part, on whether the Group Subordinated Debentures and
the New Senior Notes constitute "securities" for federal income tax purposes.
The term "security" is not defined in the Tax Code or in the regulations
issued thereunder and has not been clearly defined by judicial decisions. The
determination of whether a particular debt constitutes a "security" depends on
an overall evaluation of the nature of the debt. One of the most significant
factors considered in determining whether a particular debt is a security is
its original term. In general, debt obligations issued with a weighted average
maturity at issuance of five years or less (e.g., trade debt and revolving
credit obligations) do not constitute securities, whereas debt obligations
with a weighted average maturity at issuance of ten years or more constitute
securities. However, the characterization of debt obligations with a weighted
average maturity greater than five years but fewer than ten years is unclear.
Each holder of an Allowed TOPrS Interest is urged to consult its tax advisor
regarding the status of the underlying Group Subordinated Debentures and the
New Senior Notes as "securities."

   (a) Treatment of Exchange as Recapitalization. If, for federal income tax
purposes, both the Group Subordinated Debentures and the New Senior Notes
constitute "securities," the receipt by a holder of an Allowed TOPrS Interest
of New Senior Notes in partial satisfaction of the holder's allocable share of
the Group Subordinated Debentures would be a "recapitalization" for federal
income tax purposes. As a consequence, in general, the holder would not
recognize loss upon such exchange, but would recognize gain (computed as
described below, under C.2.(b), Treatment of Exchange as Non-
Recapitalization), if any, to the extent of Cash received in the exchange,
excluding the portion thereof allocable to accrued but unpaid dividends. (See
the discussion below for the tax consequences of the receipt of Cash in
respect of accrued and unpaid prepetition and postpetition dividends
attributable to the Allowed TOPrS Interests.) The character and timing of such
gain would also be determined in accordance with the principles discussed
below with respect to treatment of the exchange as a non-recapitalization.

   If the exchange by holders of Allowed TOPrS Interests is treated as a
"recapitalization," a holder will have an aggregate tax basis in the New
Senior Notes received equal to the holder's adjusted tax basis in its Allowed
TOPrS Interest (including any claim for accrued but unpaid dividends)
increased by any gain or income

                                      58
<PAGE>

recognized in respect thereof, and decreased by the amount of Cash received
(including to the extent allocable to accrued and unpaid dividends) and any
deductions claimed in respect of any previously accrued and unpaid dividends.
A holder's holding period for New Senior Notes in this instance will include
that holder's holding period for the Allowed TOPrS Interest.

   (b) Treatment of Exchange as Non-Recapitalization. On the other hand, it is
possible that, for federal income tax purposes, either the Group Subordinated
Notes or the New Senior Notes will not be treated as "securities." In that
case, holders of Allowed TOPrS Interests who receive Cash and New Senior Notes
will recognize gain or loss in an amount equal to the difference between (i)
the "amount realized" by the holder in satisfaction of its Interest (other
than any claim for accrued but unpaid dividends), and (ii) the holder's
adjusted tax basis in its Interest (excluding the portion, if any, of such tax
basis allocable to accrued but unpaid dividends). (See the discussion below
for the tax consequences of the receipt of Cash in respect of accrued and
unpaid dividends attributable to the Allowed TOPrS Interests.)

   For these purposes, the "amount realized" by a holder will equal the sum of
the Cash and the "issue price" of any New Senior Notes received by the holder
(see discussion above concerning the "issue price" of the New Senior Notes,
captioned Treatment of Interest and Original Issue Discount). Where gain or
loss is recognized by a holder, the character of such gain or loss as long-
term or short-term capital gain or loss, or as ordinary income or loss, will
be determined by a number of factors, including the tax status of the holder,
whether the claim constitutes a capital asset in the hands of the holder and
how long it has been held, whether the claim was acquired at a market
discount, and whether and to what extent the holder had previously claimed a
bad debt deduction. A holder's tax basis in any New Senior Notes received will
equal the "issue price" of such notes. If the exchange is not treated as a
recapitalization, the holding period for New Senior Notes generally will begin
the day following the issuance thereof.

   (c) Distribution in Discharge of Accrued Dividends. As noted above, holders
of the Allowed TOPrS Interests are treated, for tax purposes, as holding
direct interests in the underlying Group Subordinated Debentures; as such,
payments under the Plan for accrued and unpaid dividends should be treated as
payments to holders of the underlying interest. Pursuant to the Plan, holders
of Allowed TOPrS Interests will receive a Cash distribution equal to 75% of
the amount of accrued and unpaid dividends attributable to such Interests.
There is no assurance that such allocation would be respected by the IRS. In
general, to the extent that any amount received (whether Cash or other
property) by a holder of debt is received in satisfaction of accrued interest
during its holding period, such amount will be taxable to the holder as
interest income (if not previously included in the holder's gross income).
Conversely, a holder generally recognizes a deductible loss to the extent any
accrued interest claimed was previously included in its gross income and is
not paid in full. Each holder of an Interest is urged to consult its tax
advisor regarding the allocation of consideration and the deductibility of
unpaid dividends (or interest) for tax purposes.

   (d) Market Discount. A holder that purchased its Interest from a prior
holder at a market discount may be subject to the market discount rules of the
Tax Code. Under those rules, assuming that the holder has made no election to
amortize the market discount into income on a current basis with respect to
any market discount instrument, any gain recognized on the exchange of its
claim (subject to a de minimis rule) generally would be characterized as
ordinary income to the extent of the accrued market discount on such claim as
of the date of the exchange.

   To the extent that a holder's Interest constitutes a "security" and is
exchanged in a "recapitalization" for federal income tax purposes, the
Treasury Department is expected to promulgate regulations that will provide
that any accrued "market discount" not treated as ordinary income upon such
exchange would carry over to the nonrecognition property received in the
exchange. If such regulations are promulgated and applicable to the Plan (and
arguably even without issuance of regulations), any holder of an Interest that
is exchanged in a "recapitalization" would carry over any accrued market
discount incurred in respect of such Interest to the New Senior Notes
received, such that any gain recognized by the holder upon a subsequent
disposition of such New Senior Notes would be treated as ordinary income to
the extent of any accrued market discount not previously included in income.

                                      59
<PAGE>

   (e) Ownership and Disposition of the New Senior Notes. Generally, the
federal income tax consequences to a holder of an Allowed TOPrS Interest of
owning and disposing of a New Senior Note will be the same as those applicable
to the holders of Allowed General Unsecured Claims (subject to the discussion
above regarding market discount in the event the exchange by holders of such
Interests is treated as a "recapitalization"). For a discussion of the tax
treatment of owning and disposing of the New Senior Notes, see the discussion
above captioned Ownership and Disposition of the New Senior Notes.

   THE FOREGOING SUMMARY HAS BEEN PROVIDED FOR INFORMATIONAL PURPOSES ONLY.
ALL HOLDERS OF CLAIMS AND INTERESTS ARE URGED TO CONSULT THEIR TAX ADVISORS
CONCERNING THE FEDERAL, STATE, LOCAL, AND OTHER TAX CONSEQUENCES APPLICABLE
UNDER THE PLAN.

                                     XII.

                                  CONCLUSION

   This Disclosure Statement has been prepared and presented for the purpose
of permitting all creditors and stockholders to make an informed judgment to
accept or reject the Plan. Please read this Disclosure Statement and the Plan
in full and consult with your counsel if you have questions.

                                      60
<PAGE>

   If the Plan is confirmed, its terms and conditions will be binding on all
creditors and stockholders whether or not they accept the Plan and whether or
not they receive distributions under the Plan. The Debtors believe that
acceptance of the Plan by creditors and stockholders is in their best interest
and that confirmation of the Plan will provide the best recovery for creditors
and stockholders.

                                          The FINOVA Group Inc., et al.,
                                           Debtors

                                                  /s/ William J. Hallinan
                                          By: _________________________________
                                                    William J. Hallinan
                                            Authorized Officer for the Debtors

                                          Richards, Layton & Finger, P.a.

                                                  /s/ Deborah E. Spivack
                                          By: _________________________________
                                             Mark D. Collins (No. 2981)
                                             Daniel J. DeFranceschi (No. 2732)
                                             Deborah E. Spivack (No. 3220)
                                             One Rodney Square
                                             P. O. Box 551
                                             Wilmington, Delaware 19899
                                             Telephone: (302) 658-6541
                                             Facsimile: (302) 658-6548

                                             -and-

                                             Jonathan M. Landers
                                             Janet M. Weiss
                                             M. Natasha Labovitz
                                             Thayer H. Thompson
                                             GIBSON, DUNN & CRUTCHER LLP
                                             200 Park Avenue
                                             New York, New York 10166-0193
                                             Telephone: (212) 351-4000
                                             Facsimile: (212) 351-4035

                                             Attorneys for Debtors

Dated: June 13, 2001
Wilmington, Delaware
<PAGE>

                                                                       EXHIBIT A

                         UNITED STATES BANKRUPTCY COURT
                              DISTRICT OF DELAWARE

In re:                                    Chapter 11

The FINOVA Group Inc.,                    Case Nos. 01-0697 (PJW) through
FINOVA Capital Corporation,               01-0705 (PJW)

FINOVA (Canada) Capital Corporation,
FINOVA Capital plc,                       Jointly Administered
FINOVA Loan Administration Inc.,          Case No. 01-0697 (PJW)
FINOVA Mezzanine Capital Inc.,
FINOVA Portfolio Services, Inc.,
FINOVA Technology Finance, Inc., and
FINOVA Finance Trust,

Debtors.

            THIRD AMENDED AND RESTATED JOINT PLAN OF REORGANIZATION
               OF DEBTORS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

RICHARDS, LAYTON & FINGER, P.A.           GIBSON, DUNN & CRUTCHER LLP

Mark D. Collins (No. 2981)                Jonathan M. Landers
Daniel J. DeFranceschi (No. 2732)         Janet M. Weiss
Deborah E. Spivack (No. 3220)             M. Natasha Labovitz
One Rodney Square                         The Met Life Building
P. O. Box 551                             200 Park Avenue
Wilmington, Delaware 19899                New York, New York 10166-0193

Telephone: (302) 658-6541                 Telephone: (212) 351-4000
Facsimile: (302) 658-6548                 Facsimile: (212) 351-4035

                              Counsel for Debtors
                              Dated: June 13, 2001

                                       1
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
 <C>            <S>                                                         <C>
  INTRODUCTION............................................................    7

  ARTICLE I. DEFINED TERMS AND RULES OF INTERPRETATION....................    7
    A.  Scope of Definitions..............................................    7
    B.  Definitions.......................................................    7
        1.1.    Additional Group Common Stock.............................    7
        1.2.    Additional Mezzanine Common Stock.........................    7
        1.3.    Administrative Bar Date...................................    7
        1.4.    Administrative Claim......................................    7
        1.5.    Affiliate.................................................    7
        1.6.    Allowed...................................................    7
        1.7.    Allowed Claim.............................................    7
        1.8.    Allowed Interest..........................................    8
        1.9.    Ballot....................................................    8
        1.10.   Bank Claims...............................................    8
        1.11.   Bank Credit Agreements....................................    8
        1.12.   Bankruptcy Code...........................................    8
        1.13.   Bankruptcy Court..........................................    8
        1.14.   Bankruptcy Rules..........................................    8
        1.15.   Bar Date..................................................    8
        1.16.   Bar Date Order............................................    8
        1.17.   Berkadia..................................................    8
        1.18.   Berkadia Credit Agreement.................................    8
        1.19.   Berkadia Loan.............................................    8
        1.20.   Berkadia Loan Documents...................................    8
        1.21.   Berkadia Parties..........................................    9
        1.22.   Berkshire.................................................    9
        1.23.   Business Day..............................................    9
        1.24.   Cash or $.................................................    9
        1.25.   Chapter 11 Case...........................................    9
        1.26.   Claim.....................................................    9
        1.27.   Class.....................................................    9
        1.28.   Commitment Letter.........................................    9
        1.29.   Confirmation..............................................    9
        1.30.   Confirmation Date.........................................    9
        1.31.   Confirmation Hearing......................................    9
        1.32.   Confirmation Order........................................    9
        1.33.   Convenience Claim.........................................    9
        1.34.   Contingent Interest.......................................    9
        1.35.   Creditor..................................................    9
        1.36.   Cure Amount...............................................    9
        1.37.   Debt Securities...........................................    9
        1.38.   Debt Securities Claims....................................    9
        1.39.   Debt Securities (S) 510(b) Claims.........................    9
        1.40.   Debt Securities Indentures................................   10
        1.41.   Dilutive Issuance.........................................   10
        1.42.   Debtor....................................................   10
        1.43.   Disbursing Agent..........................................   10
        1.44.   Disclosure Statement......................................   10
</TABLE>

                                       2
<PAGE>

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
 <C>            <S>                                                         <C>
        1.45.   Disputed Claim............................................   10
        1.46.   Distribution Address......................................   10
        1.47.   Distribution Date.........................................   10
        1.48.   Distribution Record Date..................................   10
        1.49.   Effective Date............................................   10
        1.50.   Equity Securities (S) 510(b) Claims.......................   10
        1.51.   Estate....................................................   10
        1.52.   Excess Amount.............................................   10
        1.53.   Final Order...............................................   10
        1.54.   FNV Canada................................................   11
        1.55.   FNV Capital...............................................   11
        1.56.   FNV Capital Intercompany Loans............................   11
        1.57.   FNV Group.................................................   11
        1.58.   FNV Loan..................................................   11
        1.59.   FNV Mezzanine.............................................   11
        1.60.   FNV Portfolio.............................................   11
        1.61.   FNV Technology............................................   11
        1.62.   FNV Trust.................................................   11
        1.63.   FNV UK....................................................   11
        1.64.   Fully Diluted Basis.......................................   11
        1.65.   General Unsecured Claim...................................   11
        1.66.   Group Subordinated Debentures.............................   11
        1.67.   Group Subordinated Debenture Claim........................   11
        1.68.   Group Subordinated Debenture Indenture....................   12
        1.69.   Indenture Trustees........................................   12
        1.70.   Intercompany Note.........................................   12
        1.71.   Intercompany Claim........................................   12
        1.72.   Interest..................................................   12
        1.73.   IRS.......................................................   12
        1.74.   Leucadia..................................................   12
        1.75.   Leveraged Leases..........................................   12
        1.76.   Letter Agreement..........................................   12
        1.77.   Lien......................................................   12
        1.78.   Loan Commitments..........................................   12
        1.79.   Management Agreement......................................   12
        1.80.   New Corporate Documents...................................   12
        1.81.   New Group Preferred Stock.................................   12
        1.82.   New Senior Notes..........................................   12
        1.83.   New Senior Notes Indenture................................   12
        1.84.   Objection.................................................   12
        1.85.   Official Committees.......................................   12
        1.86.   Ordinary Course of Business Order.........................   13
        1.87.   Ordinary Course Professional..............................   13
        1.88.   Ordinary Course Professional Order........................   13
        1.89.   Other Priority Claim......................................   13
        1.90.   Person....................................................   13
        1.91.   Petition Date.............................................   13
        1.92.   Plan......................................................   13
        1.93.   Plan Supplement...........................................   13
        1.94.   Priority Tax Claim........................................   13
        1.95.   Professionals.............................................   13
</TABLE>

                                       3
<PAGE>

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
 <C>            <S>                                                       <C>
        1.96.   Professional Fees.......................................   13
        1.97.   Pro Rata Share..........................................   13
        1.98.   Reinstated or Reinstatement.............................   14
        1.99.   Reorganized.............................................   14
        1.100.  Restructuring Documents.................................   14
        1.101.  Restructuring Transactions..............................   14
        1.102.  Retirement Agreements...................................   14
        1.103.  Retirement Plan.........................................   14
        1.104.  Rights Plan.............................................   14
        1.105.  Schedules...............................................   14
        1.106.  Secondary Liability Claim...............................   14
        1.107.  Secured Claim...........................................   14
        1.108.  Securities Litigation...................................   14
        1.109.  Tax Code................................................   15
        1.110.  TOPrS...................................................   15
        1.111.  TOPrS Interests.........................................   15
        1.112.  Unclaimed Property......................................   15
        1.113.  Voting Deadline.........................................   15
        1.114.  Voting Record Date......................................   15
    C.  Rules of Interpretation.........................................   15
    D.  Computation of Time.............................................   15

  ARTICLE II. ADMINISTRATIVE EXPENSES AND PRIORITY TAX CLAIMS...........   15
        2.1.    Administrative Claims...................................   15
        2.2.    Bar Date for Administrative Claims......................   16
                Professional Compensation and Expense Reimbursement
        2.3.    Claims..................................................   16
        2.4.    Priority Tax Claims.....................................   16

  ARTICLE III. CLASSIFICATION OF CLAIMS AND INTERESTS...................   17
        3.1.    FNV Group Plan..........................................   17
        3.2.    FNV Capital Plan........................................   17
        3.3.    FNV Canada Plan.........................................   17
        3.4.    FNV UK Plan.............................................   18
        3.5.    FNV Loan Plan...........................................   18
        3.6.    FNV Mezzanine Plan......................................   18
        3.7.    FNV Portfolio Plan......................................   18
        3.8.    FNV Technology Plan.....................................   19
        3.9.    FNV Trust Plan..........................................   19

  ARTICLE IV. IDENTIFICATION OF IMPAIRED CLASSES OF CLAIMS AND
   INTERESTS............................................................   19
        4.1.    Unimpaired Classes of Claims and Interests..............   19
        4.2.    Impaired Classes of Claims and Interests................   20
        4.3.    Impairment Dispute......................................   20

  ARTICLE V. TREATMENT OF CLAIMS AND INTERESTS..........................   21
        5.1.    FNV Group Plan..........................................   21
        5.2.    FNV Capital Plan........................................   22
        5.3.    FNV Canada Plan.........................................   22
        5.4.    FNV UK Plan.............................................   23
        5.5.    FNV Loan Plan...........................................   23
        5.6.    FNV Mezzanine Plan......................................   24
        5.7.    FNV Portfolio Plan......................................   25
        5.8.    FNV Technology Plan.....................................   25
</TABLE>

                                       4

<PAGE>

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
 <C>            <S>                                                        <C>
        5.9.    FNV Trust Plan..........................................    26
        5.10.   Debtor's Election of Claim Treatment....................    27
                Special Provisions Regarding Treatment of Certain
        5.11.   Claims..................................................    27

  ARTICLE VI. THE RESTRUCTURING TRANSACTION AND THE EFFECT OF THE PLAN
   ON CLAIMS AND INTERESTS..............................................    29
                Continued Corporate Existence and Vesting of Assets in
        6.1.    the Reorganized Debtors.................................    29
        6.2.    The Restructuring Transactions..........................    29
        6.3.    Corporate Governance, Directors and Officers,
                Employment-Related Agreements and Compensation
                Programs................................................    30
        6.4.    Obtaining Cash and Securities for Plan Distributions and
                Transfers of Funds and Securities Among the Debtors.....    32
        6.5.    Preservation of Rights of Action........................    32
        6.6.    Effect of Plan on Certain Securities....................    32
        6.7.    Effectuating Documents; Further Transactions; Exemption
                from Certain Transfer Taxes.............................    32

  ARTICLE VII. EXECUTORY CONTRACTS AND UNEXPIRED LEASES.................    33
                Executory Contracts and Unexpired Leases to be
        7.1.    Rejected................................................    33
        7.2.    Executory Contracts and Unexpired Leases to be Assumed..    33
        7.3.    Special Executory Contract and Unexpired Lease Issues
                and Treatment of the Retirement Plan....................    34

  ARTICLE VIII. PROVISIONS REGARDING VOTING AND CONFIRMATION
   REQUIREMENTS.........................................................    35
        8.1.    Voting of Claims and Interests..........................    35
        8.2.    Confirmability and Severability of Plan.................    35
        8.3.    Nonconsensual Confirmation..............................    36

  ARTICLE IX. IMPLEMENTATION OF THE PLAN................................    36
        9.1.    General Distribution Provisions.........................    36
                Method of Making Distributions to Disputed Claims and
        9.2.    Disputed Interests......................................    38
        9.3.    Estimation of Disputed Claims...........................    38
        9.4.    Treatment of Unclaimed Property.........................    38
                Surrender of Instruments, Securities and Other
        9.5.    Documentation...........................................    38

  ARTICLE X. DISCHARGE, TERMINATION, INJUNCTION AND RELEASES............    39
        10.1.   Discharge of Debtors....................................    39
        10.2.   Injunction Related to the Discharge.....................    39
        10.3.   Release of Liens........................................    40
        10.4.   Term of Bankruptcy Injunction or Stays..................    40
        10.5.   Releases................................................    40

  ARTICLE XI. CONDITIONS TO CONFIRMATION AND EFFECTIVE DATE.............    41
        11.1.   Conditions to Confirmation..............................    41
        11.2.   Conditions to the Effective Date........................    41
        11.3.   Waiver of Conditions....................................    42
        11.4.   Effect of Failure of Conditions.........................    42

  ARTICLE XII. ADMINISTRATIVE PROVISIONS................................    42
        12.1.   Retention of Jurisdiction...............................    42

  ARTICLE XIII. MISCELLANEOUS PROVISIONS................................    43
        13.1.   Plan Supplement.........................................    43
        13.2.   Termination of Official Committees......................    43
                Employment and Payment of Debtors' Professionals After
        13.3.   Effective Date..........................................    43
</TABLE>

                                       5
<PAGE>

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
 <C>                 <S>                                                   <C>
        13.4.        Limitation of Liability............................    43
        13.5.        Amendment or Modification of Plan..................    44
        13.6.        Severability.......................................    44
        13.7.        Inconsistency......................................    44
        13.8.        Revocation or Withdrawal of Plan...................    44
        13.9.        Governing Law......................................    44
        13.10.       Binding Effect.....................................    45
        13.11.       Headings...........................................    45
        13.12.       Notices............................................    45

 Exhibit 1.11     -- Bank Credit Agreements
 Exhibit 1.37     -- Debt Securities
 Exhibit 1.69     -- Indenture Trustees
 Exhibit 1.75     -- Leveraged Leases
 Exhibit 1.81     -- New Group Preferred Stock Term Sheet
                     Berkadia Loan Term Sheet (Loan Documents to be
 Exhibit 6.2(a)   -- provided in Plan Supplement)
                     New Senior Notes Term Sheet (Indenture to be
 Exhibit 6.2(c)(1)-- provided in Plan Supplement)
 Exhibit 6.2(c)(2)-- Intercompany Note Term Sheet (Intercompany Note to
                     be provided in Plan Supplement)
 Exhibit 6.3(a)   -- New Corporate Documents (to be provided in Plan
                     Supplement)
 Exhibit 6.3(b)   -- Board of Directors for FNV Group (to be provided in
                     Plan Supplement)
 Exhibit 6.3(c)   -- Board of Directors for other Debtors (to be
                     provided in Plan Supplement)
 Exhibit 7.1      -- List of Rejected Executory Contracts/Unexpired
                     Leases (to be provided in Plan Supplement)
 Exhibit 7.2      -- List of Assumed Executory Contracts/Unexpired
                     Leases (to be provided in Plan Supplement)
</TABLE>

                                       6
<PAGE>

                                 INTRODUCTION

  The FINOVA Group Inc. and the other debtors in the above-captioned jointly
administered chapter 11 cases (collectively, the "Debtors") propose the
following third amended and restated plan of reorganization (the "Plan") for
the resolution of the Debtors' outstanding creditor claims and equity
interests. Reference is made to the Debtors' third amended and restated
disclosure statement, filed contemporaneously with the Plan (the "Disclosure
Statement"), for a discussion of the Debtors' history, businesses, properties,
results of operations and projections for future operations, and for a summary
and analysis of the Plan and certain related matters. The Debtors are
proponents of the Plan within the meaning of section 1129 of the Bankruptcy
Code, 11 U.S.C. (S) 1129. All holders of claims against and equity interests
in the Debtors are encouraged to read the Plan and the Disclosure Statement in
their entirety before voting to accept or reject the Plan.

                                  ARTICLE I.

                   DEFINED TERMS AND RULES OF INTERPRETATION

A. Scope of Definitions

  For purposes of this Plan, except as expressly provided or unless the
context otherwise requires, all capitalized terms not otherwise defined shall
have the meanings ascribed to them in Article I of this Plan. Any term used in
this Plan that is not defined herein, but is defined in the Bankruptcy Code or
the Bankruptcy Rules, will have the meaning ascribed to that term in the
Bankruptcy Code or the Bankruptcy Rules.

B. Definitions

  1.1. Additional Group Common Stock means the common stock of Reorganized FNV
Group to be issued pursuant to the Plan, which common stock shall have a par
value of $0.01 per share.

  1.2. Additional Mezzanine Common Stock means the common stock of Reorganized
FNV Mezzanine that may be issued pursuant to the Plan, which common stock
shall have a par value of $1.00 per share.

  1.3. Administrative Bar Date shall have the meaning set forth in Section
2.2.

  1.4. Administrative Claim means a Claim for costs and expenses of
administration allowed under sections 503(b), 507(b) or 1114(e)(2) of the
Bankruptcy Code, including: (a) the actual and necessary costs and expenses
incurred after the Petition Date of preserving the respective Estates and
operating the businesses of the Debtors; (b) the costs of curing defaults
under leases and executory contracts assumed pursuant to Article VII;
(c) compensation for legal, financial advisory, accounting and other services
and reimbursement of expenses awarded or allowed under section 330(a) or 331
of the Bankruptcy Code; (d) all fees and charges assessed against the Estates
under chapter 123 of title 28, United States Code, 28 U.S.C. (S)(S) 1911-1930;
and (e) all Intercompany Claims arising on or after the Petition Date.

  1.5. Affiliate means an "affiliate," as defined in section 101(2) of the
Bankruptcy Code.

  1.6. Allowed means an Allowed Claim or an Allowed Interest in a particular
Class or specified category.

  1.7. Allowed Claim means

    (a) a Claim against a Debtor, proof of which was filed on or before the
  Bar Date, as to which no Objection has been timely interposed; or

    (b) a Claim against a Debtor, for which no proof of Claim or motion for
  allowance of Claim was filed on or before the Bar Date, that has been or
  hereafter is listed by a Debtor in its Schedules (as such Schedules may be
  amended from time to time) as liquidated in amount and not disputed or
  contingent as to liability, and as to which no Objection has been timely
  interposed; or

                                       7
<PAGE>

    (c) any other Claim against a Debtor, to the extent that such Claim has
  been allowed (i) by a Final Order (including any such order that is termed
  "Stipulation and Order"); or (ii) pursuant to the express terms of this
  Plan.

  1.8. Allowed Interest means an Interest that (a) was registered or listed as
of the Distribution Record Date in a stock register that is maintained by or
on behalf of a Debtor and (b) either (i) has not been the subject of any
Objection or (ii) has been allowed (A) by a Final Order (including any such
order that is termed "Stipulation and Order") or (B) pursuant to the express
terms of this Plan.

  1.9. Ballot means the form or forms distributed by the Debtors to each
holder of an impaired Claim or impaired Interest on which the holder is to
indicate acceptance or rejection of this Plan.

  1.10. Bank Claims means, collectively, all Claims asserted pursuant to the
Bank Credit Agreements.

  1.11. Bank Credit Agreements means, collectively, all prepetition credit
agreements as listed and defined on Exhibit 1.11.

  1.12. Bankruptcy Code means title 11 of the United States Code, as amended
from time to time, as applicable to the Chapter 11 Cases as filed on the
Petition Date. No amendment to the Bankruptcy Code enacted after the Petition
Date shall be applicable to these Chapter 11 Cases except to the extent that a
statute expressly provides that the amendment shall have retroactive effect to
cases pending on the Petition Date.

  1.13. Bankruptcy Court means the United States Bankruptcy Court for the
District of Delaware or, if such court ceases to exercise jurisdiction over
any Chapter 11 Case or proceeding thereof, such court or adjunct thereof
having jurisdiction over such case or proceeding in lieu of the United States
Bankruptcy Court for the District of Delaware.

  1.14. Bankruptcy Rules means, collectively, the Federal Rules of Bankruptcy
Procedure and the local rules and general orders of the Bankruptcy Court, as
amended from time to time, as applicable to the Chapter 11 Cases as filed on
the Petition Date. No amendment to the Bankruptcy Rules effected after the
Petition Date shall be applicable to these Chapter 11 Cases except to the
extent that a statute or rule expressly provides that the amendment shall have
retroactive effect to cases pending on the Petition Date.

  1.15. Bar Date means the applicable deadline by which a proof of Claim,
proof of Interest or motion for allowance of Claim must have been or must be
filed, as established by this Plan or an order of the Bankruptcy Court
including, but not limited to, the Bar Date Order and the Confirmation Order.
The term "Bar Date" shall include any applicable deadline for filing
Administrative Claims, including Claims for Professional Fees, or Claims
arising from rejection of executory contracts and unexpired leases.

  1.16. Bar Date Order means an order or orders to be entered by the
Bankruptcy Court setting procedures and a deadline for the filing of proofs of
Claim, including any order regarding Administrative Claims, and, if
appropriate, proofs of Interest.

  1.17. Berkadia means Berkadia LLC, a Delaware limited liability company
whose members are Berkshire and Leucadia or their respective subsidiaries.

  1.18. Berkadia Credit Agreement shall have the meaning ascribed thereto in
Section 6.2.

  1.19. Berkadia Loan shall have the meaning ascribed thereto in Section
6.2(a).

  1.20. Berkadia Loan Documents means the collective reference to the Berkadia
Credit Agreement and any and all exhibits, schedules, instruments or other
documents, including guarantees and pledge and security agreements, as well as
all other collateral documents, created or executed pursuant thereto.

                                       8
<PAGE>

  1.21. Berkadia Parties means Berkadia, Berkshire and/or Leucadia (or their
respective subsidiaries, as shall be designated by Berkadia, Berkshire and
Leucadia).

  1.22. Berkshire means Berkshire Hathaway Inc., a Delaware corporation.

  1.23. Business Day means any day, other than a Saturday, Sunday or legal
holiday, as such term is defined in Bankruptcy Rule 9006(a).

  1.24. Cash or $ means legal tender of the United States of America and
equivalents thereof, except as specified in Section 9.1(c).

  1.25. Chapter 11 Case means the case of any Debtor under chapter 11 of the
Bankruptcy Code, as currently being administered in the Bankruptcy Court under
Chapter 11 Case Nos. 01-0697 (PJW) through 01-0705 (PJW).

  1.26. Claim means a "claim," as defined in section 101(5) of the Bankruptcy
Code, against any Debtor.

  1.27. Class means a category of holders of Claims or Interests, as described
in Article III.

  1.28. Commitment Letter means that certain Commitment Letter among
Berkshire, Leucadia, Berkadia, FNV Group and FNV Capital, dated February 26,
2001, including all documents annexed thereto, as amended and modified by
letter agreements dated May 2, 2001, May 30, 2001 and June 10, 2001 and by the
Letter Agreement, as approved by the Bankruptcy Court on June 13, 2001, and as
the Commitment Letter and annexed documents may be or may have been further
amended, modified or supplemented from time to time.

  1.29. Confirmation means issuance by the Bankruptcy Court of the
Confirmation Order.

  1.30. Confirmation Date means the date on which the Bankruptcy Court issues
the Confirmation Order.

  1.31. Confirmation Hearing means the hearing held by the Bankruptcy Court to
consider Confirmation, as such hearing may be adjourned or continued from time
to time.

  1.32. Confirmation Order means the order of the Bankruptcy Court confirming
the Plan pursuant to section 1129 of the Bankruptcy Code.

  1.33. Convenience Claim means (a) an Allowed General Unsecured Claim (other
than a Bank Claim or Debt Securities Claim) in an amount equal to or less than
$25,000 or (b) an Allowed General Unsecured Claim (other than a Bank Claim or
Debt Securities Claim) in an amount greater than $25,000 where the holder of
such claim has made an election to reduce the Allowed amount of such Claim to
$25,000 or less pursuant to Section 5.11(d).

  1.34. Contingent Interest means the Pro Rata Share of an aggregate of up to
$100 million that the holders of the New Senior Notes may have the right to
receive pursuant to the terms of the New Senior Notes.

  1.35. Creditor means the holder of a Claim.

  1.36. Cure Amount means the amount necessary to cure defaults in any assumed
executory contract or unexpired lease pursuant to section 365 of the
Bankruptcy Code.

  1.37. Debt Securities means the prepetition debt instruments listed on
Exhibit 1.37, including all public notes issued by FNV Capital.

  1.38. Debt Securities Claims means, collectively, all Claims (other than
Claims within the scope of section 510(b) of the Bankruptcy Code) asserted by
holders of Debt Securities or pursuant to Debt Securities Indentures.

  1.39. Debt Securities (S) 510(b) Claims means, collectively, (a) all Claims
asserted in the Securities Litigation on account of or for the benefit of the
current or former holders of Debt Securities and (b) all other

                                       9
<PAGE>

Claims within the scope of section 510(b) of the Bankruptcy Code asserted by,
on account of, or for the benefit of current or former holders of Debt
Securities, whether or not outstanding on the Petition Date.

  1.40. Debt Securities Indentures means, collectively, all indentures
pursuant to which the Debt Securities were issued.

  1.41. Dilutive Issuance shall have the meaning ascribed thereto in Section
5.11(f).

  1.42. Debtor means any of the above-captioned debtors and debtors in
possession.

  1.43. Disbursing Agent means each Reorganized Debtor in its individual case,
or its designee, or, in the case of FNV Trust, the Indenture Trustee for the
Group Subordinated Debentures.

  1.44. Disclosure Statement means the disclosure statement relating to the
Plan including all exhibits and schedules thereto and all documents
incorporated by reference therein, in the form approved by the Bankruptcy
Court pursuant to section 1125 of the Bankruptcy Code, as the same may be
amended, modified or supplemented.

  1.45. Disputed Claim means a Claim that (a) is not Allowed and (b) has not
been disallowed or otherwise expunged by a Final Order.

  1.46. Distribution Address shall mean the address to which a particular
distribution is to be mailed pursuant to Section 9.1(a).

  1.47. Distribution Date, when used with respect to each Claim and Interest,
means the date of, or as soon as practicable after, the later of (a) the
Effective Date and (b) 30 days after the date upon which the Claim or Interest
becomes an Allowed Claim or Allowed Interest.

  1.48. Distribution Record Date means the Confirmation Date.

  1.49. Effective Date means the fifth Business Day, or such other day as
shall be determined by the Debtors and Berkadia (in consultation with the
Official Committees), after the satisfaction or waiver of all of the
conditions specified in Section 11.2 other than those conditions to be
satisfied or waived on the Effective Date.

  1.50. Equity Securities (S) 510(b) Claims means, collectively, (a) all
Claims asserted in the Securities Litigation on account of or for the benefit
of current or former holders of Interests or equity securities of any Debtor
or predecessor thereof and (b) all other Claims within the scope of section
510(b) of the Bankruptcy Code asserted by, on account of, or for the benefit
of current or former holders of Interests or equity securities of any Debtor
or predecessor thereof, whether or not outstanding on the Petition Date.

  1.51. Estate means, as to each Debtor, the estate created for that Debtor in
its Chapter 11 Case pursuant to section 541 of the Bankruptcy Code.

  1.52. Excess Amount means, with respect to Allowed Debt Securities (S)
510(b) Claims and Allowed Equity Securities (S) 510(b) Claims against any
Debtor, the dollar amount, if any, that is the sole responsibility of that
Debtor, in excess of, apart from or in connection with amounts which are or
may be payable by, or obligations under, insurance policies available to
satisfy such claims.

  1.53. Final Order means an order or judgment of the Bankruptcy Court, or
other court of competent jurisdiction, administrative agency or other
tribunal, as entered on the docket in any Chapter 11 Case or such other court,
(a) which has not been reversed, stayed, modified or amended, and as to which
the time to appeal, seek certiorari or move for reargument or rehearing has
expired, and no appeal, petition for certiorari, or motion for reargument or
rehearing has been timely taken, or (b) as to which any appeal has been taken,
any petition for certiorari or motion for reargument or rehearing has been
filed, and such appeal, petition or motion has been conclusively withdrawn or
resolved by the highest court to which the order or judgment was appealed or
from which certiorari, reargument or rehearing was sought.

                                      10
<PAGE>

  1.54. FNV Canada means FINOVA (Canada) Capital Corporation, a Canadian
corporation, the Debtor in Chapter 11 Case No. 01-0699 (PJW).

  1.55. FNV Capital means FINOVA Capital Corporation, a Delaware corporation,
the Debtor in Chapter 11 Case No. 01-0698 (PJW).

  1.56. FNV Capital Intercompany Loans means (a) the note made by FNV UK in
favor of FNV Capital pursuant to that certain agreement dated on December 22,
1999 between FNV Capital and FNV UK and (b) the note made by FNV UK in favor
of FNV Capital pursuant to that certain agreement dated March 19, 1992 among
Greyhound Financial Corporation (predecessor-in-interest to FNV Capital) and
Greyhound Bank plc and Greyhound Financial Services Limited (predecessors-in-
interest to FNV UK).

  1.57. FNV Group means The FINOVA Group Inc., a Delaware corporation, the
Debtor in Chapter 11 Case No. 01-0697 (PJW).

  1.58. FNV Loan means FINOVA Loan Administration Inc., a Utah corporation,
the Debtor in Chapter 11 Case No. 01-0701 (PJW).

  1.59. FNV Mezzanine means FINOVA Mezzanine Capital Inc., a Tennessee
corporation, the Debtor in Chapter 11 Case No. 01-0702 (PJW).

  1.60. FNV Portfolio means FINOVA Portfolio Services, Inc., an Arizona
corporation, the Debtor in Chapter 11 Case No. 01-703 (PJW).

  1.61. FNV Technology means FINOVA Technology Finance, Inc., a Delaware
corporation, the Debtor in Chapter 11 Case No. 01-704 (PJW).

  1.62. FNV Trust means FINOVA Finance Trust, a Delaware business trust, the
Debtor in Chapter 11 Case No. 01-705 (PJW).

  1.63. FNV UK means FINOVA Capital plc, a United Kingdom corporation, the
Debtor in Chapter 11 Case No. 01-700 (PJW).

  1.64. Fully Diluted Basis means, with respect to the calculation of a
percentage of stock ownership at any date, such calculation performed (a)
assuming the exercise of all options, warrants and rights of conversion or
exchange that were not cancelled or expunged by the Plan and that are
outstanding or in effect as of the Effective Date and as of the date of
calculation, provided, however, that for the purposes of this calculation no
effect shall be given to potential issuances of Additional Common Stock to
Securities Litigation claimants, unless, until and except to the extent that
such stock is actually issued, and (b) giving effect to all actual issuances
of stock pursuant to the Plan, whether on or after the Effective Date, but not
giving effect to any post-Effective Date issuance of stock not expressly
contemplated and required by the Plan.

  1.65. General Unsecured Claim means a Claim that is not secured by a valid,
perfected and enforceable Lien against property of a Debtor (including,
without limitation, any Debt Securities Claim, Bank Claim or Intercompany
Claim), other than an Administrative Claim, a Debt Securities (S) 510(b)
Claim, an Equity Securities (S) 510(b) Claim, a Group Subordinated Debentures
Claim, an Other Priority Claim, or a Priority Tax Claim.

  1.66. Group Subordinated Debentures means the 5 1/2% Convertible
Subordinated Debentures due 2016 issued by FNV Group pursuant to the Group
Subordinated Debenture Indenture.

  1.67. Group Subordinated Debenture Claim means, collectively, all claims
asserted pursuant to the Group Subordinated Debentures.

                                      11
<PAGE>

  1.68. Group Subordinated Debenture Indenture means the Indenture between FNV
Group and Fleet National Bank, as Trustee, dated as of December 11, 1996
providing for the issuance of 5 1/2% Convertible Subordinated Debentures due
2016.

  1.69. Indenture Trustees means, collectively, all indenture trustees as
listed and defined on Exhibit 1.69, or their successors.

  1.70. Intercompany Note shall have the meaning set forth in Section 6.2(c).

  1.71. Intercompany Claim means a Claim held by a Debtor or an Affiliate that
arose, either before or after the Petition Date, under any intercompany
transaction as reflected in the Debtors' books and records.

  1.72. Interest means the rights of the holders of shares of equity
securities of any Debtor authorized, issued and outstanding as of the Petition
Date.

  1.73. IRS means the Internal Revenue Service.

  1.74. Leucadia means Leucadia National Corporation, a New York corporation.

  1.75. Leveraged Leases means the leases set forth on the attached Exhibit
1.75, as such Exhibit may be amended from time to time before Confirmation.

  1.76. Letter Agreement means the letter agreement dated June 13, 2001 among
Berkadia, Berkshire, Leucadia, FNV Group and FNV Capital modifying, subject to
Bankruptcy Court approval, certain terms of the Berkadia Loan and the New
Senior Notes.

  1.77. Lien has the meaning set forth in section 101(37) of the Bankruptcy
Code; provided, however, that a lien avoided in accordance with sections 544,
545, 546, 547, 548 or 549 of the Bankruptcy Code shall not constitute a Lien.

  1.78. Loan Commitments means the commitments by each of the Debtors or any
of their Affiliates to make loans, advances or other financial accommodations
to their customers.

  1.79. Management Agreement means that certain Second Amended and Restated
Management Services Agreement, dated as of June 10, 2001, among FNV Group,
Leucadia and Leucadia International Corporation, a Utah corporation, as
amended, supplemented or otherwise modified.

  1.80. New Corporate Documents shall have the meaning set forth in Section
6.3(a).

  1.81. New Group Preferred Stock means preferred stock of Reorganized FNV
Group that may be issued to holders of Allowed Claims in Class FNV Capital-5
(Debt Securities (S) 510(b) Claims against FNV Capital), which shall have the
terms and rights set forth in Exhibit 1.81.

  1.82. New Senior Notes means the secured notes to be issued by FNV Group
pursuant to the New Senior Notes Indenture substantially in the form provided
therein.

  1.83. New Senior Notes Indenture means the indenture to be entered into
between FNV Group and the trustee named therein, substantially in the form of
Exhibit 6.2(c).

  1.84. Objection means an objection to the allowance of a Claim or Interest
interposed within the applicable period of limitation fixed by the Plan, the
Bankruptcy Code, the Bankruptcy Rules or the Bankruptcy Court.

  1.85. Official Committees means the committees of creditors and equity
security holders that are or may be appointed in the Chapter 11 Cases pursuant
to section 1102 of the Bankruptcy Code, as the same may be constituted from
time to time.

                                      12
<PAGE>

  1.86. Ordinary Course of Business Order means the Order (1) Authorizing the
Debtors to (A) Renew, Increase and/or Fund Prepetition Commitments, (B) Honor
Existing Servicing Obligations in the Ordinary Course of Business, (C) Sell or
Lease Assets in the Ordinary Course of Business, (D) Manage Loan Portfolios in
the Ordinary Course of Business, (E) Make Intercompany Loans, Payments and
Transfers in the Ordinary Course of Business and (F) Pay Prepetition Claims to
Preserve, Enhance and Maximize the Value of Estate Assets and/or to Effectuate
Approved Transactions and (2) Authorizing and Directing Banks to Honor Checks
and Fund Transfer Requests Relating to Such Approved Transactions, dated March
7, 2001.

  1.87. Ordinary Course Professional means a professional retained by a Debtor
pursuant to the Ordinary Course Professional Order.

  1.88. Ordinary Course Professional Order means the Order Superseding March
7, 2001 Order Pursuant to 11 U.S.C. (S)(S) 105 and 327 Authorizing Retention
and Compensation of Professionals Utilized in Ordinary Course of Business,
dated March 30, 2001, and any subsequent amendments thereto or notices filed
pursuant thereto authorizing the Debtors to retain, employ and compensate
certain professionals in the ordinary course of the Debtors' businesses.

  1.89. Other Priority Claim means a Claim (or portion thereof), if any,
entitled to priority under section 507(a) of the Bankruptcy Code, other than a
Priority Tax Claim or an Administrative Claim.

  1.90. Person means any individual, entity, corporation, partnership, limited
liability company, limited liability partnership, joint venture, association,
joint stock company, estate, trust, unincorporated association or
organization, Official Committee, ad hoc committee, governmental agency or
political subdivision thereof, the United States Trustee, and any successors
or assigns of any of the foregoing.

  1.91. Petition Date means March 7, 2001, the date on which the Debtors
commenced the Chapter 11 Cases.

  1.92. Plan means this third amended and restated plan of reorganization for
each of the Debtors, to the extent applicable to any Debtor, and all exhibits
and schedules annexed hereto or referenced herein, as the same may be amended,
modified or supplemented.

  1.93. Plan Supplement means the supplement, containing copies of certain
exhibits or schedules to the Plan, which shall be filed with the Bankruptcy
Court pursuant to Section 13.1.

  1.94. Priority Tax Claim means any Claim of a governmental unit entitled to
priority under section 507(a)(8) of the Bankruptcy Code.

  1.95. Professionals means those Persons (a) employed pursuant to an order of
the Bankruptcy Court in accordance with sections 327 or 1103 of the Bankruptcy
Code and to be compensated for services pursuant to sections 327, 328, 329,
330 or 331 of the Bankruptcy Code, for which compensation and reimbursement
has been allowed by the Bankruptcy Court pursuant to section 503(b)(1) of the
Bankruptcy Code or (b) for which compensation and reimbursement has been
allowed by the Bankruptcy Court pursuant to section 503(b)(4) of the
Bankruptcy Code.

  1.96. Professional Fees means the fees for professional services rendered,
and expenses incurred in connection with such services, by Professionals.

  1.97. Pro Rata Share means the proportion that the amount of any Claim or
Interest in a particular Class bears to the aggregate amount of all Claims or
Interests in that Class, as of the date of determination, or, when used with
respect to an Allowed Claim or Allowed Interest, the proportion that the
amount of any Allowed Claim or Allowed Interest in a particular Class bears to
the aggregate amount of all Allowed Claims or Allowed Interests in that Class.

                                      13
<PAGE>

  1.98. Reinstated or Reinstatement means rendering a Claim or Interest
"unimpaired" within the meaning of section 1124 of the Bankruptcy Code.

  1.99. Reorganized means, when used with reference to a particular Debtor,
such Debtor on and after the Effective Date.

  1.100. Restructuring Documents means the collective reference to the
Commitment Letter and to the Berkadia Loan Documents, the New Senior Notes
Indenture, the Management Agreement, the Intercompany Note, and any and all
exhibits, schedules, instruments or other documents, including collateral
documents, created or executed pursuant thereto.

  1.101. Restructuring Transactions means the transactions described in
Section 6.2.

  1.102. Retirement Agreements means (i) existing ERISA-qualified pension
plans of any Debtor; (ii) existing unqualified Supplemental Employee
Retirement Plans of any Debtor, (iii) existing obligations of FNV UK under
individual pension arrangements with current or former employees, (iv)
employer obligations under existing 401(k) plans of any Debtor and (v)
existing retiree medical plans of any Debtor.

  1.103. Retirement Plan means The FINOVA Group Inc. Pension Plan, a tax
qualified defined benefit pension plan covered by Title IV of the Employee
Retirement Income Security Act ("ERISA"), as amended, 29 U.S.C. (S)(S)1301 et
seq. (1994 & Supp. IV 1988).

  1.104. Rights Plan means the Rights Plan of FNV Group dated as of February
15, 1992, as amended and restated as of September 14, 1995, as further amended
from time to time.

  1.105. Schedules means the Debtors' schedules of assets and liabilities and
statements of financial affairs, as they may be amended from time to time,
filed with the Bankruptcy Court pursuant to section 521 of the Bankruptcy
Code.

  1.106. Secondary Liability Claim means a Claim against a Debtor as a
guarantor of, or otherwise being jointly, severally, or secondarily liable
for, any contractual, tort or other obligation of another Debtor, including
any Claim based on: (a) guaranties of collection, payment or performance of an
obligation of another Debtor; (b) indemnity bonds, obligations to indemnify or
obligations to hold harmless; (c) performance bonds; (d) contingent
liabilities arising out of contractual obligations or out of undertakings
(including any assignment or other transfer) with respect to leases, operating
agreements or other similar obligations made or given by a Debtor relating to
the obligations or performance of another Debtor; (e) vicarious liability; or
(f) any other joint or several liability that any Debtor may have in respect
of any obligation of another Debtor that is the basis of a Claim.

  1.107. Secured Claim means any Claim that is (a) secured by a valid,
perfected and enforceable Lien on or against property of a Debtor's Estate,
but only to the extent of the value (as agreed to by the holder of such Claim
and the Debtor or as determined by a Final Order of the Bankruptcy Court
pursuant to section 506(a) of the Bankruptcy Code) of the Claim holder's
interest in the Estate's interest in the property securing the Claim or (b)
subject to setoff under section 553 of the Bankruptcy Code, but only to the
extent of the amount subject to setoff and only if a valid proof of secured
claim reflecting the setoff right is filed on or before the Bar Date.

  1.108. Securities Litigation means the following actions currently pending
against the Debtors and/or their current or former officers and directors for
alleged violations of securities laws and/or breaches of fiduciary duty: (i)
In re FINOVA Group Inc. Securities Litigation, No. CIV 00-619-PHX-SMM,
currently pending in the United States District Court for the District of
Arizona; (ii) Cartwright v. Sirrom Capital Corp., et al., No. CIV 01-158-PHX-
SMM, currently pending in the United States District Court for the District of
Arizona, consolidated for all purposes with In re FINOVA Group, Inc.
Securities Litigation; (iii) Sirrom Partners and Sirrom G-1 v. The FINOVA
Group Inc., et al., No. CIV 01-152-PHX-SMM, currently pending in the United
States District Court for the District of Arizona, consolidated for pretrial
purposes with In re FINOVA Group Inc. Securities Litigation; (iv) William Kass
v. Matthew M. Breyne, et al., No. 18306-NC, currently pending in the Court of
Chancery in

                                      14
<PAGE>

New Castle County, Delaware; (v) Cindy Burkholder, et al. v. Samuel L.
Eichenfield, et al., No. CIV 00-1737-PHX-LOA, currently pending in the United
States District Court for the District of Arizona; and, (vi) Ronald Benkler v.
George M. Miller, II, et al., No. 00C2630, currently pending in the Circuit
Court for the State of Tennessee, 20th Judicial District.

  1.109. Tax Code means the Internal Revenue Code of 1986, as amended.

  1.110. TOPrS means the outstanding Trust Originated Preferred Securities
issued by FNV Trust.

  1.111. TOPrS Interests means all equitable interests and legal or
contractual rights held by the holders of the TOPrS.

  1.112. Unclaimed Property shall have the meaning set forth in Section
9.4(a).

  1.113. Voting Deadline means August 1, 2001.

  1.114. Voting Record Date means June 13, 2001.

C. Rules of Interpretation

  For purposes of this Plan (1) any reference in the Plan to a contract,
instrument, release, indenture or other agreement or document being in a
particular form or on particular terms and conditions means that such document
shall be substantially in such form or substantially on such terms and
conditions, (2) any reference in the Plan to an existing exhibit or schedule
to the Plan or document referenced therein means such exhibit, schedule or
document as it may have been or may be amended, modified or supplemented, (3)
unless otherwise specified, all references in the Plan to Schedules, Exhibits,
Articles and Sections are references to Schedules, Exhibits, Articles and
Sections of or to the Plan, (4) the words "herein," "hereof," "hereunder,"
"hereto" and other words of similar import refer to the Plan in its entirety
rather than to a particular portion of the Plan, (5) whenever it appears
appropriate from the context, each term stated in the singular or the plural
includes the singular and the plural, (6) whenever it appears appropriate from
the context, each pronoun stated in the masculine, feminine or neuter includes
the masculine, feminine and neuter, (7) whenever it appears appropriate from
the context, each reference to a Debtor includes the applicable Reorganized
Debtor and (8) the rules of construction set forth in section 102 of the
Bankruptcy Code and in the Bankruptcy Rules shall apply.

D. Computation of Time

  In computing time prescribed or allowed by the Plan, unless otherwise
expressly provided, Bankruptcy Rule 9006(a) applies.

                                  ARTICLE II.

                ADMINISTRATIVE EXPENSES AND PRIORITY TAX CLAIMS

  The Claims treatments set forth below shall apply to the plans for each of
the Debtors.

  2.1. Administrative Claims. Each holder of an Allowed Administrative Claim
(other than a claim described in Section 2.3) against any Debtor shall
receive, at the sole option of the relevant Debtor, (a) payment on the
Distribution Date of Cash in an amount equal to the unpaid portion of such
Allowed Administrative Claim or (b) such other treatment as to which the
relevant Debtor and such Claim holder shall have agreed upon in writing;
provided, however, that Allowed Administrative Claims against a Debtor
representing liabilities incurred in the ordinary course of business during
the Chapter 11 Cases or liabilities arising under loans or advances to or
other obligations incurred by the Debtors that were authorized and approved by
the Bankruptcy Court shall be paid and performed by the appropriate
Reorganized Debtor in the ordinary course of business in accordance with the
terms and conditions of any agreements relating thereto.

                                      15
<PAGE>

  2.2. Bar Date for Administrative Claims. Each holder of an Administrative
Claim (other than a claim described in Section 2.3) against a Debtor shall
file a request for allowance and payment of such claim with the Bankruptcy
Court and serve such request upon counsel for the Debtors and each Official
Committee no later than thirty days after the Effective Date (the
"Administrative Bar Date"). Unless the Debtors object to an Administrative
Claim within thirty days after the Administrative Bar Date, such
Administrative Claim shall be deemed to be Allowed in the amount requested. In
the event that the Debtors object to an Administrative Claim, the Bankruptcy
Court shall determine the allowed amount of such Administrative Claim.
Notwithstanding the foregoing, no request for payment of an Administrative
Claim need be filed with respect to an Administrative Claim which is paid or
payable by a Debtor in the ordinary course of its business or for fees due to
the United States Trustee under chapter 123 of title 28 of the United States
Code, 28 U.S.C. (S)(S) 1911-1930.

  2.3. Professional Compensation and Expense Reimbursement Claims. Any Person
seeking an award by the Bankruptcy Court of an Allowed Administrative Claim on
account of Professional Fees or services rendered or reimbursement of expenses
incurred through and including the Effective Date under sections 327, 328,
330, 331, 503(b) and 1103 of the Bankruptcy Code, shall file a final
application for allowance of compensation for services rendered and
reimbursement of expenses incurred through the Confirmation Date no later than
the Administrative Bar Date (except to the extent that such Person is an
Ordinary Course Professional, in which case the procedures set forth in the
Ordinary Course Professional Order shall be followed). Objections to final
applications for payment of Professional Fees must be filed no later than 60
days after the Confirmation Date. To the extent that such an award is granted
by the Bankruptcy Court or allowed by the Ordinary Course Professional Order,
the requesting Person shall receive, (i) payment on the Distribution Date of
Cash in an amount equal to the amount allowed by the Bankruptcy Court or
Ordinary Course Professional Order, (ii) payment on such other terms as may be
mutually agreed upon by the holder of the Allowed Administrative Claim and the
applicable Debtor or (iii) payment in accordance with the terms of any
applicable administrative procedures order entered by the Bankruptcy Court.
All Professional Fees for services rendered in connection with the Chapter 11
Cases and the Plan after the Confirmation Date including, without limitation,
those relating to the occurrence of the Effective Date, the prosecution of
causes of action preserved hereunder and the resolution of Disputed Claims,
shall be paid by the applicable Debtor upon receipt of an invoice therefor, or
on such other terms as such Debtor may agree to, without the requirement of
further Bankruptcy Court authorization or entry of a Final Order.

  2.4. Priority Tax Claims. Each holder of an Allowed Priority Tax Claim
against a Debtor shall receive, at the sole option of the relevant Debtor: (a)
payment on the Distribution Date of Cash in an amount equal to the unpaid
portion of such Allowed Priority Tax Claim; (b) Cash payments over a period
not exceeding six years after the assessment of the tax on which such Claim is
based, totaling the principal amount of such Claim plus simple interest
accruing from the Effective Date, calculated at the effective interest rate
for 90-day securities obligations issued by the United States Treasury on the
Effective Date or, if no such securities were issued on the Effective Date, on
the date of issuance immediately preceding the Effective Date; (c) payment
upon such other terms determined by the Bankruptcy Court to provide the holder
of such Claim with deferred Cash payments having a value, as of the Effective
Date, equal to such Claim; or (d) such other treatment agreed to by the
applicable Debtor and the holder of such Claim.

                                      16
<PAGE>

                                 ARTICLE III.

                    CLASSIFICATION OF CLAIMS AND INTERESTS

  Pursuant to section 1122 of the Bankruptcy Code, set forth below is a
designation of classes of Claims against and Interests in each of the Debtors.
A Claim or Interest is placed in a particular Class for the purposes of voting
on the Plan and of receiving distributions pursuant to the Plan only to the
extent that such Claim or Interest is an Allowed Claim or Allowed Interest in
that Class and such Claim or Interest has not been paid, released or otherwise
settled prior to the Effective Date. In accordance with section 1123(a)(1) of
the Bankruptcy Code, Administrative Claims and Priority Tax Claims of the
kinds specified in sections 507(a)(1) and 507(a)(8), respectively, of the
Bankruptcy Code have not been classified and their treatment is set forth in
Article II.
<TABLE>
<S>                      <C>
  3.1. FNV Group Plan.

  (a) Class FNV Group-1.   Class FNV Group-1 consists of all Secured Claims
                           against FNV Group.

  (b) Class FNV Group-2.   Class FNV Group-2 consists of all Other Priority
                           Claims against FNV Group.

  (c) Class FNV Group-3.   Class FNV Group-3 consists of the Group Subordinated
                           Debenture Claims.

  (d) Class FNV Group-4.   Class FNV Group-4 consists of all General Unsecured
                           Claims, other than Convenience Claims, against FNV
                           Group.

  (e) Class FNV Group-5.   Class FNV Group-5 consists of all Convenience Claims
                           against FNV Group.

  (f) Class FNV Group-6.   Class FNV Group-6 consists of all Interests in FNV
                           Group.

  (g) Class FNV Group-7.   Class FNV Group-7 consists of all Equity Securities
                           (S) 510(b) Claims against FNV Group.

  3.2. FNV Capital Plan.

  (a) Class FNV Capital-1. Class FNV Capital-1 consists of all Secured Claims
                           against FNV Capital.

  (b) Class FNV Capital-2. Class FNV Capital-2 consists of all Other Priority
                           Claims against FNV Capital.

  (c) Class FNV Capital-3. Class FNV Capital-3 consists of all General
                           Unsecured Claims, other than Convenience Claims,
                           against FNV Capital.

  (d) Class FNV Capital-4. Class FNV Capital-4 consists of all Convenience
                           Claims against FNV Capital.

  (e) Class FNV Capital-5. Class FNV Capital-5 consists of all Debt Securities
                           (S) 510(b) Claims against FNV Capital.

  (f) Class FNV Capital-6. Class FNV Capital-6 consists of all Interests in
                           FNV Capital.

  3.3. FNV Canada Plan.

  (a) Class FNV Canada-1.  Class FNV Canada-1 consists of all Secured Claims
                           against FNV Canada.

  (b) Class FNV Canada-2.  Class FNV Canada-2 consists of all Other Priority
                           Claims against FNV Canada.

  (c) Class FNV Canada-3.  Class FNV Canada-3 consists of all General Unsecured
                           Claims against FNV Canada.

  (d) Class FNV Canada-4.  Class FNV Canada-4 consists of all Interests in FNV
                           Canada.
</TABLE>

                                      17
<PAGE>
<TABLE>
<S>                   <C>
  3.4. FNV UK Plan.

  (a) Class FNV UK-1.   Class FNV UK-1 consists of all Secured Claims against FNV UK.

  (b) Class FNV UK-2.   Class FNV UK-2 consists of all Other Priority Claims
                        against FNV UK.

  (c) Class FNV UK-3.   Class FNV UK-3 consists of all General Unsecured Claims
                        against FNV UK.

  (d) Class FNV UK-4.   Class FNV UK-4 consists of all FNV Capital Intercompany
                        Loans.

  (e) Class FNV UK-5.   Class FNV UK-5 consists of all Interests in FNV UK.

  3.5. FNV Loan Plan.

  (a) Class FNV Loan-1. Class FNV Loan-1 consists of all Secured Claims against
                        FNV Loan.

  (b) Class FNV Loan-2. Class FNV Loan-2 consists of all Other Priority Claims
                        against FNV Loan.

  (c) Class FNV Loan-3. Class FNV Loan-3 consists of all General Unsecured
                        Claims, other than Convenience Claims, against FNV Loan.

  (d) Class FNV Loan-4. Class FNV Loan-4 consists of all Convenience Claims
                        against FNV Loan.

  (e) Class FNV Loan-5. Class FNV Loan-5 consists of all Interests in FNV Loan.

  3.6. FNV Mezzanine Plan.

  (a) Class FNV
       Mezzanine-1.     Class FNV Mezzanine-1 consists of all Secured
                        Claims against FNV Mezzanine.

  (b) Class FNV
       Mezzanine-2.     Class FNV Mezzanine-2 consists of all Other
                        Priority Claims against FNV Mezzanine.

  (c) Class FNV
       Mezzanine-3.     Class FNV Mezzanine-3 consists of all General
                        Unsecured Claims, other than Convenience Claims,
                        against FNV Mezzanine.

  (d) Class FNV
       Mezzanine-4.     Class FNV Mezzanine-4 consists of all Convenience
                        Claims against FNV Mezzanine.

  (e) Class FNV
       Mezzanine-5.     Class FNV Mezzanine-5 consists of all Interests in
                        FNV Mezzanine.

  (f) Class FNV
       Mezzanine-6.     Class FNV Mezzanine-6 consists of all Equity
                        Securities (S) 510(b) Claims against FNV Mezzanine.

  3.7. FNV Portfolio Plan.

  (a) Class FNV
       Portfolio-1.     Class FNV Portfolio-1 consists of all Secured
                        Claims against FNV Portfolio.

  (b) Class FNV
       Portfolio-2.     Class FNV Portfolio-2 consists of all Other
                        Priority Claims against FNV Portfolio.

  (c) Class FNV
       Portfolio-3.     Class FNV Portfolio-3 consists of all General
                        Unsecured Claims, other than Convenience Claims,
                        against FNV Portfolio.

  (d) Class FNV
       Portfolio-4.     Class FNV Portfolio-4 consists of all Convenience
                        Claims against FNV Portfolio.
</TABLE>

                                       18

<PAGE>

  (e) Class FNV Portfolio-5. Class FNV Portfolio-5 consists of all Interests
                             in FNV Portfolio.

  3.8. FNV Technology Plan.

  (a) Class FNV Technology-1. Class FNV Technology-1 consists of all Secured
                              Claims against FNV Technology.

  (b) Class FNV Technology-2. Class FNV Technology-2 consists of all Other
                              Priority Claims against FNV Technology.

  (c) Class FNV Technology-3. Class FNV Technology-3 consists of all General
                              Unsecured Claims, other than Convenience Claims,
                              against FNV Technology.

  (d) Class FNV Technology-4. Class FNV Technology-4 consists of all
                              Convenience Claims against FNV Technology.

  (e) Class FNV Technology-5. Class FNV Technology-5 consists of all Interests
                              in FNV Technology.

  3.9. FNV Trust Plan.

  (a) Class FNV Trust-1.      Class FNV Trust-1 consists of all Secured Claims
                              against FNV Trust.

  (b) Class FNV Trust-2.      Class FNV Trust-2 consists of all Other Priority
                              Claims against FNV Trust.

  (c) Class FNV Trust-3.      Class FNV Trust-3 consists of all General
                              Unsecured Claims, other than Convenience Claims,
                              against FNV Trust.

  (d) Class FNV Trust-4.      Class FNV Trust-4 consists of all Convenience
                              Claims against FNV Trust.

  (e) Class FNV Trust-5.      Class FNV Trust-5 consists of all preferred equity
                              Interests represented by the TOPrS.

  (f) Class FNV Trust-6.      Class FNV Trust-6 consists of all common equity
                              Interests in FNV Trust.

                                  ARTICLE IV.

                          IDENTIFICATION OF IMPAIRED
                        CLASSES OF CLAIMS AND INTERESTS

  4.1. Unimpaired Classes of Claims and Interests. Classes described in the
following Sections are not impaired under this Plan:

<TABLE>
 <S>                               <C>
            FNV Group:                              FNV Capital:
 Section 3.1(a)--(Secured Claims)         Section 3.2(a)--(Secured Claims)
 Section 3.1(b)--(Other Priority      Section 3.2(b)--(Other Priority Claims)
              Claims)                       Section 3.2(f)--(Interests)

           FNV Canada:                                FNV UK:
 Section 3.3(a)--(Secured Claims)         Section 3.4(a)--(Secured Claims)
 Section 3.3(b)--(Other Priority      Section 3.4(b)--(Other Priority Claims)
              Claims)                Section 3.4(c)--(General Unsecured Claims)
     Section 3.3(c)--(General        Section 3.4(d)--(FNV Capital Intercompany
         Unsecured Claims)                             Loan)
   Section 3.3(d)--(Interests)              Section 3.4(e)--(Interests)

            FNV Loan:                              FNV Mezzanine:
 Section 3.5(a)--(Secured Claims)         Section 3.6(a)--(Secured Claims)
 Section 3.5(b)--(Other Priority      Section 3.6(b)--(Other Priority Claims)
              Claims)
   Section 3.5(e)--(Interests)
</TABLE>

                                      19
<PAGE>

<TABLE>
 <S>                               <C>
          FNV Portfolio:                          FNV Technology:
 Section 3.7(a)--(Secured Claims)         Section 3.8(a)--(Secured Claims)
 Section 3.7(b)--(Other Priority      Section 3.8(b)--(Other Priority Claims)
              Claims)                       Section 3.8(e)--(Interests)
   Section 3.7(e)--(Interests)
</TABLE>

                                  FNV Trust:
                       Section 3.9(a)--(Secured Claims)
                    Section 3.9(b)--(Other Priority Claims)

  4.2. Impaired Classes of Claims and Interests. Classes described in the
following Sections are impaired under this Plan:

<TABLE>
<S>                                              <C>
                   FNV Group:                                     FNV Capital:
 Section 3.1(c)--(Group Subordinated Debenture     Section 3.2(c)--(General Unsecured Claims)
                     Claims)                          Section 3.2(d)--(Convenience Claims)
   Section 3.1(d)--(General Unsecured Claims)     Section 3.2(e)--(Debt Securities (S) 510(b)
      Section 3.1(e)--(Convenience Claims)                          Claims)
          Section 3.1(f)--(Interests)
 Section 3.1(g)--(Equity Securities (S) 510(b)
                     Claims)

                  FNV Canada:                                       FNV UK:
                      None                                            None

                   FNV Loan:                                     FNV Mezzanine:
   Section 3.5(c)--(General Unsecured Claims)      Section 3.6(c)--(General Unsecured Claims)
      Section 3.5(d)--(Convenience Claims)            Section 3.6(d)--(Convenience Claims)
                                                          Section 3.6(e)--(Interests)
                                                 Section 3.6(f)--(Equity Securities (S) 510(b)
                                                                    Claims)

                 FNV Portfolio:                                 FNV Technology:
   Section 3.7(c)--(General Unsecured Claims)      Section 3.8(c)--(General Unsecured Claims)
      Section 3.7(d)--(Convenience Claims)            Section 3.8(d)--(Convenience Claims)
</TABLE>

                                  FNV Trust:
                  Section 3.9(c)--(General Unsecured Claims)
                     Section 3.9(d)--(Convenience Claims)
                       Section 3.9(e)--(TOPrS Interests)
                          Section 3.9(f)--(Interests)

  4.3. Impairment Dispute. If a holder of a Claim or Interest files a timely
objection with the Bankruptcy Court as to whether any Claims or Interests, or
any class of Claims or Interests, are impaired under this Plan, the Bankruptcy
Court shall, after notice and a hearing, determine such objection.

                                      20
<PAGE>

                                  ARTICLE V.

                       TREATMENT OF CLAIMS AND INTERESTS

  5.1. FNV Group Plan.

  (a) Class FNV Group-1 (Secured Claims). On the Distribution Date, each
holder of an Allowed Claim in Class FNV Group-1 shall receive one of the
following treatments, to be determined at the sole option of FNV Group: (i)
Reinstatement of such Allowed Secured Claim, (ii) payment of Cash in an amount
equal to the unpaid portion of such Allowed Secured Claim plus postpetition
interest calculated pursuant to Section 5.11(a), in which case the Lien
arising from such Allowed Secured Claim shall be released upon payment, (iii)
surrender by FNV Group of the asset subject to the Lien of the holder of the
Allowed Secured Claim, or (iv) such other treatment as to which FNV Group and
such holder shall have agreed upon in writing. At the option of FNV Group, FNV
Group may elect to exercise a different option for each asset subject to the
Lien of the holder of an Allowed Secured Claim.

  (b) Class FNV Group-2 (Other Priority Claims). On the Distribution Date, the
Allowed Claims in Class FNV Group-2 shall (i) be Reinstated, provided,
however, that such treatment shall be no less favorable than that provided in
section 1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii) receive such other
treatment as to which FNV Group and such holder shall have agreed upon in
writing.

  (c) Class FNV Group-3 (Group Subordinated Debenture Claims). On the
Distribution Date, (i) the Allowed Claims in Class FNV Group-3 shall be
satisfied by the treatment of the beneficial holders of claims in Class FNV
Trust-5 (TOPrS Interests), provided, however, that Allowed Claims of the
Indenture Trustees (including, but not limited to, prepetition and
postpetition fees, costs, expenses, indemnification, disbursements, advances
and reasonable compensation for the Indenture Trustee's counsel) shall be paid
in full in Cash on the Distribution Date, and (ii) the Group Subordinated
Debentures shall be cancelled.

  (d) Class FNV Group-4 (General Unsecured Claims). On the Distribution Date,
each holder of an Allowed Claim in Class FNV Group-4 shall receive one of the
following treatments, to be determined at the sole option of FNV Group: (i)
payment of Cash in an amount equal to the unpaid portion, without postpetition
interest, of such Allowed General Unsecured Claim, (ii) Reinstatement of such
Allowed General Unsecured Claim, or (iii) such other treatment as to which FNV
Group and such holder shall have agreed upon in writing.

  (e) Class FNV Group-5 (Convenience Claims). On the Distribution Date, each
holder of an Allowed Claim in Class FNV Group-5 shall receive payment in full,
without postpetition interest, in Cash, not to exceed $25,000, of such Allowed
Convenience Claim.

  (f) Class FNV Group-6 (Interests). On and after the Distribution Date, the
legal, equitable and contractual rights of holders of Allowed Interests in
Class FNV Group-6 shall remain in effect, subject to the effects of (i) the
issuance of Additional Group Common Stock (x) to the Berkadia Parties, as
described in Sections 5.11(f) and 6.2(b), and (y) to the holders of Allowed
Equity Securities (S) 510(b) Claims in FNV Group-7, if any, as described in
Sections 5.1(g), (ii) the issuance of New Group Preferred Stock to the holders
of Allowed Debt Securities (S) 510(b) Claims in Class FNV Capital-5, if any,
as described in Section 5.2(e) and (iii) the other terms and conditions of the
Plan (including the cancellation of certain options, warrants and rights), as
more fully described in Sections 6.2, 6.3(a), 6.6(a) and 7.1.

  (g) Class FNV Group-7 (Equity Securities (S) 510(b) Claims). On the
Distribution Date, each holder of an Allowed Equity Securities (S) 510(b)
Claim in Class FNV Group-7, if any, shall receive a distribution by
Reorganized FNV Group of Additional Group Common Stock having a value, as
determined by a Final Order, equal to the holder's Pro Rata Share of the
Excess Amount with respect to all Allowed Equity Securities (S) 510(b) Claims
in Class FNV Group-7.

                                      21
<PAGE>

  5.2. FNV Capital Plan.

  (a) Class FNV Capital-1 (Secured Claims). On the Distribution Date, each
holder of an Allowed Claim in Class FNV Capital-1 shall receive one of the
following treatments, to be determined at the sole option of FNV Capital: (i)
Reinstatement of such Allowed Secured Claim, (ii) payment of Cash in an amount
equal to the unpaid portion of such Allowed Secured Claim plus postpetition
interest calculated pursuant to Section 5.11(a), in which case, the Lien
arising from such Allowed Secured Claim shall be released upon payment, (iii)
surrender by FNV Capital of the asset subject to the Lien of the holder of the
Allowed Secured Claim, or (iv) such other treatment as to which FNV Capital
and such holder shall have agreed upon in writing. At the option of FNV
Capital, FNV Capital may elect to exercise a different option for each asset
subject to the Lien of the holder of an Allowed Secured Claim.

  (b) Class FNV Capital-2 (Other Priority Claims). On the Distribution Date,
the Allowed Claims in Class FNV Capital-2 shall (i) be Reinstated, provided,
however, that such treatment shall be no less favorable than that provided in
section 1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii) receive such other
treatment as to which FNV Capital and such holder shall have agreed upon in
writing.

  (c) Class FNV Capital-3 (General Unsecured Claims). On the Distribution
Date, each holder of an Allowed Claim in Class FNV Capital-3 shall receive a
distribution, equal to the full amount of such General Unsecured Claim plus
postpetition interest calculated pursuant to Section 5.11(a), composed of (i)
a Cash payment equal to 70% of the principal amount of that General Unsecured
Claim (not including prepetition or postpetition interest), (ii) a Cash
payment equal to the amount of accrued and unpaid prepetition and postpetition
interest on the General Unsecured Claim (with prepetition and postpetition
interest being calculated pursuant to section 5.11(a)) and (iii) New Senior
Notes in the principal amount of 30% of the principal amount of that General
Unsecured Claim (not including prepetition or postpetition interest),
provided, however, that Allowed Claims of Indenture Trustees (including, but
not limited to, prepetition and postpetition fees, costs, expenses,
indemnification, disbursements, advances and reasonable compensation for the
Indenture Trustee's counsel) shall be paid in full in Cash on the Distribution
Date.

  (d) Class FNV Capital-4 (Convenience Claims). On the Distribution Date, each
holder of an Allowed Claim in Class FNV Capital-4 shall receive payment in
full, without postpetition interest, in Cash, not to exceed $25,000, of such
Allowed Convenience Claim.

  (e) Class FNV Capital-5 (Debt Securities (S) 510(b) Claims). On the
Distribution Date, each holder of an Allowed Debt Securities (S) 510(b) Claim
in Class FNV Capital-5, if any, shall receive a distribution by Reorganized
FNV Group of New Group Preferred Stock having a value, as determined by a
Final Order, equal to the holder's Pro Rata Share of the Excess Amount with
respect to all Allowed Debt Securities (S) 510(b) Claims in Class FNV Capital-
5.

  (f) Class FNV Capital-6 (Interests). On the Distribution Date, the legal,
equitable and contractual rights of holders of Allowed Interests in Class FNV
Capital-6 shall be Reinstated.

  5.3. FNV Canada Plan.

  (a) Class FNV Canada-1 (Secured Claims). On the Distribution Date, each
holder of an Allowed Claim in Class FNV Canada-1 shall receive one of the
following treatments, to be determined at the sole option of FNV Canada: (i)
Reinstatement of such Allowed Secured Claim; (ii) payment of Cash in an amount
equal to the unpaid portion of such Allowed Secured Claim plus postpetition
interest calculated pursuant to Section 5.11(a), in which case, the Lien
arising from such Allowed Secured Claim shall be released upon payment; (iii)
surrender by FNV Canada of the asset subject to the Lien of the holder of the
Allowed Secured Claim, or (iv) such other treatment as to which FNV Canada and
such holder shall have agreed upon in writing. At the option of FNV Canada,
FNV Canada may elect to exercise a different option for each asset subject to
the Lien of the holder of an Allowed Secured Claim.

                                      22
<PAGE>

  (b) Class FNV Canada-2 (Other Priority Claims). On the Distribution Date,
the Allowed Claims in Class FNV Canada-2 shall (i) be Reinstated, provided,
however, that such treatment shall be no less favorable than that provided in
section 1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii) receive such other
treatment as to which FNV Canada and such holder shall have agreed upon in
writing.

  (c) Class FNV Canada-3 (General Unsecured Claims). On the Distribution Date,
each holder of an Allowed Claim in Class FNV Canada-3 shall receive one of the
following treatments, to be determined at the sole option of FNV Canada: (i)
payment of Cash in an amount equal to the unpaid portion of such Allowed
General Unsecured Claim plus postpetition interest calculated pursuant to
Section 5.11(a), (ii) except in the case of Bank Claims against FNV Canada,
Reinstatement of such Allowed General Unsecured Claim, or (iii) such other
treatment as to which FNV Canada and such holder shall have agreed upon in
writing.

  (d) Class FNV Canada-4 (Interests). On the Distribution Date, the legal,
equitable and contractual rights of holders of Allowed Interests in Class FNV
Canada-4 shall be Reinstated.

  5.4. FNV UK Plan.

  (a) Class FNV UK-1 (Secured Claims).  On the Distribution Date, each holder
of an Allowed Claim in Class FNV UK-1 shall receive one of the following
treatments, to be determined at the sole option of FNV UK: (i) Reinstatement
of such Allowed Secured Claim; (ii) payment of Cash in an amount equal to the
unpaid portion of such Allowed Secured Claim plus postpetition interest
calculated pursuant to Section 5.11(a), in which case, the Lien arising from
such Allowed Secured Claim shall be released upon payment; (iii) surrender by
FNV UK of the asset subject to the Lien of the holder of the Allowed Secured
Claim, or (iv) such other treatment as to which FNV UK and such holder shall
have agreed upon in writing. At the option of FNV UK, FNV UK may elect to
exercise a different option for each asset subject to the Lien of the holder
of an Allowed Secured Claim.

  (b) Class FNV UK-2 (Other Priority Claims). On the Distribution Date, the
Allowed Claims in Class FNV UK-2 shall (i) be Reinstated, provided, however,
that such treatment shall be no less favorable than that provided in section
1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii) receive such other treatment
as to which FNV UK and such holder shall have agreed upon in writing.

  (c) Class FNV UK-3 (General Unsecured Claims). On the Distribution Date,
each holder of an Allowed Claim in Class FNV UK-3 shall receive one of the
following treatments, to be determined at the sole option of FNV UK: (i)
payment of Cash in an amount equal to the unpaid portion of such Allowed
General Unsecured Claim plus postpetition interest calculated pursuant to
Section 5.11(a), (ii) except in the case of Bank Claims against FNV UK,
Reinstatement of such Allowed General Unsecured Claim, or (iii) such other
treatment as to which FNV UK and such holder shall have agreed upon in
writing.

  (d) Class FNV UK-4 (FNV Capital Intercompany Loan). On the Distribution
Date, each holder of an Allowed Claim in Class FNV UK-4 shall receive one of
the following treatments, to be determined at the sole option of FNV UK: (i)
payment of Cash in an amount equal to the unpaid portion of the Claim plus
postpetition interest calculated pursuant to Section 5.11(a), or (ii)
Reinstatement of the Claim.

  (e) Class FNV UK-5 (Interests). On the Distribution Date, the legal,
equitable and contractual rights of holders of Allowed Interests in Class FNV
UK-5 shall be Reinstated.

  5.5. FNV Loan Plan.

  (a) Class FNV Loan-1 (Secured Claims). On the Distribution Date, each holder
of an Allowed Claim in Class FNV Loan-1 shall receive one of the following
treatments, to be determined at the sole option of FNV Loan: (i) Reinstatement
of such Allowed Secured Claim; (ii) payment of Cash in an amount equal to the
unpaid portion of such Allowed Secured Claim plus postpetition interest
calculated pursuant to Section 5.11(a), in which case, the Lien arising from
such Allowed Secured Claim shall be released upon payment; (iii) surrender by
FNV

                                      23
<PAGE>

Loan of the asset subject to the Lien of the holder of the Allowed Secured
Claim or (iv) such other treatment as to which FNV Loan and such holder shall
have agreed upon in writing. At the option of FNV Loan, FNV Loan may elect to
exercise a different option for each asset subject to the Lien of the holder
of an Allowed Secured Claim.

  (b) Class FNV Loan-2 (Other Priority Claims). On the Distribution Date, the
Allowed Claims in Class FNV Loan-2 shall (i) be Reinstated, provided, however,
that such treatment shall be no less favorable than that provided in section
1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii) receive such other treatment
as to which FNV Loan and such holder shall have agreed upon in writing.

  (c) Class FNV Loan-3 (General Unsecured Claims). On the Distribution Date,
each holder of an Allowed Claim in Class FNV Loan-3 shall receive one of the
following treatments, to be determined at the sole option of FNV Loan: (i)
payment of Cash in an amount equal to the unpaid portion, without postpetition
interest, of such Allowed General Unsecured Claim, (ii) Reinstatement of such
Allowed General Unsecured Claim or (iii) such other treatment as to which FNV
Loan and such holder shall have agreed upon in writing.

  (d) Class FNV Loan-4 (Convenience Claims). On the Distribution Date, each
holder of an Allowed Claim in Class FNV Loan-4 shall receive payment in full,
without postpetition interest, in Cash, not to exceed $25,000, of such Allowed
Convenience Claim.

  (e) Class FNV Loan-5. (Interests). On the Distribution Date, the legal,
equitable and contractual rights of holders of Allowed Interests in Class FNV
Loan-5 shall be Reinstated.

  5.6. FNV Mezzanine Plan.

  (a) Class FNV Mezzanine-1 (Secured Claims). On the Distribution Date, each
holder of an Allowed Claim in Class FNV Mezzanine-1 shall receive one of the
following treatments, to be determined at the sole option of FNV Mezzanine:
(i) Reinstatement of such Allowed Secured Claim; (ii) payment of Cash in an
amount equal to the unpaid portion of such Allowed Secured Claim plus
postpetition interest calculated pursuant to Section 5.11(a), in which case,
the Lien arising from such Allowed Secured Claim shall be released upon
payment; (iii) surrender by FNV Mezzanine of the asset subject to the Lien of
the holder of the Allowed Secured Claim or (iv) such other treatment as to
which FNV Mezzanine and such holder shall have agreed upon in writing. At the
option of FNV Mezzanine, FNV Mezzanine may elect to exercise a different
option for each asset subject to the Lien of the holder of an Allowed Secured
Claim.

  (b) Class FNV Mezzanine-2 (Other Priority Claims). On the Distribution Date,
the Allowed Claims in Class FNV Mezzanine-2 shall (i) be Reinstated, provided,
however, that such treatment shall be no less favorable than that provided in
section 1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii) receive such other
treatment as to which FNV Mezzanine and such holder shall have agreed upon in
writing.

  (c) Class FNV Mezzanine-3 (General Unsecured Claims). On the Distribution
Date, each holder of an Allowed Claim in Class FNV Mezzanine-3 shall receive
one of the following treatments, to be determined at the sole option of FNV
Mezzanine: (i) payment of Cash in an amount equal to the unpaid portion,
without postpetition interest, of such Allowed General Unsecured Claim; (ii)
Reinstatement of such Allowed General Unsecured Claim or (iii) such other
treatment as to which FNV Mezzanine and such holder shall have agreed upon in
writing.

  (d) Class FNV Mezzanine-4 (Convenience Claims). On the Distribution Date,
each holder of an Allowed Claim in Class FNV Mezzanine-4 shall receive payment
in full, without postpetition interest, in Cash, not to exceed $25,000, of
such Allowed Convenience Claim.

  (e) Class FNV Mezzanine-5 (Interests). On the Distribution Date, the legal,
equitable and contractual rights of holders of Allowed Interests in Class FNV
Mezzanine-5 shall remain in effect, subject to the effect of the issuance of
Additional Mezzanine Common Stock to holders of Allowed Equity Securities (S)
510(b) Claims in Class FNV Mezzanine-6, if any, as described in Section
5.6(f).

                                      24
<PAGE>

  (f) Class FNV Mezzanine-6 (Equity Securities (S) 510(b) Claims). On the
Distribution Date, each holder of an Allowed Equity Securities (S) 510(b)
Claim in Class FNV Mezzanine-6, if any, shall receive a distribution of
Additional Mezzanine Common Stock having a value, as determined by a Final
Order, equal to the holder's Pro Rata Share of the Excess Amount with respect
to all Allowed Equity Securities (S) 510(b) Claims in Class FNV Mezzanine-6.

  5.7. FNV Portfolio Plan.

  (a) Class FNV Portfolio-1 (Secured Claims). On the Distribution Date, each
holder of an Allowed Claim in Class FNV Portfolio-1 shall receive one of the
following treatments, to be determined at the sole option of FNV Portfolio:
(i) Reinstatement of such Allowed Secured Claim; (ii) payment of Cash in an
amount equal to the unpaid portion of such Allowed Secured Claim plus
postpetition interest calculated pursuant to Section 5.11(a), in which case,
the Lien arising from such Allowed Secured Claim shall be released upon
payment; (iii) surrender by FNV Portfolio of the asset subject to the Lien of
the holder of the Allowed Secured Claim or (iv) such other treatment as to
which FNV Portfolio and such holder shall have agreed upon in writing. At the
option of FNV Portfolio, FNV Portfolio may elect to exercise a different
option for each asset subject to the Lien of the holder of an Allowed Secured
Claim.

  (b) Class FNV Portfolio-2 (Other Priority Claims). On the Distribution Date,
the Allowed Claims in Class FNV Portfolio-2 shall (i) be Reinstated, provided,
however, that such treatment shall be no less favorable than that provided in
section 1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii) receive such other
treatment as to which FNV Portfolio and such holder shall have agreed upon in
writing.

  (c) Class FNV Portfolio-3 (General Unsecured Claims). On the Distribution
Date, each holder of an Allowed Claim in Class FNV Portfolio-3 shall receive
one of the following treatments, to be determined at the sole option of FNV
Portfolio: (i) payment of Cash in an amount equal to the unpaid portion,
without postpetition interest, of such Allowed General Unsecured Claim; (ii)
Reinstatement of such Allowed General Unsecured Claim or (iii) such other
treatment as to which FNV Portfolio and such holder shall have agreed upon in
writing.

  (d) Class FNV Portfolio-4 (Convenience Claims). On the Distribution Date,
each holder of an Allowed Claim in Class FNV Portfolio-4 shall receive payment
in full, without postpetition interest, in Cash, not to exceed $25,000, of
such Allowed Convenience Claim.

  (e) Class FNV Portfolio-5 (Interests). On the Distribution Date, the legal,
equitable and contractual rights of holders of Allowed Interests in Class FNV
Portfolio-5 shall be Reinstated.

  5.8. FNV Technology Plan.

  (a) Class FNV Technology-1 (Secured Claims). On the Distribution Date, each
holder of an Allowed Claim in Class FNV Technology-1 shall receive one of the
following treatments, to be determined at the sole option of FNV Technology:
(i) Reinstatement of such Allowed Secured Claim; (ii) payment of Cash in an
amount equal to the unpaid portion of such Allowed Secured Claim plus
postpetition interest calculated pursuant to Section 5.11(a), in which case,
the Lien arising from such Allowed Secured Claim shall be released upon
payment; (iii) surrender by FNV Technology of the asset subject to the Lien of
the holder of the Allowed Secured Claim or (iv) such other treatment as to
which FNV Technology and such holder shall have agreed upon in writing. At the
option of FNV Technology, FNV Technology may elect to exercise a different
option for each asset subject to the Lien of the holder of an Allowed Secured
Claim.

  (b) Class FNV Technology-2 (Other Priority Claims). On the Distribution
Date, the Allowed Claims in Class FNV Technology-2 shall (i) be Reinstated,
provided, however, that such treatment shall be no less favorable than that
provided in section 1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii) receive
such other treatment as to which FNV Technology and such holder shall have
agreed upon in writing.

                                      25
<PAGE>

  (c) Class FNV Technology-3 (General Unsecured Claims). On the Distribution
Date, each holder of an Allowed Claim in Class FNV Technology-3 shall receive
one of the following treatments, to be determined at the sole option of FNV
Technology: (i) payment of Cash in an amount equal to the unpaid portion,
without postpetition interest, of such Allowed General Unsecured Claim; (ii)
Reinstatement of such Allowed General Unsecured Claim or (iii) such other
treatment as to which FNV Technology and such holder shall have agreed upon in
writing.

  (d) Class FNV Technology-4 (Convenience Claims). On the Distribution Date,
each holder of an Allowed Claim in Class FNV Technology-4 shall receive
payment in full, without postpetition interest, in Cash, not to exceed
$25,000, of such Allowed Convenience Claim.

  (e) Class FNV Technology-5 (Interests). On the Distribution Date, the legal,
equitable and contractual rights of holders of Allowed Interests in Class FNV
Technology-5 shall be Reinstated.

  5.9. FNV Trust Plan.

  (a) Class FNV Trust-1 (Secured Claims). On the Distribution Date, each
holder of an Allowed Claim in Class FNV Trust-1 shall receive one of the
following treatments, to be determined at the sole option of FNV Trust: (i)
payment of Cash in an amount equal to the unpaid portion of such Allowed
Secured Claim plus postpetition interest calculated pursuant to Section
5.11(a), in which case, the Lien arising from such Allowed Secured Claim shall
be released upon payment; (ii) surrender by FNV Trust of the asset subject to
the Lien of the holder of the Allowed Secured Claim or (iii) such other
treatment as to which FNV Trust and such holder shall have agreed upon in
writing. At the option of FNV Trust, FNV Trust may elect to exercise a
different option for each asset subject to the Lien of the holder of an
Allowed Secured Claim.

  (b) Class FNV Trust-2 (Other Priority Claims). On the Distribution Date, the
Allowed Claims in Class FNV Trust-2 shall (i) be Reinstated, provided,
however, that such treatment shall be no less favorable than that provided in
section 1129(a)(9)(B)(ii) of the Bankruptcy Code, or (ii) receive such other
treatment as to which FNV Trust and such holder shall have agreed upon in
writing.

  (c) Class FNV Trust-3 (General Unsecured Claims). On the Distribution Date,
each holder of an Allowed Claim in Class FNV Trust-3 shall receive one of the
following treatments, to be determined at the sole option of FNV Trust: (i)
payment of Cash in an amount equal to the unpaid portion, without postpetition
interest, of such Allowed General Unsecured Claim or (ii) such other treatment
as to which FNV Trust and such holder shall have agreed upon in writing.

  (d) Class FNV Trust-4 (Convenience Claims). On the Distribution Date,
holders of Allowed Claims in Class FNV Trust-4 shall receive payment in full,
without postpetition interest, in Cash, not to exceed $25,000, of such Allowed
Convenience Claim.

  (e) Class FNV Trust-5 (TOPrS Interests). On the Distribution Date, each
holder of an Allowed Interest in Class FNV Capital-3 shall receive a
distribution composed of (i) a Cash payment equal to 52.5% of the liquidation
preference attributable to such Allowed Interest (not including prepetition or
postpetition dividends), (ii) a Cash payment equal to 75% of the amount of
accrued and unpaid prepetition and postpetition dividends attributable to such
Allowed Interest and (iii) New Senior Notes in the principal amount of 22.5%
of the liquidation preference attributable to such Allowed Interest (not
including prepetition or postpetition dividends) provided, however, that
Allowed Claims of Indenture Trustees (including, but not limited to,
prepetition and post- petition fees, costs, expenses, indemnification,
disbursements, advances and reasonable compensation for the Indenture
Trustee's counsel) shall be paid in full in Cash on the Distribution Date.

  (f) Class FNV Trust-6 (Interests). On the Distribution Date, the legal,
equitable and contractual rights of holders of Allowed Interests in Class FNV
Trust-6 shall be cancelled. Holders of Allowed Interests in Class FNV Trust-6
shall receive any property of the Estate of FNV Trust remaining after payment
of all other classes of Claims against and TOPrS Interests in FNV Trust.

                                      26
<PAGE>

  5.10. Debtor's Election of Claim Treatment. Where the Plan specifies that a
Claim shall receive one of two or more specified treatments, to be determined
at the sole option of the applicable Debtor or Reorganized Debtor, the
Debtor's election as to the treatment that the Claim shall receive shall be
made and notice given to the holder of the Claim on or before the Distribution
Date.

  5.11. Special Provisions Regarding Treatment of Certain Claims.

  (a) Accrual of Prepetition and Postpetition Interest. Where the Plan
specifies that prepetition or postpetition interest shall be paid with respect
to any Claim, such interest shall be calculated as simple interest at the
following interest rate: (i) for Claims based upon a contract between the
Claim holder and a Debtor that specifies payment of interest at a fixed rate
upon amounts owed by the Debtor to the Claim holder, the fixed rate (but not
at the default rate, and excluding facility or other fees or any change in
rates due to failure to elect interest rates or periods from and after the
Petition Date, and without regard to the availability or unavailability of
specified rates or the inability to select specified rates as a result of a
default, financial condition or otherwise) specified in the contract; (ii) for
Claims based upon a contract between the Claim holder and a Debtor that
specifies payment of interest at a variable rate upon amounts owed by the
Debtor to the Claim holder, the variable rate (but not the default rate, and
excluding facility or other fees or any changes in rates due to the failure to
elect interest rates or periods from or after the Petition Date, and without
regard to the availability or unavailability of specified rates or the
inability to select specified rates as a result of a default, financial
condition or otherwise) (x) with respect to prepetition interest as specified
in the contract as in effect on the day such interest payment was due, and (y)
with respect to postpetition interest, calculated as specified in the
contract, provided that the component of any such variable rate based on the
London Interbank Offered Rate ("LIBOR") for U.S. dollar deposits shall be 30-
day LIBOR as was in effect on the Petition Date for the period from the
Petition Date through and including the last day of March 2001, and thereafter
for each subsequent month, 30-day LIBOR as of the first business day of such
month for such month or partial month; and (iii) for Claims not based upon any
contract that specifies payment of interest at a fixed or variable rate, the
federal judgment rate of interest as determined on a calculation date to be
determined by the Debtors and the Berkadia Parties, which date shall be within
the 5 days prior to the Effective Date. If any contract under which a Claim
arises specifies more than one rate of non-default interest, postpetition
interest shall be provided at the lower contract rate. For prepetition
interest, the interest rate shall be calculated from and including the date
such interest payment was due to but excluding the Petition Date. For
postpetition interest, the interest rate shall be calculated from and
including the Petition Date to but excluding the Distribution Date for such
claim.

  (b) Special Provisions Regarding Treatment of Allowed Secondary Liability
Claims. On the Effective Date:

    (i) Allowed Secondary Liability Claims arising from or related to any
  Debtor's joint or several liability for the obligations under any (i)
  Allowed Claim that is being Reinstated under the Plan or (ii) executory
  contract or unexpired lease that is being assumed by another Debtor, will
  be Reinstated;

    (ii) Except as provided in (i), above, holders of Allowed Secondary
  Liability Claims arising from or related to a Debtor's guarantees of
  payment or collection of Allowed Claims against another Debtor shall be
  entitled to only one distribution from the Debtor that is primarily liable
  for the underlying Allowed Claim, which distribution will be as provided in
  the Plan in respect of such underlying Allowed Claim, and such Allowed
  Secondary Liability Claim shall be deemed satisfied in full by the
  distribution on account of the related underlying Claim; provided, however,
  that if an underlying Allowed Claim is not satisfied in full by the
  treatment of the related underlying Claim, then the holder of the Allowed
  Claim shall be entitled to receive a distribution on account of its Allowed
  Secondary Liability Claim (which shall be Allowed only in the amount of the
  difference between the underlying Allowed Claim and the value of the
  distribution thereon), in accordance with the Plan classification thereof;

    (iii) Notwithstanding any other provisions in this Plan, no multiple
  recovery on account of any Allowed Secondary Liability Claim will be
  provided or permitted.

                                      27
<PAGE>

  (c) Special Provisions Regarding Indemnification Claims. All Claims against
FNV Group for indemnification asserted by current or former officers or
directors thereof shall be Reinstated. All Claims against FNV Capital for
indemnification asserted by current or former officers or directors thereof
shall be assumed by and shall continue as obligations of FNV Group, but any
obligations of FNV Capital thereunder shall be extinguished and rejected, and
the holders thereof shall have Claims in Class FNV Capital-3 (General
Unsecured Claims). All Claims against FNV Mezzanine or any other Debtor for
indemnification asserted by current or former officers or directors of FNV
Mezzanine shall be recognized, in the aggregate and on a pro rata basis, up to
a maximum of the $1 million deductible under the applicable insurance
policies, but shall otherwise be extinguished and rejected, and the holders
thereof shall have claims in Class FNV Mezzanine-3 (General Unsecured Claims).
Except as provided above in this Section 5.11(c), all Claims against any
Debtor for indemnification asserted by current or former officers or directors
of any Debtor shall be extinguished and rejected, and the holders thereof
shall have General Unsecured Claims against the appropriate Debtor.

  (d) Special Provisions Regarding Convenience Claims. If the holder of an
Allowed General Unsecured Claim (other than a Bank Claim or Debt Securities
Claim) in an amount greater than $25,000 makes an election to reduce the
Allowed amount of such Claim to an amount equal to or less than $25,000, such
claim shall be treated as a Convenience Claim for such purposes. Such election
shall be made on the Ballot, which shall be completed and returned by the
Voting Deadline. A holder of an Allowed General Unsecured Claim (other than a
Bank Claim or Debt Securities Claim) who shall make this election shall be
deemed to have accepted the Plan by such election and such election shall be
irrevocable.

  (e) Special Provisions Regarding Reinstatement of Claims. Reinstatement with
respect to any Claim or Interest shall be without prejudice to any Debtor's or
Reorganized Debtor's right to contest or otherwise defend against such Claim
or Interest in the appropriate forum when and if such Claim or Interest is
sought to be enforced by the holder of such Claim or Interest. The holder of a
Claim or Interest that is Reinstated pursuant to the Plan shall not be
entitled to any penalty, default interest, acceleration or similar remedial
measure with respect to the Reinstated Claim or Reinstated Interest.

  (f) Special Provisions Regarding Additional Group Common Stock.  If, after
the Effective Date, FNV Group issues Additional Group Common Stock to holders
of Allowed Claims in Class FNV Group-7 (Equity Securities (S) 510(b) Claims),
then, each such time (a "Dilutive Issuance"), FNV Group will contemporaneously
issue to the Berkadia Parties the number of shares of Additional Group Common
Stock that the Berkadia Parties would have received pursuant to the Plan on
the Effective Date (i.e. in addition to the shares the Berkadia Parties did
receive on the Effective Date) if the Dilutive Issuance had occurred
immediately before the Effective Date. The consideration furnished by Berkadia
in connection with the Restructuring Transactions shall be deemed to include,
as a portion thereof, consideration for the Additional Group Common Stock
issued to the Berkadia Parties pursuant to this section in an amount equal to
the aggregate par value of such stock.

  (g) Special Provisions Regarding Intercompany Claims and Subsidiary
Interests. All Intercompany Claims shall be Allowed Claims in the amounts
reflected in the books and records of the Debtors and listed on the Schedules.
No proofs of Claim evidencing Intercompany Claims must be filed. All Interests
of a Debtor held by another Debtor shall be Allowed Interests in the amounts
reflected in the books and records of the Debtors and listed on the Schedules.
No proofs of Interest evidencing Interests of a Debtor held by another Debtor
must be filed.

  (h) Special Provisions Regarding Employee Claims. All prepetition Claims of
the Debtors' employees, directors and other parties that were authorized to be
paid under the Order Authorizing Payment of Prepetition Employee and Director
Compensation, Benefits and Expense Reimbursements, and Certain Related Items,
entered by the Bankruptcy Court on March 7, 2001, that have not been paid as
of the Effective Date shall be paid by the applicable Reorganized Debtor after
the Effective Date in the ordinary course of business, and no proof of Claim
need be filed with respect to any such Claim.

                                      28
<PAGE>

                                  ARTICLE VI.

                     THE RESTRUCTURING TRANSACTION AND THE
                  EFFECT OF THE PLAN ON CLAIMS AND INTERESTS

  6.1. Continued Corporate Existence and Vesting of Assets in the Reorganized
Debtors. Each Debtor other than FNV Trust shall, as a Reorganized Debtor,
continue to exist after the Effective Date as a separate corporate entity,
with all of the powers of such an entity under applicable law and without
prejudice to any right to alter or terminate such existence (whether by merger
or otherwise) under the applicable law of its jurisdiction of incorporation.
Except as otherwise provided in the Plan, on or after the Effective Date, all
property of the respective Estates of the Debtors, and any property acquired
by a Debtor or Reorganized Debtor under any provision of the Plan, shall vest
in the applicable Reorganized Debtor, free and clear of all Claims, Liens,
charges, other encumbrances and Interests of any type or nature (except to the
extent that Claims, Liens or Interests are expressly Reinstated or granted by
operation of the Plan). On and after the Effective Date, each Reorganized
Debtor may operate its businesses and may use, acquire and dispose of property
and compromise or settle any Claims or Interests without supervision or
approval by the Bankruptcy Court and free of any restrictions of the
Bankruptcy Code or Bankruptcy Rules, other than those restrictions expressly
imposed by the Plan and the Confirmation Order. FNV Trust shall be dissolved,
and its assets and liabilities shall be dealt with as set forth in this Plan,
as of the Effective Date.

  6.2. The Restructuring Transactions. The Plan contemplates, and is
conditioned upon, the implementation of a comprehensive loan and restructuring
transaction with Berkadia, and certain related transactions, all as described
in the Restructuring Documents and herein (the "Restructuring Transactions").
The Credit Agreement between Berkadia and Reorganized FNV Capital, to be dated
as of the Effective Date (the "Berkadia Credit Agreement"), shall contain the
terms and conditions pursuant to which Berkadia will make the Berkadia Loan to
Reorganized FNV Capital. The terms and conditions of the Restructuring
Transactions will be as set forth in the Restructuring Documents. If there are
any inconsistencies between the Plan and the Restructuring Documents, the
Restructuring Documents shall control.

  (a) The Berkadia Loan. On the Effective Date, Berkadia shall lend to
Reorganized FNV Capital a five-year amortizing secured term loan in the
principal amount of $6,000,000,000 (the "Berkadia Loan"). Proceeds of the
Berkadia Loan will be used solely to fund distributions to holders of Allowed
Claims in Class FNV Group-3 (Group Subordinated Debentures), as described in
Section 5.1(c), Class FNV Capital-3 (General Unsecured Claims), as described
in Section 5.2(c), and holders of Allowed Interests in Class FNV Trust-5
(TOPrS Interests), as described in Section 5.9(e). The terms and conditions of
the Berkadia Loan are set forth in the Term Sheet for the Berkadia Loan
attached hereto as an Interim Exhibit 6.2(a). The Berkadia Loan Documents will
be filed with the Plan Supplement and made a part hereof as Exhibit 6.2(a).

  (b) Restructuring Transactions. The Restructuring Transactions will be
governed by the terms of the Restructuring Documents and consist principally
of: (i) the execution by the Debtors of, and borrowing under, the Berkadia
Loan Documents, (ii) the execution by FNV Capital of the Intercompany Note and
the delivery of the Intercompany Note to FNV Group and (iii) the distribution
by FNV Capital of the proceeds of the Berkadia Loan, other available Cash and
the New Senior Notes to the holders of Allowed Claims in Class FNV Group-3
(General Unsecured Claims), Class FNV Capital-3 (General Unsecured Claims) and
holders of Allowed Interests in Class FNV Trust-5 (TOPrS Interests). Pursuant
to the Restructuring Transactions, as of the Effective Date, (i) FNV Group and
FNV Capital shall adopt amended and restated Certificates of Incorporation and
Bylaws in form and substance satisfactory to Berkadia, (ii) designees of
Berkadia shall constitute a majority of the boards of directors of Reorganized
FNV Group and Reorganized FNV Capital as constituted on the Effective Date,
with at least two members of each of those boards being current members of the
board of directors of FNV Group as of the Petition Date and at least one
member of each of those boards being designated by the official committee of
unsecured creditors appointed in the Chapter 11 Cases, and (iii) Reorganized
FNV Group shall issue to the Berkadia Parties Additional Group Common Stock
such that the Berkadia Parties will own up to 51%, or such lesser amount as
may be agreed by the Berkadia Parties, of the outstanding common stock of
Reorganized FNV

                                      29
<PAGE>

Group on a Fully Diluted Basis as of the Effective Date, subject to the
issuance of additional shares of Additional Group Common Stock pursuant to
Section 5.11(f). In addition, Berkshire or an Affiliate thereof will commit to
make a tender offer as soon as practicable after the Effective Date to
purchase up to $500,000,000 principal amount of New Senior Notes at a Cash
price equal to 70% of the face amount thereof. The tender offer will be in
compliance with all applicable securities laws, and subject to customary
conditions, but will not be subject to any financing condition, and will
remain open for the longer of twenty (20) Business Days and thirty (30) days.
The consideration furnished by Berkadia in connection with the Restructuring
Transactions shall be deemed to include, as a portion thereof, consideration
for the Additional Group Common Stock issued to the Berkadia Parties pursuant
to this Section 6.2(b) or Section 5.11(f) in an amount equal to the aggregate
par value of such stock. By approving this Plan, the FNV Group Board of
Directors approves, for purposes of section 203 of the Delaware General
Corporations Law, the acquisition by any one or more of the Berkadia Parties
of any shares of FNV Group common stock, including all or any part of the
Additional Group Common Stock issued to it or them under the Plan, with the
intention that no Berkadia Party shall be or become an "interested
shareholder" within the meaning of that section by virtue of the acquisition
of Additional Group Common Stock or any other acquisition of common stock of
FNV Group.

  (c) The New Senior Notes. On the Effective Date, FNV Group will enter into
the New Senior Note Indenture and issue New Senior Notes in the principal
amount necessary to pay 30% of all General Unsecured Claims against FNV
Capital pursuant to the provisions of Section 5.2(c) and 22.5% of the
liquidation preference of Allowed TOPrS Interests pursuant to the provisions
of Section 5.9(e), which principal amount the Debtors estimate to be
approximately $3.26 billion. Among other things, in accordance with the terms
of the Berkadia Loan and the New Senior Notes, the New Senior Note Indenture
will provide that, subject to the prior payment or satisfaction of all
obligations under the Berkadia Loan and certain other conditions, FNV Group
will pay its obligations on the New Senior Notes out of cash dividends,
distributions or loans from FNV Capital and that the New Senior Notes will be
secured by a second-priority lien on (i) the common stock of FNV Capital held
by FNV Group and (ii) a promissory note of FNV Capital to be issued to FNV
Group in the principal amount of the aggregate amount of New Senior Notes (the
"Intercompany Note"), which note shall be secured by a second-priority lien on
the assets of FNV Capital pledged to Berkadia to secure the Berkadia Loan. The
form of the New Senior Note Indenture and the Intercompany Note will be filed
with the Plan Supplement and made a part hereof as Exhibit 6.2(c)(1) and
Exhibit 6.2(c)(2), respectively; the Term Sheets for the New Senior Note
Indenture, and the Term Sheet for the Intercompany Note are attached hereto as
Interim Exhibit 6.2(c)(1) and Interim Exhibit 6.2(c)(2), respectively.

  (d) The Management Agreement. Pursuant to the Management Agreement, Leucadia
shall designate, to be effective on the Effective Date and as disclosed
pursuant to Section 6.3(b), the Chairman of the Board and the President of
Reorganized FNV Group.

  (e) Dissolution of FNV Trust. On the Effective Date, FNV Trust will be
dissolved and its assets, if any, shall be distributed pursuant to Section
5.9.

  6.3. Corporate Governance, Directors and Officers, Employment-Related
Agreements and Compensation Programs.

  (a) Certificates of Incorporation and Bylaws. The bylaws, certificates of
incorporation and other organizing documents of FNV Group and FNV Capital and,
to the extent necessary or appropriate to effectuate the Plan or the
Restructuring Transactions, the bylaws, certificates of incorporation and
other organizing documents of the other Debtors (collectively, as amended, the
"New Corporate Documents") shall be amended and restated as of the Effective
Date to the extent necessary to, among other things, (i) authorize the
Restructuring Transactions, including but not limited to the issuance of the
Additional Group Common Stock, New Group Preferred Stock, Additional Mezzanine
Common Stock and the transactions identified in Section 6.2, (ii) if requested
by the Berkadia parties, impose restrictions on the direct or indirect
transferability of the common stock or other equity of Reorganized FNV Group
such that (x) no Person (other than the Berkadia Parties) may

                                      30
<PAGE>

acquire or accumulate five percent or more (as determined under tax law
principles governing the application of section 382 of the Tax Code) of the
common stock or other equity of Reorganized FNV Group and (y) no Person (other
than the Berkadia Parties) owning directly or indirectly (as determined under
such tax law principles) on the Effective Date, after giving effect to the
Plan, or after any subsequent issuances of Additional Group Common Stock
pursuant to the Plan, five percent or more (as determined under such tax law
principles) of the common stock or other equity of Reorganized FNV Group, may
acquire additional shares of that common stock or other equity of Reorganized
FNV Group, subject to certain exceptions, (iii) prohibit the issuance of non-
voting equity securities, (iv) with respect to FNV Group, eliminate Article IX
of the Certificate of Incorporation of FNV Group relating to certain Business
Combinations (as defined therein) and (v) with respect to FNV Group, terminate
the Rights Plan without any payment by FNV Group and without the Rights
thereunder having separated from the FNV Group common stock or become
exercisable. Copies of the New Corporate Documents will be filed with the Plan
Supplement and made a part hereof as Exhibit 6.3(a).

  (b) Directors and Officers of Reorganized FNV Group. Subject to any
requirement of Bankruptcy Court approval pursuant to section 1129(a)(5) of the
Bankruptcy Code, the majority of the board of directors of Reorganized FNV
Group as of the Effective Date shall be persons designated by Berkadia. The
members of the Reorganized FNV Group board of directors, as of the Effective
Date, shall include the directors who are listed as such on Exhibit 6.3(b).
The officers of Reorganized FNV Group on the Effective Date shall be those
persons listed as such on Exhibit 6.3(b). Each such director and officer shall
serve from and after the Effective Date until his or her term of office
expires or he or she resigns or is removed pursuant to the terms of the
applicable certificate of incorporation, the applicable bylaws or similar
corporate governance documents and applicable state law. No designation in
Exhibit 6.3(b) of a person as a director or officer of Reorganized FNV Group
shall create a contract of employment.

  (c) Directors and Officers of Other Reorganized Debtors. Subject to any
requirement of Bankruptcy Court approval pursuant to section 1129(a)(5) of the
Bankruptcy Code, as of the Effective Date, the directors and officers of each
Reorganized Debtor other than Reorganized FNV Group shall be as listed as such
on Exhibit 6.3(c). Each such director and officer shall serve from and after
the Effective Date until he or she resigns or is removed pursuant to the terms
of the applicable certificate or articles of incorporation, the applicable
bylaws or similar corporate governance documents and applicable state law. No
designation in Exhibit 6.3(c) of a person as a director or officer of a
Reorganized Debtor shall create a contract of employment.

  (d) Corporate Actions. The borrowing under the Berkadia Loan; the adoption
of New Corporate Documents; the initial selection of directors and officers of
the Reorganized Debtors; the distribution of Cash; the issuance and
distribution of New Senior Notes, the Intercompany Note, Additional Group
Common Stock, New Group Preferred Stock (if any) and Additional Mezzanine
Common Stock (if any); the allocation according to the Plan of a portion of
the consideration furnished by Berkadia in connection with the Restructuring
Transactions as consideration for the issuance of Additional Group Common
Stock to the Berkadia Parties; the grant, pledge, assignment or other transfer
of mortgages, deeds of trust, Liens and other security interests in connection
with the Berkadia Loan and the New Senior Notes Indenture; the adoption,
execution, delivery, performance and implementation of all contracts, leases,
instruments, releases, indentures and other agreements related to any of the
foregoing, including the Berkadia Loan Documents and the New Senior Notes
Indenture; and all other actions or matters provided for under the Plan or
contemplated by the Restructuring Transactions involving the corporation or
trust structure of any Debtor or Reorganized Debtor or corporate, shareholder,
trust, trustee, or holder of trust interest action to be taken by or required
of any Debtor or Reorganized Debtor or their respective shareholders or
holders of trust interests shall be deemed to have been authorized and
effective as provided herein upon Confirmation and the occurrence of the
Effective Date, and shall be authorized and approved in all respects without
any requirement of further action by shareholders, directors or trustees of
any of the Debtors or the Reorganized Debtors, all pursuant to section 303 of
the Delaware General Corporate Law with respect to those Debtors that are
Delaware corporations and to comparable provisions of applicable law, if any,
with respect to the other Debtors.

                                      31
<PAGE>

  6.4. Obtaining Cash and Securities for Plan Distributions and Transfers of
Funds and Securities Among the Debtors. All Cash necessary for the Disbursing
Agent or Agents to make payments pursuant to the Plan shall be obtained from
the Berkadia Loan, the Debtors' existing cash balances, the operations of the
Debtors or the Reorganized Debtors or post-confirmation working capital. Cash
and securities payments to be made pursuant to the Plan shall be made by the
Disbursing Agent or Agents from the Estate of the Debtor that is liable on the
underlying Allowed Claim; provided, however, that the Debtors and the
Reorganized Debtors shall be entitled to transfer funds and securities between
and among themselves as they determine to be necessary or appropriate to
enable each Reorganized Debtor to satisfy its obligations under the Plan. Any
intercompany balances resulting from such transfers shall be settled in
accordance with the Debtors' historical intercompany account settlement
practices.

  6.5. Preservation of Rights of Action. Except as expressly provided herein
or in any contract, instrument, release, indenture or other agreement entered
into in connection with the Plan, in accordance with section 1123(b) of the
Bankruptcy Code, the Reorganized Debtors shall retain and may enforce any
claims, rights and causes of action, whether arising before or after the
Petition Date, that any Debtor or Estate may hold against any entity or
person. The Reorganized Debtors or their successors may pursue such retained
claims, rights or causes of action, as appropriate, in accordance with the
best interests of the Reorganized Debtors or the successors holding such
rights of action. The Reorganized Debtors may pursue, abandon, settle or
release any or all such claims, rights and causes of action, as they may deem
appropriate. No creditor or shareholder shall have any right or power to
pursue or commence any litigation, whether direct or derivative, in regard to
such claims, rights and causes of action.

  6.6. Effect of Plan on Certain Securities.

  (a) Cancellation. On the Effective Date, (i) the notes and other documents
or instruments evidencing the Bank Claims and the Debt Securities, the Bank
Credit Agreements, the Debt Securities Indentures, the Group Subordinated
Debentures, and all other credit instruments, provided, however, that the
instruments evidencing the Loan Commitments shall not be affected by this
provision, (ii) the certificates and other documents evidencing the TOPrS
Interests and the common beneficial Interests in FNV Trust held by FNV Group,
(iii) all rights issued under the Rights Plan and (iv) all rights under
existing options, warrants and rights of conversion shall be deemed canceled
and shall be of no further force and effect, without any further action on the
part of the Bankruptcy Court or any Debtor or Reorganized Debtor. The holders
of such canceled instruments, securities and other documentation shall have no
rights arising from or relating to such instruments, securities and other
documentation or the cancellation thereof, except the rights provided pursuant
to the Plan; provided, however, that no distribution under the Plan shall be
made to or on behalf of any holder of an Allowed Claim evidenced by such
canceled instruments, securities or other documentation unless and until such
instruments, securities or other documentation are received by the Disbursing
Agent pursuant to Section 9.5.

  (b) Continuing Rights. Each indenture or other agreement that governs the
rights of the holder of a Claim and that is administered by an Indenture
Trustee or an agent shall continue in effect solely for the purposes of (a)
allowing such Indenture Trustee or agent to make the distributions to be made
on account of such Claims under this Plan, and (b) permitting such Indenture
Trustee or agent to receive payment in accordance with the terms of Sections
5.1(c), 5.2(c) and 5.9(e); provided, however, that the foregoing shall not
affect the discharge of Debtors' liabilities under the Bankruptcy Code and the
Confirmation Order.

  6.7. Effectuating Documents; Further Transactions; Exemption from Certain
Transfer Taxes. The Chairman of the Board, President, any Vice President, any
Director, the Secretary, any Assistant Secretary or the Regular Trustee of
each Debtor or Reorganized Debtor shall be authorized to execute, deliver,
file or record such

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<PAGE>

contracts, instruments, releases, indentures and other agreements or documents
and take such actions as may be necessary or appropriate to effectuate and
further evidence the terms and conditions of the Plan. The Secretary, any
Assistant Secretary or the Regular Trustee of each Debtor or Reorganized
Debtor shall be authorized to certify or attest to any of the foregoing
actions. Pursuant to section 1146(c) of the Bankruptcy Code, no stamp, real
estate transfer, mortgage recording or other similar tax may be imposed upon
the issuance, transfer or exchange of notes or equity securities under the
Plan, including, without limitation, the New Senior Notes, any notes related
to the Berkadia Loan, the Berkadia Credit Agreement, all debt public and
private, the New Group Preferred Stock (if any is issued), the Additional
Group Common Stock or the Additional Mezzanine Common Stock (if any is
issued), the creation of any Lien, the making, assignment or surrender of any
lease or sublease, the creation of any mortgage, deed of trust or other
security interest, the making or delivery of any deed, bill of sale or other
instrument of transfer under, in furtherance of, or in connection with the
Plan, whether involving real or personal property, including, without
limitation, any merger agreements or agreements of amalgamation or
consolidation, deeds, bills of sale or assignments executed in connection with
any of the transactions contemplated under the Plan. Any sale by the Debtors
of owned property pursuant to section 363(b) of the Bankruptcy Code or
otherwise and any assumption, assignment and sale by the Debtors of unexpired
leases of non-residential real property or executory contracts pursuant to
section 365(a) of the Bankruptcy Code, if (i) consummated by the Debtors and
(ii) either (A) approved by the Bankruptcy Court in the Ordinary Course of
Business Order, or (B) approved in the ordinary course of the Debtors'
business by separate order of the Bankruptcy Court on or after the Petition
Date through and including the Effective Date, shall be deemed to have been
made under, in furtherance of and in connection with the Plan and, thus, shall
not be subject to any stamp tax, real estate transfer, mortgage recording or
other similar tax. If the Debtors pay or have paid any such tax, they shall be
entitled to a refund thereof upon or after the Effective Date.

                                 ARTICLE VII.

                   EXECUTORY CONTRACTS AND UNEXPIRED LEASES

  7.1. Executory Contracts and Unexpired Leases to be Rejected.

  (a) Rejections Generally. Each of the executory contracts and unexpired
leases listed on Exhibit 7.1, which shall be filed with the Plan Supplement
and which may be amended at any time prior to the Effective Date, shall be
rejected as of the Effective Date. Each contract and lease listed on Exhibit
7.1 shall be rejected only to the extent that any such contract or lease
constitutes an executory contract or unexpired lease. The Confirmation Order
shall constitute an order of the Bankruptcy Court approving such rejections,
pursuant to section 365 of the Bankruptcy Code, as of the Effective Date.
Regardless of whether the Debt Security Indentures, Bank Credit Agreements,
TOPrS, Group Subordinated Debentures or existing options, warrants and rights
of conversion are or may be executory contracts, such indentures, agreements
and securities shall be rejected and canceled pursuant to section
1123(a)(5)(F) of the Bankruptcy Code.

  (b) Bar Date for Rejection Damages. If the rejection of any executory
contract, unexpired lease, option, warrant, right of conversion or the Rights
Plan pursuant to Section 7.1(a) gives rise to a Claim by the non-Debtor party
or parties to such contract, lease, option, warrant or right, such Claim shall
be forever barred and shall not be enforceable against the Debtors, the
Reorganized Debtors, their respective successors or their respective
properties unless a proof of Claim is filed and served on the appropriate
Reorganized Debtor within 30 days after the date of service of the
Confirmation Order.

  7.2. Executory Contracts and Unexpired Leases to be Assumed

  (a) Assumptions and Assignments Generally. Except as otherwise provided in
this Plan or in any contract, instrument, release, indenture or other
agreement or document entered into in connection with the Plan, on the
Effective Date, pursuant to section 365 of the Bankruptcy Code, the Debtors
shall assume (i) each of the executory contracts and unexpired leases listed
on Exhibit 7.2, which shall be filed with the Plan Supplement

                                      33
<PAGE>

and which may be amended at any time prior to the Effective Date, and (ii) all
other executory contracts and unexpired leases that have not been either
assumed or rejected pursuant to section 365 of the Bankruptcy Code prior to
the Effective Date or rejected as of the Effective Date pursuant to Section
7.1, other than the Loan Commitments. Each contract or lease assumed pursuant
to this Section 7.2 shall be assumed only to the extent that any such contract
or lease constitutes an executory contract or unexpired lease.

  (b) Assumptions of Leveraged Leases. Each Leveraged Lease of any of the
Debtors, whether or not listed on Exhibit 7.2, shall be assumed by the
applicable Debtor on the Effective Date unless listed on Exhibit 7.1 or
rejected by express order of the Bankruptcy Court prior to the Effective Date.

  (c) Approval of Assumptions. The Confirmation Order shall constitute an
order of the Bankruptcy Court approving the assumptions described in this
Section 7.2, pursuant to section 365 of the Bankruptcy Code.

  (d) Payment of Cure Amounts. Any Cure Amount related to an executory
contract and unexpired lease to be assumed pursuant to the Plan that is in
default shall be satisfied pursuant to section 365(b)(1) of the Bankruptcy
Code at the option of the Debtor assuming such contract or lease (i) by
payment of the Cure Amount in Cash as soon as practicable after the later of
(A) the Effective Date and (B) ten days following entry of a Final Order
approving the assumption of such contract or lease or (ii) on such other terms
as are agreed to by the parties to such executory contract or unexpired lease.
For assumptions of executory contracts and unexpired leases between or among
Debtors, if any, the Debtor or Reorganized Debtor assuming such contract or
lease may cure any monetary default through an intercompany account balance in
lieu of payment of Cash. The Debtors reserve the right, in their sole
discretion, as to any executory contract or unexpired lease designated for
assumption as to which the Cure Amount is disputed (before or after resolution
of such dispute by Final Order) to withdraw that designation and reject the
contract or lease.

  (e) Determination of Cure Amounts; Resolution of Disputes. The Cure Amount,
according to the Debtors' books and records, for each contract and unexpired
lease to be assumed pursuant to the Plan is set forth on Exhibit 7.2. Any
objection to (i) the Cure Amount as listed on Exhibit 7.2, (ii) the ability of
the applicable Reorganized Debtor to provide "adequate assurance of future
performance," within the meaning of section 365 of the Bankruptcy Code, under
the contract or lease to be assumed, or (iii) any other matter pertaining to
assumption, must be filed on or before the deadline set for objections to the
Plan or, to the extent that Exhibit 7.2 is amended after such date to change
the treatment of the contract at issue, within ten Business Days after the
filing of such amendment. If such an objection is filed, the applicable
contract or unexpired lease shall be assumed upon the entry of a Final Order
of the Bankruptcy Court resolving the dispute and approving the assumption,
and the Cure Amount shall be satisfied pursuant to Section 7.2(d).

  7.3. Special Executory Contract and Unexpired Lease Issues and Treatment of
the Retirement Plan.

  (a) Rejection or Cancellation of Securities and Bank Credit
Agreements. Notwithstanding the rejection or cancellation of the Debt
Securities Indentures, the TOPrS and the Bank Credit Agreements, such
rejection or cancellation shall not impair the rights of the holders of any
Allowed Debt Securities Claims or Allowed Bank Claims to receive distributions
as holders of General Unsecured Claims or the rights of any holders of TOPrS
to receive distributions on account of their TOPrS Interests in these Chapter
11 Cases.

  (b) Loan Commitments. The Loan Commitments shall be neither assumed nor
rejected by any Debtor under the Plan and the rights and obligations of the
Debtor and non-Debtor parties thereto shall not be affected by this Article
VII or the Plan.

  (c) Retirement Agreements. Each Retirement Agreement of any of the Debtors
that is not rejected by an order of the Bankruptcy Court prior to the
Effective Date, whether or not listed on Exhibit 7.2, shall be assumed by the
applicable Debtor on the Effective Date or, to the extent that any Retirement
Agreement is not an executory contract, Allowed Claims arising under such
Retirement Agreement shall be Reinstated as of the Effective Date.

                                      34
<PAGE>

  (d) Postpetition Executory Contracts and Unexpired Leases. Executory
contracts and unexpired leases entered into after the Petition Date by any
Debtor shall be performed by the Debtor or Reorganized Debtor liable
thereunder in the ordinary course of its business, subject to the rights of
the Debtors under those agreements and at law. Accordingly, such executory
contracts and unexpired leases shall survive and remain unaffected by
Confirmation.

  (e) Indemnity Rights. To the extent that the rights of indemnity, if any, of
the current or former officers and directors of any Debtor other than FNV
Group may be considered to be rights under executory contracts, such contracts
are rejected, except that rights of indemnity are retained to the extent
provided in Section 5.11(c).

  (f) No Admission. Listing a contract or lease on Exhibit 7.1 or Exhibit 7.2
shall not constitute an admission by a Debtor or Reorganized Debtor that such
contract or lease is an executory contract or unexpired lease or that a Debtor
or Reorganized Debtor has any liability thereunder.

  (g) Retirement Plan. The Debtors affirm and agree that they are and will
continue to be contributing sponsors of the Retirement Plan, as defined under
29 U.S.C. (S) 1301 (a)(13) and 29 C.F.R. (S) 4001.2, or a member of the
contributing sponsor's controlled group, as defined under 29 U.S.C. (S) 1302
(a)(14) and 29 C.F.R. (S) 4001.2. As contributing sponsors (or members of the
controlled group) of the Retirement Plan, the Debtors intend to fund the
Retirement Plan in accordance with the minimum funding standards under ERISA,
29 U.S.C. (S) 1082, pay all required PBGC insurance premiums, 29 U.S.C. (S)
1307, and comply with all requirements of the Retirement Plan and ERISA. The
Retirement Plan is a defined benefit pension insured by the Pension Benefit
Guaranty Corporation under Title IV of ERISA, 29 U.S.C. (S)(S) 1301-1461. The
Retirement Plan is subject to the minimum funding requirements of ERISA, 29
U.S.C. (S) 1084, and section 412 of the Internal Revenue Code, 26 U.S.C. (S)
412. No provision of or proceeding within the Debtor's reorganization
proceedings, the Plan, nor the Confirmation Order shall in any way be
construed as discharging, releasing or relieving the Debtors, Reorganized
Debtors, or any other party in any capacity, from any liability with respect
to the Retirement Plan or any other defined benefit pension plan under any
law, government policy or regulatory provision. PBGC and the Retirement Plan
shall not be enjoined or precluded from enforcing liability resulting from any
of the provisions of the Plan or Plan's confirmation.

                                 ARTICLE VIII.

                          PROVISIONS REGARDING VOTING
                         AND CONFIRMATION REQUIREMENTS

  8.1. Voting of Claims and Interests. No holder of an Allowed Claim or
Allowed Interest in an unimpaired Class is entitled to vote to accept or
reject the Plan in its capacity as a holder of such Claim or Interest. Each
holder of an Allowed Claim or Allowed Interest in an impaired Class that
retains or receives property under the Plan shall be entitled to vote
separately to accept or reject the Plan and indicate such vote on a duly
executed and delivered Ballot as provided in such order as is entered by the
Bankruptcy Court establishing certain procedures with respect to the
solicitation and tabulation of votes to accept or reject the Plan, or any
other order or orders of the Bankruptcy Court. Each holder of an Allowed Claim
or Allowed Interest in an impaired Class that does not retain or receive any
property under the Plan is deemed to have rejected the Plan. The designation
of Classes as "impaired" or "unimpaired" is set forth in Sections 4.1 and 4.2.

  8.2. Confirmability and Severability of Plan. The confirmation requirements
of section 1129 of the Bankruptcy Code must be satisfied separately with
respect to each Debtor. Therefore, notwithstanding the incorporation of the
separate plans of reorganization for each debtor in a single joint plan of
reorganization for purposes of, among other things, economy and efficiency,
Section 5.1 shall be deemed a separate plan of reorganization for FNV Group,
Section 5.2 shall be deemed a separate plan of reorganization for FNV Capital,
Section 5.3 shall be deemed a separate plan of reorganization for FNV Canada,
Section 5.4 shall be deemed a separate plan of reorganization for FNV UK,
Section 5.5 shall be deemed a separate plan of reorganization for

                                      35
<PAGE>

FNV Loan, Section 5.6 shall be deemed a separate plan of reorganization for
FNV Mezzanine, Section 5.7 shall be deemed a separate plan of reorganization
for FNV Portfolio, Section 5.8 shall be deemed a separate plan of
reorganization for FNV Technology and Section 5.9 shall be deemed a separate
plan of reorganization for FNV Trust. Should any of such separate plans not be
confirmed, the other Debtors may elect to alter, amend, revoke or withdraw the
other separate plans or to seek Confirmation thereof. Should any of the
Debtors' separate plans of reorganization not be confirmed, Berkadia shall
have no obligation to provide financing under the Berkadia Loan in the event
that the Debtors elect to consummate any or all of the other separate plans.

  8.3. Nonconsensual Confirmation. If any impaired Class does not accept the
Plan by the requisite statutory majorities provided in sections 1126(c) or
1126(d) of the Bankruptcy Code, as applicable, or if any impaired Class is
deemed to have rejected the Plan, the Debtors reserve the right (a) to
undertake to have the Bankruptcy Court confirm the Plan under section 1129(b)
of the Bankruptcy Code, (b) to reallocate distribution of assets to Claims and
Interests if necessary to obtain entry of the Confirmation Order and (c) to
amend the Plan in accordance with Section 13.5 as necessary to obtain entry of
the Confirmation Order.

                                  ARTICLE IX.

                          IMPLEMENTATION OF THE PLAN

  9.1 General Distribution Provisions.

  (a) Distribution Address. Subject to Bankruptcy Rule 9019, all distributions
under the Plan shall be made by the Disbursing Agent (i) if a proof of Claim
is filed in respect of a particular Claim, to the holder, as of the
Distribution Record Date, of each Allowed Claim at the address of such holder
set forth in the relevant proof of claim, as such address may have been
updated pursuant to Bankruptcy Rule 2002(g), (ii) if no proof of claim is
filed in respect of a particular Claim, to the holder, as of the Distribution
Record Date, of each Allowed Claim at the address set forth in the relevant
Debtor's Schedules, as such address may have been updated pursuant to
Bankruptcy Rule 2002(g) or (iii) to the holder, as of the Distribution Record
Date, of each Allowed Interest at the address of such holder as listed in the
equity interest ledger maintained by or on behalf of the applicable Debtor as
of the Distribution Record Date; provided, however, that if the Debtors or the
Reorganized Debtors have been notified, no later than ten Business Days prior
to the Distribution Record Date, in writing of a change of address by such
holder that provides an address different from that specified in (i), (ii) or
(iii), above, then the distribution shall be made at the address contained in
the written notification. Nothing contained in the Plan will require any
Debtor, Reorganized Debtor or Disbursing Agent to attempt to locate any holder
of an Allowed Claim or Allowed Interest.

  (b) Distributions to Holders as of the Distribution Record Date. As of the
Distribution Record Date, the respective transfer registers for Claims and
Interests, as maintained by the Debtors or their agents, will be closed. The
Disbursing Agent will have no obligation to recognize the transfer of, or the
sale of any participation in, any Allowed Claim or Allowed Interest that
occurs after the close of business on the Distribution Record Date, and will
be entitled for all purposes herein to recognize and distribute to only those
holders of Allowed Claims or Allowed Interest who are holders of such Claims
or Interests, or participants therein, as of the close of business on the
Distribution Record Date. The Disbursing Agent and the Reorganized Debtors
shall instead be entitled to recognize and deal for all purposes under the
Plan (except as to voting to accept or reject the Plan pursuant to Section
8.1) with only those record holders stated on the official claims register
(for Claims) and official transfer ledgers (for Interests) as of the close of
business on the Distribution Record Date.

  (c) Plan Distributions. On the Distribution Date, the Disbursing Agent shall
make all distributions or notifications contemplated under the Plan to the
holder, as of the Distribution Record Date, of each Allowed Claim or Allowed
Interest at the Distribution Address of such holder. Except as otherwise
specified herein, payments made pursuant to the Plan will be in Cash by checks
drawn on a domestic bank, or by wire transfer from a domestic bank, in each
case at the option of the Disbursing Agent; provided, however, that Cash
payments

                                      36
<PAGE>

to foreign holders of Allowed Claims may be made, at the option of the
Disbursing Agent, in such funds and by such means as are necessary or
customary in a particular foreign jurisdiction.

  (d) Allocation of Plan Distribution Between Principal and Interest. All
distributions in respect of any Allowed Claim (other than the distribution of
interest on Allowed Claims in Class FNV Capital-3) shall be allocated first to
the principal amount of such Claim, as determined for federal income tax
purposes, and thereafter, to the remaining portion of such Claim, if any.

  (e) Distributions on Non-Business Days. Any payment or distribution due on a
day other than a Business Day shall be made, without interest, on the next
Business Day.

  (f) No Distribution Pending Allowance. Notwithstanding any other provision
of this Plan, no Cash or other property shall be distributed under this Plan
on account of any Disputed Claim or Disputed Interest, unless and until such
Claim becomes an Allowed Claim or Allowed Interest.

  (g) No Distribution in Excess of Allowed Amount of Claim. Notwithstanding
anything to the contrary herein, no holder of an Allowed Claim shall receive
in respect of such Claim any distribution (of a value set forth herein or in
the Disclosure Statement) in excess of the Allowed amount of such Claim,
except that the foregoing shall not limit holders of Disputed Claims from
receiving accrued interest as provided in this Plan, if that holder's Disputed
Claim becomes Allowed.

  (h) Setoffs. The Debtors are authorized, pursuant to section 553 of the
Bankruptcy Code, to set off against any Allowed Claim or Allowed Interest and
the distributions to be made on account of such Allowed Claim or Allowed
Interest, the claims, rights and causes of action of any nature that the
Debtors may hold against the holder of such Allowed Claim or Allowed Interest;
provided, however, that neither the failure to effect such a setoff nor the
allowance of any Claim or Interest hereunder shall constitute a waiver or
release by the Debtors of any such claims, rights and causes of action that
the Debtors may possess against such holder.

  (i) Disputed Payments. If any dispute arises as to the identity of a holder
of an Allowed Claim or Allowed Interest who is to receive any distribution,
the Disbursing Agent may, in lieu of making such distribution to such Person,
make such distribution into an escrow account to be held in trust for the
benefit of such holder and such distribution shall not constitute property of
the Debtors or their Estates. Such distribution shall be held in escrow until
the disposition thereof shall be determined by Final Order or by written
agreement among the interested parties to such dispute.

  (j) Withholding Taxes. In connection with the consummation of the Plan, the
Debtors or the Reorganized Debtors, as the case may be, shall comply with all
withholding and reporting requirements imposed by any federal, state, local or
foreign taxing authority and all distributions hereunder shall be subject to
any such withholding and reporting requirements.

  (k) Obligations Incurred After the Confirmation Date. Payment obligations
incurred after the date and time of entry of the Confirmation Order,
including, without limitation, the Professional Fees of the Debtors through
the Effective Date, shall not be subject to application or proof of Claim and
may be paid by the Debtors in the ordinary course of business and without
further Bankruptcy Court approval, as Administrative Claims.

  (l) No Distribution of Fractional Securities. Notwithstanding any other
provisions of the Plan, to the extent that any Additional Group Common Stock,
New Group Preferred Stock, Additional Mezzanine Common Stock or New Senior
Notes are issued to holders of Allowed Claims, only whole numbers of such
shares or notes shall be issued. The New Senior Notes shall be issued in
denominations of $1,000 or multiples thereof (with denominations of $500 or
less rounded down to the nearest $1,000 and with denominations greater than
$500 rounded up to the nearest $1,000). When any distribution of stock or
rights on account of an Allowed Claim would otherwise result in the issuance
of a number of shares that is not a whole number, the Disbursing Agent shall
extinguish all fractional shares otherwise then distributable.

                                      37
<PAGE>

  9.2. Method of Making Distributions to Disputed Claims and Disputed
Interests.

  (a) Distributions Upon Allowance of Disputed Claims and Disputed
Interests. Disputed Claims or Disputed Interests that become Allowed after the
Effective Date shall receive the distribution set forth in the applicable
section of Article V. Cash payments to be made on account of any such Claims
shall be paid by the applicable Reorganized Debtor from operating capital in
the ordinary course of its business.

  (b) Resolution of Disputed Claims and Disputed Interests. No distribution or
payment shall be made on account of a Disputed Claim or Disputed Interest
unless and until such Disputed Claim or Disputed Interest becomes an Allowed
Claim or Allowed Interest. Unless otherwise ordered by the Bankruptcy Court,
after the Effective Date, the Reorganized Debtors shall have the exclusive
right to make and file Objections to and settle, compromise or otherwise
resolve Claims and Interests, except that as to applications for allowances of
compensation and reimbursement of expenses under sections 330 and 503 of the
Bankruptcy Code, objections may be made in accordance with the applicable
Bankruptcy Rules by parties in interest in these Chapter 11 Cases. The Debtors
or Reorganized Debtors, as applicable, shall file and serve a copy of each
Objection upon the holder of the relevant Claim or Interest as soon as
practicable, but in no event later than (i) 60 days after the Effective Date,
or (ii) such other time as may be fixed or extended by the order of the
Bankruptcy Court. After the Effective Date, the Reorganized Debtors may settle
or compromise any Disputed Claim or Disputed Interest without approval of the
Bankruptcy Court.

  9.3. Estimation of Disputed Claims and Disputed Interests. The Debtors may,
at any time, request that the Bankruptcy Court estimate any Disputed Claim or
Disputed Interest subject to estimation under section 502(c) of the Bankruptcy
Code and for which the Debtors may be liable under this Plan, including any
Disputed Claim or Disputed Interest for taxes, to the extent permitted by
section 502(c) of the Bankruptcy Code, regardless of whether any party in
interest previously objected to such Claim or Interest; and the Bankruptcy
Court will retain jurisdiction to estimate any Disputed Claim or Disputed
Interest pursuant to section 502(c) of the Bankruptcy Code at any time during
litigation concerning any objection to the Claim or Interest. In the event
that the Bankruptcy Court estimates any contingent or unliquidated Disputed
Claim or Disputed Interest, that estimated amount will constitute (at the
Debtors' option, to be exercised at the commencement of the estimation
proceeding) either the Allowed amount of such Claim or Interest or a maximum
limitation on the Allowed amount of such Claim or Interest, as determined by
the Bankruptcy Court. If the estimated amount constitutes a maximum limitation
on the Allowed amount of such Claim or Interest, the Debtors may elect to
pursue any supplemental proceedings to object to any ultimate allowance of
such Claim or Interest. All of the aforementioned Disputed Claims or Disputed
Interests objection, estimation and resolution procedures are cumulative and
not necessarily exclusive of one another. Disputed Claims or Disputed
Interests may be estimated and subsequently compromised, settled, withdrawn or
resolved by any mechanism approved by the Bankruptcy Court.

  9.4. Treatment of Unclaimed Property.

  (a) Unclaimed or Undeliverable Distributions. Any distributions under the
Plan, in respect of an Allowed Claim or Allowed Interest, that are unclaimed
or undeliverable for a period of one year after the applicable Distribution
Date thereof shall be classified as "Unclaimed Property."

  (b) Distribution of Unclaimed Property. Any distributions made under the
Plan that become Unclaimed Property pursuant to Section 9.4(a) shall be
revested in the applicable Reorganized Debtor, free of any restrictions
thereon, and any entitlement of any holder of any Claim or Interest to such
distributions shall be extinguished and forever barred.

  9.5. Surrender of Instruments, Securities and Other Documentation. Following
the Effective Date, holders of Bank Claims, Debt Securities Claims and TOPrS
will receive from their respective Indenture Trustee, agents, or from the
Disbursing Agent specific instructions regarding the time and manner in which
the instruments relating to such Claims and Interests are to be surrendered.
All Distributions under this Plan in

                                      38
<PAGE>

respect of Allowed Bank Claims and Allowed Debt Securities Claims and Allowed
TOPrS Interests shall be made to the applicable Indenture Trustee or agent for
the benefit of such holders, and shall be subject to any rights or liens that
the applicable Indenture Trustees may have for fees, costs, expenses and
indemnification under the respective indentures or other agreement. Any note
evidencing the Bank Claims or the Debt Securities Claims or any security
evidencing the TOPrS Interests which is lost, stolen, mutilated or destroyed,
shall be deemed surrendered when the holder of a Claim or Interest based
thereon delivers to the applicable Indenture Trustee, agent, or the Disbursing
Agent (a) evidence satisfactory to the Indenture Trustee, agent, or Disbursing
Agent of the loss, theft, mutilation or destruction of such instrument or
certificate, and (b) such security or indemnity as may be required by the
Indenture Trustee, agent, or the Disbursing Agent to hold each of them
harmless with respect thereto. No holder of a Bank Claim, Debt Securities
Claim or TOPrS Interest shall receive any distribution on account of its Claim
or Interest under this Plan until it has complied with the provisions of this
Section 9.5. The applicable Indenture Trustee or agent shall return to the
applicable Reorganized Debtor any distributions that become Unclaimed Property
pursuant to Section 9.4(a) and such amounts shall be revested in the
applicable Reorganized Debtor, except in the case of FNV Trust, for which any
Unclaimed Property shall be vested in Reorganized FNV Group on account of its
cancelled Interests in FNV Trust.

                                  ARTICLE X.

                DISCHARGE, TERMINATION, INJUNCTION AND RELEASES

  10.1. Discharge of Debtors. Except as otherwise expressly provided in the
Plan or the Confirmation Order, the Confirmation of the Plan shall, as of the
Effective Date: (i) discharge the Debtors from all Claims, demands,
liabilities, other debts and Interests that arose on or before the Effective
Date, including all debts of the kind specified in sections 502(g), 502(h) or
502(i) of the Bankruptcy Code, whether or not (A) a proof of Claim based on
such debt is filed or deemed filed pursuant to section 501 of the Bankruptcy
Code, (B) a Claim based on such debt is Allowed pursuant to section 502 of the
Bankruptcy Code or (C) the holder of a Claim based on such debt has accepted
the Plan; (ii) cancel all Interests and other rights of equity security
holders in the Debtors except to the extent that the Plan expressly provides
for the retention or Reinstatement of such Interests, whether or not (A) a
proof of Interest is filed or deemed filed pursuant to section 501 of the
Bankruptcy Code, (B) an Interest is Allowed pursuant to section 502 of the
Bankruptcy Code or (C) the holder of an Interest has accepted the Plan; and
(iii) preclude all persons from asserting against the Reorganized Debtors,
their successors, or their assets or properties, any other or further Claims
or Interests based upon any act or omission, transaction, or other activity of
any kind or nature that occurred prior to the Effective Date, all pursuant to
sections 524 and 1141 of the Bankruptcy Code. The discharge provided in this
Section 10.1 shall void any judgment obtained against a Debtor at any time, to
the extent that such judgment relates to a discharged Claim or canceled
Interest.

  10.2. Injunction Related to the Discharge. Except as otherwise provided in
the Plan or the Confirmation Order, all entities that have held, currently
hold, or may hold Claims or other debts or liabilities against the Debtors, or
an Interest or other right of an equity security holder in any or all of the
Debtors, that are discharged pursuant to the terms of the Plan are permanently
enjoined, on and after the Effective Date, from taking any of the following
actions on account of any such Claims, debts, liabilities or Interests or
rights: (i) commencing or continuing in any manner any action or other
proceeding of any kind with respect to any such Claim, debt, liability,
Interest or right, other than to enforce any right to a distribution pursuant
to the Plan; (ii) enforcing, attaching, collecting, or recovering in any
manner any judgment, award, decree or order against the Debtors, the
Reorganized Debtors, or their property or interests in property, on account of
any such Claim, debt, liability, Interest or right; (iii) creating,
perfecting, or enforcing any Lien or encumbrance against the Debtors, the
Reorganized Debtors or their property or interests in property on account of
any such Claim, debt, liability, Interest or right; (iv) asserting any right
of setoff, subrogation or recoupment of any kind against any debt, liability
or obligation due to the Debtors or the Reorganized Debtors or against their
property or interests in property on account of any such Claim, debt,
liability, Interest or right; and (v) commencing or continuing any action, in
any manner, in any place that does not comply with or is inconsistent with the
provisions of the Plan

                                      39
<PAGE>

or the Confirmation Order. Such injunction shall extend to any successor of
the Debtors (including, without limitation, the Reorganized Debtors) and their
respective property and interests in property. Any entity injured by any
willful violation of such injunction shall recover actual damages, including
costs and attorneys' and experts' fees and disbursements, and, in appropriate
circumstances, may recover punitive damages, from the willful violator.

  10.3. Release of Liens. Except as otherwise expressly provided in the Plan
or in any contract, instrument, indenture or other agreement or document
expressly incorporated by reference in the Plan, on the Effective Date, all
Liens and rights of setoff against the property of any Estate shall be
released, and all of the right, title and interest of any holder of any Lien
shall revert to the applicable Reorganized Debtor and its successors and
assigns.

  10.4. Term of Bankruptcy Injunction or Stays. All injunctions or stays
provided for in the Chapter 11 Cases, whether under sections 105 or 362 of the
Bankruptcy Code or otherwise, and in existence on the Confirmation Date, shall
remain in full force and effect until the later of the Effective Date or the
date on which the last Disputed Claim has been resolved, whether by consent,
Final Order or otherwise.

  10.5. Releases.

  (a) Releases by the Debtors. As of the Effective Date, each of the Debtors
releases, unconditionally and forever, (i) Berkadia, Leucadia, Berkshire and
their respective Affiliates, and the respective officers, directors,
employees, members, managers, agents, advisors, attorneys and representatives
of each of Berkadia, Leucadia, Berkshire and their respective Affiliates and
(ii) each of the Official Committees, their current and former respective
members (in their capacities as members of such Official Committees), and
their agents, advisors, attorneys and representatives (in such capacities),
from any and all claims, obligations, suits, judgments, damages, rights,
causes of action and liabilities whatsoever (other than the right to enforce
their respective obligations to the Debtors or the Reorganized Debtors under
the Plan and the contracts, instruments, releases and other agreements and
documents delivered thereunder, as applicable), whether liquidated or
unliquidated, fixed or contingent, matured or unmatured, known or unknown,
foreseen or unforeseen, then existing or thereafter arising, in law, equity or
otherwise, that are based in whole or in part upon any act or omission,
transaction, event or other occurrence taking place on or prior to the
Effective Date in any way relating to the Debtors, the Chapter 11 Cases, the
Plan or the Disclosure Statement.

  (b) Releases by Holders of Claims and Interests. As of the Effective Date,
in exchange for their receipt of distributions and other treatment
contemplated under this Plan, each holder of a Claim or Interest releases,
unconditionally and forever, any and all claims, obligations, suits,
judgments, damages, rights, causes of action and liabilities whatsoever (other
than (i) the right to enforce the Debtors' or the Reorganized Debtors'
obligations under the Plan and the contracts, instruments, releases and other
agreements and documents delivered thereunder, (ii) any rights under assumed
contracts, Loan Commitments, Leveraged Leases and other contracts that are not
rejected or otherwise extinguished by order of the Bankruptcy Court or
pursuant to the Plan and (iii) any rights, claims or interests that are
Reinstated under the terms of the Plan), whether liquidated or unliquidated,
fixed or contingent, matured or unmatured, known or unknown, foreseen or
unforeseen, against (A) any Debtor or Affiliate thereof, and (B) Berkadia,
Leucadia, Berkshire and their respective Affiliates, and the respective
officers, directors, employees, members, managers, agents, advisors, attorneys
and representatives of each of Berkadia, Leucadia, Berkshire and their
respective Affiliates, whether then existing or thereafter arising, in law,
equity or otherwise, that are based in whole or in part upon any act or
omission, transaction, event or other occurrence taking place on or prior to
the Effective Date in any way relating to the Debtors, the Chapter 11 Cases,
the Plan or the Disclosure Statement.

  (c) Injunction Related to Releases. The Confirmation Order will constitute
an injunction permanently enjoining the commencement or prosecution by any
Person, whether directly, derivatively or otherwise, of any Claim, demand,
debt, liability, cause of action, right or Interest released and waived
pursuant to the Plan against the released parties.

                                      40
<PAGE>

                                  ARTICLE XI.

                 CONDITIONS TO CONFIRMATION AND EFFECTIVE DATE

  11.1. Conditions to Confirmation. The following conditions shall be met
prior to Confirmation of the Plan:

  (a)  Disclosure Statement Order. An Order finding that the Disclosure
       Statement contains adequate information pursuant to section 1125 of
       the Bankruptcy Code shall have been issued by the Bankruptcy Court no
       later than July 6, 2001.

  (b)  Approval of Commitment Letter. An Order approving the Debtors' entry
       into the Commitment Letter, including with respect to all fees and
       expenses set forth therein, shall have been issued by the Bankruptcy
       Court no later than the earlier of (i) the date of issuance of the
       order approving the Disclosure Statement, as described in Section
       11.1(a), and (ii) July 6, 2001.

  (c)  Approval of Management Agreement. An Order approving the Debtors'
       entry into the Management Agreement, including with respect to all
       fees and expenses set forth therein, shall have been issued by the
       Bankruptcy Court no later than the earlier of (i) the date of issuance
       of the order approving the Disclosure Statement, as described in
       Section 11.1(a), and (ii) July 6, 2001.

  11.2. Conditions to the Effective Date. The following are conditions
precedent to, or shall occur simultaneously with, the Effective Date:

  (a)  Confirmation Order. A Confirmation Order, in form and substance
       reasonably satisfactory to the Debtors, Berkadia, Leucadia and
       Berkshire, shall have been entered by the Bankruptcy Court and become
       a Final Order.

  (b)  Additional Group Common Stock. The Additional Group Common Stock to be
       issued to the Berkadia Parties shall be duly authorized and, with the
       occurrence of the Effective Date, validly issued and outstanding,
       fully paid, and nonassessable.

  (c)  Necessary Approvals. All necessary governmental approvals for the
       Restructuring Transactions, including but not limited to approval
       under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
       amended, the Competition Act of Canada, and the Competition Act of
       England, if required, shall have been obtained. The Additional Group
       Common Stock to be issued to the Berkadia Parties on the Effective
       Date shall have been approved for listing on the New York Stock
       Exchange upon official notice of issuance, if the common stock of FNV
       Group is listed on the New York Stock Exchange on such date (or
       approved for listing or quotation by such other securities exchange or
       quotation system on which the FNV Group common stock is then listed or
       quoted).

  (d)  Restructuring Transactions. All conditions precedent to the
       Restructuring Transactions, as set forth herein or in a Restructuring
       Document, shall have been satisfied.

  (e)  No Revocation. No request for revocation of the Confirmation Order
       under section 1144 of the Bankruptcy Code shall be pending as of the
       Effective Date or, if such a request has been made, then such request
       shall have been denied by a Final Order.

  (f)  New Corporate Documents. The New Corporate Documents referenced in
       Section 6.3(a) shall have been authorized and, to the extent necessary
       under applicable law, filed; the Rights Plan shall have been amended
       to provide for the termination thereof and for the expiration of the
       Rights thereunder, without any payment by FNV Group and without the
       Rights thereunder having separated from the FNV Group common stock or
       having become exercisable; and such Corporate Documents and Rights
       Plan amendment shall, with the occurrence of the Effective Date, be in
       full force and effect.

  (g)  New Senior Notes Indenture. The New Senior Notes Indenture shall be
       qualified under the Trust Indenture Act of 1939, as amended.

  (h)  Other. All actions, other documents and agreements necessary to
       implement the Plan shall be executed and delivered on the Effective
       Date.

                                      41
<PAGE>

  11.3. Waiver of Conditions.  The Debtors may, at their option, but only with
Berkadia's written consent, waive the conditions set forth in Sections 11.1
and 11.2, provided, however, that the Debtors may not waive entry of the
Disclosure Statement Order, entry of the Confirmation Order, or any condition
the waiver of which is proscribed by law. Any such waivers shall be evidenced
by a writing, signed by the waiving parties and served upon counsel for the
Official Committees and the United States Trustee and filed with the
Bankruptcy Court. The waiver may be a conditional one, such as to extend the
time under which a condition may be satisfied.

  11.4. Effect of Failure of Conditions. In the event that the conditions
specified in Section 11.2 have not been satisfied or waived in the manner
provided in Section 11.3 on or before August 31, 2001, then upon written
notification filed by the Debtors with the Bankruptcy Court and served upon
counsel for Berkadia, Berkshire, Leucadia and the Official Committees and the
Office of the United States Trustee, (a) the Confirmation Order shall be
vacated, (b) no distributions under the Plan shall be made, (c) the Debtors
and all holders of Claims and Interests shall be restored to the status quo
ante as of the day immediately preceding the Confirmation Date as though the
Confirmation Date had never occurred, and (d) all the Debtors' obligations
with respect to the Claims and Interests shall remain unchanged and nothing
contained herein shall be deemed to constitute a waiver or release of any
claims by or against the Debtors or any other person or to prejudice in any
manner the rights of the Debtors or any person in any further proceedings
involving the Debtors.

                                 ARTICLE XII.

                           ADMINISTRATIVE PROVISIONS

  12.1. Retention of Jurisdiction. The Bankruptcy Court shall have exclusive
jurisdiction of all matters arising out of, and related to, the Chapter 11
Cases and the Plan pursuant to, and for the purposes of, sections 105(a) and
1142 of the Bankruptcy Code and for, among other things, the following
purposes:

  (a)  To hear and determine pending applications for the assumption or
       rejection of executory contracts or unexpired leases, and the
       allowance of Claims resulting therefrom;

  (b)  To determine any and all applications, adversary proceedings and
       contested matters commenced in connection with the Chapter 11 Cases,
       whether commenced prior to or after the Effective Date;

  (c)  To hear and determine any objections to Administrative Claims or to
       other Claims or any controversies as to the classification of any
       Claims, provided that only the Debtors may file objections to Claims;

  (d)  To liquidate, or address any issue involving, any Disputed Claim or
       Disputed Interest;

  (e)  To determine any Claim of or liability to a governmental unit that may
       be asserted as a result of the transactions contemplated herein;

  (f)  To enter and implement such orders as may be necessary or appropriate
       in the event the Confirmation Order is for any reason stayed, revoked,
       modified, or vacated;

  (g)  To issue such orders in aid of execution of the Plan as may be
       necessary or appropriate to carry out its intent and purpose or to
       implement the Plan; or in furtherance of the discharge, to the extent
       authorized by section 1142 of the Bankruptcy Code;

  (h)  To consider any modifications of the Plan, to cure any defect or
       omission, or reconcile any inconsistency in any order of the
       Bankruptcy Court, including, without limitation, the Confirmation
       Order as may be necessary to carry out its purpose and the intent of
       the Plan;

  (i)  To hear and determine all applications by Professionals for
       compensation and reimbursement of expenses;

  (j)  To ensure that distributions and rights granted to holders of Allowed
       Claims and Allowed Interests are accomplished as provided herein;

  (k)  To value the Additional Group Common Stock, New Group Preferred Stock
       and Additional Mezzanine Common Stock, if any, to be distributed
       pursuant to the Plan;

                                      42
<PAGE>

  (l)  To hear and determine disputes arising in connection with the
       interpretation, implementation, or enforcement of the Plan;

  (m)  To enforce this Plan, the Confirmation Order and any other order,
       judgment, injunction or ruling entered or made in the Chapter 11
       Cases, including, without limitation, the injunction, exculpation and
       releases provided for in this Plan;

  (n)  To recover all assets of the Debtors and all property of their
       Estates, wherever located;

  (o)  To hear and determine matters concerning state, local and federal
       taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy
       Code;

  (p)  To determine the validity, extent, priority and nonavoidability of
       Liens and other encumbrances;

  (q)  To hear any other matter not inconsistent with the Bankruptcy Code;
       and

  (r)  To enter a final decree closing the Chapter 11 Cases.

                                 ARTICLE XIII.

                           MISCELLANEOUS PROVISIONS

  13.1. Plan Supplement. No later than ten Business Days prior to the deadline
for objections to Confirmation, the Debtors shall file with the Bankruptcy
Court in the Plan Supplement such Exhibits, Schedules, agreements and other
documents as may be necessary or appropriate to effectuate and further
evidence the terms and conditions of the Plan. Such documents shall include
the Berkadia Loan Documents, the Restructuring Documents and the New Corporate
Documents, as well as any Exhibits to the Plan that have not already been
filed or that have been amended since the original filing date. Upon the
filing of the Plan Supplement with the Court, (i) the Debtors will serve
copies of the Plan Supplement on the Office of the United States Trustee and
counsel for Berkadia, Leucadia, Berkshire and the Official Committees and (ii)
the Plan Supplement may be inspected in the office of the Clerk of the
Bankruptcy Court during normal court hours. Holders of Claims or Interests may
obtain a copy of the Plan Supplement upon written request to the Debtors'
counsel. The Plan Supplement is incorporated into, and is a part of, this Plan
as if set forth in full herein, and all references to this Plan shall refer to
this Plan together with all documents contained in the Plan Supplement.

  13.2. Termination of Official Committees. Except as otherwise provided in
this Section 13.2, on the later of the date on which (a) the Effective Date
has occurred and (b) the Confirmation Order has become a Final Order, the
Official Committees shall cease to exist and their members, employees or
agents (including without limitation, attorneys, investment bankers, financial
advisors, accountants and other professionals) shall be released and
discharged from any further authority, duties, responsibilities and
obligations relating to, arising from, or in connection with the applicable
Official Committee. The Official Committees shall continue to exist after such
date solely with respect to (i) all applications filed pursuant to sections
330 and 331 of the Bankruptcy Code seeking payment of fees and expenses
incurred by any professional, and any matters pending as of the Effective Date
in the Chapter 11 Cases, until such matters are finally resolved, (ii) any
post-Confirmation modifications to the Plan or Confirmation Order and (iii)
any matters pending as of the Effective Date before the Bankruptcy Court to
which the applicable Official Committee is a party, until such matters are
resolved.

  13.3. Employment and Payment of Debtors' Professionals After Effective
Date. The Reorganized Debtors may employ and pay professionals, including any
Professionals retained in the Chapter 11 Cases, with respect to services to be
rendered after the Effective Date, including services in connection with the
implementation and consummation of the Plan, without further order of the
Bankruptcy Court.

  13.4. Limitation of Liability. The Debtors, the Reorganized Debtors,
Berkadia, Leucadia, Berkshire and their respective Affiliates, and the
respective officers, directors, employees, members, managers, agents,
advisors, attorneys and representatives of Berkadia, Leucadia, Berkshire or
their respective Affiliates (acting in such

                                      43
<PAGE>

capacity), shall neither have nor incur any liability to any entity for any
act taken or omitted to be taken in connection with or related to the
formulation, preparation, dissemination, implementation, confirmation or
consummation of the Plan, the Disclosure Statement or any contract,
instrument, release or other agreement or document created or entered into, or
any other act taken or omitted to be taken in connection with the Plan;
provided, however, that, with respect to any Person (other than Berkadia,
Leucadia, Berkshire and their respective Affiliates, and the respective
officers, directors, employees, members, managers, agents, advisors, attorneys
and representatives of each of Berkadia, Leucadia, Berkshire and their
respective Affiliates (acting in such capacity)), the foregoing provisions of
this Section 13.4 shall have no effect on the liability that would otherwise
result from any such act or omission to the extent that such act or omission
is determined in a Final Order to have constituted gross negligence or willful
misconduct.

  13.5. Amendment or Modification of Plan. Alterations, amendments or
modifications of the Plan may be proposed in writing by the Debtors at any
time prior to the Confirmation Date, if the Plan, as altered, amended or
modified, satisfies the conditions of sections 1122 and 1123 of the Bankruptcy
Code, and the Debtors have complied with section 1125 of the Bankruptcy Code.
The Plan may be altered, amended or modified at any time after the
Confirmation Date and before the Effective Date, provided that the Plan, as
altered, amended or modified, satisfies the requirements of sections 1122 and
1123 of the Bankruptcy Code, and the Bankruptcy Court after notice and hearing
confirms the Plan as altered, amended or modified. A holder of a Claim or
Interest that has accepted the Plan shall be deemed to have accepted the Plan
as altered, amended or modified if the proposed alteration, amendment or
modification does not materially and adversely change the treatment of the
Claim or Interest of the holder. Otherwise, the Debtors may alter, amend or
modify the treatment of Claims and Interests provided for under the Plan only
if the holders of Claims or Interests affected thereby agree or consent to any
such alteration, amendment or modification. Without limiting the conditions
set forth in Article XI, Berkadia shall not be required to fund the Berkadia
Loan unless the Plan as altered, amended or modified is in form and substance
reasonably satisfactory to Berkadia.

  13.6. Severability. In the event that the Bankruptcy Court determines, prior
to the Confirmation Date, that any provision in the Plan is invalid, void or
unenforceable, the Debtors may, at their option, (a) treat such provision as
invalid, void or unenforceable with respect to the holder or holders of such
Claims or Interests as to which the provision is determined to be invalid,
void or unenforceable, in which case such provision shall in no way limit or
affect the enforceability and operative effect of any other provision of the
Plan, or (b) alter, amend, revoke, or withdraw the Plan; provided, however,
that Berkadia shall not be required to fund the Berkadia Loan unless the Plan
after such severance, alteration, amendment or modification is in form and
substance reasonably satisfactory to Berkadia.

  13.7. Inconsistency. Except as provided in the following sentence, in the
event of any inconsistency between the Plan and the Disclosure Statement, any
exhibit to the Plan or Disclosure Statement or any other instrument or
document created or executed pursuant to the Plan, the Plan shall govern. In
the event of any inconsistency between the Plan and the Restructuring
Documents, any exhibit thereto or any other instrument or document created or
executed pursuant to the Restructuring Documents, the Restructuring Documents
shall govern.

  13.8. Revocation or Withdrawal of Plan. The Debtors reserve the right to
revoke or withdraw the Plan prior to the Confirmation Date. If the Debtors
revoke or withdraw the Plan prior to the Confirmation Date, then the Plan
shall be deemed null and void. In such event, nothing contained herein shall
be deemed to constitute a waiver or release of any claims by or against the
Debtors or any other person or to prejudice in any manner the rights of the
Debtors or any person in any further proceedings involving the Debtors.

  13.9. Governing Law. Except to the extent that the Bankruptcy Code or
Bankruptcy Rules are applicable, or other federal laws apply, and except for
Reinstated Claims or assumed executory contracts or unexpired leases governed
by another jurisdiction's law, the rights and obligations arising under the
Plan shall be governed by, and construed and enforced in accordance with, the
laws of the State of New York, without giving effect to the principles of
conflicts of law thereof.

                                      44
<PAGE>

  13.10. Binding Effect. Except as otherwise provided in section 1141(d) of
the Bankruptcy Code, on and after the Confirmation Date, the provisions of
this Plan shall be binding upon and inure to the benefit of the Debtors, any
holder of a Claim against, or Interest in, the Debtors and their respective
successors and assigns, whether or not the Claim or Interest of such holder is
impaired under this Plan and whether or not such holder has accepted this
Plan.

  13.11. Headings. Captions and headings to Articles and Sections are used in
this Plan for convenience and reference only and are not intended to be a part
of or to affect the interpretation of the Plan.

  13.12. Notices. Any notice required or permitted to be provided under the
Plan shall be in writing and served by either (a) certified mail, return
receipt requested, postage prepaid, (b) hand delivery, (c) facsimile or (d)
reputable overnight delivery service, freight prepaid. If to the Debtors, any
such notice shall be directed to the following at the addresses set forth
below:

    The FINOVA Group Inc., et al.
    4800 N. Scottsdale Road, 6W90
    Scottsdale, Arizona 85251-7623
    Attention: William J. Hallinan
               Richard Lieberman

    with a copy to

    Gibson, Dunn & Crutcher LLP
    200 Park Avenue
    New York, New York 10166
    Attention: Jonathan M. Landers
               Janet M. Weiss

                                      45
<PAGE>

                                          The FINOVA Group Inc., et al.,
                                          Debtors

                                               /s/ William J. Hallinan
                                          By: _________________________________
                                                    William J. Hallinan
                                            Authorized Officer for the Debtors

                                          Richards, Layton & Finger, P.A.

                                               /s/ Deborah E. Spivack
                                          By: _________________________________
                                            Mark D. Collins (No. 2981)
                                            Daniel J. DeFranceschi (No. 2732)
                                            Deborah E. Spivack (No. 3220)
                                            One Rodney Square
                                            P. O. Box 551
                                            Wilmington, Delaware 19899
                                            Telephone: (302) 658-6541
                                            Facsimile: (302) 658-6548

                                                    -and-

                                            Jonathan M. Landers
                                            Janet M. Weiss
                                            M. Natasha Labovitz
                                            GIBSON, DUNN & CRUTCHER LLP
                                            200 Park Avenue
                                            New York, New York 10166-0193
                                            Telephone: (212) 351-4000
                                            Facsimile: (212) 351-4035

                                            Attorneys for Debtors

Dated: June 13, 2001
    Wilmington, Delaware

                                       46
<PAGE>

                      EXHIBIT 1.11--BANK CREDIT AGREEMENTS
                             (As of March 7, 2001)

<TABLE>
<CAPTION>
 Entity                                Facility
 ------                                --------
 <C>                                   <S>
 FINOVA Capital Corporation........... $1 Billion Credit Agreement (Short Term
                                       Facility) dated as of May 16, 1994

 FINOVA Capital Corporation........... $1 Billion Sixth Amendment and
                                       Restatement dated as of May 16, 1994 of
                                       Credit Agreement dated as of May 31,
                                       1976

 FINOVA Capital Corporation........... $600 Million Credit Agreement dated as
                                       of May 19, 1998

 FINOVA Capital Corporation........... $500 Million Credit Agreement (Short
                                       Term Facility) dated as of May 5, 1999

 FINOVA Capital Corporation........... $700 Million Credit Agreement dated as
                                       of March 21, 1995

 FINOVA Capital Corporation........... $700 Million Credit Agreement dated as
                                       of May 15, 1996

 FINOVA Capital plc................... $100 Million Credit and Guarantee
                                       Agreement dated as of July 7, 1997

 FINOVA (Canada) Capital Corporation.. CAD $150 Million Credit Agreement dated
                                       as of July 23, 1998
</TABLE>

                                       47
<PAGE>

                        EXHIBIT 1.37--DEBT SECURITIES(1)

<TABLE>
<CAPTION>
                                                                        PRINCIPAL
                                                                          AMOUNT
       INDENTURE          CURRENT TRUSTEE:           DATED AS OF:      OUTSTANDING:
       ---------          ----------------           ------------     --------------
 <C> <S>             <C>                         <C>                  <C>
  1. Security        US Bancorp Trust            November 1, 1990     $  305,675,000
     Pacific         National Association        Supp. Indentures:
     National                                    1st--2/12/92;
     Bank                                        2nd--2/20/92;
                                                 3rd--5/4/92;
                                                 4th--4/17/92

  2. Greyhound       HSBC                        September 1, 1992    $  230,000,000
     Financial
     Corporation
     and the
     Chase
     Manhattan
     Bank, N.A.

  3. First           The Bank of New York        October 1, 1995      $  970,000,000
     Interstate
     Bank of
     Arizona,
     N.A.

  4. First           Wilmington Trust            March 20, 1998       $1,900,000,000
     National
     Bank of
     Chicago

  5. Norwest Bank    Wilmington Trust            May 15, 1999         $  250,000,000
     Minnesota,
     N.A.

  6. FMB Bank        Wilmington Trust            May 15, 1999         $  225,000,000

  7. First           Wilmington Trust            May 15, 1999         $2,005,000,000
     National
     Bank of
     Chicago

  8. The Chase       Chase London (Fiscal Agent) June 4, 1998         $  418,592,000
     Manhattan                                   (covenants contained        (FINOVA
     Bank--London                                in Terms and             Capital as
     branch (no                                  Conditions of Notes)     guarantor)
     US
     registration
     or Indenture)

  9. Bear Stearns                                February 11, 1982    $    4,000,000
     Securities
     Corp
     formerly
     Prudential
     Securities

 10. Morgan                                      December 14, 1987    $    5,812,928
     Guaranty
     Trust
     Company for
     Kingsley &
     Co.
     (Sundstrand
     Lease)

 11. Phoenix Home                                September 1, 1996    $      950,000
     Life Mutual
     Insurance
     Company

 12. Fleet           State Street Bank           December 11, 1996    $  115,000,000(2)
     National
     Bank (FINOVA
     Finance
     Trust)
</TABLE>
--------
(1) PLEASE NOTE: THE DEFINED TERM "DEBT SECURITIES" INCLUDES ALL PUBLIC NOTES
    ISSUED BY FNV CAPITAL.
(2) (This amount excludes securities that are owned indirectly by FNV Group.)

                                       48
<PAGE>

                        EXHIBIT 1.69--INDENTURE TRUSTEES

FINOVA Capital Corporation
Trustees as of 3/7/01
(in millions)

<TABLE>
<CAPTION>
                                             Debt
     Institution          Creditor Type   Outstanding   Contact Name            Address            Phone Number      Fax Number
     -----------          -------------   -----------   ------------            -------            ------------      ----------
<S>                     <C>               <C>         <C>               <C>                      <C>              <C>
The Bank of New York    Indenture Trustee  $  920.00  Walter Gitlin     101 Barclay Street         (212) 815-5375   (212) 815-5915
                                                                        New York, NY 10286

Chase Manhattan         Indenture Trustee  $  418.59  Mark Storey       1 Chaseside              44 1 202 347 436 44 1 202 347 438
 Bank--London                                                           Bournemouth BH7 7DB
                                                                        United Kingdom

US Bank Trust National  Indenture Trustee  $  305.68  Robert Von Hess   101 N. First Avenue,       (602) 371-3568   (602) 371-3728
 Association                                                            Suite 2000
                                                                        Phoenix, AZ 85003

HSBC Bank USA           Indenture Trustee  $  230.00  Rosario Palladino Issuer Services            (212) 525-1324   (212) 525-1300
 (formerly Chase)                                                       452 Fifth Avenue
                                                                        New York, NY 10018-2706

Wilmington Trust        Indenture Trustee  $4,380.00  Steven Cimalore   Rodney Square North        (302) 651-8681   (302) 427-4749
 (successor trustee to                                                  1100 North Market Street
 Bank One, Allfirst,                                                    Wilmington DE 19890-0001
 Wells)

State Street            Trustee            $  115.00  Robert Butzier                               (617) 662-1751
 Bank--TOPrS--FINOVA
 Finance Trust
</TABLE>

                                       49
<PAGE>

                       EXHIBIT 1.75--LEVERAGED LEASES(1)

<TABLE>
<CAPTION>
                                                           Equity  EMA as of
    Line of Business              Customer Name            State   12/31/00
    ----------------    --------------------------------   ------ -----------
 <C>                    <S>                                <C>    <C>
 Specialty Real Estate  Accor/Sofitel Hotels                 PA   $ 5,518,502
 Specialty Real Estate  Accor/Sofitel Hotels                 NY   $10,309,438
 Specialty Real Estate  Barclays Wall Street Realty Co       NY   $14,129,880
 Specialty Real Estate  BellSouth Corporation                FL   $ 9,105,318
 Specialty Real Estate  BellSouth Corporation                NC   $21,300,204
 Specialty Real Estate  Branch Banking & Trust Co.           NC   $ 5,181,879
 Specialty Real Estate  CBS, Inc.                            MD   $ 6,923,279
 Specialty Real Estate  CBS, Inc.                            FL   $10,384,919
 Specialty Real Estate  CBS, Inc.                            PA   $42,375,243
 Specialty Real Estate  Continental Corp.                    NY   $ 3,495,677
 Specialty Real Estate  Continental Corp.                    NJ   $ 6,340,888
 Specialty Real Estate  Continental Corp.                    OH   $ 5,796,144
 Specialty Real Estate  Cornerstone Columbia Devel. Co       WA   $24,002,609
 Specialty Real Estate  Kroger Company                       LA   $   506,135
 Specialty Real Estate  Kroger Company                       KY   $   557,483
 Specialty Real Estate  Kroger Company                       NC   $   572,153
 Specialty Real Estate  Kroger Company                       MS   $   623,500
 Specialty Real Estate  Kroger Company                       MO   $   660,177
 Specialty Real Estate  Kroger Company                       TN   $ 1,247,000
 Specialty Real Estate  Kroger Company                       GA   $ 1,364,365
 Specialty Real Estate  Kroger Company                       TX   $ 1,804,483
 Specialty Real Estate  Nevada Savings & Loan Assoc.         NV   $33,214,899
 Specialty Real Estate  Safeway Stores, Inc.                 AZ   $ 1,336,012
 Specialty Real Estate  Safeway Stores, Inc.                 MO   $ 1,799,905
 Specialty Real Estate  Safeway Stores, Inc.                 FL   $ 3,618,367
 Specialty Real Estate  Safeway Stores, Inc.                 WA   $ 5,211,425
 Specialty Real Estate  Safeway Stores, Inc.                 TX   $ 6,605,839
 Specialty Real Estate  Sundstrand Corporation               IL   $ 3,474,203
 Specialty Real Estate  Sundstrand Corporation               IL   $ 5,907,193
 Specialty Real Estate  Swiss Bank Corporation               CT   $26,021,064
 Specialty Real Estate  Winn-Dixie Stores, Inc.              FL   $ 3,375,065
 Transportation Finance A.I. Leasing II, Inc.                VA   $ 6,675,739
 Transportation Finance ACA/7/22                             VA   $ 5,207,895
 Transportation Finance Alaska Airlines, Inc. 756/760        WA   $21,595,754
 Transportation Finance Alaska Airlines, Inc. N788           WA   $10,353,607
 Transportation Finance Alaska N769AS                        WA   $10,618,227
 Transportation Finance Alaska N791AS                        WA   $10,174,491
 Transportation Finance American Trans Air, Inc.--516        IN   $23,003,306
 Transportation Finance American Trans Air, Inc.--517        IN   $16,493,165
                        American Trans Air, Inc.--Engine
 Transportation Finance 449                                  IN   $ 2,970,736
 Transportation Finance ATL--ACA7186                         VA   $ 5,238,877
 Transportation Finance ATL--ACA7211                         VA   $ 5,199,222
 Transportation Finance ATL--ACA7214                         VA   $ 5,160,681
 Transportation Finance ATLAS--N491MC                        CO   $45,235,677
 Transportation Finance ATLAS--N493MC                        CO   $46,430,840
 Transportation Finance Cargill                              MN   $10,805,107
 Transportation Finance Con N27610                           TX   $ 9,206,418
 Transportation Finance Conrail 30                           PA   $17,356,592
</TABLE>
--------
(1) Leveraged Leases with respect to Continental Airlines, Inc., include leases
    with respect to aircraft numbers N16234, N14237, N14604, N16607, N33608,
    N27610, N14613, N16618, N18622, N17245 and N14628. In addition, the Debtors
    are reviewing whether the transaction with respect to aircraft number
    N14810 is a Leveraged Lease.

                                       50
<PAGE>

<TABLE>
<CAPTION>
                                                       Equity  EMA as of
   Line of Business             Customer Name          State   12/31/00
   ----------------     ------------------------------ ------ -----------
<S>                     <C>                            <C>    <C>
Transportation Finance  Continental 11/99                TX   $11,486,401
Transportation Finance  Continental 604                  TX   $ 7,802,456
Transportation Finance  Continental 607                  TX   $ 7,714,118
Transportation Finance  Continental 608                  TX   $ 7,698,123
Transportation Finance  Continental 613                  TX   $ 8,123,315
Transportation Finance  Continental 618                  TX   $ 7,910,188
Transportation Finance  Continental 622                  TX   $ 7,954,258
Transportation Finance  Continental 628                  TX   $ 9,960,051
Transportation Finance  Continental N14237               TX   $11,266,016
Transportation Finance  Continental N16234               TX   $11,253,017
Transportation Finance  Delta N617DL                     GA   $15,460,540
Transportation Finance  GATC -501 railcars               TX   $16,034,555
Transportation Finance  Horizon 345                      WA   $ 2,677,903
Transportation Finance  Horizon 346                      WA   $ 2,687,483
Transportation Finance  Horizon 347                      WA   $ 2,706,644
Transportation Finance  Horizon 348                      WA   $ 2,728,201
Transportation Finance  Horizon 354                      WA   $ 2,885,335
Transportation Finance  Horizon 356                      WA   $ 2,864,287
Transportation Finance  Horizon 358                      WA   $ 2,546,744
Transportation Finance  Horizon 359                      WA   $ 2,557,446
Transportation Finance  Horizon 360                      WA   $ 2,606,315
Transportation Finance  Horizon 362                      WA   $ 2,659,581
Transportation Finance  Horizon 364                      WA   $ 2,775,675
Transportation Finance  Horizon 365PH                    WA   $ 2,785,334
Transportation Finance  Horizon 366                      WA   $ 2,763,085
Transportation Finance  Horizon 367PH                    WA   $ 2,785,348
Transportation Finance  Northwest Airlines 1995 N535US   MN   $24,930,313
Transportation Finance  Northwest Airlines 1996 N537US   MN   $19,037,868
Transportation Finance  Northwest Airlines N501/6        MN   $35,606,538
Transportation Finance  Union Pacific                    NE   $17,353,984
Transportation Finance  United 505                       IL   $12,363,443
Transportation Finance  United 517                       IL   $13,241,357
Transportation Finance  United 525                       IL   $15,718,811
Transportation Finance  UP St Louis SW                   NE   $   (16,204)
Transportation Finance  US Airways N101                  VA   $11,464,260
Transportation Finance  US Airways N706                  VA   $ 9,855,646
Transportation Finance  US Airways N707                  VA   $ 9,854,922
Transportation Finance  Western Fuels Assoc. Inc.        CO   $ 1,818,750
</TABLE>

                                       51
<PAGE>

              EXHIBIT 1.81--NEW GROUP PREFERRED STOCK TERM SHEET

Issuer.......................  The FINOVA Group Inc.

Security.....................  Shares of 6% Perpetual Non-Cumulative
                               Redeemable Preferred Stock (the "New Group
                               Preferred Stock") with an aggregate liquidation
                               preference equal to the Excess Amount, if any,
                               attributable to Allowed Debt Securities
                               (S)510(b) Claims in Class FNV Capital-5.

Dividends....................  Non-cumulative cash dividends on the New Group
                               Preferred Stock will be payable at a rate of 6%
                               per annum of the per share liquidation
                               preference when, as and if declared by the
                               Board of Directors. To the extent dividends are
                               declared, they will be payable semi-annually on
                               the semi-annual payment dates for the New
                               Senior Notes.

Ranking......................  The New Group Preferred Stock will rank senior
                               to the FNV Group common stock (and any other
                               FNV Group stock without a liquidation
                               preference) and pari passu with or junior to
                               any other FNV Group preferred stock, as
                               determined by the FNV Group Board of Directors,
                               both as to dividends and upon liquidation,
                               dissolution or winding up. No dividends on the
                               FNV Group common stock may be paid unless
                               dividends for the then current period (but not
                               prior periods) are paid on the New Group
                               Preferred Stock.

Liquidation Preference.......  If FNV Group dissolves, is liquidated or is
                               wound up, holders of the New Group Preferred
                               Stock will be entitled to receive, out of any
                               assets available for distribution to
                               stockholders after satisfaction of the
                               preferences of any FNV Group preferred stock
                               that is senior to the New Group Preferred
                               Stock, up to the per share liquidation
                               preference, plus declared and unpaid dividends,
                               if any, prior to any payment being made to the
                               holders of FNV Group common stock or any other
                               junior stock with respect to the distribution
                               of assets upon dissolution, winding up or
                               liquidation.

Optional Redemption..........  FNV Group will have the option to redeem the
                               New Group Preferred Stock at any time or from
                               time to time, in whole or in part, at a
                               redemption price equal to the per share
                               liquidation preference, plus declared and
                               unpaid dividends, if any, to the redemption
                               date.

Open Market or Negotiated
 Repurchases.................
                               FNV Group may repurchase New Group Preferred
                               Stock at any time and from time to time, in
                               whole or in part, in the open market or
                               negotiated transactions.

                                      52
<PAGE>

Voting Rights................  None, except:

                               . with respect to changes in the terms of the
                                 New Group Preferred Stock that are materially
                                 adverse to the holders of the New Group
                                 Preferred Stock; and

                               . in the event the FNV Group Board of Directors
                                 does not declare dividends on the New Group
                                 Preferred Stock for six consecutive dividend
                                 periods, the size of the Board of Directors
                                 will be increased by one and the holders of
                                 the New Group Preferred Stock, voting as a
                                 separate class, will be entitled to elect one
                                 director, who shall serve until such time as
                                 dividends have been declared and have been
                                 paid with respect to one semi-annual dividend
                                 period.

                                       53
<PAGE>

                   EXHIBIT 6.2(a)--BERKADIA LOAN TERM SHEET

  This Summary of Terms and Conditions outlines certain terms of the Facility
referred to in the Commitment Letter dated February 26, 2001 among The FINOVA
Group Inc. ("FNV"), FINOVA Capital Corporation (the "Company" or the
"Borrower"), Lender, Berkshire and Leucadia (the "Commitment Letter") as
amended by letter agreements dated May 2, 2001, May 30, 2001, June 10, 2001
and June 13, 2001. This Summary of Terms and Conditions is part of and subject
to the Commitment Letter. Certain capitalized terms used herein are defined in
the Commitment Letter.

Borrower:....................  The Company.

Guarantors:..................  FNV and all of FNV's direct and indirect
                               subsidiaries other than (i) the Company and
                               (ii) any special purpose subsidiary that is
                               contractually prohibited (as of February 26,
                               2001) from acting as a guarantor (the
                               "Guarantors").

Lender:......................  Berkadia LLC ("Lender").

The Facility:................  A five-year amortizing term loan made to the
                               Borrower in a single drawing on the Closing
                               Date in a principal amount of $6,000,000,000
                               (the "Term Loan"), mandatorily prepayable with
                               cash flows as set forth under "Prepayments."

                               The final maturity date for the Term Loan will
                               be five years from the Closing Date.

Closing Date:................  On or before August 31, 2001.

Purpose:.....................  Proceeds of the Term Loan will be used solely
                               to repay a portion of the pre-petition debt and
                               post-petition interest of the Company and its
                               subsidiaries in accordance with the Plan.

Interest:....................  The Term Loan will bear interest at a floating
                               rate equal to:

                               the current LIBO rate (for a period not to
                               exceed six months and to be determined prior to
                               execution of the loan documentation) as quoted
                               by Telerate Page 3750, adjusted for reserve
                               requirements, if any, applicable to Lender's
                               source of funds and subject to customary change
                               of circumstance provisions and reserve
                               requirements applicable to Lender and Lender's
                               provider of funds (the "LIBO Rate"), plus 2.25%
                               per annum.

                               The interest rate shall be reset daily and
                               interest shall be calculated on the basis of
                               the actual number of days elapsed in a 360-day
                               year.

                               Interest shall be payable quarterly.

Default Interest:............  During the continuance of an event of default
                               (as defined in the loan documentation), the
                               Term Loan (including unpaid interest and unpaid
                               default interest) will bear interest at an
                               additional 2% per annum.

                                      54
<PAGE>

Prepayments:.................  Following the (i) payment of or funding of a
                               reserve for accrued interest on the Term Loan,
                               (ii) payment of operating expenses and taxes of
                               FNV, the Company and their respective
                               subsidiaries, (iii) funding of reasonable
                               reserves for (a) revolving and unfunded
                               commitments existing at the Closing Date and
                               acceptable to Lender, (b) commitments otherwise
                               acceptable to Lender and (c) general corporate
                               purposes of FNV, the Company and their
                               respective subsidiaries, and (iv) payment of
                               accrued interest on the Senior Notes, mandatory
                               prepayments of the Term Loan without premium
                               thereon shall be required in an amount equal to
                               the aggregate net positive amount of each of
                               (x) 100% of the net sale proceeds from asset
                               sales, (y) 100% of excess cash flow (to be
                               defined in the loan documentation) and (z) 100%
                               of net proceeds from insurance and
                               condemnation, in each case received by FNV, the
                               Company or any of its subsidiaries, except to
                               the extent any special purpose subsidiary is
                               subject (as of February 26, 2001) to a
                               contractual restriction on making distributions
                               to its parent entity. In no event shall the
                               Company or its subsidiaries make any prepayment
                               on the Term Loan out of any refinancing or
                               issuance of securities.

Security:....................  All amounts owing by and the obligations of the
                               Company under the Term Loan and the Guarantors
                               in respect thereof will be secured by (i) a
                               first priority perfected pledge of (x) all
                               notes owned by the Company and the Guarantors
                               and (y) all capital stock, securities,
                               partnership and LLC interests owned by the
                               Company and the Guarantors and (ii) a first
                               priority perfected security interest in all
                               other assets owned by the Company and the
                               Guarantors, including, without limitation,
                               accounts, inventory, equipment, investment
                               property, instruments, chattel paper, real
                               estate, leasehold interests, contracts,
                               patents, copyrights, trademarks and other
                               general intangibles, subject to customary
                               exceptions for transactions of this type.

Conditions Precedent to the
Closing:.....................  The loan documentation will contain conditions
                               to the closing of the Facility customarily
                               found in loan agreements for similar financings
                               and transactions of this type and other
                               conditions deemed by Lender to be appropriate
                               to the specific transaction and in any event
                               including without limitation:

                               . All documentation relating to the Facility
                                 shall be in form and substance satisfactory
                                 to the Company and its counsel and Lender and
                                 its counsel. Guarantees in form and substance
                                 satisfactory to the Lender and its counsel
                                 shall have been executed and delivered by the
                                 Guarantors, and shall be in full force and
                                 effect.

                               . FNV and the Company shall not be in default
                                 of any of their obligations under the
                                 Commitment Letter.

                               . The terms and conditions of, and
                                 documentation relating to the Senior Notes,
                                 the principal terms of which are outlined on
                                 Exhibit A to this Annex I together with any
                                 changes thereto as may be agreed to by
                                 Lender, shall be satisfactory to Lender,
                                 including in the case of such debt the extent
                                 of subordination, security, absence

                                      55
<PAGE>

                               of guarantees, amortization, maturity,
                               prepayments, limitations on remedies and
                               acceleration, covenants, events of default,
                               interest rate and other intercreditor
                               arrangements. All conditions precedent to the
                               issuance of the Senior Notes shall have been
                               satisfied or, with the prior approval of
                               Lender, waived and the Senior Notes shall be
                               issued concurrently with the closing of the
                               Facility.

                              . FNV, the Company and certain of their
                                subsidiaries (the "Debtors") shall have filed
                                voluntary petitions for relief under chapter
                                11 of the Bankruptcy Code (the "Chapter 11
                                Cases") in the Bankruptcy Court and (i) all
                                motions and other documents to be filed with
                                and submitted to the Bankruptcy Court in
                                connection with the Facility and the
                                Management Agreement, the fees and
                                transactions contemplated thereby and the
                                approval thereof and (ii) the plan of
                                reorganization of each of the Debtors shall be
                                in form and substance reasonably satisfactory
                                to Lender.

                              . An order of the Bankruptcy Court granting
                                approval and confirmation of the Plan of each
                                of the Debtors shall have been entered and
                                have become final and nonappealable (the
                                "Final Order"), which Final Order and plans
                                shall provide for, among other things, (i)
                                borrowing under the Facility, including first
                                priority liens on all collateral thereunder,
                                (ii) the use of proceeds of the Facility to
                                make the Existing Debt Repayment and cash
                                payments to the holders of Trust Originated
                                Preferred Securities of FINOVA Finance Trust
                                ("TOPrS") interests, (iii) issuance of the
                                Senior Notes to holders of allowed general
                                unsecured claims against the Company, (iv)
                                issuance of New Senior Notes to holders of
                                TOPrS (v) the adoption by each of FNV and the
                                Company of a Certificate of Incorporation and
                                By-laws in form and substance acceptable to
                                Lender, (vi) the designees of Lender
                                constituting not less than a majority of the
                                Boards of Directors of FNV and the Company, at
                                least two (2) of the remaining members of
                                which shall be selected from the current Board
                                of Directors of FNV as of the date hereof and
                                one (1) of which shall be designated by the
                                creditors of the Company, (vii) the issuance
                                by FNV to Lender, and/or Berkshire and
                                Leucadia (the "Berkadia Parties") and/or their
                                subsidiaries for no additional consideration
                                of shares of common stock of FNV such that
                                such parties will own, in the aggregate, 51%
                                (or a lesser amount as agreed by the Berkadia
                                Parties) of the outstanding equity of FNV on a
                                fully diluted basis (and an allocation of
                                consideration for such issuance to the capital
                                of FNV in an amount equal to the aggregate par
                                value represented by such equity interests so
                                that such equity interests are fully paid and
                                non-assessable), (viii) the release, in form
                                and substance satisfactory to Lender, Leucadia
                                and Berkshire, of each Indemnified Party (as
                                defined in the Commitment Letter) from any and
                                all claims or liabilities that any creditor or
                                other party in interest has or could have had
                                in connection with or arising out of the
                                Chapter 11 Cases, the Commitment Letter, the
                                Management Agreement and/or any action,
                                authority, event or transaction contemplated
                                by any of the

                                      56
<PAGE>

                               foregoing, (ix) such other terms as shall be
                               acceptable to Lender in its reasonable
                               discretion, and (x) such other terms as are
                               requested by Lender following the initial date
                               of filing of the Plan and that do not adversely
                               affect the holders of claims against or
                               interests in any of the debtors in the Chapter
                               11 Cases.

                              . All fees and expenses (including reasonable
                                fees and expenses of counsel) required to be
                                paid or reimbursed to Lender, Berkshire and
                                Leucadia on or before the Closing Date shall
                                have been paid.

                              . Lender shall be satisfied in its reasonable
                                judgment that there shall not occur as a
                                result of the funding of the Facility, a
                                default (or any event which with the giving of
                                notice or lapse of time or both would be a
                                default) under any debt instruments and other
                                material agreements of FNV, the Company or any
                                of their respective subsidiaries that exist
                                following the effective date of the plans of
                                reorganization of the Debtors.

                              . Lender shall have received satisfactory
                                opinions of counsel to FNV and the Company,
                                addressing such matters as Lender shall
                                reasonably request, including, without
                                limitation, the enforceability of all loan
                                documentation, compliance with all laws and
                                regulations (including Regulations T, U and X
                                of the Board of Governors of the Federal
                                Reserve System), the perfection of all
                                security interests purported to be granted and
                                no conflicts with material agreements.

                              . There shall not have occurred any change,
                                occurrence or development that could, in
                                Lender's reasonable opinion, result in a
                                material adverse change in (i) the business,
                                condition (financial or otherwise),
                                operations, performance, properties, assets,
                                liabilities (actual or contingent) or
                                prospects of FNV, the Company and their
                                respective subsidiaries taken as a whole since
                                June 7, 2001 (other than the commencement and
                                continuation of the Chapter 11 Cases and the
                                consequences that would normally result
                                therefrom), (ii) the ability of the Company to
                                perform its obligations under the loan
                                documentation, (iii) the ability of the
                                Guarantors (other than Guarantors as to which
                                Lender, in its reasonable judgment, is
                                satisfied that their inability, individually
                                or in the aggregate, to perform their
                                obligations is not material) to perform their
                                obligations under the loan documentation or
                                (iv) the ability of Lender to enforce the loan
                                documentation (any of the foregoing being a
                                "Material Adverse Change").

                              . There shall exist no action, suit,
                                investigation, litigation or proceeding
                                pending or threatened in any court or before
                                any arbitrator or governmental instrumentality
                                that (i) could reasonably be expected to
                                result in a Material Adverse Change or, if
                                adversely determined, could reasonably be
                                expected to result in a Material Adverse
                                Change or (ii) restrains, prevents or imposes
                                or can reasonably be expected to impose
                                materially adverse conditions upon the
                                Facility, the plans of reorganization of the
                                Debtors or the transactions contemplated
                                thereby.

                                      57
<PAGE>

                               . All necessary governmental and material third
                                 party consents and approvals necessary in
                                 connection with the Facility, the plans of
                                 reorganization of the Debtor and the
                                 transactions contemplated thereby shall have
                                 been obtained (without the imposition of any
                                 conditions that are not reasonably acceptable
                                 to Lender) and shall remain in effect, and
                                 all applicable governmental filings have been
                                 made and all applicable waiting periods shall
                                 have expired without in either case any
                                 action being taken by any competent
                                 authority; and no law or regulation shall be
                                 applicable in the judgment of Lender that
                                 restrains, prevents or imposes materially
                                 adverse conditions upon the Facility or the
                                 transactions contemplated thereby.

                               . No information shall have come to the
                                 attention of Lender following the date hereof
                                 that leads Lender to determine that, and
                                 Lender shall not have become aware of any
                                 fact or condition not disclosed to them prior
                                 to the date hereof which leads Lender to
                                 determine that, the Company's or any of its
                                 subsidiaries' condition (financial or
                                 otherwise), operations, performance,
                                 properties, assets, liabilities (actual or
                                 contingent) or prospects are different in any
                                 material adverse respect from that known to
                                 Lender as of this date.

                               . Lender shall have a valid and perfected first
                                 priority lien on and security interest in the
                                 collateral referred to above under Security
                                 (other than collateral which Lender is
                                 satisfied in its reasonable judgment is not
                                 material, individually or in the aggregate);
                                 all filings, recordations and searches
                                 necessary or desirable in connection with
                                 such liens and security interests shall have
                                 been duly made; and all filing and recording
                                 fees and taxes shall have been duly paid.

                               . Lender shall have received endorsements
                                 naming Lender as an additional insured and
                                 loss payee under all insurance policies to be
                                 maintained with respect to the properties of
                                 the Company and its subsidiaries forming part
                                 of Lender's collateral.

                               . The Management Agreement shall be in full
                                 force and effect, and there shall be no cause
                                 for termination thereunder.

                               . There shall not exist or have occurred any
                                 defaults, prepayment events or creation of
                                 liens under debt instruments that exist
                                 following the effective date of the Plan or
                                 otherwise as a result of the Facility, the
                                 plans of reorganization of the Debtors, or
                                 the transactions contemplated thereby.

                               . FNV shall have granted registration rights to
                                 the Berkadia Parties and/or their affiliates
                                 relating to the shares of common stock of FNV
                                 issued pursuant to the Plan in form and
                                 substance reasonably satisfactory to the
                                 Berkadia Parties.

Conditions Precedent to the
Loan:........................  On the funding date of the Term Loan (if
                               different from the closing date of the
                               Facility) (i) there shall exist no default
                               under the loan documentation, (ii) the
                               representations and warranties of the Company
                               and each Guarantor therein shall be true and
                               correct

                                      58
<PAGE>

                               immediately prior to, and after giving effect
                               to, funding, and (iii) the making of the Term
                               Loan shall not violate any requirement of law
                               and shall not be enjoined, temporarily,
                               preliminarily or permanently.

Representations and
Warranties:..................  The loan documentation will contain
                               representations and warranties customarily
                               found in loan documentation for similar
                               financings and transactions of this type and
                               other representations and warranties deemed by
                               Lender appropriate to the specific transaction
                               (which will be applicable to FNV, the Company
                               and their respective subsidiaries) including,
                               without limitation with respect to: valid
                               existence, requisite power, due authorization,
                               no conflict with agreements or applicable law,
                               enforceability of loan documentation, validity,
                               priority and perfection of security interests
                               and enforceability of liens, accuracy of
                               financial statements and all other information
                               provided, compliance with law, absence of
                               Material Adverse Change, no default under the
                               loan documentation, absence of material
                               litigation, ownership of properties and
                               necessary rights to intellectual property, no
                               burdensome restrictions and inapplicability of
                               Investment Company Act or Public Utility
                               Holding Company Act.

Affirmative and Financial
Covenants:...................  The loan documentation will contain affirmative
                               and financial covenants customarily found in
                               loan documentation for similar financings and
                               transactions of this type and other covenants
                               deemed by Lender appropriate to the specific
                               transaction (which will be applicable to FNV,
                               the Company and their respective subsidiaries),
                               including, without limitation, the following:

                               . Comply in all material respects with laws
                                 (including, without limitation, ERISA and
                                 environmental laws), pay taxes, maintain all
                                 necessary licenses and permits and trade
                                 names, trademarks, patents and other
                                 intellectual property, preserve corporate
                                 existence, maintain accurate books and
                                 records, maintain properties, maintain
                                 appropriate and adequate insurance, permit
                                 inspection of properties, books and records,
                                 use loan proceeds as specified and provide
                                 further assurances as required.

                               . Perform obligations under leases, contracts
                                 and other agreements.

                               . Conduct all transactions with affiliates on
                                 terms reasonably equivalent to those
                                 obtainable in arm's length transactions,
                                 including, without limitation, restrictions
                                 on management fees to affiliates.

                               . Maintain with a bank satisfactory to Lender
                                 main cash concentration accounts and blocked
                                 accounts into which all cash flows of the
                                 Borrower and proceeds of collateral are paid
                                 and which are swept daily (and with respect
                                 to accounts at other banks, which will be
                                 limited, blocked account agreements in form
                                 and substance acceptable to Lender have been
                                 executed).

                               . Financial covenants as follows:

                                 Minimum net worth of $400 million; and

                                      59
<PAGE>

                                 Maximum capital expenditures (excluding
                                 expenditures made with respect to portfolio
                                 assets held for sale, lease or disposition)
                                 of $10 million per year, cumulative, but not
                                 to exceed $20 million in any year.

                               . Maintain a loan-to-collateral value ratio of
                                 no greater than 1:1.60 for periods ending
                                 prior to June 30, 2002 and 1:1.75 for periods
                                 ending on and after June 30, 2002. For
                                 purposes of this covenant, "collateral" (i)
                                 shall only include the net book value of the
                                 tangible assets of the Company and the
                                 Guarantors that have been specifically
                                 identified by the Company and that are
                                 subject to a perfected, first priority
                                 security interest in favor of the Lender (and
                                 shall exclude all assets of (a) any special
                                 purpose subsidiary of the Company that is
                                 subject to contractual or legal restrictions
                                 on making distributions to its parent entity
                                 and (b) any Guarantor for which the Company
                                 does not exercise sole voting control and/or
                                 for which all of the capital stock is not
                                 subject to a perfected, first priority pledge
                                 to Lender) and (ii) shall be net of all
                                 specific and general reserves.

Negative Covenants:..........  The loan documentation will contain negative
                               covenants customarily found in loan
                               documentation for similar financings and
                               transactions of this type (which will be
                               applicable to FNV, the Company and their
                               respective subsidiaries). Each of FNV, the
                               Company and their respective subsidiaries shall
                               agree that (i) except pursuant to the Plan, or
                               (ii) without the consent of Lender, it will
                               not:

                               . Incur or assume any debt (whether or not non-
                                 recourse) other than the Term Loan or the
                                 Senior Notes (as the case may be); give any
                                 guaranties; create any liens, charges or
                                 encumbrances; incur additional lease
                                 obligations; merge or consolidate with any
                                 other person, or change the nature of
                                 business or corporate structure or create any
                                 new subsidiaries or amend its charter or by-
                                 laws; sell, lease or otherwise dispose of
                                 assets (including, without limitation, in
                                 connection with a sale leaseback
                                 transaction), except for asset sales for cash
                                 where seller retains no residual interest in
                                 such assets and proceeds are applied as set
                                 forth under "Prepayments;" give a negative
                                 pledge on any assets in favor of any person
                                 other than Lender; permit to exist any
                                 consensual encumbrance on the ability of any
                                 subsidiary to pay dividends or other
                                 distributions to the Company; or permit to
                                 exist any restrictions on the ability of the
                                 Company to prepay the Term Loan.

                               . Prepay, redeem, purchase, defease, exchange,
                                 refinance or repurchase any debt including,
                                 without limitation, the Senior Notes, or
                                 amend or modify any of the terms of any such
                                 debt or other similar agreements, or other
                                 material agreements, entered into or binding
                                 upon FNV, the Company or their respective
                                 subsidiaries.

                               . Make any loans or advances, capital
                                 contributions or acquisitions (except to fund
                                 existing commitments not discharged in the
                                 Chapter 11 Cases) or form any joint ventures
                                 or partnerships or make any other investments
                                 in subsidiaries or any other person.

                                      60
<PAGE>

                               . Make or commit to make any payments in
                                 respect of warrants, options, repurchase of
                                 stock, dividends or any other distributions
                                 to shareholders, except the commitment
                                 contemplated under the terms of the Senior
                                 Notes following the payment in full of the
                                 Term Loan.

                               . Permit any change in ownership or control of
                                 the Company or any of its respective
                                 subsidiaries or any change in accounting
                                 treatment or reporting practices, except as
                                 required by GAAP and as permitted by the loan
                                 documentation.

                               . Redeem or otherwise acquire any shares of its
                                 capital stock, or issue or sell any
                                 securities (other than the issuance of the
                                 Senior Notes, pursuant to the exercise of
                                 options or conversion of outstanding
                                 securities or otherwise pursuant to the Plan)
                                 or grant any option, warrant or right
                                 relating to its capital stock or split,
                                 combine or reclassify any of its capital
                                 stock, other than pursuant to a stock option
                                 plan adopted following the effective date of
                                 the Plan and reasonably acceptable to
                                 Berkadia.

                               . Make any material amendment to any existing
                                 or enter into any new employment, consulting,
                                 severance, change in control or similar
                                 agreement or establish any new compensation
                                 or benefit or commission plans or
                                 arrangements for directors or employees.

                               . Merge, amalgamate or consolidate with any
                                 other entity in any transaction, sell all or
                                 any substantial portion of its business or
                                 assets, or acquire all or substantially all
                                 of the business or assets of any other
                                 entity, other than acquisitions of businesses
                                 in connection with foreclosures in the
                                 ordinary course of business and mergers or
                                 consolidations among wholly-owned
                                 subsidiaries of the Company.

                               . File any petition for voluntary
                                 reorganization or enter into any
                                 reorganization plan or recapitalization,
                                 dissolution or liquidation of the Company.

                               . Take any action that would have a material
                                 impact on the consolidated federal income tax
                                 return filed by FNV as the common parent,
                                 make or rescind any express or deemed
                                 material election relating to taxes, settle
                                 or compromise any material claim, action,
                                 suit, litigation, proceeding, arbitration,
                                 investigation, audit or controversy relating
                                 to taxes, enter into any material tax ruling,
                                 agreement, contract, arrangement or plan,
                                 file any amended tax return, or, except as
                                 required by applicable law or GAAP or in
                                 accordance with past practices, make any
                                 material change in any method of accounting
                                 for taxes or otherwise or any tax or
                                 accounting practice or policy.

                               . Enter into any contract, understanding or
                                 commitment that restrains, restricts, limits
                                 or impedes the ability of FNV or any of its
                                 subsidiaries to compete with or conduct any
                                 business or line of business in any
                                 geographic area.

                               . Permit FNV to engage in any business or
                                 activity, or hold any assets, other than
                                 holding the capital stock of the Company.

                                      61
<PAGE>

                               . Pay any management or similar fees, other
                                 than pursuant to the Management Agreement.

Financial Reporting            The Company shall provide: (i) monthly
Requirements:................  consolidated financial statements of FNV, the
                               Company and their respective subsidiaries,
                               including balance sheet, income statement and
                               cash flow statement within 30 days of month-
                               end, certified by the chief financial officer
                               of FNV or the Company, as appropriate; (ii)
                               quarterly consolidated and consolidating
                               financial statements of FNV, the Company and
                               its subsidiaries within 45 days of quarter-end,
                               certified by the chief financial officer of FNV
                               or the Company, as appropriate; (iii) annual
                               audited consolidated and consolidating
                               financial statements of FNV, the Company and
                               their subsidiaries within 90 days of year-end,
                               certified with respect to such consolidated
                               statements by independent certified public
                               accountants acceptable to Lender; (iv) copies
                               of all reports on Form 10-K, 10-Q or 8-K filed
                               by FNV or the Company with the Securities and
                               Exchange Commission; (v) projections for the
                               balance of the term of the Facility provided
                               annually and annual business and financial
                               plans provided in each case at least 30 days
                               prior to fiscal year-end, with the business and
                               financial plans being updated quarterly; (vi)
                               periodic compliance certificates; and (vii)
                               periodic certifications as to collateral value,
                               loan and asset classification and reserves.

Other Reporting                The loan documentation will contain other
Requirements:................  reporting requirements customarily found in
                               loan documentation for similar financings and
                               transactions of this type and other reporting
                               requirements deemed by Lender appropriate to
                               the specific transaction, including, without
                               limitation, with respect to litigation,
                               contingent liabilities, defaults, ERISA or
                               environmental events and potential defaults or
                               events of default relating to loans or assets
                               held by the Company and its subsidiaries at
                               such times and in form and substance as is
                               satisfactory to Lender.

Events of Default:...........  The loan documentation will contain events of
                               default customarily found in loan documentation
                               for similar financings and transactions of this
                               type and other events of default deemed by
                               Lender appropriate to the specific transaction
                               (which will be applicable to FNV, the Company
                               and their respective subsidiaries), including,
                               without limitation, failure to make payments
                               when due, defaults or accelerations under other
                               indebtedness, noncompliance with covenants,
                               breaches of representations and warranties,
                               bankruptcy and insolvency events, failure to
                               satisfy or stay execution of judgments in
                               excess of specified amounts, the existence of
                               certain materially adverse employee benefit or
                               environmental liabilities, impairment of loan
                               documentation or security, Material Adverse
                               Change, actual or asserted invalidity of the
                               guarantees, the security documents or the liens
                               of Lender, change of ownership or control, and
                               defaults under material contracts, including
                               the Management Agreement.

Indemnification:.............  The Company shall indemnify and hold harmless
                               Lender, Berkshire and Leucadia and each of
                               their respective affiliates, officers,
                               directors, employees, members, managers,
                               agents, advisors,

                                      62
<PAGE>

                               attorneys and representatives of each (each, an
                               "Indemnified Party") from and against any and
                               all claims, damages, losses, liabilities and
                               expenses (including, without limitation,
                               reasonable fees and disbursements of counsel),
                               joint or several, that may be incurred by or
                               asserted or awarded against any Indemnified
                               Party (including, without limitation, in
                               connection with or relating to any
                               investigation, litigation or proceeding or the
                               preparation of any defense in connection
                               therewith), in each case arising out of or in
                               connection with or by reason of the Facility,
                               the loan documentation or any of the
                               transactions contemplated thereby, or any
                               actual or proposed use of the proceeds of the
                               Facility, except to the extent such claim,
                               damage, loss, liability or expense is found in
                               a final non-appealable judgment by a court of
                               competent jurisdiction (or admitted by an
                               Indemnified Party pursuant to a written
                               settlement agreement) to have resulted
                               primarily from such Indemnified Party's gross
                               negligence or willful misconduct. In the case
                               of an investigation, litigation or other
                               proceeding to which the indemnity in this
                               paragraph applies, such indemnity shall be
                               effective whether or not such investigation,
                               litigation or proceeding is brought by FNV, the
                               Company, any of their respective directors,
                               securityholders or creditors, an Indemnified
                               Party or any other person, or an Indemnified
                               Party is otherwise a party thereto and whether
                               or not the transactions contemplated hereby are
                               consummated. The Company further agrees that no
                               Indemnified Party shall have any liability
                               (whether direct or indirect, in contract, tort
                               or otherwise) to the Company or any of its
                               securityholders or creditors for or in
                               connection with the transactions contemplated
                               hereby, except for direct damages (as opposed
                               to special, indirect, consequential or punitive
                               damages (including, without limitation, any
                               loss of profits, business or anticipated
                               savings)) determined in a final non-appealable
                               judgment by a court of competent jurisdiction
                               (or admitted by an Indemnified Party pursuant
                               to a written settlement agreement) to have
                               resulted primarily from such Indemnified
                               Party's gross negligence or willful misconduct
                               and any liability of any Indemnified Party
                               shall be limited to the amount of fees actually
                               received hereunder by such Indemnified Party.

Expenses:....................  FNV, the Company and each of their respective
                               subsidiaries shall jointly and severally pay
                               all (i) reasonable costs and expenses of
                               Lender, Berkshire and Leucadia (including all
                               reasonable fees, expenses and disbursements of
                               outside counsel) in connection with the
                               preparation, execution and delivery of the loan
                               documentation and the funding of all loans
                               under the Facility, and all search, filing and
                               recording fees, incurred or sustained by
                               Lender, Berkshire and Leucadia in connection
                               with the Facility, the loan documentation or
                               the transactions contemplated thereby, the
                               administration of the Facility and any
                               amendment or waiver of any provision of the
                               loan documentation and (ii) costs and expenses
                               of Lender, Berkshire and Leucadia (including
                               fees, expenses and disbursements of counsel) in
                               connection with the enforcement of any of their
                               rights and remedies under the loan
                               documentation.

                                      63
<PAGE>

Miscellaneous:...............
                               The loan documentation will include standard
                               yield protection provisions (including, without
                               limitation, provisions relating to compliance
                               with risk-based capital guidelines, increased
                               costs and payments free and clear of
                               withholding taxes) relating to Lender and
                               Lender's provider of funds.

Fees and Expenses:...........  Commitment Fee: A commitment fee of $60,000,000
                               shall be due and payable to Lender upon
                               execution of the Commitment Letter.

                               Funding Fee: A funding fee of $60,000,000 shall
                               be due and payable to Lender upon the closing
                               of and borrowing under the Facility.

                               Termination Fee: A termination fee of
                               $60,000,000 shall be due and payable to Lender
                               if the Company does not borrow under the
                               Facility for any reason (including the
                               termination of Lender's obligations under the
                               Commitment Letter, whether or not the Facility
                               agreements have been entered) unless the
                               Company's failure to borrow is solely due to
                               (x) the failure by Lender to fund in violation
                               of its obligations under the Commitment Letter
                               or, (y) following confirmation of the Plan by
                               the Bankruptcy Court, a Material Adverse Change
                               has occurred.

                               Reimbursement Fees: All fees, if any, and
                               expenses incurred from time to time by Lender
                               and its affiliates relating to its financing
                               for the Facility shall be due and payable to
                               Lender or such affiliates when incurred by
                               Lender or such affiliates, not to exceed
                               $30,000,000 in the aggregate.

Governing Law and Submission
to Jurisdiction:.............  State of New York.

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                EXHIBIT 6.2(c)(1)--NEW SENIOR NOTES TERM SHEET

Issuer.......................  The FINOVA Group Inc. ("FNV Group").

Aggregate Principal Amount...  Approximately $3.26 billion, representing 30%
                               of (i) the aggregate principal amount of
                               Allowed General Unsecured Claims (as defined in
                               the Joint Plan of Reorganization (the "Plan")
                               of FNV Group and the debtors named therein)
                               against FINOVA Capital Corporation ("FNV
                               Capital") (but not including pre-petition or
                               post-petition interest) and (ii) 22.5% of the
                               liquidation preference attributable to the
                               Allowed TOPrS Interests (as defined in the
                               Plan) of FINOVA Finance Trust (not including
                               pre-petition or post-petition accrued and
                               unpaid dividends).

Term.........................  Eight (8) years, subject to prepayment as
                               described below.

Annual Interest Rate.........  The annual interest rate on the New Senior
                               Notes will be 7.5%.

Payment......................  Interest will be paid on semi-annual interest
                               payment dates if and to the extent that (i) FNV
                               Group has available cash on such dates for that
                               purpose as described below under clause SECOND
                               of the "Use of Cash" covenant and (ii) no
                               default or event of default has occurred and is
                               continuing on such dates under the credit
                               agreement pursuant to which Berkadia LLC
                               ("Berkadia") will make a $6 billion five-year
                               amortizing senior secured term loan (the
                               "Berkadia Loan") to FNV Capital (the "Berkadia
                               Credit Agreement").

                               Each $1,000 principal amount of the New Senior
                               Notes issued under the Plan (whether issued on
                               the Effective Date or later) will entitle the
                               holder thereof to receive such holder's pro
                               rata share of an aggregate of up to $100
                               million of additional interest ("Contingent
                               Interest") in respect of all New Senior Notes
                               issued under the Plan (whether issued on the
                               Effective Date or later) . Contingent Interest
                               will be paid on semi-annual interest payment
                               dates if and to the extent that FNV Group has
                               available cash on such dates for that purpose
                               as described below under clause Seventh of the
                               "Use of Cash" covenant until the first to occur
                               of (i) the payment of an aggregate of $100
                               million in Contingent Interest (as such amount
                               may be reduced as described below under clause
                               Seventh of the "Use of Cash" covenant) or (ii)
                               15 years after the Effective Date of the Plan.

                               Principal will be paid on semi-annual principal
                               payment dates if and to the extent that FNV
                               Group has available cash on such dates for that
                               purpose as described below under clause Fifth
                               of the "Use of Cash" covenant.

Optional Prepayment..........  Subject to compliance with the "Use of Cash"
                               covenant, FNV Group will have the option to
                               prepay the principal of the New Senior Notes,
                               in whole or in part, at any time and from time
                               to time, without premium or penalty, by
                               delivering to the indenture

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                               trustee under the New Senior Notes indenture
                               (the "Indenture Trustee") an amount equal to
                               the principal to be repaid, plus interest from
                               the last interest payment date on which
                               interest was paid to the prepayment date;
                               provided that such prepayment will not release
                               FNV Group from its obligations to pay
                               Contingent Interest with respect to the New
                               Senior Notes so prepaid.

Priority and Collateral        FNV Group will grant to the Collateral Trustee
Security.....................  under a collateral trust agreement among the
                               Indenture Trustee, Berkadia, FNV Group and the
                               Collateral Trustee a security interest for the
                               benefit of the holders of the New Senior Notes
                               in (i) all of the capital stock of FNV Capital
                               and (ii) a promissory note of FNV Capital
                               issued to FNV Group in the principal amount of
                               the aggregate amount of New Senior Notes issued
                               under the Indenture (the "Intercompany Note").
                               The Intercompany Note Term Sheet sets forth the
                               principal terms of the Intercompany Note.

                               These security interests shall be released upon
                               payment in full of all interest (other than
                               Contingent Interest) on and principal of the
                               New Senior Notes. Until such time as all
                               obligations under the Berkadia Loan and related
                               guarantees are paid in full or otherwise
                               satisfied, the security interest to be granted
                               to the Collateral Trustee for the benefit of
                               the holders of New Senior Notes will be junior
                               to the perfected, first priority security
                               interests in the capital stock of FNV Capital
                               and the Intercompany Note granted to the
                               Collateral Trustee for the benefit of Berkadia
                               to secure FNV Group's guarantee of the Berkadia
                               Loan. The holders of the New Senior Notes will
                               have no right to instruct the Collateral
                               Trustee to take action to enforce or otherwise
                               realize on the security interests held by the
                               Collateral Trustee unless and until all
                               obligations under the Berkadia Loan and related
                               FNV Group guarantee have been paid in full or
                               otherwise satisfied or released. Neither the
                               indenture governing the New Senior Notes nor
                               the security agreements effecting the grant of
                               the security interests (the "Security
                               Agreements") will restrict the sale of
                               collateral, other than as required by the Trust
                               Indenture Act of 1939, as amended.

                               The Collateral Trust Agreement will reflect
                               appropriate intercreditor arrangements among
                               Berkadia, the Indenture Trustee, FNV Group and
                               FNV Capital.

                               The payment of Contingent Interest will not be
                               secured by the security interest or otherwise.
                               Contingent Interest shall constitute general
                               unsecured obligations of FNV Group.

Covenants....................  The indenture governing the New Senior Notes
                               will contain the following covenants:

                               Use of Cash

                               To the extent not prohibited by the Berkadia
                               Credit Agreement so long as the Berkadia Loan
                               is outstanding, FNV Group will, and will cause
                               its subsidiaries including FNV Capital to,
                               apply the aggregate net positive amount of each
                               of (x) 100% of the net sale proceeds

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<PAGE>

                               from asset sales, (y) 100% of available cash
                               (to be defined in the indenture) and (z) 100%
                               of net proceeds from insurance and
                               condemnation, in each case received by FNV
                               Group or any of its subsidiaries, except to the
                               extent any special purpose subsidiary is
                               subject to a contractual restriction (which
                               existed on February 26, 2001) or legal
                               restriction on making distributions to its
                               parent entity, to the following purposes in the
                               following order:

                               First:

                               For FNV Group or any of its subsidiaries (a) to
                               pay or to fund its operating expenses, taxes,
                               reasonable reserves (which reserve amounts
                               shall be determined in good faith by the entity
                               setting such reserves) for revolving
                               commitments, unfunded commitments and general
                               corporate purposes, (b) to pay when due
                               interest on and principal of Permitted
                               Indebtedness (as defined below) of such entity
                               (other than, in the case of FNV Capital, the
                               Berkadia Loan and the Intercompany Note, or, in
                               the case of FNV Group, the New Senior Notes,
                               the payment of each of which is provided for
                               specifically below), (c) to pay when due
                               interest on and principal of any Refinancing
                               Indebtedness (as defined below) incurred to
                               refinance the Permitted Indebtedness described
                               in clause (b), (d) to pay or to fund a reserve
                               to pay the next quarterly interest due on the
                               Berkadia Loan, and (e) to make payments
                               excluded from the definition of Restricted
                               Payments (as defined below) under the proviso
                               contained in the definition of Restricted
                               Payments (provided that any payments described
                               in clause (v) of such proviso shall not exceed
                               $1 million per year); provided that FNV Capital
                               and its subsidiaries may make distributions to
                               any parent entity, including FNV Group, which
                               entity shall use such distributions, plus any
                               other cash it has available for this purpose,
                               to satisfy its obligations under this clause
                               First (it being understood that the listing of
                               subclauses (a) through (e) herein shall be for
                               ease of reference only and shall not imply any
                               priority of allocation or payment within this
                               clause First);

                               Second:

                               to pay when due interest on the Intercompany
                               Note to FNV Group, which shall use such
                               payments plus any other cash it has available
                               for this purpose, to pay accrued and unpaid
                               interest on the New Senior Notes when due;

                               Third:

                               at the option of FNV Group, to make prepayments
                               of principal and accrued interest on the
                               Intercompany Note, which FNV Group shall use,
                               plus any other cash FNV Group has available and
                               elects to use for this purpose, to purchase New
                               Senior Notes (including the Contingent Interest
                               in respect of such New Senior Notes) at a
                               purchase price not to exceed par plus accrued
                               and unpaid interest thereon (the "Maximum
                               Price") through (a) tender offers, (b) open
                               market purchases and/or (c) privately
                               negotiated transactions, in all cases at FNV
                               Group's discretion; provided, that, if the
                               Berkadia Loan is outstanding, no distribution
                               to FNV Group or use by it of cash to purchase
                               New Senior Notes shall be made under this
                               clause

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<PAGE>

                               Third without the prior consent of Berkadia and
                               such distribution or use of cash shall not
                               exceed $1.5 billion in the aggregate; and
                               provided, further, that if the Berkadia Loan is
                               not outstanding, such distribution or use of
                               cash shall not exceed $150 million per calendar
                               year and, provided further, any such purchases
                               of New Senior Notes by FNV Group shall be made
                               pursuant to procedures adopted by the Board of
                               Directors of FNV Group to protect against
                               preferring or discriminating against Berkadia
                               and its affiliates with respect to such
                               purchases;

                               Fourth:

                               to make distributions to FNV Capital, or in the
                               case of FNV Group to make contributions to FNV
                               Capital, which shall use such distributions or
                               contributions, plus any other cash it has
                               available for this purpose, to repay principal
                               of the Berkadia Loan as required under the
                               Berkadia Credit Agreement;

                               Fifth:

                               until the principal of and interest (but not
                               Contingent Interest) on the New Senior Notes
                               are paid in full, to pay principal on the
                               Intercompany Note and to make distributions to
                               FNV Group, (A) 95% of which FNV Group will use
                               to repay principal of the New Senior Notes
                               until the principal of the New Senior Notes has
                               been paid in full and/or, at FNV Group's
                               option, to prepay all or part of the New Senior
                               Notes as described under "Optional Prepayment"
                               and (B) 5% of which FNV Group will use to make
                               Restricted Payments (unless the making of any
                               such Restricted Payments would be an
                               "Impermissible Restricted Payment" (as defined
                               below), in which event FNV Group shall retain
                               such amounts and any retained amounts shall
                               accumulate and shall be used to make Restricted
                               Payments at such time or from time to time, as
                               such Restricted Payments are not Impermissible
                               Restricted Payments);

                               Sixth:

                               until an amount equal to 5.263% of the
                               aggregate principal amount of the New Senior
                               Notes issued under the Plan (whether on the
                               Effective Date or later) has been used to make
                               Restricted Payments to FNV Group's common
                               stockholders under clause Fifth or, after
                               repayment of the New Senior Notes, has been
                               used to make "Deemed Restricted Payments" (as
                               defined below), to make Deemed Restricted
                               Payments (unless the making of such Deemed
                               Restricted Payments would be an "Impermissible
                               Deemed Restricted Payment," (as defined below)
                               in which event FNV Group shall retain such
                               amounts and any retained amounts shall
                               accumulate and shall be used to make Deemed
                               Restricted Payments at such time or from time
                               to time, as such Deemed Restricted Payments are
                               not Impermissible Deemed Restricted Payments);
                               and

                               Seventh:

                               until an aggregate of up to $100 million (as
                               such amount may be reduced to reflect a
                               decrease in the principal amount of New Senior
                               Notes outstanding as a result of purchases (but
                               not prepayments or repayments) by FNV Group
                               under clause Third above) has been

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<PAGE>

                               paid as Contingent Interest, to make
                               distributions to FNV Group (i) 95% of which
                               will be used to pay Contingent Interest and
                               (ii) 5% of which will be used by FNV Group to
                               make Deemed Restricted Payments) (unless the
                               making of such Deemed Restricted Payments would
                               be an Impermissible Deemed Restricted Payment,
                               in which event FNV Group shall retain such
                               amounts and any retained amounts shall
                               accumulate and shall be used to make Deemed
                               Restricted Payments at such time or from time
                               to time, as such Deemed Restricted Payments are
                               not Impermissible Deemed Restricted Payments);.

                               provided that, notwithstanding the foregoing,
                               it shall not be a default of this "Use of Cash"
                               covenant if a subsidiary does not make
                               distributions to its parent entity as set forth
                               in First through Seventh above if such
                               dividends or distributions would be
                               Impermissible Restricted Payments or
                               Impermissible Deemed Restricted Payments.

                               Funding and payments in respect of any
                               Refinancing Indebtedness (as defined below)
                               will have the same priority in this "Use of
                               Cash" covenant as corresponds to the
                               Indebtedness so refinanced.

                               "Deemed Restricted Payments" means any payments
                               to FNV Group's stockholders that would have
                               been Restricted Payments prior to repayment of
                               the New Senior Notes.

                               "Impermissible Deemed Restricted Payments"
                               means a Deemed Restricted Payment that, if made
                               by FNV Group or any of its subsidiaries, would
                               render such entity insolvent, would be a
                               fraudulent conveyance by such entity or would
                               not be permitted to be made by such entity
                               under applicable law.

                               "Impermissible Restricted Payments" means a
                               Restricted Payment that, if made by FNV Group
                               or any of its subsidiaries, would render such
                               entity insolvent, would be a fraudulent
                               conveyance by such entity or would not be
                               permitted to be made by such entity under
                               applicable law.

                               For purposes of clause First above, "general
                               corporate purposes" shall not include any
                               acquisitions of businesses, except (i) those
                               acquired by foreclosure or in full or partial
                               satisfaction of a bona fide obligation to FNV
                               Group or any of its subsidiaries existing prior
                               to such acquisition and (ii) those related to
                               an existing customer or to a transaction or
                               property in which FNV Group or its subsidiaries
                               has an interest and the entity to make such
                               acquisition has determined in good faith that
                               such acquisition is in furtherance of
                               maximizing the ultimate recovery from such
                               entity's asset portfolio.

                               Limitation on Restricted Payments

                               FNV Group will not, directly or indirectly,
                               make any Restricted Payments, other than
                               Restricted Payments permitted under the "Use of
                               Cash" covenant described above.

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                               "Restricted Payment" means (i) the declaration
                               or payment of any dividend or the making of any
                               distribution on account of FNV Group's equity
                               interests (other than dividends or
                               distributions payable in equity interests of
                               FNV Group) and (ii) the purchase, redemption or
                               other acquisition or retirement for value of
                               any equity interests of FNV Group, other than
                               redemptions, acquisitions or retirements in
                               exchange for equity interests of FNV Group;
                               provided, however, that Restricted Payments
                               shall not include (i) repurchase of shares to
                               eliminate fractional shares or odd-lots,
                               whether pursuant to a reverse stock-split, odd-
                               lot tender offer or otherwise; (ii) cash
                               payments in lieu of issuance of fractional
                               shares in connection with the exercise of any
                               warrants, rights, options or other securities
                               convertible into or exchangeable for FNV Group
                               equity interests, (iii) the deemed repurchase
                               of FNV Group's equity interests by FNV Group on
                               the cashless exercise of stock options; (iv)
                               payments or distributions to dissenting
                               shareholders pursuant to applicable law,
                               pursuant to or in connection with a
                               consolidation, merger or transfer of assets; or
                               (v) repurchases, redemptions, acquisitions or
                               retirements of equity interests of FNV Group
                               from employees, directors or officers of FNV
                               Group and its subsidiaries; provided that the
                               aggregate of all payments in clauses (i), (ii),
                               (iv) and (v) hereof shall not exceed $5 million
                               per calendar year

                               Limitation on Incurrence of Indebtedness

                               FNV Group will not, and will not permit any of
                               its subsidiaries to, directly or indirectly,
                               create, incur, issue, assume, guarantee or
                               otherwise become directly or indirectly liable,
                               contingently or otherwise, for or with respect
                               to (collectively, "incur") any Indebtedness
                               other than Permitted Indebtedness or Permitted
                               Nonrecourse Indebtedness.

                               "Indebtedness" means any indebtedness in
                               respect of borrowed money.

                               "Permitted Indebtedness" means (A) Indebtedness
                               outstanding (or deemed outstanding under the
                               Plan) on the Effective Date of the Plan,
                               including the Berkadia Loan and the New Senior
                               Notes; (B) Refinancing Indebtedness; (C)
                               Indebtedness at any time outstanding of up to
                               $25 million, excluding Indebtedness outstanding
                               under clause (A) or (B); provided, however,
                               that availability under this clause (C) shall
                               be reduced by the aggregate liquidation
                               preference of any preferred equity interests
                               issued to any person other than FNV Group or a
                               subsidiary thereof in accordance with the
                               "Limitation on Issuance of Capital Stock of
                               Subsidiaries" covenant; (D) Foreclosure
                               Indebtedness and (E) intercompany Indebtedness
                               between or among FNV Group and/or any of its
                               subsidiaries.

                               "Foreclosure Indebtedness" means Indebtedness
                               of any person either (i) existing at the time
                               that such person becomes a subsidiary of FNV
                               Group or any of its subsidiaries provided that
                               such person becomes a subsidiary of FNV Group
                               as a result of a pre-existing

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                               bona fide obligation to FNV Group or any of its
                               subsidiaries, (ii) assumed in connection with
                               the acquisition of assets from any such person
                               provided that such person had a pre-existing
                               bona fide obligation to FNV Group or any of its
                               subsidiaries and that if the Indebtedness so
                               assumed was secured, FNV Group and its
                               subsidiaries shall not agree to extend such
                               security interest to any new assets or to any
                               assets of FNV Group and its subsidiaries or
                               (iii) incurred to refinance (as defined below)
                               any Indebtedness described in (i) or (ii)
                               above, subject to the same limitations
                               contained in the proviso to the definition of
                               Refinancing Indebtedness below.

                               "Refinancing Indebtedness" means Indebtedness
                               of FNV Group or any of its subsidiaries that is
                               incurred to refund, refinance, replace, renew,
                               repay or extend (including pursuant to any
                               defeasance or discharge mechanism)
                               (collectively, "refinance") any Indebtedness
                               issued under the Plan and/or outstanding or
                               deemed to be outstanding on the Effective Date
                               of the Plan or incurred in compliance with the
                               New Senior Notes Indenture (including
                               Indebtedness of FNV Group that refinances
                               Indebtedness of any subsidiary and Indebtedness
                               of any subsidiary that refinances Indebtedness
                               of another subsidiary) including Indebtedness
                               that refinances Refinancing Indebtedness;
                               provided, however, that (a) such Refinancing
                               Indebtedness is incurred in an aggregate
                               principal amount (or if issued with original
                               issue discount, an aggregate accreted value)
                               not exceeding the then outstanding amount of
                               the Indebtedness being refinanced, plus a
                               reasonable premium (except with respect to the
                               Berkadia Loan) and reasonable costs and
                               expenses paid or incurred in connection with
                               such refinancing (b) except with respect to
                               Refinancing Indebtedness incurred to refinance
                               (i) the New Senior Notes, (ii) Foreclosure
                               Indebtedness or (iii) Permitted Indebtedness
                               not issued under the Plan, such Refinancing
                               Indebtedness shall not have a weighted average
                               life to maturity or maturity date that is
                               earlier than the Indebtedness being refinanced
                               and (c) if the Indebtedness being refinanced is
                               subordinate to the New Senior Notes, then such
                               Refinancing Indebtedness shall be subordinate
                               to the New Senior Notes at least to the same
                               extent. The accretion of interest with respect
                               to Indebtedness issued with original issue
                               discount shall not constitute an incurrence of
                               additional Indebtedness.

                               "Permitted Nonrecourse Indebtedness" means
                               Indebtedness incurred in connection with the
                               acquisition or lease (as lessor) of equipment
                               or real estate (a) that is secured solely by
                               the equipment or real estate acquired or
                               leased, (b) with respect to which the holder of
                               such Indebtedness has recourse only to such
                               equipment or real estate, and (c) which is
                               otherwise nonrecourse to FNV Group or any
                               subsidiary thereof, provided that all proceeds
                               of such Indebtedness, less reasonable expenses
                               incurred in connection with such acquisition or
                               lease, are used as provided in the "Use of
                               Cash" covenant.

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                               Limitation on Issuance of Capital Stock of
                               Subsidiaries.

                               FNV Group will not permit FNV Capital to issue
                               any additional equity interests to any person
                               other than to FNV Group and will not permit any
                               other subsidiary of FNV Group to issue any
                               preferred equity interests to any person other
                               than to FNV Group or a subsidiary thereof,
                               except that preferred equity interests may be
                               issued such that the liquidation preference of
                               such preferred equity interests is equal to the
                               amount of Indebtedness that would be permitted
                               to be incurred under the "Limitation on
                               Incurrence of Indebtedness" covenant if the
                               liquidation preference of such preferred equity
                               interest were treated as Indebtedness for
                               purposes of the "Limitation on Incurrence of
                               Indebtedness" covenant.

                               Mergers and Consolidations

                               FNV Group will not, directly or indirectly,
                               consolidate or merge with or into another
                               person (whether or not FNV Group is the
                               surviving person) unless the person formed by
                               or surviving any such consolidation or merger
                               (if other than FNV Group) assumes all of the
                               obligations under the New Senior Notes and the
                               indenture and, immediately after such
                               consolidation or merger, there is no default or
                               event that, with the passage of time or notice
                               or both, would be a default under the indenture
                               and the credit rating of the surviving entity
                               immediately following the merger or
                               consolidation would not be lower than that of
                               FNV Group immediately prior to the
                               effectiveness of the merger or consolidation.
                               Notwithstanding the foregoing, FNV Group shall
                               not merge or consolidate with or into FNV
                               Capital.

                               No Payment Restrictions Affecting Subsidiaries

                               FNV Group and its subsidiaries will not permit
                               their respective subsidiaries to create any
                               restriction on the ability of any subsidiary to
                               make Restricted Payments, to make loans or
                               advances to its parent entity or to transfer
                               any property or assets to its parent entity,
                               except for restrictions pursuant to (i) the New
                               Senior Notes, (ii) the Berkadia Loan, (iii)
                               contracts as of February 26, 2001 restricting
                               special purpose subsidiaries, (iv) applicable
                               law, (v) Refinancing Indebtedness containing
                               restrictions no more restrictive, taken as a
                               whole, than those contained in the Indebtedness
                               so refinanced, (vi) Permitted Indebtedness
                               described in clause C or D of the definition of
                               Permitted Indebtedness, provided restrictions
                               contained therein are no more restrictive,
                               taken as a whole, than restrictions contained
                               in any Permitted Indebtedness, or (vii)
                               Permitted Nonrecourse Indebtedness incurred by
                               any special purpose subsidiary.

                               The right to receive Contingent Interest under
                               the New Senior Notes shall not constitute any
                               equity interest or indebtedness of FNV Group
                               for purposes of the indenture.

                               The covenants described under "Limitation on
                               Restricted Payments," "Limitation on Incurrence
                               of Indebtedness," "Limitation on Issuance of
                               Capital Stock of FNV Subsidiaries" and

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                               "No Payment Restrictions Affecting
                               Subsidiaries" will no longer apply to FNV Group
                               or its subsidiaries upon payment in full of all
                               interest on (other than Contingent Interest)
                               and principal of the New Senior Notes.

Additional Covenants.........  Additional affirmative covenants typically
                               included in indentures for publicly issued debt
                               securities will be added to the indenture,
                               including financial reporting requirements.

Event of Default.............  Each of the following will constitute an "Event
                               of Default": (i) default in the payment of all
                               or any part of the unpaid principal, if any,
                               and accrued and unpaid interest, if any, on the
                               New Senior Notes at maturity; (ii) failure to
                               pay interest in full on the New Senior Notes
                               for two consecutive interest payment dates;
                               (iii) failure by FNV Group or any of its
                               subsidiaries to observe or perform in all
                               material respects the provisions of the
                               "Payment" covenant and of clauses First through
                               Seventh of the "Use of Cash" covenants for 30
                               days; (iv) failure by FNV Group to observe or
                               perform in all material respects any other
                               covenant or agreement on the part of FNV Group
                               contained in the New Senior Notes, the
                               indenture or the Security Agreements if that
                               failure is not remedied within 60 days after
                               written notice is given to FNV Group by the
                               trustee or to FNV Group and the trustee by the
                               holders of at least 25% in aggregate principal
                               amount of the New Senior Notes then
                               outstanding, specifying such default, requiring
                               that it be remedied and stating that such
                               notice is a "Notice of Default" under the
                               indenture; and (v) certain events of
                               bankruptcy, dissolution or reorganization of
                               FNV Group or FNV Capital.

Book-Entry; Delivery and
Form.........................  New Senior Notes will be represented by one or
                               more permanent global notes in definitive,
                               fully registered form, deposited with the
                               Indenture Trustee as custodian for, and
                               registered in the name of, a nominee of the
                               Depository Trust Company.

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                EXHIBIT 6.2(c)(2)--INTERCOMPANY NOTE TERM SHEET

(Capitalized terms used without definition are defined in the New Senior Notes
                                  Term Sheet)

Issuer.......................  FINOVA Capital Corporation ("FNV Capital").

Aggregate Principal Amount ..  Same as New Senior Notes.

Term.........................  Same as New Senior Notes (without regard to
                               Contingent Interest).

Annual Interest Rate.........  Same as New Senior Notes.

Payment......................  Same as New Senior Notes, with payments applied
                               to interest (other than Contingent Interest)
                               and/or principal in the same manner as
                               applicable to New Senior Notes. No payments
                               will be made under the Intercompany Note with
                               respect to Contingent Interest.

Optional Prepayment..........  Same as New Senior Notes.

Subordination................  Subordinated in right of payment to the
                               Berkadia Loan.

Priority and Collateral
Security.....................  FNV Capital will grant to the Collateral
                               Trustee under a Collateral Trust Agreement
                               among the Indenture Trustee, Berkadia, FNV
                               Group and the Collateral Trustee for the
                               benefit of the holder of the Intercompany Note
                               a security interest in all assets of FNV
                               Capital as to which a lien has been granted to
                               secure the Berkadia Loan. This security
                               interest shall be junior to the first priority
                               perfected security interest granted to Berkadia
                               to secure the Berkadia Loan. This security
                               interest shall be released upon payment in full
                               of all interest on and principal of the
                               Intercompany Note. The holder of the
                               Intercompany Note will have no right to
                               instruct the Collateral Trustee to take action
                               to enforce or otherwise realize on the security
                               interests held by the Collateral Trustee unless
                               and until all obligations under the Berkadia
                               Loan have been paid in full or otherwise
                               satisfied or released. Neither the Intercompany
                               Note, nor the security agreements effecting the
                               grant of the security interests, will restrict
                               the sale, lease or other disposition of
                               collateral, or the amendment of any of the
                               Berkadia loan documents.

Covenants....................  None.

Event of Default.............  None, other than (i) cross-acceleration of New
                               Senior Notes and (ii) certain events of
                               bankruptcy, dissolution or reorganization of
                               FNV Capital.

                                      74
<PAGE>

                           EXHIBIT 6.3(a) TO THE PLAN

                            NEW CORPORATE DOCUMENTS

                       TO BE PROVIDED IN PLAN SUPPLEMENT

                                       75
<PAGE>

                           EXHIBIT 6.3(b) TO THE PLAN

                        BOARD OF DIRECTORS FOR FNV GROUP

                       TO BE PROVIDED IN PLAN SUPPLEMENT

                                       76
<PAGE>

                           EXHIBIT 6.3(c) TO THE PLAN

                      BOARD OF DIRECTORS FOR OTHER DEBTORS

                       TO BE PROVIDED IN PLAN SUPPLEMENT

                                       77
<PAGE>

                            EXHIBIT 7.1 TO THE PLAN

             LIST OF REJECTED EXECUTORY CONTRACTS/UNEXPIRED LEASES

                       TO BE PROVIDED IN PLAN SUPPLEMENT

                                       78
<PAGE>

                            EXHIBIT 7.2 TO THE PLAN

              LIST OF ASSUMED EXECUTORY CONTRACTS/UNEXPIRED LEASES

                       TO BE PROVIDED IN PLAN SUPPLEMENT

                                       79
<PAGE>

                                                                      EXHIBIT B

                        UNITED STATES BANKRUPTCY COURT

                             DISTRICT OF DELAWARE

In re:                                          Chapter 11

The FINOVA Group Inc.,                    Case Nos. 01-0697 (PJW) through
FINOVA Capital Corporation,               01-0705 (PJW)
FINOVA (Canada) Capital Corporation,
FINOVA Capital plc,                       Jointly Administered
FINOVA Loan Administration Inc.,          Case No. 01-0697 (PJW)
FINOVA Mezzanine Capital Inc.,
FINOVA Portfolio Services, Inc.,
FINOVA Technology Finance, Inc., and
FINOVA Finance Trust,

Debtors.

     ORDER (i) APPROVING DISCLOSURE STATEMENT; (ii) APPROVING SOLICITATION
    PROCEDURES, FORM OF BALLOTS, AND MANNER OF NOTICE AND (iii) FIXING THE
 DATE, TIME AND PLACE FOR THE CONFIRMATION HEARING AND THE DEADLINE FOR FILING
                              OBJECTIONS THERETO

  Upon consideration of (a) the Third Amended and Restated Disclosure
Statement (the "Disclosure Statement") with respect to Joint Plan of
Reorganization of Debtors Under Chapter 11 of the Bankruptcy Code (the "Plan")
filed on June 13, 2001 by The FINOVA Group Inc. and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors") and (b) the Motion by Debtors for Order (i) Approving Solicitation
Procedures, Form of Ballots, and Manner of Notice and (ii) Fixing the Date,
Time and Place for the Confirmation Hearing and the Deadline for Filing
Objections Thereto, dated May 18, 2001 (the "Motion"); and upon the hearing
held on June 13, 2001 (the "Hearing") for consideration of the Motion and
approval of the Disclosure Statement; and upon consideration of the foregoing,
the papers filed in support of the Motion, and the responses and objections to
the Motion and the Disclosure Statement (the "Objections"); and the Court
having jurisdiction to consider the foregoing in accordance with 28 U.S.C.
(S)(S) 157 and 1334; and it appearing that due and proper notice of the
Disclosure Statement and the Motion having been given, and that no other or
further notice need be given; and the Court having determined after due
deliberation that the Disclosure Statement contains adequate information to
allow parties in interest to determine whether to accept or reject the Plan
and that granting of the Motion is in the best interests of the Debtors'
estates; and upon the proceedings had before the Court and good and sufficient
cause appearing therefor, it is hereby

  ORDERED that any Objections to the Motion or the Disclosure Statement that
were not withdrawn or settled as set forth in the record of the Hearing are
overruled and the Motion is granted in all respects, and it is further

  ORDERED that, in accordance with section 1125 of the Bankruptcy Code and
Bankruptcy Rule 3017(b), the Disclosure Statement (and all exhibits and
schedules thereto), as the same may be amended and modified from time to time
to reflect any modifications that the Debtors determine to be appropriate
which do not materially change the Disclosure Statement or materially and
adversely affect any rights of a party in interest, is approved as containing
adequate information; and it is further

  ORDERED that a hearing will be held before the undersigned United States
Bankruptcy Judge at 824 Market Street, Sixth Floor, Wilmington, Delaware 19801
on August 10, 2001 at 9:30 a.m., or as soon thereafter as counsel may be
heard, to consider the confirmation of the Plan and any objections thereto
(the "Confirmation Hearing"); and it is further

                                       1
<PAGE>

  ORDERED that the Confirmation Hearing may be continued by the Court from
time to time without prior notice to holders of claims or equity interests and
parties in interest other than the announcement of the adjourned hearing date
at the Confirmation Hearing or at an adjourned Confirmation Hearing; and it is
further

  ORDERED that objections to confirmation of the Plan, if any, must be in
writing, must state the name of the objector, its interest in these chapter 11
cases, and, if applicable, the amount and nature of its claim or interest, as
well as state with particularity the nature of the objection and the legal
basis therefore, and must be filed with this Court and served in a manner so
as to be received by the parties listed below, together with proof of service,
no later than August 3, 2001 at 4:00 p.m. (Eastern Daylight Time): the
Debtors: The FINOVA Group Inc., et al, 4800 North Scottsdale Road, Scottsdale,
Arizona 85251-7623, Attention: William J. Hallinan; Co-Counsel to the Debtors:
Gibson, Dunn & Crutcher LLP, 200 Park Avenue, New York, New York 10166, Attn:
Jonathan M. Landers, and Richards, Layton & Finger, P.A., One Rodney Square,
9th Floor, Wilmington, Delaware 19899, Attn: Mark D. Collins; Co-Counsel to
the Creditors Committee: Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street,
New York, New York 10019, Attn: Chaim J. Fortgang, and Pachulski, Stang,
Ziehl, Young & Jones, 919 North Market Street, Suite 1600, Wilmington,
Delaware 19801, Attn: Laura Davis Jones; Counsel to the Equity Committee:
Anderson, Kill & Olick, P.C., 1251 Avenue of the Americas, New York, New York
10020, Attn: Andrew Rahl; and Office of the United States Trustee: Office of
the United States Trustee, 601 Walnut Street, Suite 950 West, Philadelphia,
Pennsylvania 19106, Attn: Frank Perch; and it is further

  ORDERED that any objecting party that has not filed and served an objection
to confirmation of the Plan as prescribed in the preceding paragraph may be
barred from objecting to the confirmation of the Plan and be precluded from
being heard at the Confirmation Hearing; and it is further

  ORDERED that notwithstanding the requirements set forth in Rule 9014-1(d) of
the Local Rules, Debtors may file a reply to any objections, if any, to the
Plan and such reply will be served on the objectant, the Creditors Committee,
the Equity Committee and the United States Trustee and filed with the Court on
or before August 8, 2001 at 4:00 p.m. (Eastern Daylight Time); and it is
further

  ORDERED that the Confirmation Notice, substantially in the form annexed
hereto as Exhibit "A," and proposed manner for providing notice of the
Confirmation Hearing, as set forth in the Motion, are approved in all respects
and deemed good, adequate and sufficient notice; and it is further

  ORDERED that on or before June 29, 2001, the Debtors will cause the
Confirmation Notice to be published once in The Wall Street Journal (National
Edition), The New York Times (National Edition), and USA Today (National
Edition); and it is further

  ORDERED that, pursuant to Bankruptcy Rule 3018(c), the Ballots,
substantially in the form annexed hereto as Exhibit "B," the Master Ballots,
substantially in the form annexed hereto as Exhibit "C," and the proposed
terms and conditions of the voting and tabulation procedures, as set forth in
the Motion and as modified on the record at the Hearing and to reflect the
filing of an amended Disclosure Statement and Plan on June 13, 2001, are
hereby approved in all respects; and it is further

  ORDERED that pursuant to Bankruptcy Rule 3018(a), the record date for
determining the holders of claims against and equity interests in the Debtors
who may vote to accept or reject the Proposed Plan shall be June 13, 2001 (the
"Voting Record Date"); and it is further

  ORDERED that King & Associates (the "Balloting Agent") is hereby authorized
and directed to act as impartial voting and solicitation agent with respect to
the Proposed Plan; and it is further

  ORDERED that on or before June 25, 2001, the Debtors will distribute or
cause to be distributed to Eligible Voters a Solicitation Package, which will
include the following:

    a. the Confirmation Notice;

    b. a copy of the Disclosure Statement as approved by the Court (with
  exhibits including the Plan);

                                       2
<PAGE>

    c. except as provided in the following paragraph, a personalized Ballot
  identifying the name and address of the Eligible Voter as well as the
  applicable Voting Class and, where appropriate, the amount of the claim;
  and

    d. a postage-paid return envelope addressed to the Balloting Agent;
and it is further

  ORDERED that the special procedures set forth below will govern for voting
by beneficial holders of (i) The FINOVA Group Inc. common stock in Class FNV
Group-6 (Interests), (ii) FINOVA Capital Corporation Notes or Bonds in Class
FNV Capital-3 (General Unsecured Claims), and (iii) FINOVA Finance Trust TOPrS
in Class FNV Trust-5 (TOPrS Interests):
    a. The Debtors will provide the Nominees with sufficient copies of the
  Solicitation Packages to forward to the Beneficial Holders;

    b. The Nominees will forward the Solicitation Package or copies thereof
  to the applicable Beneficial Holders within three business days of receipt
  by such Nominees of the Solicitation Package;

    c. With respect to any Ballot not authenticated and signed in advance by
  a Nominees:

      i. the Nominee will include with the Solicitation Package sent to
    each Beneficial Holder a postage-prepaid, return envelope provided by
    and addressed to the Nominee;

      ii. the Beneficial Holder will complete the Ballot and return the
    Ballot to the respective Nominee, in accordance with the instructions
    for the Ballot;

      iii. the Nominee will summarize the votes of the respective
    beneficial Holders on the Master Ballot, in accordance with the
    instructions for the Master Ballot; and

      iv. the Nominee will return the Master Ballots to the Balloting Agent
    so that it is actually received by the Balloting Agent before the
    Voting Deadline;

and

    d. With respect to any Ballots that are authenticated and signed in
  advance by the Nominee:

      i. the Nominee will include with the Solicitation Package sent to the
    Beneficial Holder a postage-prepaid, return envelope addressed to the
    Balloting Agent; and

      ii. the Beneficial Holder will sign and complete the Ballot and
    return such Ballot directly to the Balloting Agent, in accordance with
    the instructions for the Ballot, so that it is actually received by the
    Balloting Agent before the Voting Deadline;

and it is further

  ORDERED that, to the extent that the Indenture Trustees and Nominees incur
out-of-pocket expenses in connection with distribution of the Solicitation
Packages, the Debtors are authorized to reimburse them for their reasonable,
actual and necessary out-of-pocket expenses incurred in this regard; and it is
further

  ORDERED that, on or before June 25, 2001, the Debtors will distribute or
cause to be distributed to Notice Parties a Notice Package, which will include
the following:

    a. the Confirmation Notice, substantially in the form annexed hereto as
  Exhibit "A;"

    b. a copy of the Disclosure Statement as approved by the Court (with
  exhibits, including the Plan); and

    c. either (i) a notice identifying that the Debtors have identified the
  recipient party as being ineligible to vote, but providing instructions as
  to how to obtain a ballot if the recipient disagrees with that

                                       3
<PAGE>

  classification, substantially in the form annexed hereto as Exhibit "D," or
  (ii) in certain circumstances as specified in the Motion, a Ballot;

and it is further

  ORDERED that Ballots must be properly executed and delivered, in accordance
with the procedures specified in the Disclosure Statement and Ballots, and
will be submitted so as to be actually received by the Balloting Agent on or
before August 1, 2001 at 5:00 p.m., Mountain Standard Time (the "Voting
Deadline") at one of the following addresses:

<TABLE>
<S>                                            <C>
                By U.S. Mail:                             By Delivery or Courier:
            The FINOVA Group Inc.                          The FINOVA Group Inc.
         c/o King & Associates, Inc.                    c/o King & Associates, Inc.
                P.O. Box 2742                      7301 East Sundance Trail--Suite D 201
         Carefree, Arizona 85377-2742                   Carefree, Arizona 85377-2742
</TABLE>

and it is further

  ORDERED that only the votes of Eligible Voters will be considered in the
tabulation process and the amount of a claim used to tabulate acceptance or
rejection of the Plan shall be the Scheduled Amount; provided, however, that
(a) if a claim has been estimated and temporarily allowed pursuant to an order
of this Court, then for tabulation purposes the amount of the claim shall be
the amount estimated or temporarily allowed; and (b) if a proof of claim is
filed, as to which no objection has been filed and which has not been
disallowed or expunged, then for tabulation purposes the amount of the claim
shall be as set forth in the proof of claim; and it is further

  ORDERED that, in connection with the procedures outlined in the preceding
paragraph and to streamline the solicitation process, each Ballot sent to a
particular creditor or interest holder shall carry a notation of the Scheduled
Amount of the underlying claim; and it is further

  ORDERED that, for the purposes of voting, the number of shares of equity
securities used to tabulate acceptance or rejection of the Plan will be the
number of shares held by the particular stockholder, as of the close of
business on the Voting Record Date, as reflected on the records of the
Debtors' stock transfer agent and the Depository Trust (CEDE); and it is
further

  ORDERED that with respect to Ballots submitted by the Eligible Voters (which
shall include holders of the beneficial interests of claims otherwise defined
as Eligible Voters), the following procedures will govern:

    a. Any Ballot that is returned to the Balloting Agent indicating
  acceptance or rejection of the Plan, but which is unsigned or does not
  indicate an acceptance or rejection of the Plan, shall not be counted or
  otherwise included in the tabulation of votes;

    b. Any Eligible Voter that has delivered a valid Ballot to the Balloting
  Agent may withdraw its vote by delivering a written notice of withdrawal to
  the Balloting Agent. To be valid, the notice of withdrawal must (a) be
  signed by the party who signed the ballot to be revoked, and (b) be
  received by the Balloting Agent before the Voting Deadline. The Debtors may
  contest the validity of any withdrawals;

    c. Any Eligible Voter that has delivered a valid Ballot to the Balloting
  Agent may change its vote by delivering to the Balloting Agent a properly
  executed, completed replacement Ballot so as to be received on or before
  the Voting Deadline. Whenever an Eligible Voter casts more than one Ballot
  voting the same claim, each of which is received by the Balloting Agent
  prior to the Voting Deadline, only the Ballot that bears the latest date
  shall be counted;

    d. If an Eligible Voter casts simultaneous duplicative Ballots voted
  inconsistently, those Ballots shall count as one vote accepting the Plan;

    e. Each Eligible Voter shall be deemed to have voted the full amount of
  its claim or interest;

                                       4
<PAGE>

    f. Each Eligible Voter shall vote the full amount of its claim or
  interest within a particular Voting Class either to accept or reject the
  Plan, and may not split the amount of its claim or interest so that a portion
  accepts the Plan and a portion rejects the Plan. This provision does not apply
  to Master Ballots completed by Nominees;

    g. Any Ballot that partially rejects and partially accepts the Plan shall
  not be counted. This provision does not apply to Master Ballots completed
  by Nominees;

    h. Any Ballot or Master Ballot received by the Balloting Agent by
  telecopier, facsimile or other electronic communication shall not be
  counted; and

    i. The Debtors, in their discretion, may request that the Balloting Agent
  attempt to contact Eligible Voters to cure any defects in Ballots or Master
  Ballots;

and it is further

  ORDERED that the provisions regarding notice in accordance with the
procedures set forth in this Order shall be deemed good, adequate and
sufficient notice of (i) the Confirmation Hearing; (ii) the time fixed for
filing objections to confirmation of the Plan; and (iii) the time within which
holders of Claims entitled to vote may vote to accept or reject the Plans;

  ORDERED that the Debtors are hereby authorized and empowered to take such
steps and perform such acts as may be necessary to implement and effectuate
this Order.

Dated: Wilmington, Delaware
   June 14, 2001

                                              /s/ Honorable Peter J. Walsh
                                         -------------------------------------
                                             United States Bankruptcy Judge

                                       5
<PAGE>

                                                                      EXHIBIT C

                          SECOND AMENDED AND RESTATED
                         MANAGEMENT SERVICES AGREEMENT

  SECOND AMENDED AND RESTATED MANAGEMENT SERVICES AGREEMENT, dated as of
June 10, 2001 (the "Agreement"), by and among The FINOVA Group Inc. ("FINOVA"
or the "Company"), a Delaware corporation, and Leucadia National Corporation,
a New York corporation ("Leucadia" or "Manager") and Leucadia International
Corporation, a Utah corporation that is a wholly owned subsidiary of Leucadia
("Leucadia International").

  WHEREAS, FINOVA, Leucadia and Leucadia International are parties to the
Management Services Agreement dated as of February 26, 2001, as amended by the
Amended and Restated Management Services Agreement dated as of April 3, 2001
(the "Original Agreement") and desire to amend and restate such agreement as
previously amended in its entirety as set forth herein;

  WHEREAS, FINOVA filed a petition for voluntary reorganization (the
"Voluntary Petition") under chapter 11 of title 11 of the United States Code
11 U.S.C. Sections 101 et seq. (the "Bankruptcy Code") with the United States
Bankruptcy Court for the District of Delaware (and together with any United
States District Court that exercises jurisdiction over the bankruptcy cases of
FINOVA and its affiliated debtors, the "Bankruptcy Court"); and

  WHEREAS, FINOVA, its subsidiary, FINOVA Capital Corporation ("FCC"),
Berkadia LLC, a Delaware limited liability company ("Berkadia"), Berkshire
Hathaway Inc., a Delaware corporation ("Berkshire") and Leucadia have entered
into a commitment letter dated February 26, 2001, as such commitment letter
may be amended from time to time (the "Commitment Letter") pursuant to which,
among other things, Berkadia has committed, which commitment is guarantied by
Berkshire and Leucadia, to lend to FCC $6 billion on the terms and conditions
set forth in the Commitment Letter; and

  WHEREAS, pursuant to the Commitment Letter, the Company and FCC have agreed
to file a chapter 11 plan containing the principal terms outlined in the
Commitment Letter or such other terms agreed to by the Company as are mutually
acceptable to both Leucadia and Berkshire in their reasonable discretion (the
"Plan"); and

  WHEREAS, the Board of Directors of the Company (the "Board") has formed a
special committee consisting of two directors to serve as a special committee
of the Board until the effective date of the Company's chapter 11 plan (the
"Special Committee"), to work closely with Leucadia and the designee of
Berkadia provided by Leucadia hereunder (the "Berkadia Liaison"); and

  WHEREAS, certain management functions have previously been performed for
FINOVA by its own officers; and

  WHEREAS, Leucadia, directly and through its subsidiaries, has the capability
to provide advice and assistance to FINOVA with respect to such services prior
to the effective date of the Plan and to provide those services to FINOVA
after the effective date of the Plan; and

  WHEREAS, the Board has determined that it is in the best interests of FINOVA
to obtain such services from Leucadia and its subsidiaries.

  It is hereby mutually agreed that the Original Agreement is hereby amended
and restated in its entirety to read as follows:

  1. Term. The term of this Management Agreement shall be ten years commencing
on the date hereof.

  2. Compensation. For a period of ten years, commencing on the date of the
Original Agreement, FINOVA shall pay to Leucadia International annually a
management fee of $8 million, payable in immediately available

                                       1
<PAGE>

funds (the "Annual Management Fee"). The Annual Management Fee shall be
payable quarterly, in advance, at the beginning of each calendar quarter;
provided, however, that the entire first Annual Management Fee was paid to
Leucadia International on February 27, 2001.

  3. Services of Leucadia. (a) The following applies prior to the effective
date of the Plan: Subject to the authority of the Board and the Special
Committee, Leucadia, directly and through its subsidiaries including Leucadia
International, shall provide advice and assistance to FINOVA in the management
of the asset "portfolio" of FCC, including advice and assistance regarding the
supervision of corporate wide management of portfolio sales, dispositions,
acquisitions, and administration and shall provide to the Company the services
of the Berkadia Liaison, who initially shall be Lawrence S. Hershfield (an
employee of Leucadia International), who will report to and work closely with
the Special Committee in the formulation and execution of the Plan. FINOVA
shall keep the Berkadia Liaison informed and shall request his advice and
assistance, in each case on a timely basis, as to all material acts and
decisions of FINOVA with respect to the management of the asset portfolio of
FCC. Nothing contained in this Agreement shall preclude the Board and the
Special Committee from considering, acting upon or making decisions with
respect to proposals for alternatives to the Plan.

  (b) Following the effective date of the Plan, Leucadia shall be responsible
for the general management of the Company, subject to the authority of the
Board, and shall provide to the Company, the Chairman of the Board and
President of the Company and such other officers, if any, as shall be mutually
determined between Leucadia and the Company. In providing such general
management, Leucadia will act in a reasonably prudent manner.

  4. Personnel. Leucadia shall provide a portion of the time of such executive
officers of Leucadia and its subsidiaries as Leucadia reasonably determines is
necessary to carry out the services specified herein. The number of persons
providing services at any one time and the number of hours such persons devote
to the services specified herein shall not be fixed but shall at all times be
adequate to properly and promptly perform and discharge the specified
services, it being understood that acting as Berkadia Liaison shall be Mr.
Hershfield's principal professional activity through the effective date of the
Plan.

  The persons provided by Leucadia hereunder shall for all purposes be
employees of Leucadia. Neither Leucadia nor Leucadia International shall be
entitled to receive any additional compensation for services rendered under
this Agreement other than the payments set forth in paragraph 2 above, but
shall be reimbursed for all reasonable out of pocket expenses, including
reimbursement of travel expenses. Nothing herein shall prevent, however, any
individual provided hereunder from becoming an elected or appointed officer or
director of FINOVA and enjoying the benefits (other than compensation)
afforded to any persons in any such position.

  5. Office Space, Equipment and Supplies, Etc. FINOVA shall provide to
Leucadia and its personnel provided hereunder office space, secretarial
services, equipment and supplies, telephone, telefax and related support
facilities to the extent available at FINOVA's regular work locations.

  6. Mutual Obligations. In addition to their other obligations under this
Agreement, each of FINOVA and Leucadia shall cooperate with the other in the
preparation of the Plan and in matters relating to the confirmation of the
Plan. The parties hereto also shall keep each other fully and promptly
informed of developments in FINOVA's and FCC's businesses and relationships
and discussions and negotiations with or affecting their respective creditors,
including any notices from their respective lenders, suppliers or advisors or
any notices from any third party related to their respective creditors. Upon
execution of this Agreement, Leucadia shall be entitled to name three
designees (or alternate designees for any designee that can not attend a
meeting of the Board) each of whom is mutually acceptable to FINOVA and
Leucadia as observers to the Board and, in such capacity, each such designee
(or his named alternate) (i) shall receive from FINOVA all communications with
the Board at the same time sent to all members of the Board and (ii) shall be
entitled to attend all meetings of the Board (whether telephonic or in person)
and to receive reports of any meetings (whether telephonic or in person) of
the Board promptly following such meetings not attended by such designee;
provided, however, that if the Board believes that the Leucadia designees
should be excluded from deliberations on or being present during voting with
respect to any proposal for an alternative to the Plan, the Leucadia designees
shall remove themselves from

                                       2
<PAGE>

any such meeting. FINOVA agrees that prior to confirmation of the Plan, FINOVA
and its subsidiaries will carry on their respective businesses in the ordinary
course of business in compliance in all material respects with all applicable
laws and in accordance with Annex A hereto.

  7. Company Expenses. FINOVA will continue to bear the cost and expense of
its own employees, including their salary, travel, entertainment, other
business and benefit expenses.

  8. Bankruptcy Court Approval. If the Bankruptcy Court does not approve this
Agreement on or before the day an order is issued by the Bankruptcy Court
approving a disclosure statement for the Company and FCC (which shall be no
later than July 6, 2001), this Agreement will automatically terminate unless
termination is specifically waived by Leucadia in writing. The Company agrees
that it will use its best efforts to obtain Bankruptcy Court approval of this
Agreement in a timely manner. If the Agreement is not approved by the
Bankruptcy Court, the $8 million Annual Management Fee paid to Leucadia
International upon execution of this Agreement shall be deemed to be fully
earned upon its payment and shall not be refundable to the Company upon
termination of this Agreement.

  9. Termination. If (i) the Commitment Letter is terminated or (ii) a plan of
reorganization other than the Plan is confirmed by order of the Bankruptcy
Court, then Leucadia and the Company each shall have the right to terminate
this Agreement. Any termination shall be upon not less than 30 days prior
written notice given by the terminating party to the other party to this
Agreement. However, any termination (whether under this paragraph or
otherwise) shall not relieve FINOVA of its obligation to pay to Leucadia
International the portion of the Management Fee, if any, that has been earned
through the termination date but has not been paid to Leucadia International
as of the date of such termination and any unpaid Management Fee due to the
date of termination shall be paid to Leucadia International in one payment, in
immediately available funds, upon the effective date of such termination.
Notwithstanding the foregoing, the $8 million Annual Management Fee paid to
Leucadia International upon execution of this Agreement shall be deemed to be
fully earned upon its payment and shall not be refundable to the Company upon
termination of this Agreement.

  10. Governing Law. This Agreement shall be governed in accordance with the
laws of the State of New York.

  11. Assignment. Neither party may assign this Agreement or any of its rights
or duties hereunder, except that Manager may assign this Agreement to any
entity that is controlled by, controlling or under common control with
Leucadia.

  12. Notices. Services of all notices, if any, under this Agreement shall be
sufficient if given personally or sent by certified, registered mail, return
receipt requested, or telefax to the addresses set forth below:

  If to Company, at:

    The FINOVA Group Inc.
    4800 North Scottsdale Road
    Scottsdale, Arizona 85251-7623
    Attention: William Hallinan, President and Chief Executive Officer,
    General Counsel and Secretary
    Facsimile No.: (480) 636-4949

    with a copy (which shall not constitute notice) to:

    Gibson, Dunn & Crutcher LLP
    333 South Grand Avenue
    Los Angeles, California 90071-3197
    Attention: Andrew E. Bogen, Esq.
    Facsimile No.: (213) 229-7520

                                       3
<PAGE>

  If to Manager or Leucadia International, at:

    Leucadia National Corporation
    315 Park Avenue South
    New York, New York 10010
    Attention: Joseph S. Steinberg, President
    Facsimile No.: (212) 598-4869

    with a copy (which shall not constitute notice) to:

    Weil, Gotshal & Manges LLP
    767 Fifth Avenue
    New York, New York 10153
    Attention: Stephen E. Jacobs, Esq.
    Facsimile No: (212) 310-8007

or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder
shall be deemed to have been duly given or served on the date on which
personally delivered, with receipt acknowledged, telecopied and confirmed by
telecopy answerback or three Business Days after the same shall have been
deposited in the United States mail.

  13. Entire Agreement. This Agreement supercedes in its entirety the
Management Services Agreement dated as of February 26, 2001 among FINOVA,
Leucadia and Leucadia International.

  14. No Third Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended or shall be construed to give any person or entity other
than the parties to this Agreement or their respective successors or assigns
any legal or equitable right, remedy or claim under or in respect of any
agreement or any provision contained herein.

  IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
Management Services Agreement to be duly executed on the date first written
above.

                                          The Finova Group Inc.

                                                  /s/ William J. Hallinan
                                          By: _________________________________
                                            Name:
                                            Title:

                                          Leucadia National Corporation

                                                   /s/ Joseph A. Orlando
                                          By: _________________________________
                                                     Joseph A. Orlando
                                                      Vice President

                                          L eucadia International Corporation

                                                  /s/ Philip M. Cannella
                                          By: _________________________________
                                                    Philip M. Cannella
                                                      Vice President

                                       4
<PAGE>

                                                                        Annex A

  Except as otherwise expressly permitted or required by the terms of the Plan
or as otherwise expressly contemplated by this Management Agreement or the
Commitment Letter, during the period from the date of the Management Agreement
to entry of a final order of the Bankruptcy Court confirming the Plan, the
Company shall not, and shall cause any of its subsidiaries not to, without the
written consent of Manager, which decision regarding consents shall be made
promptly (in light of its circumstances) after receipt of notice seeking such
consent:

    (i) amend its certificate of incorporation, bylaws or other comparable
  organizational documents or those of any subsidiary of the Company;

    (ii) except (A) pursuant to the exercise or conversion of outstanding
  securities, (B) for issuances of Common Stock upon the exercise of
  outstanding options under the benefit plans of the Company, (C) in
  connection with other awards outstanding on the date of this Management
  Agreement under any benefit plan, or (D) upon conversion of TOPrS, redeem
  or otherwise acquire any shares of its capital stock, or issue or sell any
  securities (including securities convertible into or exchangeable for any
  shares of its capital stock), or grant any option, warrant or right
  relating to any shares of its capital stock, or split, combine or
  reclassify any of its capital stock or issue any securities in exchange or
  in substitution for shares of its capital stock;

    (iii) make any material amendment to any existing, or enter into any new,
  employment, consulting, severance, change in control or similar agreement,
  or establish any new compensation or benefit or commission plans or
  arrangements for directors or employees, or amend or agree to amend any
  existing benefit plan;

    (iv) other than in connection with foreclosures in the ordinary course of
  business and mergers or consolidations among wholly-owned subsidiaries of
  the Company, merge, amalgamate or consolidate with any other entity in any
  transaction, sell all or any substantial portion of its business or assets,
  or acquire all or substantially all of the business or assets of any other
  person;

    (v) enter into any plan of reorganization or recapitalization,
  dissolution or liquidation of the Company;

    (vi) declare, set aside or make any dividends, payments or distributions
  in cash, securities or property to the stockholders of the Company in
  respect of any capital stock of the Company;

    (vii) except for borrowings under credit facilities or lines of credit
  existing on the date hereof, incur or assume any indebtedness of the
  Company or any of its subsidiaries, except indebtedness of the Company or
  any of its subsidiaries incurred in the ordinary course of business;

    (viii) take any action that would have a material impact on the
  consolidated federal income tax return filed by the Company as the common
  parent, make or rescind any express or deemed material election relating to
  taxes, settle or compromise any material claim, action, suit, litigation,
  proceeding, arbitration, investigation, audit or controversy relating to
  taxes, enter into any material tax ruling, agreement, contract, arrangement
  or plan, file any amended tax return, or, except as required by applicable
  law or GAAP or in accordance with past practices, make any material change
  in any method of accounting (whether for taxes or otherwise) or make any
  material change in any tax or accounting practice or policy;

    (ix) enter into any contract, understanding or commitment that restrains,
  restricts, limits or impedes the ability of the Company or any of its
  subsidiaries, or the ability of Leucadia, to compete with or conduct any
  business or line of business in any geographic area;

    (x) enter into, or amend the terms of, any contract relating to interest
  rate swaps, caps or other hedging or derivative instruments relating to
  indebtedness of the Company or any of its subsidiaries; or

agree or commit, whether in writing or otherwise, to do any of the foregoing.

                                       5
<PAGE>

                                                                      EXHIBIT D

        Berkshire Hathaway Inc.             Leucadia National Corporation
           1440 Kiewit Plaza                    315 Park Avenue South
         Omaha, Nebraska 68131                New York, New York 10010

                                 Berkadia LLC
                               1440 Kiewit Plaza
                             Omaha, Nebraska 68131

February 26, 2001

The FINOVA Group Inc.
4800 North Scottsdale Road
Scottsdale, Arizona 85251-7623
Attention: Matthew M. Breyne
        President

FINOVA Capital Corporation
4800 North Scottsdale Road
Scottsdale, Arizona 85251-7623
Attention: Matthew M. Breyne
        President

                               COMMITMENT LETTER

                 $6,000,000,000 Senior Secured Credit Facility

Ladies and Gentlemen:

  You have advised us that The FINOVA Group Inc. ("FNV"), its subsidiary,
FINOVA Capital Corporation (the "Company" or the "Borrower"), and certain
affiliated entities each intend to file a petition for voluntary
reorganization under Chapter 11 of the United States Bankruptcy Code with the
United States Bankruptcy Court for the District of Delaware and to seek
confirmation of a chapter 11 plan having the principal terms outlined herein,
or such other terms agreed to by the Company as are reasonably acceptable to
both Berkshire Hathaway Inc. ("Berkshire") and Leucadia National Corporation
("Leucadia") (the "Plan") pursuant to which, among other things, the Company
would repay approximately $6,000,000,000 of its existing pre-petition
unsecured indebtedness (the "Existing Debt Repayment") with the proceeds of a
$6,000,000,000 senior secured term loan facility (the "Facility") to be made
available by Lender (as defined below) to the Company. You have advised us
that the Existing Debt Repayment will be made pursuant to the Plan and that
under the Plan, the unpaid portion of the Company's pre-petition indebtedness
(after giving effect to the Existing Debt Repayment) will be restructured into
new secured notes of FNV (the "Senior Notes") as described herein.

  You have also advised us that simultaneous with the execution of this
Commitment Letter (as defined herein), FNV is entering into a Management
Services Agreement with Leucadia and Leucadia International Corporation dated
the date of this Commitment Letter (the "Management Agreement").

  Leucadia and Berkshire have organized Berkadia LLC, a Delaware limited
liability company owned jointly by them (the "Lender"), whose performance
hereunder is guaranteed by Berkshire and Leucadia. Berkshire guaranties 90% of
Lender's commitments hereunder; Leucadia guaranties 10% of Lender's
commitments hereunder; and Berkshire secondarily guaranties the 10% of
Lender's commitments guaranteed by Leucadia. Leucadia shall have no obligation
to FNV or the Company (or any affiliate of either FNV or the Company) with
respect to the Facility (other than the guaranty of Lender's commitment stated
in the immediately preceding sentence).

                                       1
<PAGE>

  Lender is pleased to inform you of its commitment to provide the entire
amount of the Facility, subject to (i) the receipt by Lender in immediately
available funds of the non-refundable commitment fee of $60,000,000 (the
"Commitment Fee") and (ii) the terms and conditions described in this letter
and the attached Annex I ("Annex I," and together with this letter, the
"Commitment Letter"). Until Lender has received payment in full of the
Commitment Fee and Leucadia has received payment in full of the first Annual
Management Fee (as defined in the Management Agreement), none of Lender,
Berkshire nor Leucadia shall have any obligation to you with respect to the
Facility.

Conditions Precedent

  The commitment and other obligations of Lender hereunder are subject to:

    (i) the filing by the Company and FNV no later than March 8, 2001 of a
  petition for voluntary reorganization (each a "Voluntary Petition") under
  chapter 11 of title 11 of the United States Code, 11 U.S.C. Sections 101 et
  seq., with the United States Bankruptcy Court for the District of Delaware
  (and together with the United States District Court, the "Bankruptcy
  Court");

    (ii) the approval by the Bankruptcy Court, on or before the day an order
  is issued by the Bankruptcy Court approving a disclosure statement for the
  Company and FNV, which shall be no later than 130 days from the date hereof
  (the "Disclosure Statement Approval Date"), of this Commitment Letter
  including all fees set forth herein (the "Commitment Letter Approval")
  (such fees to include without limitation (x) the Company's payment of all
  reasonable fees incurred by Lender in connection with its financing of the
  Facility ("Reimbursement Fees") as and when such fees are incurred by
  Lender and reimbursement by the Company of the Reimbursement Fees to the
  extent incurred by Lender prior to such Bankruptcy Court Approval and (y)
  the Company's payment of a termination fee (the "Termination Fee") of
  $60,000,000 to Lender if Borrower does not borrow under the Facility for
  any reason (including the termination of Lender's obligations under this
  Commitment Letter, whether or not the Facility agreements have been entered
  into), unless Borrower's failure to borrow is solely due to (a) the failure
  by Lender to fund the Facility in violation of its obligations hereunder
  or, (b) following confirmation of the Plan by the Bankruptcy Court, a
  Material Adverse Change (as defined in Annex I) has occurred or a due
  diligence condition relating to environmental, insurance or employee
  matters has not been satisfied);

    (iii) the Management Agreement being in effect and there being no
  material breach by FNV thereunder;

    (iv) our reasonable satisfaction with, and the approval by the Bankruptcy
  Court of, (x) the Facility and the fees and transactions contemplated
  thereby, including, without limitation, the liens to be granted by the
  Company to secure the Facility, and the Definitive Documentation (as
  defined below) and (y) all actions to be taken, all undertakings to be made
  and obligations to be incurred by the Company in connection with the
  Facility and by the Company and FNV in connection with the Plan (all such
  approvals to be evidenced by the entry of one or more orders of the
  Bankruptcy Court reasonably satisfactory in form and substance to Lender,
  which orders shall, among other things, approve the payment by the Company
  of all unpaid fees that are provided for in Annex I, and such orders shall
  have become final and nonappealable);

    (v) the preparation, execution and delivery of mutually acceptable loan
  documentation, including, without limitation, a credit agreement containing
  terms consistent with the terms and conditions outlined in this Commitment
  Letter (the "Definitive Documentation");

    (vi) the absence of any change, occurrence or development that could, in
  our reasonable opinion, constitute a material adverse change in the
  business, condition (financial or otherwise), operations, performance,
  properties, assets, liabilities (actual or contingent) or prospects of FNV,
  the Company and each of their respective subsidiaries taken as a whole
  since December 31, 2000 (other than the commencement and continuation of
  the Chapter 11 cases and the consequences that would normally result
  therefrom);

    (vii) the accuracy and completeness in all material respects of all
  representations and warranties that you make to us and all information that
  you furnish to us and your compliance with the terms of this Commitment
  Letter;

                                       2
<PAGE>

    (viii) the immediate payment in full of all fees, expenses and other
  amounts due and payable under this Commitment Letter;

    (ix) our not becoming aware after the date hereof of any information or
  other matter which in our reasonable judgment is inconsistent in a material
  and adverse manner with any information or other matter disclosed to us
  prior to the date hereof;

    (x) the satisfaction of the other conditions precedent to the closing of
  the Facility contained in Annex I; and

    (xi) a closing of and borrowing under the Facility on or prior to August
  31, 2001.

Commitment Termination

  Lender's commitment set forth in this Commitment Letter will terminate on
the earlier of (x) August 31, 2001, unless the Facility closes and funds on or
before such date or (y) the Disclosure Statement Approval Date if the
Commitment Letter Approval is not received from the Bankruptcy Court by the
Disclosure Statement Approval Date. Prior to such termination, Lender's
commitment set forth in this Commitment Letter may be terminated (i) by Lender
if any event occurs or information has become available that, in its
reasonable judgment, results in, or is likely to result in, the occurrence of
any of the events referred to in clause (vi) of the paragraph captioned
"Conditions Precedent" or the failure of any other condition referred to in
the paragraph captioned "Conditions Precedent" or (ii) by Lender upon
termination of the Management Agreement.

Fees

  In addition to the fees described herein, you agree to pay the unpaid fees
set forth in Annex I, including, without limitation, the Funding Fee (as
defined therein), the Termination Fee, the Reimbursement Fees and the Facility
Fee (as defined therein). You agree to seek the Commitment Letter Approval by
the Bankruptcy Court, and shall use your best efforts to obtain the same on or
before the Disclosure Statement Approval Date. If the Commitment Letter
Approval is not received from the Bankruptcy Court by such date, Lender's
entitlement to the Termination Fee shall be a general unsecured claim against
the estates of the Company and FNV. Each of the fees described in this
Commitment Letter shall be non-refundable when paid.

Indemnification

  You agree to indemnify and hold harmless Lender, Leucadia, Berkshire and
each of their respective affiliates and each of their respective officers,
directors, employees, members, managers, agents, advisors, attorneys and
representatives (each, an "Indemnified Party") from and against any and all
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable fees and disbursements of counsel), whether joint or
several, that may be incurred by or asserted or awarded against any
Indemnified Party (including, without limitation, in connection with or
relating to any investigation, litigation or proceeding or the preparation of
any defense in connection therewith), in each case arising out of or in
connection with or by reason of this Commitment Letter or any of the
transactions contemplated hereby, or any actual or proposed use of the
proceeds of the Facility, except to the extent such claim, damage, loss,
liability or expense is found in a final non-appealable judgment by a court of
competent jurisdiction (or admitted by an Indemnified Party pursuant to a
written settlement agreement) to have resulted primarily from such Indemnified
Party's gross negligence or willful misconduct. In the case of an
investigation, litigation or other proceeding to which the indemnity in this
paragraph applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Company, FNV, any of
their respective directors, securityholders or creditors, an Indemnified Party
or any other person, or an Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are consummated.

  You further agree that no Indemnified Party shall have any liability
(whether direct or indirect, in contract, tort or otherwise) to FNV, the
Company or their respective securityholders or creditors for or in connection
with

                                       3
<PAGE>

the transactions contemplated hereby, except for direct damages (as opposed to
special, indirect, consequential or punitive damages (including, without
limitation, any loss of profits, business or anticipated savings)) determined
in a final non-appealable judgment by a court of competent jurisdiction (or
admitted by an Indemnified Party pursuant to a written settlement agreement)
to have resulted primarily from such Indemnified Party's gross negligence or
willful misconduct and any liability of any Indemnified Party shall be limited
to the amount of actual fees received by such Indemnified Party hereunder.

  Prior to Commitment Letter Approval by the Bankruptcy Court, this
indemnification shall be a general unsecured claim against the estates of the
Company and FNV.

Costs and Expenses

  In further consideration of the commitment of Lender hereunder, and
recognizing that in connection herewith Lender, Berkshire and Leucadia are
incurring substantial costs and expenses in connection with the Facility and
the preparation, negotiation, execution and delivery of this Commitment
Letter, as well as in connection with any financing to be obtained by Lender
in providing funds to you under the Facility, including, without limitation,
reasonable fees and disbursements of counsel to Lender, Berkshire and
Leucadia, filing and recording fees and due diligence, transportation,
computer, duplication, messenger, appraisal, audit, insurance and consultant
costs and expenses, you hereby agree to pay, or reimburse Lender, Berkshire
and Leucadia on demand, upon presentation of reasonable documentation, for all
such reasonable costs and expenses (whether incurred before or after the date
hereof), regardless of whether any of the transactions contemplated hereby is
consummated. You also agree to pay all reasonable costs and expenses of
Lender, Berkshire and Leucadia (including, without limitation, reasonable fees
and disbursements of counsel) incurred in connection with the enforcement of
any of their respective rights and remedies hereunder. Prior to Commitment
Letter Approval by the Bankruptcy Court, the claims of Lender, Berkshire and
Leucadia hereunder shall be general unsecured claims against the estates of
the Company and FNV.

Confidentiality

  Each of Lender, Berkshire and Leucadia agrees to keep confidential any
information concerning FNV, the Company or their affiliates (whether prepared
by FNV, the Company, their respective advisors or otherwise) which is
furnished to Lender, Berkshire or Leucadia by or on behalf of FNV, the Company
or their affiliates in connection with this Commitment Letter and the
transactions contemplated hereby (herein collectively referred to as the
"Evaluation Material"); provided, however, that (i) any such information may
be disclosed by Lender, Berkshire and Leucadia to their respective directors,
officers, employees, representatives and advisors and their financing sources
and the directors, officers, employees, representatives and advisors of such
financing sources who need to know such information for the purpose of
evaluating the transactions contemplated by this Commitment Letter (it being
understood that such directors, officers, employees, representatives, advisors
and financing sources shall be informed by Lender, Berkshire or Leucadia, as
the case may be, of the confidential nature of such information and shall be
directed to treat such information confidentially), (ii) any disclosure of
such information may be made to which the Company consents in writing and
(iii) Lender, Berkshire and Leucadia may make any public disclosures of such
information as any of them is required by law or as part of the Chapter 11
cases to make. The term "Evaluation Material" does not include information
which (i) is already in the possession of Lender, Berkshire or Leucadia,
provided that such information is not known by any such party to be subject to
another confidentiality agreement with or other obligation of secrecy to FNV,
the Company or another party, (ii) becomes generally available to the public
other than as a result of a disclosure by Lender, Berkshire or Leucadia or
their respective directors, officers, employees, agents or advisors, or (iii)
becomes available to Lender, Berkshire or Leucadia on a non-confidential basis
from a source other than FNV, the Company or its advisors, provided that such
source is not known by Lender, Berkshire or Leucadia to be bound by a
confidentiality agreement with or other obligation of secrecy to FNV, the
Company or another party. Nothing contained herein shall prevent Lender,
Berkshire or Leucadia from disclosing to each other the Evaluation Material.
The obligations of Lender, Berkshire and Leucadia hereunder to keep
confidential the Evaluation

                                       4
<PAGE>

Material shall (i) survive for a period of eighteen (18) months following the
expiration or termination of this Commitment Letter in accordance with its
terms and (ii) supersede any and all prior agreements between any of the
parties with respect to the subject matter hereof. Without limiting the
generality of the foregoing, this Commitment Letter shall supercede in its
entirety the agreement between FNV and Leucadia dated August 14, 2000.

Representations, Warranties and Covenants of the Company

  You represent and warrant that (i) all information, considered together in
its entirety, that has been or will hereafter be made available to Lender,
Berkshire or Leucadia by you or any of your representatives in connection with
the transactions contemplated hereby is and will be complete and correct in
all material respects and does not and will not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements contained therein not misleading in light of the circumstances
under which such statements were or are made, (ii) all financial projections,
if any, that have been or will be prepared by you and made available to
Lender, Berkshire and Leucadia have been or will be prepared in good faith
based upon assumptions that were reasonable as of the date of the preparation
of such financial projections (it being understood that such projections are
subject to significant uncertainties and contingencies, many of which are
beyond the Company's control, and that no assurance can be given that the
projections will be realized) and (iii) as of February 23, 2001, FNV and its
consolidated subsidiaries had at least $1,100,000,000 of cash and cash
equivalents on hand and such amounts will be used solely to fund, in whole or
in part, legal commitments, normal operating expenses, the allowed claims
against the debtors and expenses relating to the Chapter 11 proceedings and
the expenses of the transactions contemplated by this Commitment Letter. You
agree to provide such information and projections as reasonably requested by
Lender, and to supplement such information and projections from time to time
so that the representations and warranties contained in this paragraph remain
correct in all material respects at all times.

  In issuing this Commitment Letter, Lender is relying on the accuracy of the
information furnished to it or to Berkshire or Leucadia by or on behalf of the
Company and its affiliates without independent verification thereof.

No Third Party Enforcement, Etc.

  The commitment of Lender hereunder is made solely for the benefit of FNV and
the Company and may not be enforced by any other person. Please note that
those matters that are not covered or made clear herein or in Annex I are
subject to mutual agreement of the parties. The parties hereto may not assign
or delegate any of their respective rights or obligations hereunder without
the prior written consent of Lender (on behalf on Lender, Berkshire and
Leucadia) or FNV (on behalf of FNV and the Company), as the case may be, which
may be withheld in such party's sole discretion; provided, however, that each
of Lender, Berkshire and Leucadia may (without obtaining any consent) assign
its rights or obligations under this Commitment Letter, in whole or in part,
to any of their respective direct or indirect wholly owned subsidiaries. No
assignment will relieve the assigning party of its obligations hereunder. The
terms and conditions of this Commitment Letter may be modified only in writing
signed by all parties hereto. This Commitment Letter is not intended to create
a fiduciary relationship among the parties hereto, or between any of the
Lender, Berkshire and Leucadia on the one hand, and any third parties,
including creditors and stockholders of FNV, the Company and their respective
subsidiaries, on the other hand.

Governing Law, Etc.

  This Commitment Letter shall be governed by, and construed in accordance
with, the law of the State of New York. This Commitment Letter sets forth the
entire agreement between the parties with respect to the matters addressed
herein and supersedes all prior communications, written or oral, with respect
hereto. This Commitment Letter may be executed in any number of counterparts,
each of which, when so executed, shall be deemed to be an original and all of
which, taken together, shall constitute one and the same Commitment Letter.

                                       5
<PAGE>

Delivery of an executed counterpart of a signature page to this Commitment
Letter by telecopier shall be as effective as delivery of a manually executed
counterpart of this Commitment Letter. The paragraphs captioned "Fees",
"Indemnification", "Costs and Expenses," "Confidentiality," "No Third Party
Enforcement," "Governing Law" and "Waiver of Jury Trial" shall survive the
expiration or termination of this Commitment Letter.

Waiver of Jury Trial

  Each party hereto irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to the Commitment Letter or the
transactions contemplated by the Commitment Letter or the actions of any of
the parties hereto or any of their respective affiliates in the negotiation,
performance or enforcement of the Commitment Letter.

           [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                       6
<PAGE>

  Please indicate your acceptance of the provisions hereof by signing the
enclosed copy of this Commitment Letter and returning it to Marc Hamburg,
President, c/o Berkadia LLC, 1440 Kiewit Plaza, Omaha, Nebraska 68131
(telecopier: 402-346-3375 ) on February 26, 2001. Notwithstanding anything
contained herein to the contrary, this Commitment Letter will not be
effective, and neither the existence of this Commitment Letter nor the terms
hereof shall be disclosed by you to any person (other than your officers,
directors, employees, accountants, attorneys and other advisors, and then only
on a "need to know" basis in connection with the transactions contemplated
hereby and on a confidential basis), unless both the Commitment Fee is
received by Lender and the first Annual Management Fee due upon execution of
the Management Agreement is received by Leucadia at or before 2 p.m. (New York
City time) on February 27, 2001. If you elect to deliver the Commitment Letter
by telecopier, please arrange for the executed original to follow by next-day
courier.

                                          Very truly yours,

                                          Berkadia LLC

                                                    /s/ Marc D. Hamburg
                                          By: _________________________________
                                                      Marc D. Hamburg
                                                         President

                                          Berkshire Hathaway Inc.

                                                    /s/ Marc D. Hamburg
                                          By: _________________________________
                                                      Marc D. Hamburg
                                                       Vice President

                                          Leucadia National Corporation

                                                   /s/ Joseph A. Orlando
                                          By: _________________________________
                                                     Joseph A. Orlando
                                                       Vice President

ACCEPTED this 26th day
of February, 2001

The Finova Group Inc.                     Finova Capital Corporation

         /s/ Matthew M. Breyne                     /s/ Matthew M. Breyne
By: _________________________________     By: _________________________________
           Matthew M. Breyne                         Matthew M. Breyne
            President & CEO                           President & CEO

                                       7
<PAGE>

    For Annex I, see FNV Group's Current Report on Form 8-K, filed with the
            Securities and Exchange Commission on February 28, 2001.

                                       8
<PAGE>

                                 Berkadia LLC
                               1440 Kiewit Plaza
                             Omaha, Nebraska 68131

                                  May 2, 2001

The FINOVA Group Inc.
FINOVA Capital Corporation
4800 North Scottsdale Road
Scottsdale, Arizona 85251-7623

Ladies and Gentlemen:

  Pursuant to and as contemplated by the commitment letter (the "Commitment
Letter") dated as of February 26, 2001 by and among Berkadia LLC, Berkshire
Hathaway Inc., Leucadia National Corporation, The FINOVA Group Inc. ("FNV")
and FINOVA Capital Corporation ("Borrower"), we hereby confirm that the
attached Senior Secured Credit Facility term sheet and Summary of Terms of New
Senior Notes (the "Term Sheets") are acceptable to Berkshire and Leucadia to
be included as part of the plans of reorganization filed by FNV, Borrower and
their subsidiaries (together, the "Debtors") that have filed petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code with the
United States Bankruptcy Court for the District of Delaware (the "Court"). We
and you agree that:

    (i) the Term Sheets shall replace Annex I and Exhibit A to Annex I to the
  Commitment Letter, respectively, effective upon the earlier to occur of (a)
  the approval of the Commitment Letter and the Term Sheets by the Court, or
  (b) the effective date of plans of reorganization of the Debtors that
  satisfy and incorporate the terms and conditions set forth in the
  Commitment Letter and the Term Sheets, and

    (ii) this letter and the Term Sheets do not amend or modify the
  Commitment Letter in any respect unless and until the occurrence of either
  of the events described in clauses (a) or (b) of paragraph (i).

                                          Very truly yours,

                                          Berkadia LLC

                                                    /s/ Marc D. Hamburg
                                          By: _________________________________
                                                      Marc D. Hamburg
                                                          Manager

                                          Berkshire Hathaway Inc.

                                                    /s/ Marc D. Hamburg
                                          By: _________________________________
                                                      Marc D. Hamburg
                                                      Vice President

                                          Leucadia National Corporation

                                                   /s/ Joseph A. Orlando
                                          By: _________________________________
                                                     Joseph A. Orlando
                                                      Vice President

                                       9
<PAGE>

Acknowledged and Agreed
this 2nd day of May, 2001

The Finova Group Inc.

          /s/ W. J. Hallinan
By: _________________________________
            W. J. Hallinan
            President & CEO

Finova Capital Corporation

            W. J. Hallinan
By: _________________________________
            W. J. Hallinan
            President & CEO

                                       10
<PAGE>

                                 Berkadia LLC
                               1440 Kiewit Plaza
                             Omaha, Nebraska 68131

                                 May 30, 2001

The FINOVA Group Inc.
FINOVA Capital Corporation
4800 North Scottsdale Road
Scottsdale, Arizona 85251-7623

Ladies and Gentlemen:

  Reference is made to the commitment letter (the "Commitment Letter") dated
as of February 26, 2001 by and among Berkadia LLC ("Berkadia"), Berkshire
Hathaway Inc. ("Berkshire"), Leucadia National Corporation ("Leucadia") , The
FINOVA Group Inc. ("FNV") and FINOVA Capital Corporation ("Borrower"), and the
letter agreement among Berkadia, Berkshire, Leucadia, FNV and Borrower dated
May 2, 2001 (the "Letter Agreement"), which annexes the term sheet for the
Term Loan (as defined in the Annex I to the Commitment Letter) and the term
sheet for the New Senior Notes (as defined in Annex I to the Commitment
Letter). These term sheets annexed to the Letter Agreement are referred to in
this letter as the "Term Sheets."

  Please be advised that Berkadia, Berkshire and Leucadia are prepared,
subject to the conditions set forth in this letter, to modify the terms of the
Berkadia Loan and the New Senior Notes as set forth below, and to agree that
such modified terms are acceptable to Berkadia, Berkshire and Leucadia for
inclusion as part of the plans of reorganization previously filed by FNV and
Borrower and their subsidiaries (together, the "Debtors") that have filed
petitions for reorganization under Chapter 11 of the United States Bankruptcy
Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the
District of Delaware (the "Court").

Term Loan.

  Interest Rate. The interest rate on the Term Loan will be a floating rate
equal to the current LIBO rate (for a period not to exceed six months and to
be determined prior to the execution of the loan documentation) as quoted by
Telerate Page 3750, adjusted for reserve requirements, if any, applicable to
Lender's source of funds and subject to customary change of circumstance
provisions and reserve requirements applicable to Lender and Lender's provider
of funds (the "LIBO Rate"), plus 2.25% per annum. The alternate minimum rate
of 9% per annum and the annual 25 basis point facility fee on the Term Loan
will be eliminated.

  The interest rate shall be reset daily and interest shall be calculated on
the basis of the actual number of days elapsed in a 360-day year.

  Use of Proceeds. The proceeds of the Term Loan ($6 billion) will be used,
together with cash on hand at FNV and its subsidiaries, to make an aggregate
cash payment to holders of general unsecured Claims (as defined in the
Disclosure Statement filed by the Debtors on May 2, 2001 with the Court)
against Borrower (i) of $7 billion in respect of the principal amount of
general unsecured Claims and (ii) of approximately $350 million of post-
petition interest on such general unsecured Claims (assuming an effective date
of the Plan of August 31, 2001). The balance of the principal amount of such
Claims (excluding post-petition interest) will be paid in New Senior Notes.

New Senior Notes.

  Annual Interest Rate. The annual interest rate on the New Senior Notes will
be 7%.

  Mandatory Purchases of New Senior Notes. The obligation (contained in clause
Third of the "Use of Cash" covenant of the New Senior Notes) to commit $75
million of available cash quarterly (up to a maximum

                                      11
<PAGE>

of $1.5 billion in total) to repurchase New Senior Notes at a price not to
exceed par plus accrued interest will be eliminated, although FNV will retain
the right (to be contained in clause Third of the "Use of Cash" covenant of
the New Senior Notes), subject to the consent of Berkadia, to make purchases
of New Senior Notes, at a price not to exceed par plus accrued interest, out
of available cash.

  In all other respects the terms of the Term Loan, the New Senior Notes and
the Plan set forth in the Commitment Letter and the Letter Agreement shall
remain in effect.

  Berkadia's obligations with respect to the foregoing proposed modifications
to the terms of the Term Loan and the New Senior Notes will terminate if (i)
there is any agreement requiring the Debtors or any of their subsidiaries to
pay under any circumstances whatsoever to any third party (X) any "break up
fee," "topping fee," "due diligence fee," "expense reimbursement," or similar
payment or arrangement therefor, or any other fee arrangement in connection
with a third party proposal or (Y) any reimbursement on the basis of having
made a "substantial contribution" under Section 503 of the Bankruptcy Code, or
(ii) there is any award or approval by the Court of (X) any "break up fee,"
"topping fee," "due diligence fee," "expense reimbursement fee," or similar
payment or arrangement therefor to any third party, or any other fee
arrangement in connection with a third-party proposal or (Y) any reimbursement
on the basis of having made a "substantial contribution" under Section 503 of
the Bankruptcy Code, whether or not any such agreement, approval, award or
payment referred to in clause (i) or clause (ii) of this paragraph is subject
to any conditions, prerequisites, contingencies or future events and whether
or not absolutely due or due under limited or special circumstances.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      12
<PAGE>

  Furthermore, subject to your agreement with respect thereto, the proposed
modifications contained in this letter (i) shall become effective upon the
approval of the Commitment Letter, the Term Sheets and such proposed
modifications by the Court and (ii) are not intended to and do not amend or
modify the Commitment Letter in any respect unless and until receipt of such
Court approval.

                                          Very truly yours,

                                          Berkadia LLC

                                                   /s/ Robert E. Denham
                                          By: _________________________________
                                                     Robert E. Denham
                                                     Attorney-in-Fact

                                          Berkshire Hathaway Inc.

                                                   /s/ Robert E. Denham
                                          By: _________________________________
                                                     Robert E. Denham
                                                     Attorney-in-Fact

                                          Leucadia National Corporation

                                                    /s/ Thomas S. Mara
                                          By: _________________________________
                                                      Thomas S. Mara
                                                 Executive Vice President

Accepted and Agreed to
as of May 30, 2001

The Finova Group Inc.

          /s/ W. J. Hallinan
By: _________________________________
            W. J. Hallinan
            President & CEO

Finova Capital Corporation:

          /s/ W. J. Hallinan
By: _________________________________
            W. J. Hallinan
            President & CEO

                                      13
<PAGE>

                                 Berkadia LLC
                               1440 Kiewit Plaza
                             Omaha, Nebraska 68131

                                 June 10, 2001

The FINOVA Group Inc.
FINOVA Capital Corporation
4800 North Scottsdale Road
Scottsdale, Arizona 85251-7623

   Re: Proposed June 10 Modifications

Ladies and Gentlemen:

  Reference is made to the commitment letter (the "Commitment Letter") dated
as of February 26, 2001 by and among Berkadia LLC ("Berkadia"), Berkshire
Hathaway Inc. ("Berkshire"), Leucadia National Corporation ("Leucadia"), The
FINOVA Group Inc. ("FNV Group") and FINOVA Capital Corporation ("FNV
Capital"), the letter agreement among Berkadia, Berkshire, Leucadia, FNV Group
and FNV Capital dated May 2, 2001 (the "May 2 Agreement"), which annexes a
term sheet for the Term Loan (as defined in the Annex I to the Commitment
Letter) and a term sheet for the New Senior Notes (as defined in Annex I to
the Commitment Letter) and the letter agreement among Berkadia, Berkshire,
Leucadia, FNV Group and FNV Capital dated May 30, 2001 (the "May 30
Agreement"). Attached hereto are a revised term sheet for the New Senior Notes
(the "Revised Senior Notes Term Sheet") and a revised term sheet for the Term
Loan (the "Revised Term Loan Term Sheet"), which reflect changes agreed to in
the May 30 Agreement and are marked to show the changes agreed to in this
letter agreement, and a new term sheet for the note to be issued by FNV
Capital to FNV Group (the "Intercompany Note Term Sheet").

  Please be advised that Berkadia, Berkshire and Leucadia confirm that,
subject to the terms and conditions set forth in this letter, the Revised
Senior Notes Term Sheet, the Revised Term Loan Term Sheet and the Intercompany
Note Term Sheet attached to this letter and the additional terms and
modifications to the Commitment Letter set forth below (the "Additional
Terms") are acceptable to Berkadia, Berkshire and Leucadia for inclusion as
part of the joint plans of reorganization (the "Plan") previously filed by FNV
Group and FNV Capital and their subsidiaries (together, the "Debtors") that
have filed petitions for reorganization under Chapter 11 of the United States
Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court
for the District of Delaware (the "Court"). Any capitalized term used in this
letter agreement without definition shall have the meaning established for
such term in the Amended and Restated Disclosure Statement with respect to the
Joint Plan of Reorganization of Debtors under Chapter 11 of the Bankruptcy
Code filed with the Court on June 1, 2001.

 Additional Terms:

  1. Berkadia, Berkshire and Leucadia agree that, pursuant to the Plan, (i)
holders of Allowed General Unsecured Claims against FNV Capital will receive a
cash distribution equal to 70% of the principal amount of such Claims, a cash
distribution equal to 100% of accrued and unpaid pre-petition interest
included in such Claims, a cash distribution equal to 100% of accrued and
unpaid post-petition interest in respect of such Claims, and New Senior Notes
in the principal amount of 30% of such claims and (ii) holders of Allowed
TOPrS Interests of FINOVA Finance Trust will receive a cash distribution equal
to 52.5% of the liquidation preference attributable to the Allowed TOPrS
Interests, a cash distribution equal to 75% of the amount of accrued and
unpaid pre-petition and post-petition dividends attributable to such Allowed
TOPrS Interests, and New Senior Notes in the principal amount of 22.5% of the
liquidation preference attributable to such Allowed TOPrS Interests.

                                      14
<PAGE>

  2. Berkshire will deliver to FNV Group the letter attached hereto as Exhibit
A (the "Berkshire Holding Agreement").

  3. The following modifications to the Commitment Letter are to be
implemented:

    (i) Clause (i) of "Conditions Precedent" has been satisfied;

    (ii) In clause (vi) of "Conditions Precedent" the words "December 31,
  2000" will be replaced with the words "June 7, 2001";

    (iii) In clause (ix) of "Conditions Precedent" the words "the date
  hereof" will be replaced with the words "June 7, 2001";

    (iv) Under "Fees" the words "and the Facility Fee (as defined therein)"
  shall be deleted;

    (v) The first paragraph under "Representations, Warranties and Covenants
  of the Company" shall be amended to read in its entirety as follows:

    "You represent and warrant that (i) all information, considered
    together in its entirety, that has been or will hereafter be made
    available to Lender, Berkshire or Leucadia by you or any of your
    representatives in connection with the transactions contemplated hereby
    is and will be complete and correct in all material respects and does
    not and will not contain any untrue statement of a material fact or
    omit to state a material fact necessary in order to make the statements
    contained therein not misleading in light of the circumstances under
    which such statements were or are made, (ii) all financial projections
    that on or after June 7, 2001 have been or will be prepared by you and
    made available to Lender, Berkshire and Leucadia have been or will be
    prepared in good faith based upon assumptions that were reasonable as
    of the date of the preparation of such financial projections (it being
    understood that such projections are subject to significant
    uncertainties and contingencies, many of which are beyond the Company's
    control, and that no assurance can be given that the projections will
    be realized) and (iii) after June 7, 2001 all cash and cash equivalents
    of FNV and its consolidated subsidiaries will be used solely to fund,
    in whole or in part, legal commitments, normal operating expenses, the
    allowed claims against the debtors and expenses relating to the Chapter
    11 proceedings and the expenses of the transactions contemplated by
    this Commitment Letter. You agree to provide such information and
    projections as reasonably requested by Lender, and to supplement such
    information and projections from time to time so that the
    representations and warranties contained in this paragraph remain
    correct in all material respects at all times.

  Berkadia's agreement herein to the Revised Senior Notes Term Sheet, the
Revised Term Loan Term Sheet, the Intercompany Note Term Sheet and Additional
Terms and Berkshire's obligations under the Berkshire Holding Agreement:

    (i) will terminate, and the agreement between Berkadia, FNV Group and FNV
  Capital shall revert to the provisions and agreements in the Commitment
  Letter, the May 2 Agreement and the May 30 Agreement, if the Official
  Committee of Unsecured Creditors of FINOVA Capital Corporation

      (A) objects to or announces its intent to object to the joint plans
    of reorganization of the Debtors as modified to include the Revised
    Commitment Letter, the Revised Senior Notes Term Sheet, the Revised
    Term Loan Term Sheet and the Intercompany Note Term Sheet (herein
    referred to as "modified joint plans");

      (B) requests the Court, or announces its intention to request the
    Court, to approve a disclosure statement for or confirm any plan of
    reorganization of the Debtors other than the modified joint plans or
    for any financing arrangements for a plan of reorganization other than
    the financing arrangements proposed by Berkadia and reflected in the
    modified joint plans;

                                      15
<PAGE>

      (C) makes any filing in the bankruptcy cases of the Debtors presently
    pending in the Court that (1) supports any plan of reorganization other
    than the modified joint plans or (2) supports or seeks approval of any
    request by a third party to conduct due diligence of any of the Debtors
    in connection with a bankruptcy plan, or that supports the payment to
    any third party (other than any of Berkadia, Berkshire or Leucadia)
    under any circumstance whatsoever of any commitment fee, break-up fee,
    topping fee, due diligence fee, expense reimbursement or similar
    payment or arrangement therefor, or any other fee arrangements in
    connection with a third party proposal (except a payment to General
    Electric Capital Corporation of up to $5 million) or any reimbursement
    on the basis of having made a "substantial contribution" under Section
    503 of the Bankruptcy Code, whether or not any such agreement or award
    or payment is subject to any conditions, prerequisites, contingencies
    or future events and whether or not absolutely due or due under limited
    or special circumstances;

      (D) fails to timely file pleadings in the Court or state a position
    in the Court which evidences support for or no objection to, and fails
    to withdraw within three days prior to the hearing therefor any
    pleadings previously filed objecting to, the entry of a Court order
    approving the currently pending motions styled "Motion to Approve (i)
    Commitment Letter with Berkshire Hathaway Inc., Leucadia National
    Corporation and Berkadia LLC; and (ii) Management Services Agreement
    with Leucadia National Corporation and Leucadia International
    Corporation and Authorizing the Assumption of Those Agreements as
    Amended," "Motion (i) to Approve Compensation and Release Agreements
    for Senior Executives and (ii) To Approve Disclaimer of Escrow Funds,"
    and "Motion to Approve Amended and Restated Disclosure Statement," as
    well as any motion and/or hearing where an order confirming the
    modified joint plans has been requested, or fails to oppose any appeal
    brought from an order approving any of the foregoing or any stay of an
    order approving any of the foregoing;

      (E) objects to any requests by the Debtors to obtain hearings that
    relate to the matters referenced in clause D above at the earliest
    available Court hearing dates, including any request for an order
    shortening time; or

      (F) fails to timely file pleadings in the Court or state a position
    in the Court opposing (1) approval of a disclosure statement for or a
    confirmation of the "Alternative Transaction" described in the Joint
    Objection of General Electric Capital Corporation, Goldman Sachs
    Mortgage Company and Goldman Sachs Credit Partners L.P. filed in the
    Court on June 6, 2001 (the "June 6 Objection"), (2) approval of any
    agreement with respect to the Alternative Transaction or any fee
    arrangement with respect to the Alternative Transaction, and (3)
    approval of the revised schedule proposed in the June 6 Objection,
    unless, with respect to sub-clauses (1), (2) and (3) to this clause
    (F), the June 6 Objection is withdrawn; and

    (ii) will terminate, and the agreement between Berkadia, FNV Group and
  FNV Capital shall revert to the provision and agreements in the Commitment
  Letter and the May 2 Agreement, if there is

      (A) any agreement requiring the Debtors or any of their subsidiaries
    to pay under any circumstances whatsoever to any third party (other
    than any of Berkadia, Berkshire or Leucadia) (1) any commitment fee,
    break up fee, topping fee, due diligence fee, expense reimbursement, or
    similar payment or arrangement therefor, or any other fee arrangement
    in connection with a third party proposal (except a payment of up to $5
    million, with the consent of Berkadia) or (2) any reimbursement on the
    basis of having made a "substantial contribution" under Section 503 of
    the Bankruptcy Code; or

      (B) there is any award or approval by the Court of (1) any commitment
    fee, break up fee, topping fee, due diligence fee, expense
    reimbursement fee, or similar payment or arrangement therefor to any
    third party (other than any of Berkadia, Berkshire or Leucadia), or any
    other fee arrangement in connection with a third-party proposal (except
    a payment to General Electric Capital Corporation of up to $5 million)
    or (2) any reimbursement on the basis of having made a "substantial
    contribution"

                                      16
<PAGE>

    under Section 503 of the Bankruptcy Code, whether or not any such
    agreement, approval, award or payment referred to in this clause (ii)
    is subject to any conditions, prerequisites, contingencies or future
    events and whether or not absolutely due or due under limited or
    special circumstances.

  In addition, Berkadia's agreement herein to the Revised Senior Notes Term
Sheet, the Revised Term Loan Term Sheet and Additional Terms and Berkshire's
obligations under the Berkshire Holding Agreement will terminate, and the
agreement between Berkadia, FNV Group and FNV Capital shall revert to the
provisions and agreements in the Commitment Letter, the May 2 Agreement and
the May 30 Agreement, if (a) the Debtors fail to file the modified joint plans
with the Court or withdraw or modify, without the consent of Berkadia, the
modified joint plans, (b) any of the Debtors take any of the actions set forth
in (i) (B) or (C) of the preceding paragraph, (c) the Debtors fail to
diligently pursue the entry of the Court orders described in (i)(D) of the
preceding paragraph or fail to seek hearings that relate to the matters
referenced in (i)(D) of the preceding paragraph at the earliest available
hearing dates, or (d) any of the Debtors fails to timely file pleadings in the
Court opposing the Alternative Transaction, any agreement or fee arrangement
with respect to the Alternative Transaction, or the revised schedule proposed
in the June 6 Objection.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      17
<PAGE>

  Furthermore, subject to your agreement with respect thereto, the proposed
modifications contained in this letter (i) shall become effective upon Court
approval of the Commitment Letter, the modifications in the May 2 Agreement,
the modifications in the May 30 Agreement, and this letter agreement,
including the Revised Senior Notes Term Sheet, the Revised Term Loan Term
Sheet and the Intercompany Note Term Sheet and (ii) are not intended to and do
not amend or modify the Commitment Letter in any respect unless and until
receipt of such Court approval.

                                          Very truly yours,

                                          Berkadia LLC

                                                   /s/ Robert E. Denham
                                          By: _________________________________
                                                     Robert E. Denham
                                                     Attorney-in-Fact

                                          Berkshire Hathaway Inc.

                                                   /s/ Robert E. Denham
                                          By: _________________________________
                                                     Robert E. Denham
                                                     Attorney-in-Fact

                                          Leucadia National Corporation

                                                  /s/ Joseph A. Orlando
                                          By: _________________________________
                                                    Joseph A. Orlando
                                                      Vice President

Accepted and Agreed to
as of June 10, 2001

The Finova Group Inc.                     Finova Capital Corporation:

        /s/ William J. Hallinan                   /s/ William J. Hallinan
By: _________________________________     By: _________________________________
Name: _______________________________     Name: _______________________________
Title: ______________________________     Title: ______________________________

                                      18
<PAGE>

                                 Berkadia LLC
                               1440 Kiewit Plaza
                             Omaha, Nebraska 68131

                                                                  June 13, 2001

The FINOVA Group Inc.
FINOVA Capital Corporation
4800 North Scottsdale Road
Scottsdale, Arizona 85251-7623

                      Re: Proposed June 13 Modifications

Ladies and Gentlemen:

  Reference is made to the letter agreement among Berkadia, Berkshire,
Leucadia, FNV Group and FNV Capital dated June 10, 2001 (the "June 10 Letter
Agreement"). Any capitalized term used in this letter agreement without
definition shall have the meaning established for such term in June 10 Letter
Agreement or the Second Amended and Restated Disclosure Statement with respect
to the Joint Plan of Reorganization of Debtors under Chapter 11 of the
Bankruptcy Code filed with the Court on June 11, 2001.

  The undersigned agree that the June 10 Letter Agreement shall be modified
and supplemented in the following manner (the "June 13 Terms"):

  1. Berkshire will deliver to FNV Group the letter attached hereto as Exhibit
A (the "Amended Berkshire Holding Agreement") in lieu of the Berkshire Holding
Agreement.

  2. The parenthetical phrase "(except a payment to General Electric Capital
Corporation of up to $5 million)" appearing in subparagraph (i) (C ) and
subparagraph (ii) (B) of the first paragraph following the "Additional Terms"
section of June 10 Letter Agreement shall be deleted, and the following
parenthetical phrase shall be substituted in its entirety therefor: "(except
an aggregate payment to General Electric Capital Corporation and Goldman Sachs
Mortgage Company of up to $5 million in the aggregate)".

  3. FNV Group will provide the Creditors' Committee with financial
information evidencing compliance with the "loan to collateral value"
financial covenant to be contained in the Berkadia Loan Agreement, as such
covenant is proposed to be modified as indicated in paragraph 4 immediately
below.

  4. The sixth bullet point under "Affirmative and Financial Covenants" set
forth in the Revised Term Loan Term Sheet shall be revised to delete the
reference to "December 31, 2001" appearing twice in the first sentence, and
replacing such text with "June 30, 2002".

  5. The Revised Senior Note Term Sheet shall be revised to:

    (a) prohibit any merger or consolidation between FNV Group and FNV
  Capital; and

    (b) to amend clause Third in the "Use of Cash" covenant to add to the end
  of such clause immediately before the semi-colon:

    "and; provided further, any such purchases of New Senior Notes by FNV
    Group shall be made pursuant to procedures adopted by the board of
    directors of FNV Group to protect against preferring or discriminating
    against Berkadia and its affiliates with respect to such purchases"

                                      19
<PAGE>

  6. Section 5.11 (a) of the Plan will be amended to delete therefrom clause
(ii) and to replace such deleted language with the following:

    "(ii) for Claims based upon a contract between the Claim holder and a
  Debtor that specifies payment of interest at a variable rate upon amounts
  owed by the Debtor to the Claim holder, the variable rate (but not the
  default rate, and excluding facility or other fees or any changes in rates
  due to the failure to elect interest rates or periods from or after the
  Petition Date, and without regard to the availability or unavailability of
  specified rates as a result of a default, financial condition or
  otherwise), (x) with respect to prepetition interest, as specified in the
  contract as in effect on the day such interest payment was due, and (y)
  with respect to postpetition interest, calculated as specified in the
  contract, provided that the component of any such variable rate based on
  London Interbank Offered Rates ("LIBOR") for U.S. dollar deposits shall be
  30-day LIBOR as was in effect on the Petition Date for the period from the
  Petition Date through and including the last day of March 2001, and
  thereafter for each subsequent month, 30-day LIBOR as of the first business
  day of such month for such month or partial month."

  7. Section 10.5 "Releases" of the Plan shall be amended to restate in its
entirety subsection (a) as follows:

    Releases by the Debtors. As of the Effective Date, each of the Debtors
    releases, unconditionally and forever, (A) Berkadia, Leucadia,
    Berkshire and their respective Affiliates, and the respective officers,
    directors, employees, members, managers, agents, advisors, attorneys
    and representatives of each of Berkadia, Leucadia, Berkshire and their
    respective Affiliates and (B) each of the Official Committees, their
    current and former respective members (in their capacities as members
    of such Official Committees), and their agents, advisors, attorneys and
    representatives (in such capacities), from any and all claims,
    obligations, suits, judgments, damages, rights, causes of action and
    liabilities whatsoever (other than the right to enforce their
    respective obligations to the Debtors or the Reorganized Debtors under
    the Plan and the contracts, instruments, releases and other agreements
    and documents delivered thereunder, as applicable), whether liquidated
    or unliquidated, fixed or contingent, matured or unmatured, known or
    unknown, foreseen or unforeseen, then existing or thereafter arising,
    in law, equity or otherwise, that are based in whole or in part upon
    any act or omission, transaction, event or other occurrence taking
    place on or prior to the Effective Date in any way relating to the
    Debtors, the Chapter 11 Cases, the Plan or the Disclosure Statement.

  8. The Disclosure Statement will be revised to reflect the resignation of
Bank of America from the Creditors' Committee.

  The June 13 Terms are conditioned upon the same conditions, and will become
effective and will terminate upon the same events, as those conditions and
events set forth in the June 10 Letter Agreement as such June 10 Letter
Agreement is proposed to be revised pursuant to the terms of this letter
agreement, as fully as if such conditions and terms were set forth herein.

                 [Remainder of page intentionally left blank.]

                                      20
<PAGE>

  Furthermore, subject to your agreement with respect thereto, the June 13
Terms (i) shall become effective upon Court approval of this letter and (ii)
are not intended to and do not amend or modify the Commitment Letter or the
June 10 Letter Agreement in any respect unless and until receipt of such Court
approval.

                                          Very truly yours,

                                          Berkadia LLC

                                                    /s/ Marc D. Hamburg
                                          By: _________________________________
                                          Name: _______________________________
                                                      Vice President
                                          Title: ______________________________

                                          Berkshire Hathaway Inc.

                                                    /s/ Marc D. Hamburg
                                          By: _________________________________
                                          Name: _______________________________
                                                      Vice President
                                          Title: ______________________________

                                          Leucadia National Corporation

                                                   /s/ Joseph A. Orlando
                                          By: _________________________________
                                          Name: _______________________________
                                                      Vice President
                                          Title: ______________________________

Accepted and Agreed to
as of June 13, 2001

The Finova Group Inc.                     Finova Capital Corporation:

        /s/ William J. Hallinan                   /s/ William J. Hallinan
By: _________________________________     By: _________________________________
Name: _______________________________     Name: _______________________________
Title: ______________________________     Title: ______________________________

                                       21
<PAGE>

                                                                    "EXHIBIT A"
                                            [To June 13, 2001 Letter Agreement]

                            Berkshire Hathaway Inc.
                               1440 Kiewit Plaza
                             Omaha, Nebraska 68131

                                                                  June 13, 2001

The FINOVA Group Inc.
FINOVA Capital Corporation
4800 North Scottsdale Road
Scottsdale, Arizona 85251

Ladies and Gentlemen:

  Reference is made to the letter agreement dated June 10, 2001 (the "Letter
Agreement") by and among Berkadia LLC, Berkshire Hathaway Inc ("Berkshire"),
Leucadia National Corporation, The FINOVA Group Inc., and FINOVA Capital
Corporation.

  Berkshire (which as used hereinafter means Berkshire Hathaway Inc. and its
direct and indirect subsidiaries) hereby agrees not to transfer the New Senior
Notes received by Berkshire pursuant to the Plan (as defined in the Letter
Agreement) and purchased pursuant to the Tender Offer (as defined below) for a
period of four (4) years from the Effective Date of the Plan. If Berkshire
acquires New Senior Notes in addition to those received by it on the Effective
Date of the Plan and purchased by it pursuant to the Tender Offer, Berkshire
may transfer any New Senior Notes it owns so long as at all times during the
four (4) years from the Effective Date it owns not less than the aggregate
principal amount of New Senior Notes that it received on the Effective Date
pursuant to the Plan and purchased pursuant to the Tender Offer . Nothing
herein restricts Berkshire Hathaway Inc. from transferring ownership of New
Senior Notes to any of its direct or indirect subsidiaries or restricts any
such subsidiary from transferring ownership of New Senior Notes to Berkshire
Hathaway Inc. or any other such subsidiary. As used in this paragraph,
"transfer" means any sale, transfer or other disposition of New Senior Notes,
any short sale of New Senior Notes, and any hedge or derivative transaction
that would result in Berkshire ceasing to have the economic risk of the holder
of such New Senior Notes.

  In addition, if the Berkadia Loan is funded and the New Senior Notes are
issued as contemplated by the Plan, then as soon as reasonably practicable
thereafter, Berkshire will commence a tender offer for up to $500 million in
aggregate principal amount of New Senior Notes, at a cash purchase price of
70% of par ($700 per $1,000 principal amount) (the "Tender Offer"). The Tender
Offer will be made in compliance with all applicable securities laws and will
remain open for the longer of 20 business days or 30 days. Berkshire will
purchase any and all New Senior Notes validly tendered, up to the $500 million
aggregate principal amount limit, and will prorate among tendering holders of
the New Senior Notes if the Tender Offer is oversubscribed. Definitive
offering documents to be prepared and distributed at that time will set forth
the detailed terms of the Tender Offer, consistent with the above. Berkshire's
obligations to commence and to consummate the Tender Offer will be subject to
the conditions to be specified in those documents, which will be customary,
but which will not include a financing condition.

  Berkshire's agreements herein are conditioned upon the same conditions, and
will terminate upon the same events, as those conditions and events set forth
in the Letter Agreement, as fully as if such conditions were set forth herein.

                                      22
<PAGE>

  Capitalized terms used herein without definition have the meanings given
them in the Amended and Restated Disclosure Statement with respect to the
Joint Plan of Reorganization of Debtors under Chapter 11 of the United States
Bankruptcy Code filed with the United States Bankruptcy Court for the District
of Delaware on June 1, 2001. This letter amends and restates the letter
agreement among the parties hereto dated June 10, 2001.

                                          Very truly yours,

                                          Berkshire Hathaway Inc.

                                          By: _________________________________
                                          Name: _______________________________
                                          Title: ______________________________

Accepted and Agreed to
as of June 13, 2001

The Finova Group Inc.

By: _________________________________
Name: _______________________________
Title: ______________________________

Finova Capital Corporation:

By: _________________________________
Name: _______________________________
Title: ______________________________

                                      23
<PAGE>

 FOR TERM SHEETS OF THE TERM LOAN, NEW SENIOR NOTES AND INTERCOMPANY NOTE, SEE
 EXHIBITS 6.2(a), 6.2(c)(1) AND 6.2(c)(2) TO THE PLAN, WHICH IS ANNEXED TO THIS
                       DISCLOSURE STATEMENT AS EXHIBIT A

                                       24
<PAGE>

                                                                      EXHIBIT E

                            Berkshire Hathaway Inc.
                               1440 Kiewit Plaza
                             Omaha, Nebraska 68131

                                 June 13, 2001

The FINOVA Group Inc.
FINOVA Capital Corporation
4800 North Scottsdale Road
Scottsdale, Arizona 85251

Ladies and Gentlemen:

  Reference is made to the letter agreement dated June 10, 2001 (the "Letter
Agreement") by and among Berkadia LLC, Berkshire Hathaway Inc ("Berkshire"),
Leucadia National Corporation, The FINOVA Group Inc., and FINOVA Capital
Corporation.

  Berkshire (which as used hereinafter means Berkshire Hathaway Inc. and its
direct and indirect subsidiaries) hereby agrees not to transfer the New Senior
Notes received by Berkshire pursuant to the Plan (as defined in the Letter
Agreement) and purchased pursuant to the Tender Offer (as defined below) for a
period of four (4) years from the Effective Date of the Plan. If Berkshire
acquires New Senior Notes in addition to those received by it on the Effective
Date of the Plan and purchased by it pursuant to the Tender Offer, Berkshire
may transfer any New Senior Notes it owns so long as at all times during the
four (4) years from the Effective Date it owns not less than the aggregate
principal amount of New Senior Notes that it received on the Effective Date
pursuant to the Plan and purchased pursuant to the Tender Offer. Nothing
herein restricts Berkshire Hathaway Inc. from transferring ownership of New
Senior Notes to any of its direct or indirect subsidiaries or restricts any
such subsidiary from transferring ownership of New Senior Notes to Berkshire
Hathaway Inc. or any other such subsidiary. As used in this paragraph,
"transfer" means any sale, transfer or other disposition of New Senior Notes,
any short sale of New Senior Notes, and any hedge or derivative transaction
that would result in Berkshire ceasing to have the economic risk of the holder
of such New Senior Notes.

  In addition, if the Berkadia Loan is funded and the New Senior Notes are
issued as contemplated by the Plan, then as soon as reasonably practicable
thereafter, Berkshire will commence a tender offer for up to $500 million in
aggregate principal amount of New Senior Notes, at a cash purchase price of
70% of par ($700 per $1,000 principal amount) (the "Tender Offer"). The Tender
Offer will be made in compliance with all applicable securities laws and will
remain open for the longer of 20 business days or 30 days. Berkshire will
purchase any and all New Senior Notes validly tendered, up to the $500 million
aggregate principal amount limit, and will prorate among tendering holders of
the New Senior Notes if the Tender Offer is oversubscribed. Definitive
offering documents to be prepared and distributed at that time will set forth
the detailed terms of the Tender Offer, consistent with the above. Berkshire's
obligations to commence and to consummate the Tender Offer will be subject to
the conditions to be specified in those documents, which will be customary,
but which will not include a financing condition.

  Berkshire's agreements herein are conditioned upon the same conditions, and
will terminate upon the same events, as those conditions and events set forth
in the Letter Agreement, as fully as if such conditions were set forth herein.

                                       1
<PAGE>

  Capitalized terms used herein without definition have the meanings given
them in the Amended and Restated Disclosure Statement with respect to the
Joint Plan of Reorganization of Debtors under Chapter 11 of the United States
Bankruptcy Code filed with the United States Bankruptcy Court for the District
of Delaware on June 1, 2001. This letter agreement amends and restates the
letter agreement among the parties hereto dated June 10, 2001.

                                          Very truly yours,

                                          Berkshire Hathaway Inc.

                                                   /s/  Marc D. Hamburg
                                          By: _________________________________
                                                      Marc D. Hamburg
                                                      Vice-President

Accepted and Agreed to
as of June 10, 2001

The Finova Group Inc.

        /s/ William J. Hallinan
By: _________________________________

Name: _______________________________
              Pres. & CEO
Title: ______________________________

FINOVA Capital Corporation

        /s/ William J. Hallinan
By: _________________________________

Name: _______________________________
              Pres. & CEO
Title: ______________________________

                                       2
<PAGE>

                                                                      EXHIBIT F

                             Financial Projections

  THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO COMPLYING WITH THE
GUIDELINES FOR PROSPECTIVE FINANCIAL STATEMENTS PUBLISHED BY THE AMERICAN
INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS ("AICPA") OR THE FINANCIAL
ACCOUNTING STANDARDS BOARD ("FASB"). THE DEBTORS' INDEPENDENT ACCOUNTANTS HAVE
NEITHER COMPILED NOR EXAMINED THE ACCOMPANYING PROSPECTIVE FINANCIAL
INFORMATION TO DETERMINE THE REASONABLENESS THEREOF AND, ACCORDINGLY, HAVE NOT
EXPRESSED ANY OPINION OR ANY OTHER FORM OF ASSURANCE WITH RESPECT THERETO.

  THE DEBTORS DO NOT, AS A MATTER OF COURSE, PUBLISH THEIR BUSINESS PLANS AND
STRATEGIES OR PROJECTIONS OF THEIR ANTICIPATED FINANCIAL POSITION, RESULTS OF
OPERATIONS OR CASH FLOWS. ACCORDINGLY, THE DEBTORS DO NOT INTEND, AND DISCLAIM
ANY OBLIGATION TO, (A) FURNISH UPDATED BUSINESS PLANS OR PROJECTIONS TO
HOLDERS OF CLAIMS OR EQUITY INTERESTS PRIOR TO THE EFFECTIVE DATE OR TO
HOLDERS OF NEW SENIOR NOTES, THE GROUP SUBORDINATED DEBENTURES, REORGANIZED
FNV GROUP COMMON STOCK OR ANY OTHER SECURITIES TO BE ISSUED UNDER THE PLAN OR
ANY OTHER PARTY AFTER THE EFFECTIVE DATE, (B) INCLUDE SUCH UPDATED INFORMATION
IN ANY DOCUMENTS WHICH MAY BE REQUIRED TO BE FILED WITH THE SEC, OR (C)
OTHERWISE MAKE SUCH UPDATED INFORMATION PUBLICLY AVAILABLE.

  THESE PROJECTIONS, WHILE PRESENTED WITH NUMERICAL SPECIFICITY, NECESSARILY
ARE BASED UPON A VARIETY OF ESTIMATES AND ASSUMPTIONS, WHICH, THOUGH
CONSIDERED REASONABLE BY MANAGEMENT, MAY NOT BE REALIZED, AND ARE INHERENTLY
SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE UNCERTAINTIES AND
CONTINGENCIES, MANY OF WHICH ARE BEYOND THE PARTIES' CONTROL. THE DEBTORS
CAUTION THAT NO REPRESENTATION IS MADE AS TO THE ACCURACY OF THESE FINANCIAL
PROJECTIONS OR TO THE ABILITY OF THE REORGANIZED DEBTORS TO ACHIEVE THE
PROJECTED RESULTS. SOME ASSUMPTIONS INEVITABLY WILL NOT MATERIALIZE, AND
EVENTS AND CIRCUMSTANCES OCCURRING SUBSEQUENT TO THE DATE ON WHICH THESE
PROJECTIONS WERE PREPARED MAY BE DIFFERENT FROM THOSE ASSUMED, OR MAY BE
UNANTICIPATED AND THUS MAY AFFECT FINANCIAL RESULTS IN A MATERIAL AND POSSIBLY
ADVERSE MANNER. THE PROJECTIONS, THEREFORE, MAY NOT BE RELIED UPON AS A
GUARANTEE OR OTHER ASSURANCE OF THE ACTUAL RESULTS THAT WILL OCCUR.

Summary of Significant Assumptions

  The Debtors have developed the Projections based on the business plan
described elsewhere herein, beginning with the December 31, 2000 audited
consolidated balance sheet of FNV Group and its subsidiaries. The Projections
include the consolidated accounts of FNV Group, including those consolidated
entities that did not file for bankruptcy protection, and assume an Effective
Date of August 31, 2001.

  The Projections were prepared to illustrate the potential cash flow to each
creditor group and to common equity. As such, the historical accounting bases
of all assets and liabilities, except as noted below, have been maintained
throughout the projection period. The Projections were not prepared using
"Fresh Start Reporting" principles, which the Debtors may be required to use
upon emergence from bankruptcy. Fresh Start Reporting would require, among
other things, that the Debtors' assets and liabilities be recorded at fair
value on the Effective Date, and that any resulting discount or premium to
face or par values be amortized in future periods.

                                       1
<PAGE>

Since these fair value adjustments and related future amortization may be
required in order for the Projections to be prepared in conformity with
generally accepted principles, no representation is made that the Projections
have been prepared on that basis.

  Certain adjustments have been made to the historical accounting basis of
certain of the Debtors assets and liabilities as of the Effective Date. These
include the charge-off of all remaining goodwill ($43.3 million); the charge-
off of deferred loan origination costs ($32.9 million); the charge-off of
unamortized debt discounts and deferred debt issuance costs ($28.2 million);
the recognition of deferred net gains from termination of interest rate swap
agreements ($74.0 million); and a gain recognized on the discounted payment
with respect to the TOPrS ($28.9 million). The total of these adjustments is
reflected in the Consolidated Statement of Operations in the caption "Gains
(losses) on disposal of assets and other items."

 Investment in Financing Transactions (including discontinued operations)

  Each loan, lease and investment in the portfolio with a balance in excess of
$1 million (other than those in the Rediscount Finance and Resort Finance
lines of business) has been categorized as follows:

Category 1:  The borrower or lessee will repay obligations according to their
             contractual terms, including the purchase, where applicable, of
             residual interests at the end of the term, or, with respect to
             substantially all of the Realty Capital line of business and a
             portion of the Public Finance line of business, assets will be sold
             during 2001 and 2002 at an amount approximating book value.

Category 2:  The borrower's credit is acceptable, but it is unlikely that the
             borrower will be able to refinance a balloon payment at maturity or
             finance a purchase of the residual for cash and the Debtors are
             willing to refinance at a market rate.

Category 3:  The Debtors will likely take a loss on the investment based upon
             existing contractual terms (in such case, monthly anticipated
             cashflows were estimated). The values ascribed to Category 3 assets
             are estimates of proceeds expected to be realized over time; such
             values do not represent market values in a sale of the underlying
             assets.

  In addition to the specific losses identified through categorization,
general reserves have been projected for certain lines of business. These
amounts are intended to account for unidentified future account losses.

  With respect to the Transportation Finance line of business, aircraft
identified in Category 2 above are assumed to be re-leased at the expiration
of the current term of the lease or the due date of the loan. For each lease
renewal, residual values are estimated to be 70% of the prior residual value
and lease revenues are derived using aircraft age and aircraft type rental
factors which are applied to residual values. Each lease renewal is assumed to
have a three-year term, with subsequent renewals every three years for the
remaining useful life of the aircraft.

  With respect to the Rediscount Finance and Resort Finance lines of business,
cash flow forecasts have been prepared to run off the portfolio over the
projection period, based on estimates of loan losses, as well as refinancings
and/or extensions of loans and commitments to borrowers.

  Funding to customers under existing commitments, revolvers and certain other
circumstances has been projected. For floating rate assets, the rate used to
project cash flows was based on a prime rate of 7.0% per year. The
categorizations and assumptions were used to determine income and principal
cash flow forecasts, income statement activity and balance sheets amounts.

 Cash & Equivalents

  Necessary cash reserves have been estimated on a quarterly basis for the
projection period. Excess available cash at the Effective Date is applied to
fund a portion of the cash payment under the Plan to holders of bond and bank
debt of FNV Capital outstanding on the Petition Date and to pay down the
Berkadia Loan.

                                       2
<PAGE>

 Investments and Other Assets

  Realization of portfolio related assets (equity securities, repossessed
assets, etc.) are based upon projections supplied by each line of business.
Gains or losses, if any, upon disposition are reflected in the statement of
operations.

 Liabilities

  Accrued interest on pre-petition debt as of the Filing Date, interest
accruing during the pendency of the chapter 11 proceedings (assumed to be
6.037% per annum; the actual interest rate will be calculated as set forth in
Section 5.11(a) of the Plan and will depend upon the applicable LIBO rate
during the period from and including the Petition Date but excluding the
Distribution Date) and interest and principal due under the Berkadia Loan and
the New Senior Notes are treated as set forth in the Plan. Based on the LIBO
rate at May 30, 2001, the Berkadia Loan annual interest rate is assumed to be
6.25% per annum. The annual interest rate on the New Senior Notes is fixed at
7.5%. In addition to the $60 million funding fee to Berkadia, other costs
estimated to be $20 million are assumed reimbursed to Berkadia.

  Other payables are treated as set forth in the Plan.

 Taxes

  As of December 31, 2000, the Debtors have approximately $480 million of net
operating loss carryforwards ("NOLs") to reduce future taxable income. The
Projections assume that the estimated amount of cancellation of indebtedness
income ("COD") to be generated in connection with consummation of the Plan (as
described under "Certain Federal Income Tax Consequences of the Plan") will
result in the elimination of the Debtors' NOLs and minimum tax credits, and
will partially reduce the tax basis of the Debtors' assets. However, based
upon future estimates of taxable income or loss, including estimates of
interest deductions resulting from original issue discount ("OID") on the
issuance of the New Senior Notes, no material federal or state income tax cash
expenditures are assumed for the projection period. If actual amounts of
taxable income are greater than estimated, the actual amount of COD and
corresponding reduction to the tax basis of the Debtors' assets is greater
than estimated, and/or actual deductible interest (including OID) is less than
anticipated, then the Debtors could have material federal or state income tax
cash expenditures after the Effective Date.

  Deferred tax benefits have been recorded only to the extent that it is more
likely than not that the Debtors will have future taxable income sufficient to
fully utilize such benefits. As a result, valuation allowances have been
recorded to reflect this uncertainty.

 Operating Expenses

  Detailed operating expense budgets have been prepared for the years 2001,
2002 and 2003. These budgets include costs related to retention programs as
well as severance programs. Headcount reductions during this period are
assumed to match the declining portfolio. After 2003, costs are estimated to
decline throughout the projection period in proportion to the decline in the
portfolio.

 Discontinued Operations

  The amounts projected for discontinued operations represent the projected
earnings for the portfolio less direct expenses. The results have not been
reduced for allocations of interest expense.

                                       3
<PAGE>

                             THE FINOVA GROUP INC.

               PROJECTED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                           December 31,
                         August 31,   ----------------------------------------------------------
                            2001         2001        2002        2003        2004        2005
                         -----------  ----------  ----------  ----------  ----------  ----------
<S>                      <C>          <C>         <C>         <C>         <C>         <C>
         ASSETS
         ------

Cash and cash
 equivalents............ $   100,000  $  196,718  $  179,162  $  153,524  $  124,955  $  145,763
Investment in financing
 transactions:
  Loans and other
   financing contracts..   7,417,922   7,142,196   5,889,297   4,953,375   3,796,034   2,548,041
  Direct financing
   leases...............     481,699     460,662     387,963     342,131     306,054     288,301
  Operating leases......     649,091     707,141     677,188     643,874     545,851     480,429
  Leveraged leases......     798,245     780,411     803,697     805,604     810,630     788,293
                         -----------  ----------  ----------  ----------  ----------  ----------
                           9,346,957   9,090,410   7,758,145   6,744,984   5,458,569   4,105,064
  Less reserve for
   credit losses........    (534,967)   (428,595)   (314,891)   (192,167)   (165,176)   (123,152)
                         -----------  ----------  ----------  ----------  ----------  ----------
Net investment in
 financing
 transactions...........   8,811,990   8,661,815   7,443,254   6,552,817   5,293,393   3,981,912
Other assets............     422,441     345,229     200,500     105,558      59,896      13,814
Investments.............     234,603     232,249     196,544     188,409     158,905     128,744
Net assets of
 discontinued
 operations.............     469,177     419,150     250,011     174,784      47,310
                         -----------  ----------  ----------  ----------  ----------  ----------
                         $10,038,211  $9,855,161  $8,269,471  $7,175,092  $5,684,459  $4,270,233
                         ===========  ==========  ==========  ==========  ==========  ==========

     LIABILITIES &
  STOCKHOLDERS' EQUITY
  ---------------------
Liabilities:
  Short-term
   liabilities.......... $    96,518  $   85,819  $   59,030  $   38,315  $   20,584  $    3,875
  Berkadia loan.........   5,985,841   5,791,835   4,275,273   3,206,437   1,839,432     506,268
  New senior notes......   3,255,293   3,255,293   3,255,293   3,255,293   3,255,293   3,255,293
  Deferred income taxes,
   net..................      48,249      68,828      54,010      52,320      15,256
                         -----------  ----------  ----------  ----------  ----------  ----------
                           9,385,901   9,201,775   7,643,606   6,552,365   5,130,565   3,765,436
                         -----------  ----------  ----------  ----------  ----------  ----------
Shareowners' equity.....     652,310     653,386     625,865     622,727     553,894     504,797
                         -----------  ----------  ----------  ----------  ----------  ----------
                         $10,038,211  $9,855,161  $8,269,471  $7,175,092  $5,684,459  $4,270,233
                         ===========  ==========  ==========  ==========  ==========  ==========
</TABLE>

                                       4
<PAGE>

                             THE FINOVA GROUP INC.

           PROJECTED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                           12 Months
                          8 Months  4 Months  ---------------------------------------
                            2001      2001      2002      2003      2004       2005
                          --------  --------  --------  --------  ---------  --------
<S>                       <C>       <C>       <C>       <C>       <C>        <C>
Interest, fees and other
 income.................  $503,554  $209,905  $553,094  $477,540  $ 384,548  $288,018
Financing lease income..    52,485    23,239    63,130    51,006     47,025    44,625
Operating lease income..    71,694    43,358   124,451   126,784    111,931    97,033
                          --------  --------  --------  --------  ---------  --------
Income earned from
 financing
 transactions...........   627,733   276,502   740,675   655,330    543,504   429,676
Operating lease
 depreciation...........    45,025    25,948    80,655    83,518     73,542    61,140
Interest expense on pre-
 petition debt..........   453,729
Interest expense on
 Berkadia loan..........       330   128,840   355,136   262,041    190,091   105,934
Interest expense on New
 Senior Notes...........              82,739   247,538   247,538    247,538   247,538
                          --------  --------  --------  --------  ---------  --------
Total interest expense..   454,059   211,579   602,674   509,579    437,629   353,472
                          --------  --------  --------  --------  ---------  --------
Interest margins
 earned.................   128,649    38,975    57,346    62,233     32,333    15,064
Provision for credit
 losses.................     6,000                                   72,657    16,795
                          --------  --------  --------  --------  ---------  --------
Net interest margins
 earned.................   122,649    38,975    57,346    62,233    (40,324)   (1,731)
Gains (losses) on
 disposal of assets and
 other items............    36,538     4,784    (2,603)   16,141     12,488     8,119
                          --------  --------  --------  --------  ---------  --------
                           159,187    43,759    54,743    78,374    (27,836)    6,388
Operating expenses......   171,538    51,907   125,574   109,530     91,103    72,099
                          --------  --------  --------  --------  ---------  --------
(Loss) income from
 continuing operation
 before taxes...........   (12,351)   (8,148)  (70,831)  (31,156)  (118,939)  (65,711)
Income tax expense
 (benefit)..............       555    (2,852)  (24,791)  (10,905)   (41,629)  (15,731)
                          --------  --------  --------  --------  ---------  --------
(Loss) income before
 preferred dividends....   (12,906)   (5,296)  (46,040)  (20,251)   (77,310)  (49,980)
Preferred dividends(1)..     3,163
                          --------  --------  --------  --------  ---------  --------
(Loss) income from
 continuing operations..   (16,069)   (5,296)  (46,040)  (20,251)   (77,310)  (49,980)
Income from
 discountinued
 operations, net of
 tax....................    17,263     6,372    18,519    17,114      8,477       882
                          --------  --------  --------  --------  ---------  --------
Net (loss) income.......  $  1,194  $  1,076  $(27,521) $ (3,137) $ (68,833) $(49,098)
                          ========  ========  ========  ========  =========  ========
</TABLE>
--------
(1)Pre-tax dividends on Toprs for the first eight months of 2001.

                                       5
<PAGE>

                             THE FINOVA GROUP INC.
                 PROJECTED CONSOLIDATED CASH FLOWS (UNAUDITED)
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                           Years Ended December 31,
                          ---------------------------------------------------------------
                             2001         2002         2003         2004         2005
                          -----------  -----------  -----------  -----------  -----------
<S>                       <C>          <C>          <C>          <C>          <C>
OPERATING ACTIVITIES:
  Net (loss) income...... $     2,270  $   (27,521) $    (3,137) $   (68,833) $   (49,097)
  Adjustments to
   reconcile net (loss)
   income to net cash
   provided by operating
   activities:
    Provision for credit
     losses..............       6,000                                 72,657       16,795
    Net non cash
     restructuring (gain)
     loss................       1,643
    Depreciation and
     amortization........      70,973       80,655       83,518       73,542       61,140
  Change in assets and
   liabilities:
    Deferred income
     taxes...............      19,624      (14,819)      (1,689)     (37,064)     (15,256)
    (Increase) decrease
     in other assets.....      21,869      144,730       94,941       45,662       46,083
    Increase (decrease)
     in short-term
     liabilities.........    (177,604)     (26,788)     (20,717)     (17,732)     (16,709)
                          -----------  -----------  -----------  -----------  -----------
      Net cash provided
       by operating
       activities........     (55,225)     156,257      152,916       68,232       42,957
                          -----------  -----------  -----------  -----------  -----------
INVESTING ACTIVITIES:
  Net change in
   investments...........     (31,449)      35,705        8,135       29,505       30,160
  Principal collections,
   net of
   refinancings/fundings..    829,974    1,137,905      806,920    1,113,225    1,233,546
  Net proceeds from
   discontinued
   operations............     743,073      169,139       75,226      127,474       47,309
                          -----------  -----------  -----------  -----------  -----------
      Net cash provided
       by investing
       activities........   1,541,598    1,342,749      890,281    1,270,204    1,311,015
                          -----------  -----------  -----------  -----------  -----------
FINANCING ACTIVITIES:
  Borrowing /
   (Repayments) under
   Berkadia Loan.........   5,791,835   (1,516,562)  (1,068,835)  (1,367,005)  (1,333,164)
  Repayment of New Senior
   Notes / Existing
   Debt..................  (7,780,716)
  Dividends..............
                          -----------  -----------  -----------  -----------  -----------
      Net cash used by
       financing
       activities........  (1,988,881)  (1,516,562)  (1,068,835)  (1,367,005)  (1,333,164)
                          -----------  -----------  -----------  -----------  -----------
Increase (decrease) in
 cash and cash
 equivalents.............    (502,510)     (17,556)     (25,638)     (28,569)      20,808
CASH AND CASH
 EQUIVALENTS, BEGINNING
 OF PERIOD...............     699,228      196,718      179,162      153,524      124,955
                          -----------  -----------  -----------  -----------  -----------
CASH AND CASH
 EQUIVALENTS, END OF
 PERIOD.................. $   196,718  $   179,162  $   153,524  $   124,955  $   145,763
                          ===========  ===========  ===========  ===========  ===========
</TABLE>

                                       6
<PAGE>

                                                                      EXHIBIT G

                             Liquidation Analysis

  Best Interests Test: With respect to each impaired Class of Claims and
Interests, confirmation of the Plan requires that each holder of an Allowed
Claim or Allowed Interest in such impaired Class either (a) accepts the Plan
or (b) receives or retains under the Plan property of a value, as of the
Effective Date of the Plan, that is not less than the value such holder would
receive or retain if the Debtors were liquidated under chapter 7 of the
Bankruptcy Code.

  This analysis requires the Bankruptcy Court to determine what the holders of
Allowed Claims and Allowed Interests in each impaired class would receive from
the liquidation of the Debtors' assets and properties in the context of
chapter 7 liquidation cases. The cash amount that would be available for the
satisfaction of general unsecured Claims and Interests of the Debtors would
consist of the proceeds resulting from the disposition of the assets of the
Debtors, augmented by the cash held by the Debtors at the time of the
commencement of the chapter 7 liquidation cases. Such amount would be reduced
by the costs and expenses of the liquidation and by such additional
administrative and priority Claims that may result from the termination of the
Debtors' business and the use of chapter 7 for the purposes of liquidation.

  The Debtors' costs of liquidation under chapter 7 would include the fees
payable to a trustee in bankruptcy, as well as those payable to attorneys,
financial advisors and other professionals that a chapter 7 trustee may
engage, plus any unpaid expenses incurred by the Debtors during the Chapter 11
Cases, such as compensation for attorneys, financial advisors, accountants and
costs and expenses of members of any official committees that are appointed by
the United States Trustee during the Chapter 11 Cases. Additional
administrative Claims could arise by reason of the breach or rejection of
obligations incurred and executory contracts entered into or assumed by the
Debtors during the pendency of the Chapter 11 Cases.

  The foregoing types of Claims and other claims that may arise in the chapter
7 liquidation cases or result from the pending Chapter 11 Cases would be paid
in full from the liquidation proceeds prior to payment of prepetition Other
Priority Claims, General Unsecured Claims and Interests.

  To determine if the Plan is in the best interests of the holders of Claims
or Interests in each impaired class, the value of the distributions from the
proceeds of the liquidation of the Debtors' assets and properties (after
subtracting the amounts attributable to claims set forth in the preceding
paragraph and expenses associated with the liquidation) is then compared with
the value offered to such impaired classes of Claims and Interests under the
Plan.

  The Liquidation Analysis. The Plan provides for distributions to creditors
from the proceeds of (i) the Berkadia Loan and (ii) the collection of the
Debtors' loan portfolio as the obligations under such loans are performed over
time. The Debtors believe they can realize a higher value on their outstanding
loan portfolio through collections and, in limited cases, the properly timed
sale of assets, than can be realized through the immediate sale of the entire
loan portfolio to one or more third parties. Thus, the Debtors believe that
the proceeds that would be received in a liquidation (assuming a liquidation
period of six to twelve months) would be significantly less than the values
that would be received under the Plan. The bases for this conclusion are set
forth below.

  Historically, the Debtors provided structured finance to specialty niche
middle market borrowers that generally were of a credit profile below the
target range of bank and finance company competitors. The Debtors' specialty
niche focus resulted in a limited number of direct competitors within several
of their businesses. As a result, the Debtors amassed significant market share
in many of its businesses. For most of the Debtors' lines of business, there
are a limited number of competitors, and in most cases these competitors have
much smaller existing portfolios (in similar lines of business) as compared to
the Debtors. Potential buyers are likely to be unwilling to add a portfolio in
an acquisition that is larger than the their pre-acquisition portfolio.
Liquidation of the Debtors' assets in an environment with a limited number of
often-smaller potential buyers would likely result in significant discounts.

                                       1
<PAGE>

  .  The Debtors believe that they would suffer a significant loss of key
     personnel if the Chapter 11 Cases were converted to cases under chapter
     7. The Debtors believe that retention of individuals with knowledge of
     the history of the Debtors' assets is very valuable, and that there
     could be a substantial reduction in the values obtained if key
     personnel are lost.

  . The Debtors lent money to a number of their customers at higher advance
    rates (i.e., higher loan to collateral ratios) than did many of their
    competitors. In a liquidation sale, potential purchasers will likely
    demand a discount in order to lower their effective advance rates.

  .  In many cases, the typical risk profiles of the Debtors' customers were
     higher than those financed by competitors, while interest rates charged
     by the Debtors were no higher or only slightly higher than the rates
     charged by competitors. In addition, interest spreads in many of the
     Debtors' lines of business have increased since the date the loans were
     originally made (in part due to an industry-wide general tightening of
     credit standards). In a liquidation sale, potential purchasers will
     likely demand additional discounts in order to increase the rate of
     return to match additional risk inherent in the acquired assets.

  .  The Debtors have a number of exposures where the amount lent is to a
     single borrower or group of related entities. Some of these borrowers
     are experiencing financial difficulties, and in these cases, the related
     loans or leases are also often classified as impaired. The Debtors
     believe that in many of these cases there are few purchasers that would
     be willing to purchase such assets due to such purchasers' internal
     concentration limits. In any case, a purchaser of these loans, if one
     could be found, would likely require a significant discount to
     compensate for affiliated borrower concentration risk.

  .  The Debtors recorded significant write-downs and reserves in 2000, and
     there can be no assurance that there will not be additional future
     losses. At December 31, 2000, the Debtors had approximately $1.2 billion
     of impaired, repossessed and non-accruing assets in their continuing
     lines of business as compared to total reserves of $579 million. In
     addition, there were approximately $490 million of impaired, repossessed
     and non-accruing assets, which have been marked down to net estimated
     realizable value, in the Debtors' discontinued lines of business.
     Although the Debtors believe they have taken adequate write-downs and
     reserves, a potential purchaser would likely demand significant
     additional discounts given the recent credit deterioration of the
     Debtors' portfolio.

  .  The Debtors' largest line of business is Transportation Finance, which
     primarily consists of various forms of financing of commercial aircraft.
     Because almost all of these financings (excluding leveraged leases) are
     relatively short term (in almost all cases the sole source of cash flow
     is a lease of less than five years), and because in most cases the
     financings are recourse only to the collateral value of the aircraft,
     this line of business is highly dependent on market conditions for the
     re-leasing or sale of the aircraft when leases terminate. The Debtors
     have estimated the "residual value" of each aircraft at lease
     termination, i.e., the value to be recovered (usually through re-leasing
     but occasionally from sale) upon the future termination of each lease.
     Residual estimation is a highly subjective exercise (particularly for
     older aircraft). Although the Debtor believes that its residual
     estimates are appropriate, current market conditions in the used
     aircraft market are weak, especially for certain types of aircraft owned
     or financed by the Debtors. The Debtors believe any potential purchaser
     of its aircraft assets in the current market would potentially demand a
     significant discount from book value to reflect the current weak market
     conditions and the uncertainty inherent in forecasting future re-leasing
     or sale. In addition, the Debtor has approximately $230 million of
     aircraft assets off-lease; these aircraft likely will not be sold
     without a substantial discount.

  .  The Debtors have significant revolving and other unfunded commitments to
     their customers, which the Debtors intend to honor under the Plan. The
     existence of these commitments is a potential impediment to purchasers
     (who would have to honor the Debtors' commitments) and would likely have
     a negative impact on the values received in a sale of such assets. If
     the chapter 7 trustee did not honor such commitments in the context of
     the chapter 7 liquidation (which the Debtors believe is likely), the
     financial condition of customers who could not readily find alternative
     sources of financing would be adversely impacted, thereby jeopardizing
     the repayment of the Debtors' loans and increasing the likelihood of

                                       2
<PAGE>

   significant litigation. In addition, in a chapter 7 liquidation, it is
   possible that some of the Debtors' financially stronger customers might
   stop honoring their repayment obligations to the Debtors, which would
   increase collection costs, including the costs of work out and litigation
   and reduce the value and realization of the Debtors' assets.

  The Debtors have specific experience with respect to the likely outcome of a
short-term liquidation, as required under a chapter 7 liquidation. During the
year 2000, the Debtors attempted to sell certain lines of business that they
considered the most saleable in terms of price and speed of closing, or the
least strategic in terms of the then-current business plan. In virtually all
cases, purchasers were unwilling to offer to purchase significant portions of
the line of business that the Debtors' offered for sale. Instead, the
purchasers offered to purchase only the most desirable assets in the line of
business, and the prices offered for the best assets were still generally
below book value. Most of those efforts were terminated because the Debtors
believed that price indications from potential buyers were too low and did not
reflect the full value of the assets.

  Finally, there could be a substantial tax impact if the Debtors' assets were
liquidated under chapter 7 liquidations. While the Debtors would presumably
incur significant tax losses on the sale of their portfolio, they may also
experience significant taxable income on the sale of their leveraged and
operating lease assets.

  The anticipated effects that a chapter 7 liquidation would have on the
ultimate proceeds available for distribution to creditors would include: (a)
the increased costs and expenses of a liquidation under chapter 7 arising from
fees payable to a trustee in bankruptcy and professional advisors to such
trustee; (b) the substantial erosion in value of assets in a chapter 7 case in
the context of the expeditious liquidation required under chapter 7 and the
"forced sale" atmosphere that would prevail; (c) the adverse effects on the
salability of business segments as a result of the departure of key employees
and the loss of customers and suppliers; and (d) the substantial increases in
Claims which would be satisfied on a priority basis or on parity with
creditors in the Chapter 11 Cases. Accordingly, the Debtors believe that
confirmation of the Plan will provide each holder of an impaired Allowed Claim
or impaired Allowed Interest with not less than the amount it would receive
pursuant to liquidation of the Debtors under chapter 7 of the Bankruptcy Code,
particularly because the Plan provides for Claims to be paid in full and
Interests (other than those of FNV Trust) to be retained. In most cases,
holders of Allowed Claims and Allowed Interests would receive substantially
more under the Plan than they would receive under a chapter 7 liquidation.

                                       3
<PAGE>

Introduction

  The Liquidation Analysis (the "Analysis") is based on the Company's
financial statements in its 10-Q at March 31, 2001.

  The Company's management, with the assistance of Rothschild Inc.
("Rothschild"), has prepared the Analysis. The Analysis presents the Company's
current estimated net value of its assets, if it were to be liquidated under
the provisions of Chapter 7 of the United States Bankruptcy Code and the net
proceeds of the liquidation were to be distributed to the Company's creditors.
The values set forth in the Analysis are highly dependent on factors outside
of the Company's control, including general economic conditions, the level of
interest rates and the condition of the various industry sectors in which the
Company participates. The liquidation recovery does not take into account the
affect that a Chapter 7 filing might have on the Company's taxes. The Company
reserves the right to periodically update or modify the estimates set forth
herein, although it is under no obligation to do so even if conditions
impacting the Analysis change.

  The Company's principal assets are loans and leases to mid-size borrowers
and lessees. In arriving at estimated liquidation values for each portfolio, a
number of factors were considered, including specific marketability factors
for that portfolio, estimates of a buyer's assumptions regarding potential but
unidentified future credit losses, the yield on the portfolio assets, the
advance rates (relative to underlying collateral values) in the portfolio and
the general circumstances of the Company (compulsion to sell in a Chapter 7
liquidation scenario). Additional factors pertaining to each line of business
are described below.

  The Analysis has not been examined or reviewed by independent accountants in
accordance with the standards promulgated by the AICPA. The estimates and
assumptions, although considered reasonable by the Company, are inherently
subject to significant uncertainties and contingencies beyond the control of
the Company. Accordingly, there can be no assurance that the results shown
would be realized if the Company were liquidated. Actual results in such case
could vary materially from those presented.

  The notes to the Analysis are an integral part of the Analysis:

  A. The Company's cash and cash equivalents balance as of March 31, 2001 was
     $1,624.2 million. The cash and cash equivalents positions are liquid
     and, in the event of a liquidation, the estimated recovery is 100%

  B. Rediscount Finance ("RdF") offers revolving credit facilities to the
     independent consumer finance industry, including direct loan, sub-prime
     automobile, mortgage and premium-finance companies. The loan assets of
     RdF are concentrated in automobile portfolios. The funds employed as of
     March 31, 2001 were $1,185.2 million. It is estimated that in a low
     recovery scenario 75% of the portfolio will be recovered and in a high
     recovery scenario 80 % of the portfolio will be recovered.

    A marketability discount range has been applied to the funds employed
    to reflect:

    (i) limited capital sources in the RdF market, and accordingly, a
    limited number of potential buyers and (ii) the RdF portfolio average
    yield is estimated to be between 25bps and 50bps lower than market
    yields for new loans of similar type and quality. It is assumed that
    the relationship between Company average yields and market rates remain
    unchanged during the liquidation period.

    An additional discount has been applied to the net funds employed to
    reflect the pricing dynamics anticipated as a result of the Company's
    compulsion to sell as well as potential market concerns relating to the
    Company's ability to maintain and service its portfolio.

    A further discount has been applied to reflect the Company's estimate
    of a buyer's assumptions regarding potential but unidentified future
    credit losses in excess of amounts reserved.

                                       4
<PAGE>

  C. Transportation Finance ("TF"'), the Company's largest line of business,
     offers equipment loans, direct financing, operating and leveraged leases
     primarily for commercial and cargo airlines and railroad operators. The
     majority of TF's portfolio consists of direct operating leases and loans
     to operating lessors, with long-term assets that can age up to 35 to 40
     years. The funds employed as of March 31, 2001 were $2,240.2 million. It
     is estimated that in a low recovery scenario 55% of the portfolio will
     be recovered and in a high recovery scenario 70% of the portfolio will
     be recovered.

    Approximately $555 million of the TF portfolio are leveraged leases,
    which produce little or no cashflow to the Company. A marketability
    discount range has been applied to the leveraged leases to reflect the
    low values usually received on sales of such assets that occur early in
    the lease term. With respect to the balance of the portfolio, market
    discounts have been applied to reflect: (i) the general slowdown in the
    economy, which impacts demand for both passenger and cargo aircraft
    (ii) the composition of the Company's fleet, which is comprised of
    older aircraft that are particularly susceptible to the current
    environment of high fuel prices, and (iii) the exit of many finance
    companies from lending in TF's market. The average rate earned on TF's
    assets is approximately 10%, as compared to current market rates for
    new loans of approximately 10.5%. The yield on the TF portfolio is
    highly dependent on assumed residual values at lease termination.

    An additional discount has been applied to the net funds employed to
    reflect the pricing dynamics anticipated as a result of the Company's
    compulsion to sell as well as potential market concerns relating to the
    Company's ability to maintain and service its portfolio.

    A further discount has been assumed to reflect the Company's estimate
    of a buyer's assumptions regarding potential but unidentified future
    credit losses in excess of amounts reserved.

  D. Resort Finance ("RF") offers acquisition, construction and receivables
     financing for timeshare resorts, second home communities and fractional
     interest resorts. Average transaction size is between $5 million to $35
     million. The funds employed as of March 31, 2001, was $1,693.6 million.
     It is estimated that in a low recovery scenario 75% of the portfolio
     will be recovered and in a high recovery scenario 85% of the portfolio
     will be recovered.

    A marketability discount range has been applied to the funds employed
    to reflect: (i) the limited number of competitors and (ii) the lower
    average yields of RF, compared with current market yields. The recent
    tightening of the IPO markets and the increased need for capital has
    resulted in upward pricing pressures. The average yield for RF is
    approximately Prime+150bps, the average market yields for new loans are
    approximately Prime+200bps. It is assumed that the relationship between
    Company average yields and market rates remain unchanged during the
    liquidation period.

    An additional discount has been applied to the net funds employed to
    reflect the pricing dynamics anticipated as a result of the Company's
    compulsion to sell as well as potential market concerns relating to the
    Company's ability to maintain and service its portfolio.

    A further discount has been applied to reflect the Company's estimate
    of a buyer's assumptions regarding potential but unidentified future
    credit losses in excess of amounts reserved.

  E. Franchise Finance ("FF") offers equipment, real estate and acquisition
     financing for operators of established franchise concepts, particularly
     restaurants, and to a lesser extent, company-owned fast food chains.
     Average transaction size is between $500,000 to $40 million. The funds
     employed as of March 31, 2001, was $885.7 million. It is estimated that
     in a low recovery scenario 80% of the portfolio will be recovered and in
     a high recovery scenario 85% of the portfolio will be recovered.

    A marketability discount range has been applied to the funds employed
    to reflect: (i) the industry consolidation, resulting in fewer
    potential buyers (ii) tightening of the average market rates and (iii)
    likely difficulties in placing FF's loan portfolios because the loans
    have historically been underwritten with aggressive credit fundamentals
    and long amortization periods.

                                       5
<PAGE>

    An additional discount has been applied to the net funds employed to
    reflect the pricing dynamics anticipated as a result of the Company's
    compulsion to sell as well as potential market concerns relating to the
    Company's ability to maintain and service its portfolio.

    A further discount has been assumed to reflect the Company's estimate
    of a buyer's assumptions regarding potential but unidentified future
    credit losses in excess of amounts reserved.

  F. Healthcare Finance ("HF") offers a full range of working capital,
     equipment and real estate financing products for the US healthcare
     industry. The funds employed as of March 31, 2001, was $807.5 million.
     It is estimated that in a low recovery scenario 60% of the portfolio
     will be recovered and in a high recovery scenario 70% of the portfolio
     will be recovered.

    A marketability discount range has been applied to the funds employed
    to reflect: (i) the recent retraction in the lending environment and
    (ii) the lower average yields of HF, compared with current market
    yields for new loans. It is assumed that market rates remain unchanged
    during the liquidation period.

    An additional discount has been applied to the net funds employed to
    reflect the dynamics anticipated as a result of the Company's
    compulsion to sell as well as potential market concerns relating to the
    Company's ability to maintain and service its portfolio.

  G. Communication Finance ("CF") provides term financing to advertising and
     subscriber-supported businesses, including radio and television
     broadcasting, cable television, paging, outdoor advertising, publishing
     and emerging technologies such as ISPs. Average transaction size is
     between $3 million to $40 million. The funds employed as of March 31,
     2001, was $659.5 million. It is estimated that in a low recovery
     scenario 60% of the portfolio will be recovered and in a high recovery
     scenario 70% of the portfolio will be recovered.

    A marketability discount range has been applied to the funds employed
    to reflect the depressed market conditions as signaled by the decline
    in the radio/TV advertising as well as the decrease in the pager/rural
    cable subscriber levels. In addition, the CF portfolio assets are
    generally more highly leveraged (relative to underlying collateral)
    than current underwriting standards would allow.

    An additional discount has been applied to the net funds employed to
    reflect the pricing dynamics anticipated as a result of the Company's
    compulsion to sell as well as potential market concerns relating to the
    Company's ability to maintain and service its portfolio.

    A further discount has been applied to reflect the Company's estimate
    of a buyer's assumptions regarding potential but unidentified future
    credit losses in excess of amounts reserved. The quality of CF's
    portfolio is weakened due to its exposure to the rural cable and paging
    markets, and, to a lesser extent, the Internet market.

  H. Specialty Real Estate Finance ("SREF") provides senior term acquisition
     and bridge/interim loans on hotel and resort properties in the US,
     Canada and the Caribbean. Average transaction size is between $5 million
     to $30 million. The funds employed as of March 31, 2001, was $678.4
     million. It is estimated that in a low recovery scenario 80% of the
     portfolio will be recovered and in a high recovery scenario 85% of the
     portfolio will be recovered.

    A marketability discount range has been applied to the funds employed
    to reflect: (i) the softening of the real estate market as indicated by
    the recent coverage erosions, (ii) limited new construction funding,
    narrowing the availability of interested buyers for this type of loan
    portfolio (iii) the lower average yields of SREF, compared with current
    market yields for new loans, and (iv) the fact that approximately $263
    million of SREF's assets are real estate leveraged leases, which often
    do not command attractive prices in the secondary market.

    An additional discount has been applied to the net funds employed to
    reflect the pricing dynamics anticipated as a result of the Company's
    compulsion to sell as well as potential market concerns relating to the
    Company's ability to maintain and service its portfolio.

                                       6
<PAGE>

    A further discount has been applied to reflect the Company's estimate
    of a buyer's assumptions regarding potential but unidentified future
    credit losses in excess of amounts reserved.

  I. Commercial Equipment Finance ("CEF") offers leases and loans to mid-
     sized companies generally in the technology, corporate aircraft and
     supermarket / specialty industries. Average transaction size is between
     $1 million to $20 million. The funds employed as of March 31, 2001, was
     $494.6 million. It is estimated that in a low recovery scenario 80% of
     the portfolio will be recovered and in a high recovery scenario 85 % of
     the portfolio will be recovered.

    A marketability discount range has been applied to the funds employed
    to reflect: (i) the fewer interested buyers for this type of loan
    portfolio, as banks who were competing with FINOVA are no longer
    lending or leasing in this line of business and (ii) the moderately
    lower average yields of CEF, compared with current market yields for
    new loans. The decline in available funds has resulted in increased
    market rates.

    An additional discount has been applied to the net funds employed to
    reflect the pricing dynamics anticipated as a result of the Company's
    compulsion to sell as well as potential market concerns relating to the
    Company's ability to maintain and service its portfolio.

  J. Public Finance ("PF") provides fixed rate, tax-exempt term financing to
     non-profit corporations, manufacturers and state and local governments.
     Average transaction size is between $2 million to $15 million. The funds
     employed as of March 31, 2001, was $160.0 million. PF is scheduled to
     runoff the majority of its assets (with $30 million remaining at
     December 31, 2002) and close its operations by March 31, 2002. Based on
     the rapid runoff rate over the next two years, only a small discount to
     funds employed is applied. It is estimated that in a low recovery
     scenario 93% of the portfolio will be recovered and in a high recovery
     scenario 97% of the portfolio will be recovered.

    A marketability discount range has been applied to the funds employed
    to reflect for fewer buyers of higher yield tax-exempts, limiting the
    number of potential buyers of the remaining $30 million at December 31,
    2002.

    An additional discount has been applied to the net funds employed to
    reflect the pricing dynamics anticipated as a result of the Company's
    compulsion to sell as well as potential market concerns relating to the
    Company's ability to maintain and service its portfolio.

  K. Realty Capital ("RC") provides commercial real estate bridge/interim
     mortgage loans and capital markets-funded commercial real estate loans.
     Average transaction size is between $1 million to $25 million. The funds
     employed as of March 31, 2001, was $375.3 million.

    A discount has been applied to reflect the pricing dynamics anticipated
    as a result of the Company's compulsion to sell.

  L. Mezzanine Capital ("MC") provides secured subordinated debt with
     warrants to mid-size North American companies for expansion capital,
     buyouts or re-capitalization. Typical transaction sizes range from $2
     million to $15 million. The funds employed as of March 31, 2001, was
     $307.3 million. It is estimated that in a low recovery scenario 55% of
     the portfolio will be recovered and in a high recovery scenario 65% of
     the portfolio will be recovered.

    A marketability discount range has been applied to the funds employed
    to reflect: (i) the tightening credit markets, (ii) the economic slow
    down, (iii) the lack of interested strategic buyers (as indicated in
    the attempted sale of MC in the first quarter of 2001, where potential
    interest was from financial buyers, who in addition to the usual
    discounts, placed additional discounts in order to achieve desired
    IRRs) and (iv) the deterioration of the IPO, buy-out and M&A markets.
    The average coupon yield for MC is approximately 13%, with expected
    IRRs in the low teens, as compared to average market coupon yields of
    approximately 13% with expected IRRs in the low twenties.

                                       7
<PAGE>

    An additional discount has been applied to the net funds employed to
    reflect the pricing dynamics anticipated as a result of the Company's
    compulsion to sell as well as potential market concerns relating to the
    Company's ability to maintain and service its portfolio.

    A further discount has been applied to reflect the Company's estimate
    of a buyers assumptions regarding potential but unidentified future
    credit losses in excess of amounts reserved.

  M. Investment alliance ("IA") provides equity and debt financing for mid-
     size businesses in partnership with institutional investors and selected
     fund sponsors. IA generally invests as a limited partner and less
     frequently as a general partner in funds that address general middle
     market financing. As of March 31, 2001, IA's investments had a marked-
     to-market valuation of $38.1 million. It is estimated that in a low
     recovery scenario 93% of the portfolio will be recovered and in a high
     recovery scenario 95% of the portfolio will be recovered.

  N. Represents corporate assets with little or no value.

  O. Represents investments, mostly in the form of mezzanine financings, in
     public and private companies. Net book value was $271.9 million as of
     March 31, 2001. It is estimated that in a low recovery scenario 70% of
     the portfolio will be recovered and in a high recovery scenario 80% of
     the portfolio will be recovered, reflecting the unique nature of the
     borrower and the illiquid market for these smaller company securities.

  P. Goodwill book value of $44.6 million as of March 31, 2001. Assumed 100%
     loss of goodwill value in case of a liquidation.

  Q. Other Assets of $469.1 million as of March 31, 2001 (includes $293
     million of off-lease aircraft). It is estimated that in a low recovery
     scenario 55% of the portfolio will be recovered and in a high recovery
     scenario 65% of the portfolio will be recovered.

  R. Corporate Finance ("CorpFin") provides direct revolving loans
     (approximately two-third of its net assets) and also participates in
     syndicated loans (approximately one-third of its net assets). The net
     funds employed as of March 31, 2001, was $741.9 million. It is estimated
     that in a low recovery scenario 70% of the portfolio will be recovered
     and in a high recovery scenario 80% of the portfolio will be recovered.

    A marketability discount range has been applied to the net funds
    employed to reflect: (i) the lack of interested buyers for this type of
    loan portfolio and (ii) the lower average yields of CorpFin's
    syndicated loan portfolio, compared with current market yields.

    An additional discount has been applied to the net funds employed to
    reflect the pricing dynamics anticipated as a result of the Company's
    compulsion to sell as well as potential market concerns relating to the
    Company's ability to maintain and service its portfolio.

  S. Source: Company estimates.

  T. In the event of liquidation, the Company estimates that the net amount
     of Bankruptcy Causes of Action would be not material.

  U. Property relocation costs, such as premature lease termination fees, are
     estimated to be a low of $25 million to a high of $30 million.

  V. Existing severance obligations include an estimated $27.6 million for
     all non-executive employees and an estimated $11.0 million for Company
     executives. The analysis assumes no material reduction in headcount, as
     the Company has already reduced headcount to an approximate number of
     employees necessary to run-off the Company's assets. Source: Company
     estimates.

  W. Assumed additional severance payments for the year 2002. Source: Company
     estimates.

  X. Retention payments during liquidation period assumed to be 50% of
     estimated compensation (base and bonus) for the year 2001. Source:
     Company estimates.

  Y. Assumed broker fees range of $25 million to $30 million associated with
     asset sales. Source: Company estimates.

  Z. Assumed Trustee fee of $25 million to $30 million. Source: Company
     estimates.

 AA.Outstanding and unpaid administrative fees assumed to be $6 million.

                                       8
<PAGE>

                             THE FINOVA GROUP INC.

                    Liquidation Valuation Analysis--Summary
                               (US$ in millions)

<TABLE>
<CAPTION>
                                                     Est. Liquidation Range
                                               ------------------------------------
                                      Book       Low      High     Low       High
                                      Value    Recovery Recovery Recovery  Recovery
                          Footnotes  3/31/01      %        %        $         $
                          --------- ---------  -------- -------- --------  --------
<S>                       <C>       <C>        <C>      <C>      <C>       <C>
Cash and Cash
 Equivalents............       a    $ 1,624.2    100%     100%   $1,624.2  $1,624.2
Investments in Financing
 Transactions:
 Commercial Finance
  Group
 Rediscount Finance
  Group.................       b    $ 1,185.2     75%      80%   $  888.9  $  948.2
 Specialty Finance Group
 Transportation
  Finance...............       c    $ 2,240.2     55%      70%   $1,232.1  $1,568.2
 Resort Finance.........       d      1,693.6     75%      85%    1,270.2   1,439.6
 Franchise Finance......       e        885.7     80%      85%      708.6     752.9
 Healthcare Finance.....       f        807.5     60%      70%      484.5     565.2
 Communications
  Finance...............       g        659.5     60%      70%      395.7     461.7
 Specialty Real Estate
  Finance...............       h        678.4     80%      85%      542.7     576.6
 Commercial Equipment
  Finance...............       i        494.6     80%      85%      395.7     420.4
 Public Finance.........       j        160.0     93%      97%      148.8     155.2
 Capital Markets Group
 Realty Capital.........       k    $   375.3     93%      93%   $  349.0  $  349.0
 Mezzanine Capital......       l        307.3     55%      65%      169.0     199.8
 Investment Alliance....       m         38.1     93%      95%       35.4      36.2
 Other..................       n         37.6      0%       1%        --        0.4
 General Credit
  Reserve...............               (618.0)   100%     100%   $ (618.0) $ (618.0)
                                    ---------    ---      ---    --------  --------
Net Book Value of
 Investments In
 Financing
 Transactions:..........            $ 8,945.1     67%      77%   $6,002.7  $6,855.3
Other Assets:
 Investments............       o    $   271.9     70%      80%   $  190.3  $  217.5
 Goodwill, Net of Accum.
  Amortization..........       p         44.6      0%       0%        --        --
 Other Assets...........       q        469.1     55%      65%      258.0     304.9
 Net Assets of
  Discontinued
  Operations............       r        741.9     70%      80%      519.3     593.5
                                    ---------    ---      ---    --------  --------
Total Assets............            $12,096.9     71%      79%   $8,594.6  $9,595.4
                                    ---------    ---      ---    --------  --------
Net Operating Results
 for 12 months during
 liquidation
 (3/31/01-3/31/02)......       s                                 $  100.0  $  150.0
                                                                 --------  --------
Other Items Available
 for Distribution:
 Bankruptcy Causes of
  Action, Net...........       t                                 $    --   $    --
                                                                 --------  --------
Assets and Other Items
 Available for
 Distribution...........                                         $8,694.6  $9,745.4
                                                                 ========  ========
Costs Associated with
 Liquidation/Winddown:
 Property Relocation
  costs.................       u                                 $  (30.0) $  (25.0)
 Existing Severance
  Obligations...........       v                                    (38.6)    (38.6)
 Estimated Additional
  Severance.............       w                                     (2.5)     (2.5)
 Estimated Retention....       x                                    (30.0)    (26.3)
 Additional Fees
  Associated with
  Liquidation...........       y                                    (30.0)    (25.0)
 Trustee Fees...........       z                                    (30.0)    (25.0)
                                                                 --------  --------
 Total Costs............                                         $ (161.1) $(142.4)
                                                                 --------  --------
Net Estimated
 Liquidation Proceeds
 Available for
 Allocation.............                                         $8,533.5  $9,603.1
                                                                 ========  ========
Less: Chapter 11
 Administrative and
 Priority Claims
 Priority Claims........            $     --                     $    --   $    --
 Administrative Claims..      aa          6.0    100%     100%       (6.0)     (6.0)
                                    ---------                    --------  --------
 Total Administrative
  and Priority Claims...            $     --                     $   (6.0) $   (6.0)
                                    ---------                    --------  --------
Net Estimated
 Liquidation Proceeds
 After Priority Claims..                                         $8,527.5  $9,597.1
Net Estimated
 Liquidation Proceeds
 Available for
 General Unsecured
 Claims
 Senior Debt plus
  Interest Payable......            $11,185.4     75%      84%   $8,391.9  $9,444.6
 Nonrecourse installment
  notes due 2002,
  10.6%.................                  5.8     75%      84%        4.4       4.9
 Accounts Payable and
  Accrued Expenses......            $   174.8     75%      84%      131.2  $  147.6
                                    ---------                    --------  --------
 Total..................            $11,366.0     75%      84%   $8,527.5  $9,597.1
                                    ---------                    --------  --------
</TABLE>

                                       9
<PAGE>

                      [CORPORATE STRUCTURE TREE DIAGRAM]

<PAGE>

                                                                      EXHIBIT I

                      TERMS OF NEW GROUP PREFERRED STOCK

Issuer.......................  The FINOVA Group Inc.

Security.....................  Shares of 6% Perpetual Non-Cumulative
                               Redeemable Preferred Stock (the "New Group
                               Preferred Stock") with an aggregate liquidation
                               preference equal to the Excess Amount, if any,
                               attributable to Allowed Debt Securities
                               (S)510(b) Claims in Class FNV Capital-5.

Dividends:...................  Non-cumulative cash dividends on the New Group
                               Preferred Stock will be payable at a rate of 6%
                               per annum of the per share liquidation
                               preference when, as and if declared by the
                               Board of Directors. To the extent dividends are
                               declared, they will be payable semi-annually on
                               the semi-annual payment dates for the New
                               Senior Notes.

Ranking......................  The New Group Preferred Stock will rank senior
                               to the FNV Group common stock (and any other
                               FNV Group stock without a liquidation
                               preference) and pari passu with or junior to
                               any other FNV Group preferred stock, as
                               determined by the FNV Group Board of Directors,
                               both as to dividends and upon liquidation,
                               dissolution or winding up. No dividends on the
                               FNV Group common stock may be paid unless
                               dividends for the then current period (but not
                               prior periods) are paid on the New Group
                               Preferred Stock.

Liquidation Preference.......  If FNV Group dissolves, is liquidated or is
                               wound up, holders of the New Group Preferred
                               Stock will be entitled to receive, out of any
                               assets available for distribution to
                               stockholders after satisfaction of the
                               preferences of any FNV Group preferred stock
                               that is senior to the New Group Preferred
                               Stock, up to the per share liquidation
                               preference, plus declared and unpaid dividends,
                               if any, prior to any payment being made to the
                               holders of FNV Group common stock or any other
                               junior stock with respect to the distribution
                               of assets upon dissolution, winding up or
                               liquidation.

Optional Redemption..........  FNV Group will have the option to redeem the
                               New Group Preferred Stock at any time or from
                               time to time, in whole or in part, at a
                               redemption price equal to the per share
                               liquidation preference, plus declared and
                               unpaid dividends, if any, to the redemption
                               date.

Open Market or Negotiated
Repurchases..................  FNV Group may repurchase New Group Preferred
                               Stock at any time and from time to time, in
                               whole or in part, in the open market or
                               negotiated transactions.

Voting Rights................  None, except:

                               . with respect to changes in the terms of the
                                 New Group Preferred Stock that are materially
                                 adverse to the holders of the New Group
                                 Preferred Stock; and

                                       1

<PAGE>

                               . in the event the FNV Group Board of Directors
                                 does not declare dividends on the New Group
                                 Preferred Stock for six consecutive dividend
                                 periods, the size of the Board of Directors
                                 will be increased by one and the holders of
                                 the New Group Preferred Stock, voting as a
                                 separate class, will be entitled to elect one
                                 director, who shall serve until such time as
                                 dividends have been declared and have been
                                 paid with respect to one semi-annual dividend
                                 period.

                                       2

<PAGE>

                                                                      EXHIBIT J
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

                      SECURITIES AND EXCHANGE COMMISSION
                             Washington D.C. 20594

                               ----------------

                                  FORM 10-K/A
                  ANNUAL REPORT PURSUANT TO SECTION 13 OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  For the Fiscal Year Ended December 31, 2000

                        Commission File Number 1-11011

                               ----------------

                             THE FINOVA GROUP INC.
            (Exact Name of Registrant as Specified in Its Charter)

               Delaware                              86-0695381
    (State or Other Jurisdiction of               (I.R.S. Employer
    Incorporation or Organization)               Identification No.)

      4800 North Scottsdale Road                     85251-7623
            Scottsdale, AZ                           (Zip Code)
    (Address of Principal Executive
               Offices)

       Registrant's Telephone Number, Including Area Code: 480-636-4800

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

<TABLE>
<CAPTION>
                                            Name of Each Exchange On Which
           Title of Each Class                        Registered
           -------------------              ------------------------------
   <S>                                   <C>
      Common Stock, $0.01 par value            New York Stock Exchange
   Junior Participating Preferred Stock
             Purchase Rights                   New York Stock Exchange
</TABLE>

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

  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

                                  Yes X  No
                                      -    -
  Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Registration S-K is not contained herein, and will not be contained, to
the best of registrant"s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment of this Form 10-K. X
                             -

  As of April 12, 2001, approximately 61,156,000 shares of Common Stock ($0.01
par value) were outstanding, and the aggregate market value of the Common
Stock (based on its closing price per share on that date of $1.50), held by
nonaffiliates was approximately $90,902,000.

                     DOCUMENTS INCORPORATED BY REFERENCE:

                                     None

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>

                                Explanatory Note

  This Form 10-K/A is being filed for the purpose of filing the information
required by Part III of Form 10-K.
<PAGE>

                               TABLE OF CONTENTS

                                  Name of Item

<TABLE>
 <C>      <S>                                                               <C>
                                    Part I

 Item 1.  Business.......................................................     1
          Introduction...................................................     1
          Recent Developments............................................     1
          General........................................................     2
          Business Groups................................................     3
          Portfolio Composition..........................................     4
          Investment In Financing Transactions...........................     4
          Cost And Use Of Borrowed Funds.................................    10
          Leased Asset Realization Experience............................    11
          Business Development...........................................    12
          Customer Requirements..........................................    12
          Portfolio Management...........................................    12
          Delinquencies And Workouts.....................................    13
          Governmental Regulation........................................    13
          Employees......................................................    13
          Other Matters..................................................    14
          Special Note Regarding Forward-Looking Statements..............    14
 Item 2.  Properties.....................................................    15
 Item 3.  Legal Proceedings..............................................    15
 Item 4.  Submission Of Matters To A Vote Of Security Holders............    17
          Optional Executive Officers Of Registrant......................    17

                                    Part II

 Item 5.  Market Price Of And Dividends On The Registrant's Common Equity
           & Related Shareowner Matters..................................    18
 Item 6.  Selected Financial Data........................................    19
 Item 7.  Management's Discussion And Analysis Of Financial Condition And
          Results Of Operations..........................................    20
 Item 7a. Quantitative And Qualitative Disclosure About Market Risk......    20
 Item 8.  Financial Statements & Supplemental Data.......................    20
 Item 9.  Changes In And Disagreements With Accountants On Accounting &
          Financial Disclosure...........................................    20

                                   Part III

 Item 10. Directors & Executive Officers Of The Registrant...............    21
 Item 11. Executive Compensation.........................................    21
 Item 12. Security Ownership Of Certain Beneficial Owners & Management...    21
 Item 13. Certain Relationships & Related Transactions...................    21

                                    Part IV

 Item 14. Exhibits, Financial Statement Schedules And Reports On Form 8-
          K..............................................................    22
</TABLE>
<PAGE>

                                    PART I

Item 1. Business.

Introduction

  The following discussion relates to The FINOVA Group Inc. and its
subsidiaries (collectively "FINOVA" or the "Company"), including FINOVA
Capital Corporation and its subsidiaries ("FINOVA Capital"). The FINOVA Group
Inc. is a financial services holding company. Through its principal operating
subsidiary, FINOVA Capital, the Company has provided a broad range of
financing and capital markets products, primarily to mid-size businesses.
FINOVA Capital has been in operation since 1954.

Recent Developments

  On March 7, 2001, The FINOVA Group Inc., FINOVA Capital Corporation and
seven of their subsidiaries filed for protection pursuant to Chapter 11, Title
11, of the United States Code to enable them to restructure their debt (the
"Reorganization Proceedings"). Historically, the Company has relied upon
borrowed funds together with internal cash flow to finance its operations.
Profit has largely been recorded from the spread between the cost of borrowing
and the rates paid by its customers, less operating costs. The Company also
generates revenues through loan servicing and related activities and the sale
of assets. Beginning late in the first quarter of 2000, a series of events
impeded FINOVA's access to lower cost capital in the public and private
markets. These events are generally described below.

  On March 27, 2000, FINOVA announced the retirement of its Chairman,
President and Chief Executive Officer, Samuel L. Eichenfield, for personal and
health reasons. The Company also announced an $80 million pre-tax charge to
earnings in the first quarter of 2000, to increase loss reserves and provide
for payment of deferred compensation and executive severance. The additional
loss reserves related to the replenishment of reserves after a write-off of a
loan to a single customer in the Distribution & Channel Finance line of
business that had previously been partially reserved. Following these
announcements, some of the credit rating agencies downgraded or placed on
credit watch its senior debt and commercial paper ratings.

  Historically, a significant portion of its business was financed with
commercial paper, which was reissued when it matured. The Company also
borrowed funds in the form of publicly traded debt securities with staggered
maturities. In May 2000, the Company was unable to renew in full its bank
facilities, which were in place to provide a back-up mechanism for the
commercial paper program. Without full coverage for outstanding commercial
paper under the back-up bank facilities, FINOVA drew down on the bank lines to
meet maturing commercial paper obligations and other debt obligations. This
resulted in additional debt rating downgrades.

  The Company engaged Credit Suisse First Boston in May 2000 to assist in the
exploration of strategic alternatives, including a sale of the Company.

  As the year progressed, the U.S. economy began to show signs of weakening
and FINOVA's portfolio of leases and loans began to experience higher levels
of delinquencies and nonaccruing assets. The impact of these events and
current economic conditions resulted in increased levels of problem accounts
and higher cost of funds (resulting in lower interest margins earned), higher
reserve requirements, higher write-offs, losses on investments and disposal of
assets, impairment of intangible assets, reduced tax benefits, and the
decision to exit certain businesses.

  On February 26, 2001, FINOVA and FINOVA Capital entered into a commitment
letter with Berkshire Hathaway Inc. ("Berkshire Hathaway"), Leucadia National
Corporation ("Leucadia") and Berkadia, an entity jointly owned by Leucadia and
Berkshire Hathaway, pursuant to which Berkadia committed to lend $6.0 billion
to FINOVA, to facilitate a Chapter 11 restructuring of the outstanding debt of
FINOVA and its principal subsidiaries. The $6.0 billion five-year term loan
will be secured by substantially all of the assets of FINOVA and its
subsidiaries and guaranteed on a secured basis by FINOVA Group and
substantially all of the

                                       1
<PAGE>

subsidiaries of FINOVA Capital (the "Berkadia Loan"). The balance of FINOVA
Capital's bank and bond indebtedness will be restructured into approximately
$5 billion of new ten-year senior notes of FINOVA ("New Senior Notes").
Berkadia's commitment is subject to various conditions, including Berkadia's
satisfaction with FINOVA's Chapter 11 plan of reorganization (the "Plan") and
bankruptcy court and necessary creditor approvals. In connection with the
commitment letter, FINOVA also entered into a Management Services Agreement
with Leucadia and its subsidiary, Leucadia International Corporation, which
has been amended and restated. For a more detailed description of these
agreements, see the section in this report captioned "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

  FINOVA received bankruptcy court approval to continue operating its business
in the ordinary course and, as a result, will continue funding existing
commitments to its customers. In light of these events, FINOVA has effectively
eliminated new business development activities other than funding existing
commitments and for the foreseeable future intends to focus on managing and
maximizing the value of its existing portfolio. These activities will include
the continued collection of its portfolio pursuant to contractual terms and
may include efforts to retain certain customer relationships, restructure or
terminate other relationships or sell certain assets if buyers can be found at
attractive prices. The Company will also continue to focus on negotiating
appropriate rates and fee structures with its customers. While it is possible
that new business opportunities may present themselves in the future, no
assurance can be given as to the Company's ability to take advantage of those
opportunities.

  The following description of FINOVA's business includes a discussion of the
Company's historical business activities. As mentioned in "Management's
Discussion and Analysis of Financial Condition and Results of Operations," the
Company has effectively eliminated new business development activities.
Accordingly, the description is presented to provide an understanding of the
Company's current assets and liabilities but should not be interpreted to mean
that the Company continues to make similar investments. It should be read in
conjunction with the section of this report captioned "Recent Developments and
Business Outlook" in "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

General

  FINOVA's principal executive offices are located at 4800 North Scottsdale
Road, Scottsdale, Arizona 85251-7623, telephone (480) 636-4800. FINOVA also
has offices throughout the U.S. and in London, U.K. and Toronto, Canada.

  FINOVA is a Delaware corporation. The Company was incorporated in 1991 to
serve as the successor to The Dial Corporation's financial services
businesses. FINOVA's common stock is traded on the New York Stock Exchange
under the symbol "FNV."

  FINOVA extends a broad range of customized financing and capital market
products, including revolving credit facilities, term loans, leases and equity
capital primarily to "middle-market companies."

  Historically, FINOVA's financing activities have been managed within three
market groups: Specialty Finance, Capital Markets and Commercial Finance.
Lines of business within each segment focus on providing tailored products and
services to specific market niches. The following business descriptions
include information regarding typical sizes of individual transactions. In
some cases, FINOVA provides multiple financing transactions to a borrower or
to affiliates of a borrower, which significantly increases the Company's total
exposure to that borrower beyond the typical transaction size. Certain FINOVA
businesses including Resort Finance, Transportation Finance and Rediscount
Finance, have multiple exposures exceeding $100 million. "Discontinued
Operations" were designated as such during the third quarter of 2000 when
FINOVA's Board of Directors voted to discontinue and offer the five businesses
for sale.

                                       2
<PAGE>

Business Groups

 Specialty Finance

  .  Commercial Equipment Finance offers equipment leases and loans to a
     broad range of mid-size companies. Specialty markets include emerging
     growth technology industries (primarily biotechnology), electronics,
     telecommunications, corporate aircraft, supermarket/specialty retailers
     and most heavy industry. Typical transaction sizes range from $1 million
     to $20 million.

  .  Communications Finance specializes in term financing to advertising and
     subscriber-supported businesses, including radio and television
     broadcasting, cable television, paging, outdoor advertising, publishing
     and emerging technologies such as internet service providers and
     competitive local exchange carriers. Typical transaction sizes range
     from $3 million to $40 million.

  .  Franchise Finance offers equipment, real estate and acquisition
     financing for operators of established franchise concepts. Typical
     transaction sizes generally range from $500,000 to $40 million.

  .  Healthcare Finance offers a full range of working capital, equipment and
     real estate financing products for the U.S. healthcare industry.
     Transaction sizes typically range from $500,000 to $35 million.

  .  Portfolio Services provides customized receivable servicing and
     collections for resort timeshare developers and other holders of
     consumer receivables.

  .  Public Finance provides tax-exempt term financing to non-profit
     corporations, manufacturers, and state and local governments. Typical
     transaction sizes range from $2 million to $15 million.

  .  Resort Finance focuses on acquisition, construction and receivables
     financing for timeshare resorts, second home communities and fractional
     interest resorts. Typical transaction sizes range from $5 million to $35
     million or more, and in some instances exceed $100 million.

  .  Specialty Real Estate Finance provides senior term acquisition and
     bridge/interim loans from $5 million to $30 million or more on hotel and
     resort properties in the U.S., Canada and the Caribbean. Through this
     division, FINOVA also provides equity investments in credit-oriented
     real estate sale-leasebacks.

  .  Transportation Finance structures equipment loans, direct financing,
     operating and leveraged leases and acquisition financing for commercial
     and cargo airlines worldwide, railroads and operators of other
     transportation-related equipment. Typical transaction sizes range from
     $5 million to $30 million or more, and in some instances exceed $100
     million.

 Capital Markets

  .  Investment Alliance provides equity and debt financing for mid-size
     businesses in partnership with institutional investors and selected fund
     sponsors. Typical transaction sizes range from $2 million to $15
     million.

  .  Loan Administration provides servicing and subservicing of commercial
     mortgages, business leases and prime and sub-prime consumer loans.

  .  Mezzanine Capital provides secured subordinated debt with warrants to
     mid-size North American companies for expansion capital, buyouts or re-
     capitalization. Typical transaction sizes range from $2 million to $15
     million.

  .  Realty Capital provides commercial real estate bridge/interim mortgage
     loans and capital markets funded commercial real estate loans. Typical
     transaction sizes range from $1 million to $25 million. This line of
     business is being offered for sale and is classified as held for sale.

                                       3
<PAGE>

 Commercial Finance

  .  Rediscount Finance offers revolving credit facilities to the independent
     consumer finance industry, including direct loan, automobile, mortgage
     and premium finance companies. Typical transaction sizes range from $1
     million to $35 million or more, and in some instances exceed $100
     million.

 Discontinued Operations

  .  Corporate Finance provided a full range of cash flow-oriented and asset-
     based term and revolving loan products for manufacturers, wholesalers,
     distributors, specialty retailers and commercial and consumer service
     businesses. Typical transaction sizes ranged from $2 million to $35
     million. In February 2001, $309 million of assets were sold. Although
     discontinued, Corporate Finance (which includes Business Credit and
     Growth Finance) continues to fund existing commitments to its customers
     until such commitments expire. Corporate Finance is not entering into
     new commitments. Net assets of discontinued operations at December 31,
     2000 were $1.0 billion for Corporate Finance.

    -- Business Credit provided collateral-oriented revolving credit
       facilities and term loans for manufacturers, retailers,
       distributors, wholesalers and service companies. Typical transaction
       sizes ranged from $1 million to $5 million. Fremont Capital
       Corporation, acquired in December 1999, was added to this line of
       business. Business Credit is not entering into new commitments.

    -- Growth Finance provided collateral-based working capital financing
       primarily secured by accounts receivable for manufacturers,
       wholesale distributors, service companies and importers. Typical
       transaction sizes ranged from $100,000 to $1 million and were made
       to small and mid-size businesses with annual sales under $10
       million. Growth Finance is not entering into new commitments.

  .  Distribution & Channel Finance historically provided inbound and
     outbound inventory financing, combined inventory/accounts receivable
     lines of credit and purchase order financing for equipment distributors,
     value-added resellers and dealers nationwide. Transaction sizes
     generally ranged from $500,000 to $30 million. In December 2000, $46.4
     million of assets were sold. Net assets of this line of business at
     December 31, 2000 were $132.1 million.

Portfolio Composition

  The total managed assets consist of FINOVA's net investment in financing
transactions plus certain assets that are owned by others but serviced by the
Company (securitized assets). Managed assets are not reported on the Company's
balance sheet. The Company's investment in financing transactions is primarily
settled in U.S. dollars.

Investment in Financing Transactions

  The following primarily relates to continuing operations, except as noted.

  The following tables detail FINOVA's investment in financing transactions
(before reserve for credit losses) at December 31, 2000, 1999 and 1998.

                                       4
<PAGE>

                      INVESTMENT IN FINANCING TRANSACTIONS
                              BY LINE OF BUSINESS

                               DECEMBER 31, 2000
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                           Revenue Accruing                  Nonaccruing
                                   -------------------------------- ------------------------------
                                   Performing
                                       at                                                             Total
                                   Contractual          Repossessed            Repossessed Lease &  Carrying
                                      Terms    Impaired   Assets     Impaired    Assets     Other    Amount      %
                                   ----------- -------- ----------- ---------- ----------- ------- ----------- -----
<S>                                <C>         <C>      <C>         <C>        <C>         <C>     <C>         <C>
Specialty Finance Group
 Transportation Finance..........  $2,194,415  $ 61,076   $           $138,028   $            $    $ 2,393,519  23.5
 Resort Finance..................   1,538,712   133,851    13,293      136,889     5,107             1,827,852  18.0
 Franchise Finance...............     862,310     8,453                 48,101     2,088               920,952   9.0
 Healthcare Finance..............     590,997               1,452      264,589              1,677      858,715   8.4
 Communications Finance..........     623,301                           92,823                         716,124   7.0
 Specialty Real Estate Finance...     660,983              25,602       12,950     7,923               707,458   6.9
 Commercial Equipment Finance....     496,165                           12,521     5,559      845      515,090   5.1
 Public Finance..................     173,135                            5,200                         178,335   1.8
                                   ----------  --------   -------   ----------   -------   ------  ----------- -----
                                    7,140,018   203,380    40,347      711,101    20,677    2,522    8,118,045  79.7
                                   ----------  --------   -------   ----------   -------   ------  ----------- -----
Commercial Finance Group
 Rediscount Finance..............   1,062,151    32,375       520      119,005     4,412             1,218,463  12.0
                                   ----------  --------   -------   ----------   -------   ------  ----------- -----
                                    1,062,151    32,375       520      119,005     4,412             1,218,463  12.0
                                   ----------  --------   -------   ----------   -------   ------  ----------- -----
Capital Markets Group
 Realty Capital..................     406,080                           15,876                         421,956   4.2
 Mezzanine Capital...............     294,725                           43,925                         338,650   3.3
 Investment Alliance.............      35,892                            3,833                          39,725   0.4
                                   ----------  --------   -------   ----------   -------   ------  ----------- -----
                                      736,697                           63,634                         800,331   7.9
                                   ----------  --------   -------   ----------   -------   ------  ----------- -----
Other............................      43,565                                                           43,565   0.4
                                   ----------  --------   -------   ----------   -------   ------  ----------- -----
Total Continuing Operations (1)..   8,982,431   235,755    40,867      893,740    25,089    2,522   10,180,404 100.0
                                   ----------  --------   -------   ----------   -------   ------  ----------- =====
Discontinued Operations (2)......     737,658     3,633                473,724     7,769    4,695    1,227,479
                                   ----------  --------   -------   ----------   -------   ------  -----------
TOTAL............................  $9,720,089  $239,388   $40,867   $1,367,464   $32,858   $7,217  $11,407,883
                                   ==========  ========   =======   ==========   =======   ======  ===========
</TABLE>
--------
NOTES:
(1) Excludes $357.5 million of assets sold which the Company manages, including
    $243.0 million in Commercial Equipment Finance and $114.5 million in
    Franchise Finance.
(2) Excludes $475 million of Corporate Finance assets that were sold and are
    managed by the Company.

                                       5
<PAGE>

                      INVESTMENT IN FINANCING TRANSACTIONS
                              BY LINE OF BUSINESS

                               DECEMBER 31, 1999
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                  Revenue Accruing                 Nonaccruing
                          -------------------------------- ----------------------------
                          Performing
                              at                                                           Total
                          Contractual          Repossessed          Repossessed Lease &  Carrying
                             Terms    Impaired   Assets    Impaired   Assets     Other    Amount      %
                          ----------- -------- ----------- -------- ----------- ------- ----------- -----
<S>                       <C>         <C>      <C>         <C>      <C>         <C>     <C>         <C>
Specialty Finance Group
 Transportation
  Finance...............  $ 2,424,262 $ 64,073   $             $        $          $    $ 2,488,335  24.1
 Resort Finance.........    1,584,508             14,383      2,699    19,318             1,620,908  15.7
 Healthcare Finance.....      692,876   17,695     5,137     35,076     1,162     5,945     757,891   7.4
 Franchise Finance......      769,162              1,917      4,953     2,770       172     778,974   7.6
 Communications
  Finance...............      674,331    3,908               10,327                         688,566   6.7
 Specialty Real Estate
  Finance...............      726,788             35,807      9,042     6,151       152     777,940   7.5
 Commercial Equipment
  Finance...............      809,456              5,090     12,000    19,657     2,725     848,928   8.2
 Public Finance.........      168,778                                                       168,778   1.6
                          ----------- --------   -------   --------   -------   ------- ----------- -----
                            7,850,161   85,676    62,334     74,097    49,058     8,994   8,130,320  78.8
                          ----------- --------   -------   --------   -------   ------- ----------- -----
Commercial Finance Group
 Rediscount Finance.....    1,059,930             12,574      1,071     3,042             1,076,617  10.4
                          ----------- --------   -------   --------   -------   ------- ----------- -----
                            1,059,930             12,574      1,071     3,042             1,076,617  10.4
                          ----------- --------   -------   --------   -------   ------- ----------- -----
Capital Markets Group
 Realty Capital.........      578,808                         4,614                         583,422   5.7
 Mezzanine Capital......      386,555   21,981               34,117                         442,653   4.3
 Investment Alliance....       25,292                                                        25,292   0.2
                          ----------- --------   -------   --------   -------   ------- ----------- -----
                              990,655   21,981               38,731                       1,051,367  10.2
                          ----------- --------   -------   --------   -------   ------- ----------- -----
Other...................       62,403    1,107                                               63,510   0.6
                          ----------- --------   -------   --------   -------   ------- ----------- -----
Total Continuing
 Operations (1).........    9,963,149  108,764    74,908    113,899    52,100     8,994  10,321,814 100.0
                          ----------- --------   -------   --------   -------   ------- ----------- =====
Discontinued Operations
 (2)....................    2,548,671  131,362               92,305     3,736    24,089   2,800,163
                          ----------- --------   -------   --------   -------   ------- -----------
TOTAL...................  $12,511,820 $240,126   $74,908   $206,204   $55,836   $33,083 $13,121,977
                          =========== ========   =======   ========   =======   ======= ===========
</TABLE>
--------
NOTES:
(1) Excludes $121.3 million of Franchise Finance assets that were sold and are
    managed by the Company.
(2) Excludes $300 million of Corporate Finance assets that were sold and are
    managed by the Company.

                                       6
<PAGE>

                      INVESTMENT IN FINANCING TRANSACTIONS
                              BY LINE OF BUSINESS

                               DECEMBER 31, 1998
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                   Revenue Accruing                  Nonaccruing
                          ---------------------------------- ----------------------------
                          Performing at                                                      Total
                           Contractual           Repossessed          Repossessed Lease &  Carrying
                              Terms     Impaired   Assets    Impaired   Assets     Other    Amount      %
                          ------------- -------- ----------- -------- ----------- ------- ----------- -----
<S>                       <C>           <C>      <C>         <C>      <C>         <C>     <C>         <C>
Specialty Finance Group
 Transportation
  Finance...............   $2,140,541   $ 61,895   $         $          $         $       $ 2,202,436  27.1
 Resort Finance.........    1,209,062               16,415               24,800             1,250,277  15.4
 Healthcare Finance.....      597,201                7,018      5,902               1,102     611,223   7.5
 Franchise Finance......      597,916      1,619     1,741      1,763     2,120       274     605,433   7.5
 Communications
  Finance...............      694,863      7,169               24,264                         726,296   8.9
 Specialty Real Estate
  Finance...............      635,952     16,966    34,230      9,799     7,620       194     704,761   8.7
 Commercial Equipment
  Finance...............      712,854      1,526     4,858     10,884    17,855     4,135     752,112   9.3
 Public Finance.........      183,099                                                         183,099   2.3
                           ----------   --------   -------   --------   -------   ------- ----------- -----
                            6,771,488     89,175    64,262     52,612    52,395     5,705   7,035,637  86.7
                           ----------   --------   -------   --------   -------   ------- ----------- -----
Commercial Finance Group
 Rediscount Finance.....      766,250                  999      3,762                         771,011   9.5
                           ----------   --------   -------   --------   -------   ------- ----------- -----
                              766,250                  999      3,762                         771,011   9.5
                           ----------   --------   -------   --------   -------   ------- ----------- -----
Capital Markets Group
 Realty Capital.........      243,278                                                         243,278   3.0
 Investment Alliance....       12,297                                                          12,297   0.1
                           ----------   --------   -------   --------   -------   ------- ----------- -----
                              255,575                                                         255,575   3.1
                           ----------   --------   -------   --------   -------   ------- ----------- -----
Other...................       54,284                                                          54,284   0.7
                           ----------   --------   -------   --------   -------   ------- ----------- -----
Total Continuing
 Operations (1).........    7,847,597     89,175    65,261     56,374    52,395     5,705   8,116,507 100.0
                           ----------   --------   -------   --------   -------   ------- ----------- =====
Discontinued
 Operations (2).........    1,796,124     16,831               63,364     2,051    25,344   1,903,714
                           ----------   --------   -------   --------   -------   ------- -----------
TOTAL...................   $9,643,721   $106,006   $65,261   $119,738   $54,446   $31,049 $10,020,221
                           ==========   ========   =======   ========   =======   ======= ===========
</TABLE>
--------
NOTES:
(1) Excludes $136.1 million of Franchise Finance assets that were sold and are
    managed by the Company.
(2) Excludes $300 million of Corporate Finance assets that were sold and are
    managed by the Company.

                                       7
<PAGE>

  The Company's geographic portfolio diversification at December 31, 2000 in
the continuing operations was as follows:

<TABLE>
<CAPTION>
   State                                                        Total    Percent
   -----                                                     ----------- -------
                                                                 (Dollars in
                                                                 thousands)
   <S>                                                       <C>         <C>
   Florida.................................................. $ 1,175,886   11.2%
   California...............................................   1,154,679   11.0%
   Texas....................................................     851,048    8.1%
   Virginia.................................................     408,647    3.9%
   New York.................................................     402,698    3.8%
   Nevada...................................................     391,411    3.7%
   Georgia..................................................     333,515    3.2%
   Arizona..................................................     312,870    3.0%
   South Carolina...........................................     306,850    2.9%
   Missouri.................................................     269,102    2.6%
   New Jersey...............................................     264,173    2.4%
   Illinois.................................................     255,161    2.4%
   Colorado.................................................     223,335    2.1%
   Minnesota................................................     214,615    2.0%
   Washington...............................................     213,112    2.0%
   Pennsylvania.............................................     211,163    2.0%
   Other (1)................................................   3,549,610   33.7%
                                                             -----------  -----
   Total managed assets..................................... $10,537,875  100.0%
                                                             ===========  =====
</TABLE>
--------
NOTE:
(1) Other includes all states which on an individual basis represent less than
    2% of the total; and international, which represents approximately 12.5%
    of the total.

  The following is an analysis of the reserve for credit losses for the years
ended December 31:

<TABLE>
<CAPTION>
                               2000       1999       1998      1997      1996
                             ---------  ---------  --------  --------  --------
                                         (Dollars in thousands)
   <S>                       <C>        <C>        <C>       <C>       <C>
   Balance, beginning of
    year...................  $ 178,266  $ 141,579  $ 99,008  $ 84,874  $ 83,732
   Provision for credit
    losses.................    643,000     22,390    48,470    23,429    10,240
   Write-offs..............   (240,655)   (24,422)  (12,161)  (12,751)  (17,449)
   Recoveries..............      1,018      1,830     1,174     1,061     1,765
   Acquisitions and other..     (2,879)    36,889     5,088     2,395     6,586
                             ---------  ---------  --------  --------  --------
   Balance, end of year....  $ 578,750  $ 178,266  $141,579  $ 99,008  $ 84,874
                             =========  =========  ========  ========  ========
</TABLE>

  At December 31, 2000, the total carrying amount of impaired loans was $1.1
billion, of which $235.8 million were revenue accruing. A specific impairment
reserve for credit losses of $246.4 million has been established for $697.0
million of nonaccruing impaired loans and $1.8 million has been established
for $34.7 million of accruing impaired loans. Additionally, $2.2 million was
established for other accounts. As a result, 43.3% of FINOVA's reserve for
credit losses was allocated to specific reserves. The remaining $328.4 million
or 56.7% of the reserve for credit losses is designated for general purposes
and represents management's best estimate of inherent losses in the remaining
portfolio considering delinquencies, loss experience and collateral. At
December 31, 1999, the total amount of impaired loans was $222.7 million, of
which $108.8 million were revenue accruing. The specific impairment reserve
for credit losses at December 31, 1999 was $35.4 million for $89.0 million of
nonaccruing impaired loans and $25.3 million for $52.0 million of accruing
impaired loans. Actual results could differ from estimates and values, and
there can be no assurance that the reserves will be sufficient to cover
portfolio losses. Additions to the general and specific reserves are reflected
in current operations. Management may transfer reserves between the general
and specific reserves as considered necessary.

                                       8
<PAGE>

  At December 31, 2000, discontinued operations included $486.2 million of
nonaccruing assets, of which $421.9 million were in Corporate Finance. Since
the assets of the discontinued operations have been written down to estimated
net realizable value, no reserve for credit losses are carried against those
assets. Net realizable value write-downs were $347.5 million.

  Write-offs and recoveries by line of business, during the years ended
December 31, were as follows:

<TABLE>
<CAPTION>
                                   2000     1999     1998     1997     1996
                                 --------  -------  -------  -------  -------
                                          (Dollars in thousands)
<S>                              <C>       <C>      <C>      <C>      <C>
WRITE-OFFS
Specialty Finance Group
  Commercial Equipment Finance.. $ 19,998  $ 6,030  $ 3,845  $ 3,722  $ 3,207
  Communications Finance........    3,953    3,100      494      750    2,994
  Healthcare Finance............   60,171    1,327    1,502    1,798    1,018
  Franchise Finance.............      245    1,064    3,035      696    3,267
  Public Finance................    4,648
  Resort Finance................       61      656             2,700    4,275
  Transportation Finance........   40,500
  Specialty Real Estate
   Finance......................    2,646      500    1,785    2,106    1,793
                                 --------  -------  -------  -------  -------
                                  132,222   12,677   10,661   11,772   16,554
                                 --------  -------  -------  -------  -------
Commercial Finance Group
  Rediscount Finance............   19,233    3,523    1,500
                                 --------  -------  -------
                                   19,233    3,523    1,500
                                 --------  -------  -------
Capital Markets Group
  Mezzanine Capital.............   86,009    8,222
  Realty Capital................    3,000
                                 --------  -------
                                   89,009    8,222
                                 --------  -------
Other...........................      191                        979      895
                                 --------  -------  -------  -------  -------
Total Write-Offs................  240,655   24,422   12,161   12,751   17,449
                                 --------  -------  -------  -------  -------
RECOVERIES
Specialty Finance Group
  Commercial Equipment Finance..      107      257      200      514      829
  Healthcare Finance............      534      139      542       94        8
  Franchise Finance.............      326      824      255      263      422
  Resort Finance................                                           26
  Specialty Real Estate
   Finance......................               371                        177
                                 --------  -------  -------  -------  -------
                                      967    1,591      997      871    1,462
                                 --------  -------  -------  -------  -------
Commercial Finance Group
  Rediscount Finance............       25       51
                                 --------  -------
                                       25       51
                                 --------  -------
Capital Markets Group
  Mezzanine Capital.............       14       68
                                 --------  -------
                                       14       68
                                 --------  -------
Other...........................       12      120      177      190      303
                                 --------  -------  -------  -------  -------
Total Recoveries................    1,018    1,830    1,174    1,061    1,765
                                 --------  -------  -------  -------  -------
Total Net Write-Offs............ $239,637  $22,592  $10,987  $11,690  $15,684
                                 ========  =======  =======  =======  =======
Net write-offs as a percentage
 of average managed assets......     2.25%    0.24%    0.15%    0.19%    0.28%
                                 ========  =======  =======  =======  =======
</TABLE>

                                       9
<PAGE>

  A further breakdown of the portfolio by line of business can be found in
Consolidated Financial Statements--Annex A ("Annex A"), Notes C and D.

  Pre-tax charges of $347.5 were incurred in 2000 to write-down the investment
in financing transactions included in discontinued operations to net
realizable value. The carrying amount of investments in financing transactions
in discontinued operations at December 31, 2000 was $1.2 billion, down from
$2.8 billion at December 31, 1999.

Cost and Use of Borrowed Funds

  Historically, FINOVA Capital has relied on borrowed funds as well as
internal cash flow to finance its operations. It has also raised funds through
the sale or securitization of assets. The Company managed its exposure to
changes in interest rates through the issuance of swaps and other hedging
techniques. In addition, the Company historically attempted to "match" its
assets and liabilities by borrowing fixed and floating-rate debt in amounts
and tenor that approximated the character of its assets.

  As a result of the recent developments described above, the Company does not
expect to have access to the capital markets in the foreseeable future. In
addition, most of the Company's interest rate swap agreements were terminated
as a result of the bankruptcy filing. During the pendancy of the bankruptcy,
the interest rate which will be applied to the Company's debt prior to plan
confirmation obligations is also uncertain.

  Under the terms of the Company's Plan, the New Senior Notes will be fixed-
rate obligations, at the weighted average rate of the existing debt excluding
default interest or penalties, if any. The Berkadia Loan bears interest at the
greater of 9% or LIBOR plus 3%. Therefore, if LIBOR is below 6%, the Berkadia
Loan will be fixed at 9%. If LIBOR rises above 6%, the Berkadia Loan will be a
floating-rate obligation. If approved, the Plan will result in a significantly
higher cost of funds than the Company has traditionally incurred in the past.
Regardless of whether the Company's Plan is approved, during the pendancy of
the bankruptcy the Company is not able to match its floating-rate assets with
floating-rate liabilities. No assurance can be given that the Plan will be
approved or that the Company will be able to employ hedging techniques to
mitigate its exposure to changes in market interest rates. For further
information, see "Quantitative and Qualitative Disclosure about Market Risk."

  The following table reflects the approximate average pre-tax effective cost
of borrowed funds and pre-tax equivalent rate earned on accruing assets for
FINOVA Capital for each of the periods listed:

<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                                 ----------------------------
                                                 2000  1999  1998  1997  1996
                                                 ----  ----  ----  ----  ----
<S>                                              <C>   <C>   <C>   <C>   <C>
Short-term and variable rate long-term debt.....  7.2%  5.7%  6.1%  6.4%  6.5%
Fixed-rate long-term debt.......................  7.1%  6.7%  7.0%  7.1%  7.2%
Aggregate borrowed funds (1)....................  7.1%  6.1%  6.4%  6.6%  6.8%
Rate earned on average earning assets (2) (3)... 11.3% 10.8% 11.0% 10.8% 10.3%
Interest margins earned as a percentage of
 average earning assets (1).....................  4.7%  5.4%  5.5%  5.3%  4.8%
</TABLE>
--------
NOTES:
(1) If the transaction with Berkadia is approved by the creditors and the
    bankruptcy court, the cost of funds will increase and interest margins
    earned will decrease.
(2) Earning assets are net of average nonaccruing assets and average deferred
    taxes applicable to leveraged leases.
(3) Earned amounts are net of depreciation.

  The effective costs presented above include costs of commitment fees and
related borrowing costs. They do not necessarily predict future costs of
funds. For further information on FINOVA Capital's cost of funds, refer to
Annex A, Notes F and G.

                                      10
<PAGE>

  Following are the ratios of (losses) income to fixed charges and preferred
stock dividends ("ratio") for each of the past five years:

<TABLE>
<CAPTION>
                         Year Ended December 31,
                         -----------------------
 2000               1999                         1998                         1997                         1996
 ----               ----                         ----                         ----                         ----
<S>                 <C>                          <C>                          <C>                          <C>
(0.19)              1.75                         1.60                         1.61                         1.56
======              ====                         ====                         ====                         ====
</TABLE>

  For purposes of the ratio calculation, (losses) income consists of (losses)
income from continuing operations before income taxes and fixed charges. Fixed
charges include interest and related debt expense, a portion of rental expense
representative of interest, and preferred stock dividends grossed up to a pre-
tax basis. The ratio declined in 2000 due to a loss from continuing operations
and an increase in the cost of funds, and income was insufficient to cover
fixed charges by $123.1 million. Declines in the interest coverage ratio for
FINOVA Capital below a level of 1.25 to 1 constituted a default in the
covenants in the bank back-up facilities.

Leased Asset Realization Experience

  FINOVA Capital has historically earned total proceeds from the sale of
assets upon lease termination in excess of carrying amounts. There can be no
assurance, however, that those results can be achieved in future years, and in
2000 FINOVA Capital received proceeds from the sale of assets upon early lease
termination that were less than the carrying amounts. Actual proceeds will
depend on current market values for those assets at the time of sale. While
market values are generally beyond the control of FINOVA, the Company has some
discretion in the timing of sales of the assets. During 1996 through 1999, the
Company was able to negotiate a number of early terminations on transactions
where the market value exceeded the residual value, effectively reducing the
number of such transactions remaining in the portfolio at December 31, 2000.
Sales proceeds on lease terminations in excess of or less than carrying
amounts are reported as gains or losses on disposal of assets, respectively
when the assets are sold.

  Estimated residual values at December 31, 2000 were $1.023 billion and
consisted of $533.3 million of aircraft residuals, $397.3 million of real
estate residuals and $92.6 million for all other residuals. Estimated residual
values at December 31, 1999 were $998.7 million and consisted of $578.4
million of aircraft residuals, $332 million of real estate residuals and $88.3
million for all other residuals. Additionally, the Company had $235.2 million
and $135.9 million of assets off lease (primarily aircraft) that were held for
sale or lease, at December 31, 2000 and 1999, respectively. The estimated
residual values of direct finance and leveraged lease assets, in the accounts
of FINOVA Capital at December 31, 2000 were 34.0% of the original cost of
those assets (28.3% excluding the original costs of the assets and residuals
applicable to real estate leveraged leases, which typically have higher
residuals than other leases). The financing contracts and leases outstanding
at December 31, 2000 had initial terms ranging from one to 25 years. The
average initial term weighted by carrying amount at inception and the average
remaining term weighted by remaining carrying amount of financing contracts at
December 31, 2000 for financing contracts excluding leveraged leases were
approximately 7.4 and 5.2 years, respectively, and for leveraged leases were
approximately 20.0 and 11.6 years, respectively. The comparable average
initial term and remaining term at December 31, 1999 for financing contracts
excluding leveraged leases were approximately 7.0 and 5.1 years, respectively,
and for leveraged leases were approximately 18.4 and 10.3 years, respectively.
FINOVA Capital uses either employed or outside appraisers to determine the
collateral value of assets to be leased or financed and the estimated residual
or collateral value thereof at the expiration of each lease. Actual proceeds
could differ from those appraised values.

                                      11
<PAGE>

  Income from leasing transactions is affected by gains from asset sales on
lease termination and therefore, can be significantly less predictable than
income from lending activities. During the five years ended December 31, 2000,
the proceeds to FINOVA Capital from sales of assets on early termination and
at the expiration of leases and the related carrying amounts are as follows:

<TABLE>
<CAPTION>
                                                           Terminations at End
                   Early Terminations                         of Lease Term
      --------------------------------------------- ---------------------------------
               Carrying
                Amount                                  Estimated     Proceeds as a %
       Sales      of    Proceeds as a % of  Sales   Residual Value of  of Estimated
Year  Proceeds  Assets   Carrying Amount   Proceeds      Assets       Residual Value
----  -------- -------- ------------------ -------- ----------------- ---------------
                                  (Dollars in thousands)
<S>   <C>      <C>      <C>                <C>      <C>               <C>
2000  $27,695  $28,102          99%        $61,597       $57,088            108%
1999   95,721   81,000         118%         29,474        23,559            125%
1998   82,671   67,650         122%         40,571        35,647            114%
1997  114,680   96,656         119%         78,372        71,914            109%
1996   87,311   75,910         115%         16,334        13,872            118%
</TABLE>

  For a discussion of accounting for lease transactions, refer to Annex A,
Notes B and C.

Business Development

  In light of the recent developments, FINOVA has effectively eliminated new
business development activities, and for the foreseeable future, intends to
focus on managing and maximizing the value of its existing portfolio. These
activities include the continued collection of its portfolio pursuant to
contractual terms and may include efforts to retain certain customer
relationships, restructure or terminate other relationships or sell certain
assets if buyers can be found at attractive prices. The Company will also
continue to focus on negotiating appropriate rates and fee structures with its
customers. While it is possible that new business opportunities may present
themselves in the future, no assurance can be given as to the Company's
ability to take advantage of those opportunities.

Customer Requirements

  FINOVA Capital's financing contracts and leases generally require the
customer to pay taxes, license fees and insurance premiums and to perform
maintenance and repairs at the customer's expense. Contract payment rates for
existing customers were based on several factors, including the costs of
borrowed funds, term of contract, creditworthiness of the prospective
customer, type and nature of collateral and other security and, in leasing
transactions, the timing of tax effects and estimated residual values. In true
lease transactions, lessees generally are granted an option to purchase the
equipment at the end of the lease term at its then fair market value or, in
some cases, are granted an option to renew the lease at its then fair rental
value. The extent to which lessees exercise their options to purchase leased
equipment varies from year to year, depending on, among other factors, the
state of the economy, the financial condition of the lessee, interest rates
and technological developments.

Portfolio Management

  In addition to the review at the time of original underwriting, FINOVA
Capital's Portfolio Management department or dedicated personnel within the
business units generally review financial statements to assess customer cash
flow performance and trends; periodically confirm operations of the customer
as practical; conduct periodic assessments, appraisals and/or verification of
the underlying collateral; seek to identify issues concerning the
vulnerabilities of the customer; seek to resolve outstanding issues with the
borrower; periodically review and address covenant compliance issues; and
prepare periodic summaries of the aggregate portfolio quality and
concentrations for management review.

  Evaluation for loan impairment is performed as a part of the portfolio
management review process. When an impaired loan is determined to have
measurable impairment, a write-down is taken or an impairment reserve

                                      12
<PAGE>

is established, if required, based on the difference between the recorded
balance of the loan ("carrying amount") and either the fair value of the
collateral or the present value of anticipated cash flows.

Delinquencies and Workouts

  FINOVA Capital monitors the timing of payments on its accounts, and has
established detailed centralized policies and procedures for collection of
delinquencies. Generally, for term loans and leases, when an invoice is 10
days past due, the customer is typically contacted and a determination is made
as to the extent of the problem, if any. A commitment for immediate payment is
pursued and the account is observed closely. If satisfactory results are not
obtained in communication with the customer, guarantors, if any, are usually
contacted to advise them of the situation and the potential obligation under
the guarantee agreement. If an invoice for interest becomes 31 days past due
at the end of the month, it is reported as delinquent. A notice of default is
generally sent prior to an invoice becoming 45 days past due if satisfactory
discussions are not in progress. Between 60 and 90 days past the due date, if
satisfactory negotiations are not underway, outside counsel generally is
retained to help protect FINOVA Capital's rights and to pursue its remedies.

  While accounts may be moved to nonaccrual status prior to the 90th day of
delinquency, income recognition is generally suspended when accounts become
more than 90 days past due on the payment of interest, at which time FINOVA
Capital vigorously pursues its legal remedies. Foreclosed or repossessed
assets are considered to be nonperforming, and are reported as such unless the
assets generate sufficient cash to result in a reasonable rate of return.
Those accounts are continually reviewed, and write-downs are taken as deemed
necessary. While pursuing collateral and obligors, FINOVA Capital generally
continues to negotiate the restructuring or other settlement of the debt, as
appropriate.

  Management believes that collateral values significantly reduce loss
exposure and that the reserve for credit losses is adequate. For additional
information regarding the reserve for credit losses, see Annex A, Note D.

Governmental Regulation

  FINOVA Capital's domestic activities, including the financing of its
operations, are subject to a variety of federal and state regulations such as
those imposed by the Federal Trade Commission, the Securities and Exchange
Commission, the Consumer Credit Protection Act, the Equal Credit Opportunity
Act and the Interstate Land Sales Full Disclosure Act. Additionally, a
majority of states have ceilings on interest rates chargeable to customers in
financing transactions. Some of FINOVA Capital's financing transactions and
servicing activities are subject to additional government regulation. For
example, aircraft leasing is regulated by the Federal Aviation Administration,
and Communications Finance is regulated by the Federal Communication
Commission. FINOVA Capital's international activities are also subject to a
variety of laws and regulations of the countries in which the business is
conducted. FINOVA's operations during the Reorganization Proceedings are also
subject to oversight by the bankruptcy court discussed more fully below in
"Legal Proceedings."

Employees

  At December 31, 2000, the Company had 1,098 employees compared to 1,465 at
December 31, 1999. Of the employees, 749 were in its continuing operations and
349 were in discontinued operations at December 31, 2000, compared to 929 in
its continuing operations and 536 in discontinued operations at December 31,
1999. The decrease relates primarily to discontinuance and/or sale of certain
business units, the Company's efforts to trim operating expenses, and
attrition caused by the events of the past year. FINOVA believes it continues
to retain sufficient personnel to operate in the ordinary course. None of
these employees are covered by collective bargaining agreements. FINOVA
believes its employee relations are satisfactory.

  As of April 13, 2001, the employee headcount has been reduced to 762. A
substantial portion of the reductions since December 31, 2000 were employees
involved in originating and underwriting new transactions. Although the
Company has significantly reduced its workforce, it has continued to implement
retention plans

                                      13
<PAGE>

throughout the organization designed to help retain employees to enable it to
efficiently operate its businesses, maximize recovery of its portfolio and to
be successful in its reorganization efforts. In connection with this effort,
the bankruptcy court has approved the final payment due employees under a
retention plan that was in effect since May of 2000 and expires in April 2001.
This plan was in effect for virtually all employees, except the executive
officers. New retention and severance plans covering all employees, including
the executive officers, have been approved by the Board of Directors of FINOVA
and are in the process of being submitted to the bankruptcy court for
approval.

Other Matters

  The Company is working diligently toward finalization of a plan of
reorganization and intends to file the Plan with the bankruptcy court in the
second quarter of 2001. The Plan is subject to approval by the Company's
creditors as well as the bankruptcy court.

Special Note Regarding Forward-Looking Statements

  Certain statements in this report are "forward-looking," in that they do not
discuss historical fact, but instead note future expectations, projections,
intentions or other items. These forward-looking statements include matters in
the sections of this report captioned "Business," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Quantitative
and Qualitative Disclosure About Market Risk." They are also made in documents
incorporated in this report by reference, or in which this report may be
incorporated, such as a prospectus.

  Forward-looking statements are subject to known and unknown risks,
uncertainties and other factors that may cause FINOVA's actual results or
performance to differ materially from those contemplated by the forward-
looking statements. Many of those factors are noted in conjunction with the
forward-looking statements in the text. Other important factors that could
cause actual results to differ include:

  .  The results of FINOVA's efforts to implement its business strategy,
     including successful completion of the Reorganization Proceedings.
     Failure to fully implement its business strategy might result in adverse
     effects including materially adverse impacts on its financial position
     and results of operations. The current focus on maximizing portfolio
     values and liquidity while minimizing or eliminating new business
     generation will likely result in financial results that differ
     materially from prior periods.

  .  The effect of economic conditions and the performance of FINOVA's
     borrowers. Economic conditions in general or in particular market
     segments could impact the ability of FINOVA's borrowers to operate or
     expand their businesses, which might result in decreased performance,
     impacting repayment of their obligations. The rate of borrower defaults
     or bankruptcies may increase. Economic conditions could adversely affect
     FINOVA's ability to realize gains from sales of assets and investments
     and estimated residual values. Those items could be particularly
     sensitive to changing market conditions. Certain changes in fair market
     values must be reflected in FINOVA's reported financial results.

  .  The cost of FINOVA's capital. That cost has increased significantly as a
     result of the events of 2000 and will increase further if the Berkadia
     transaction is consummated. The impact of these developments will be a
     significant reduction in profit margins.

  .  Loss of employees. FINOVA must retain a sufficient amount of employees
     to continue to monitor and collect its portfolio. Failure to do so could
     result in additional losses.

  .  Changes in air worthiness directives. These changes could have a
     significant impact on airplane values, especially FINOVA's portfolio of
     airplanes, which are of an older vintage.

  .  Changes in government regulations, tax rates and similar matters. For
     example, government regulations could significantly increase the cost of
     doing business or could eliminate certain tax advantages of some of
     FINOVA's financing products. The current financial condition of FINOVA
     also makes it difficult to record potential tax benefits that may never
     be recognized.

                                      14
<PAGE>

  .  Necessary technological changes, such as implementation of information
     management systems, may be more difficult, expensive or time consuming
     than anticipated.

  .  Potential liabilities associated with dispositions of assets or lines of
     business.

  .  Changes in interest rates could adversely affect financial results.

  .  Other risks detailed in FINOVA's other SEC reports or filings.

  FINOVA does not intend to update forward-looking information to reflect
actual results or changes in assumptions or other factors that could affect
those statements. FINOVA cannot predict the risk from reliance on forward-
looking statements in light of the many factors that could affect their
accuracy.

Item 2. Properties.

  FINOVA's principal executive offices are located in Scottsdale, Arizona.
FINOVA Capital operates various additional offices in the United States, one
in Canada and one in Europe. All of these properties are leased. Alternative
office space could be obtained in the event leases are not renewed.

Item 3. Legal Proceedings.

  FINOVA is a party either as plaintiff or defendant to various actions,
proceedings and pending claims, including legal actions, some of which involve
claims for compensatory, punitive or other damages in significant amounts.
Litigation often results from FINOVA's attempts to enforce its lending
agreements against borrowers and other parties to those transactions.
Litigation is subject to many uncertainties. It is possible that some of the
legal actions, proceedings or claims could be decided against FINOVA. Other
than the matters described below, FINOVA believes that any resulting liability
for their litigation matters should not materially affect FINOVA's financial
position, results of operations or cash flows. One or more of the following
matters, for which nominal accruals have been made, could have a material
adverse impact on FINOVA's financial position, results of operations or cash
flows.

  Between March 29 and May 23, 2000, five shareowner lawsuits were filed
against FINOVA and Samuel Eichenfield, FINOVA's former chairman, president,
and chief executive officer; two of the lawsuits also named FINOVA Capital as
a defendant, and one named three other executive officers. All of the lawsuits
purport to be on behalf of the named plaintiffs (William K. Steiner, Uri
Borenstein, Jerry Krim, Mark Kassis, and the Louisiana School Employees
Retirement System), and others who purchased FINOVA common stock during the
class period of July 15, 1999, through either March 26, 2000, or May 7, 2000.
The suit brought by the Louisiana School Employees Retirement System also
purports to be on behalf of all those who purchased FINOVA Capital 7.25% Notes
which are due November 8, 2004, pursuant to the registration statement and
prospectus supplement dated November 1, 1999.

  In an order by the U.S. District Court for the District of Arizona dated
August 30, 2000, these five lawsuits were consolidated and captioned In re:
FINOVA Group, Inc. Securities Litigation. The court also selected the
Louisiana School Employees Retirement System ("LSERS") as the lead plaintiff
in the consolidated cases. LSERS filed its Amended Consolidated Complaint on
September 29, 2000, naming FINOVA, FINOVA Capital, Samuel Eichenfield, Matthew
Breyne, and Bruno Marszowski as defendants. The consolidated amended complaint
generally alleges that the defendants made materially misleading statements
regarding FINOVA's loss reserves, and otherwise violated the federal
securities laws in an effort to bolster FINOVA's stock price, among other
reasons. Among other things, the complaint seeks unspecified damages for
losses incurred by shareowners, plus interest, and other relief, and
rescission with regard to the notes purchased.

  Since consolidation of the original five shareowner lawsuits, other related
lawsuits have been initiated against the Company and current and former
officers and directors. Three shareowner lawsuits were filed in the United
States District Court for the Middle District of Tennessee, in which the named
plaintiffs (John Cartwright, Sirrom Partners and Sirrom G-1, and Caldwell
Travel) assert claims relating to the Company's acquisition in

                                      15
<PAGE>

1999 of Sirrom Capital Corporation, and the exchange of shares of Sirrom stock
for shares of FINOVA stock. The Cartwright complaint purports to be a class
action lawsuit on behalf of all Sirrom shareowners that exchanged their Sirrom
stock for FINOVA stock as a result of the acquisition. The defendants named
are Sirrom Capital Corporation, Samuel Eichenfield, John W. Teets, Constance
Curran, G. Robert Durham, James L. Johnson, Kenneth Smith, Shoshana Tancer,
Bruno Marszowski, and FINOVA Group. The complaints allege that the defendants
made materially misleading statements regarding FINOVA's loss reserves, and
otherwise violated the federal securities laws in an effort to reduce the
total consideration provided to Sirrom shareowners at the time of the
acquisition. The complaints seek unspecified damages for losses incurred by
shareowners, plus interest, and other relief.

  On January 4, 2001, the United States District Court for the Middle District
of Tennessee granted a motion brought by FINOVA and the other defendants to
transfer the Cartwright and Sirrom Partners cases to the United States
District Court for the District of Arizona. The plaintiff in Caldwell Travel
agreed to dismiss that case without prejudice. Pursuant to a Stipulation and
Order entered in March 2001, the Cartwright case has been consolidated for all
purposes with the previous five cases in the FINOVA Group Securities
Litigation, and the Sirrom Partners case has been consolidated for all pre-
trial purposes. In April 2001, the lead plaintiffs are scheduled to file a
Second Amended Consolidated Complaint.

  There have also been two shareowners' derivative lawsuits filed against
current and former officers and directors of FINOVA Group, one in the United
States District Court for the District of Arizona, and one in the Court of
Chancery for Newcastle County, Delaware. Both complaints were filed on
September 11, 2000, and both purport to be brought by the named plaintiffs
(William Kass and Cindy Burkholter) derivatively on behalf of the Company
against the officers and directors, alleging generally breaches of fiduciary
and other duties as directors. These actions seek unspecified money damages
and other relief. As with the consolidated securities litigation, the
allegations center generally on claims that there were materially misleading
statements regarding FINOVA's loss reserves. In both of these actions, the
plaintiffs have agreed to a stay of all proceedings pending the final
determination of the motion to dismiss in the consolidated securities
litigation.

  Finally, another shareowner's derivative lawsuit was filed on September 13,
2000, in the Circuit Court for Davidson County, Tennessee, by Ronald Benkler,
purportedly on behalf of Sirrom Capital Corporation, against several former
officers of Sirrom Capital Corporation. The complaint alleges that the Sirrom
officers breached various duties to Sirrom in connection with the acquisition
of Sirrom by the Company in 1999, and the exchange of Sirrom stock for FINOVA
stock as a result of the acquisition. The plaintiffs have agreed to a stay of
discovery in this case, pending the final determination of the motion to
dismiss the consolidated securities litigation.

  FINOVA believes the claims in all of these securities and derivative cases
are without merit. FINOVA and the other defendants intend to vigorously defend
against these claims.

  On March 6, 2001, one of FINOVA Capital's subsidiaries, FINOVA (Canada)
Capital Corporation, had an involuntary Petition for Receiving Order filed
against it in the Ontario, Canada, Superior Court of Justice in Bankruptcy.
The action was filed by the Bank of Nova Scotia, as agent for the lenders on a
$150 million (Canadian) bank facility. That same day, the courts in Canada
issued a temporary injunction prohibiting transfers of assets out of the
Canadian subsidiary to its other affiliates. FINOVA has not received service
of process in those proceedings, but has agreed to refrain from transferring
assets to its affiliates without court order.

  On March 7, 2001, FINOVA, FINOVA Capital and seven of their subsidiaries
filed voluntary petitions for protection from creditors pursuant to Chapter
11, Title 11, United States Code, in the United States Bankruptcy Court for
the District of Delaware (the "Bankruptcy Court") (the "Reorganization
Proceedings"). The other subsidiaries were FINOVA (Canada) Capital
Corporation, FINOVA Capital plc, FINOVA Loan Administration Inc., FINOVA
Mezzanine Capital Inc., FINOVA Portfolio Services, Inc., FINOVA Technology
Finance Inc., and FINOVA Finance.

                                      16
<PAGE>

  FINOVA obtained orders from the bankruptcy court on the first day permitting
FINOVA to continue its operations in the ordinary course including honoring
its obligations to borrowers. The orders also permit the Filing Entities to
pay certain prepetition expenses and claims, such as to employees (other than
executive officers, with exceptions), taxing authorities and foreign trade
vendors. The cases will be jointly administered.

Item 4. Submission of Matters to a Vote of Security Holders.

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

Optional Item. Executive Officers of Registrant.

  Set forth below is information with respect to those individuals who serve
as executive officers of FINOVA, including those officers of FINOVA Capital
who are responsible for its principal business units.

<TABLE>
<CAPTION>
         Name          Age                Position and Background
         ----          --- ----------------------------------------------------
 <C>                   <C> <S>
 William J. Hallinan..  58 President and Chief Executive Officer, General
                           Counsel and Secretary of FINOVA Group and President,
                           Chief Executive Officer and General Counsel of
                           FINOVA Capital since March 2001. Previously, Senior
                           Vice President--General Counsel and Secretary of
                           FINOVA and FINOVA Capital for more than five years.

 Derek C. Bruns.......  41 Senior Vice President--Internal Audit of FINOVA for
                           more than five years.

 Jack Fields, III.....  46 Executive Vice President or similar positions of
                           FINOVA Capital for more than five years.

 Bruno A. Marszowski..  59 Senior Vice President--Controller and Chief
                           Financial Officer of FINOVA and FINOVA Capital for
                           more than five years.

 William C. Roche.....  47 Senior Vice President--Human Resources & Facilities
                           Planning of FINOVA and FINOVA Capital for more than
                           five years.

 Stuart A. Tashlik....  45 Senior Vice President--Planning & Communications of
                           FINOVA since 1999. Previously, Senior Vice President
                           or similar positions of FINOVA Capital for more than
                           five years.
</TABLE>

                                      17
<PAGE>

                                    PART II

Item 5. Market Price of and Dividends on the Registrant's Common Equity &
Related Shareowner Matters.

  The FINOVA Group Inc.'s common stock trades on the New York Stock Exchange
under the symbol "FNV." The following tables summarize the high and low market
prices as reported on the New York Stock Exchange Composite Tape and the cash
dividends declared from January 1, 1999 through December 31, 2000.

<TABLE>
<CAPTION>
                                              Sales Price Range of Common Stock
                                             -----------------------------------
                                                   2000              1999
                                             ----------------- -----------------
                                               High     Low      High     Low
                                             -------- -------- -------- --------
<S>                                          <C>      <C>      <C>      <C>
Quarters:
  First..................................... $36.5000 $16.0000 $62.4375 $48.1250
  Second....................................  17.3125   7.5625  53.9375  45.3125
  Third.....................................  16.5000   5.9375  54.5000  34.3750
  Fourth....................................   7.1875   0.4688  44.6250  32.5000
</TABLE>

<TABLE>
<CAPTION>
                                                                      Dividends
                                                                     Declared on
                                                                       Common
                                                                        Stock
                                                                     -----------
                                                                     2000  1999
                                                                     ----- -----
<S>                                                                  <C>   <C>
February............................................................ $0.18 $0.16
May.................................................................  0.18  0.16
August..............................................................  0.18  0.18
November............................................................  0.00  0.18
                                                                     ----- -----
                                                                     $0.54 $0.68
                                                                     ===== =====
</TABLE>

  Prior to the first calendar quarter of 2001, quarterly dividends were paid
on the first business day of each calendar quarter. In November 2000, FINOVA
suspended its quarterly dividends. FINOVA anticipates it will not pay
dividends in the foreseeable future, except as noted below. If the Plan
proposed by the Company and affiliates is implemented, distributions to
shareowners will not occur until the Berkadia Loan is fully paid, and then it
is expected that distribution to shareowners will be made only as contemplated
by the Plan, including the terms of the New Senior Notes. See "Recent
Developments--Berkadia Commitment--Proposed Restructuring" in "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

  As of April 12, 2001, there were approximately 18,770 holders of record of
The FINOVA Group Inc.'s common stock. The closing price of the common stock on
that date was $1.50.

                                      18
<PAGE>

Item 6. Selected Financial Data.

  The following table summarizes selected financial data of FINOVA, which have
been derived from the audited Consolidated Financial Statements of FINOVA for
each of the years ended December 31, 2000, 1999, 1998, 1997 and 1996. The
information set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations," the
Consolidated Financial Statements of FINOVA and the Notes included in Annex A,
as well as the rest of this report. Prior year amounts have been reclassified
to conform to 2000 presentation and restated to exclude operations which were
discontinued in 2000 and 1996 and to reflect a two-for-one stock split in
1997. For further detail, see Annex A, Note I.

<TABLE>
<CAPTION>
                                            Year Ended December 31,
                          ----------------------------------------------------------------
                             2000          1999         1998         1997         1996
                          -----------   -----------  -----------  -----------  -----------
                                 (Dollars in thousands, except per share data)
<S>                       <C>           <C>          <C>          <C>          <C>
OPERATIONS:
Income earned from
 financing
 transactions...........  $ 1,148,323   $ 1,006,278  $   823,291  $   714,360  $   602,365
Interest margins
 earned.................      453,565       473,187      379,756      315,904      253,594
Provision for credit
 losses.................      643,000        22,390       48,470       23,429       10,240
(Losses) gains on
 investments and
 disposal of assets.....     (168,589)       67,886       27,912       30,286       12,417
(Loss) income from
 continuing operations..     (546,709)      218,241      142,661      130,036      101,610
Net (loss) income.......     (939,817)      215,244      160,341      137,910      118,475
Basic (loss) earnings
 from continuing
 operations per share...        (8.96)         3.64         2.55         2.39         1.86
Basic (loss) earnings
 per share..............       (15.41)         3.59         2.87         2.53         2.17
Basic adjusted weighted
 average shares.........   60,994,000    59,880,000   55,946,000   54,405,000   54,508,000
Diluted (loss) earnings
 from continuing
 operations per share...  $     (8.96)  $      3.45  $      2.41  $      2.27  $      1.81
Diluted (loss) earnings
 per share..............       (15.41)         3.41         2.70         2.40         2.11
Diluted adjusted
 weighted average
 shares.................   60,994,000    64,300,000   60,705,000   59,161,000   56,051,000
Dividends declared per
 common share...........  $      0.54   $      0.68  $      0.60  $      0.52  $      0.46
Dividend payout ratio...         (3.5%)        19.0%        21.0%        20.6%        21.2%
FINANCIAL POSITION:
Investment in financing
 transactions...........  $10,180,404   $10,321,814  $ 8,116,507  $ 6,592,458  $ 5,957,088
Ending managed assets...   10,537,875    10,443,136    8,252,571    6,629,065    5,957,088
Nonaccruing assets......      921,351       174,993      114,474       94,845       84,677
Reserve for credit
 losses.................      578,750       178,266      141,579       99,008       84,874
Funded new business.....    2,882,589     4,132,150    3,495,160    2,672,025    2,317,023
Fee-based volume........      193,579     2,072,280    2,811,766      731,445        7,144
Total assets............   12,089,086    13,889,889   10,228,374    8,476,435    7,351,987
Deferred income taxes,
 net....................       49,202       439,518      342,268      275,971      246,217
Total debt..............   10,997,687    11,407,767    8,394,578    6,764,581    5,850,223
Company-obligated
 mandatory redeemable
 convertible preferred
 of subsidiary trust
 solely holding
 convertible debentures
 of FINOVA ("TOPrS")....      111,550       111,550      111,550      111,550      111,550
Shareowners' equity.....      672,934     1,663,381    1,167,231    1,092,254      936,085
</TABLE>

                                      19
<PAGE>

<TABLE>
<CAPTION>
                                                   December 31,
                                           ----------------------------------
                                           2000    1999   1998   1997   1996
                                           -----   -----  -----  -----  -----
<S>                                        <C>     <C>    <C>    <C>    <C>
RATIOS:
Nonaccruing assets/managed assets(1)......   8.7%    1.7%   1.4%   1.4%   1.4%
Reserve for credit losses as a % of:
  Ending managed assets(1)................   5.7%    1.7%   1.8%   1.5%   1.4%
  Nonaccruing assets......................  62.8%  101.9% 123.7% 104.4% 100.2%
  As a multiple of net write-offs.........   2.4x    7.9x  12.9x   8.5x   5.4x
Total debt to equity(2)...................  16.5x    6.9x   7.3x   6.3x   6.4x
Return on average common equity........... (61.0%)  14.4%  14.1%  14.1%  13.5%
Return from continuing operations on
 average funds employed(3)................  (5.5%)   2.5%   2.0%   2.2%   1.9%
Equity to assets..........................   5.6%   12.0%  11.4%  12.9%  12.7%
</TABLE>
--------
NOTES:
(1) Managed assets exclude financing contracts held for sale.
(2) Debt in 2000, 1999, 1998, 1997 and 1996 includes the TOPrS noted above.
(3) Average funds employed excludes deferred taxes applicable to leveraged
    leases.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

  See pages 1-14 of Annex A.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk.

  See page 15 of Annex A.

Item 8. Financial Statements & Supplemental Data.

  1. Financial Statements--See Item 14 hereof and Annex A.

  2. Supplementary Data--See Condensed Quarterly Results included in
Supplemental Selected Financial Data of Notes to Consolidated Financial
Statements included in Annex A.

Item 9. Changes in and Disagreements with Accountants on Accounting & Financial
Disclosure.

  Not applicable.

                                       20
<PAGE>

                                   PART III

Item 10. Directors & Executive Officers of the Registrant.

  See "The Board of Directors" and "Section 16(a) Beneficial Ownership
Reporting Compliance" in Annex B and "Legal Proceedings" in Item 3.

  For information regarding FINOVA's executive officers, see the Optional Item
in Part I, following Item 4 and "Legal Proceedings" in Item 3.

Item 11. Executive Compensation.

  See "Board Information," "Board Compensation," "Executive Compensation and
Other Information," "Employment Agreements" and "Compensation Committee
Interlocks and Insider Participation" in Annex B.

Item 12. Security Ownership of Certain Beneficial Owners & Management.

  See "FINOVA Share Ownership" in Annex B. See "Management's Discussion and
Analysis of Financial condition and Results of Operations--Berkadia
Commitment--Proposed Restructuring Plan" in Annex A for information regarding
a possible change in control of FINOVA.

Item 13. Certain Relationships & Related Transactions.

  See "Related Party Transactions" in Annex B.

                                      21
<PAGE>

                                    PART IV

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

  (a) Documents filed.

  1. Financial Statements.

  The following financial information of FINOVA are included in Annex A:

<TABLE>
<CAPTION>
                                                                       Annex A
                                                                        Page
                                                                       -------
<S>                                                                    <C>
Management's Discussion and Analysis of Financial Condition and
 Results of Operations................................................  1-14
Quantitative and Qualitative Disclosure about Market Risk.............   19
Report of Independent Auditors and Independent Auditors' Report.......  20-21
Consolidated Balance Sheets...........................................   22
Statements of Consolidated Operations.................................   23
Statements of Consolidated Shareowners' Equity........................   24
Statements of Consolidated Cash Flows.................................   25
Notes to Consolidated Financial Statements............................  26-64
Supplemental Selected Financial Data (unaudited)......................   65
</TABLE>

  2. All Schedules have been omitted because they are not applicable or the
required information is shown in the financial statements or related notes.

  3. Exhibits.

<TABLE>
<CAPTION>
 Exhibit No.
 -----------
 <C>         <S>
 (3.A)       Amended and Restated Certificate of Incorporation (incorporated by
             reference from FINOVA's Registration Statement on Form S-3/A, SEC
             File No. 333-74473, filed on May 28, 1999, Exhibit 4.1).

 (3.B)       Bylaws, as amended (incorporated by reference from FINOVA's report
             on Form 10-K for the year ended December 31, 1995 (the "1995 10-
             K") Exhibit 3.B).

 (4.A)       Form of FINOVA's Common Stock Certificate (incorporated by
             reference from the 1994 10-K, Exhibit 4.B).

 (4.B)       Relevant portions of FINOVA's Certificate of Incorporation and
             Bylaws included in Exhibits 3.A and 3.B above are incorporated by
             reference.

 (4.C)       Rights Agreement dated as of February 15, 1992 between FINOVA and
             the Rights Agent named therein, as amended ("Rights Agreement")
             (incorporated by reference from FINOVA's report on Form 8-K dated
             September 21, 1995, Exhibit 4.1).

 (4.C.1)     Acceptance of Successor Trustee to Appointment under Rights
             Agreement (incorporated by reference from FINOVA's report on Form
             8-K, dated November 30, 1995, Exhibit 4).

 (4.C.2)     Amendment dated as of December 20, 2000 to Rights Agreement.*

 (4.C.3)     Amendment No. 2 dated as of February 26, 2001 to Rights
             Agreement.*

 (4.D)       Long-term debt instruments with principal amounts not exceeding
             10% of FINOVA's total consolidated assets are not filed as
             exhibits to this report. FINOVA will furnish a copy of those
             agreements to the SEC upon its request.

 (4.E)       Form of Indenture dated as of September 1, 1992 between FINOVA
             Capital and the Trustee named therein (incorporated by reference
             from the Greyhound Financial Corporation Registration Statement on
             Form S-3, Registration No. 33-51216, Exhibit 4).

</TABLE>

                                       22
<PAGE>

<TABLE>
<CAPTION>
 Exhibit No.
 -----------
 <C>         <S>
 (4.F)       Form of Indenture dated as of October 1, 1995 between FINOVA
             Capital and the Trustee named therein (incorporated by reference
             from FINOVA Capital's report on Form 8-K dated October 24, 1995,
             Exhibit 4.1).

 (4.G)       Indenture, dated as of December 11, 1996, between FINOVA and Fleet
             National Bank as trustee (incorporated by reference from FINOVA's
             report on Form 8-K dated December 20, 1996, (the "December 1996 8-
             K") Exhibit 4.1).

 (4.G.1)     Indenture, dated as of May 15, 1999, between FINOVA Capital and
             Norwest Bank Minnesota, National Association (incorporated by
             reference from FINOVA's Registration Statement on Form S-3/A, SEC
             File No. 333-74473, filed on May 28, 1999, Exhibit 4.8.B).

 (4.G.2)     Indenture, dated as of May 15, 1999, between FINOVA Capital and
             FMB Bank (incorporated by reference from FINOVA's Registration
             Statement on Form S-3/A, SEC File No. 333-74473, filed on May 28,
             1999, Exhibit 4.8.C).

 (4.G.3)     Indenture, dated as of May 15, 1999 between FINOVA Capital and The
             First National Bank of Chicago (incorporated by reference from
             FINOVA's Registration Statement on Form S-3/A, SEC File No. 333-
             74473, filed on May 28, 1999, Exhibit 4.8.A).

 (4.G.4)     Form of Trust Indenture among FINOVA (Canada) Finance Inc., FINOVA
             Capital Corporation and CIBC Mellon Trust Company made as of
             February 25, 2000 (incorporated by reference from FINOVA Capital's
             Report on Form 10-K for the year ended December 31, 1999, Exhibit
             4.G.4).

 (4.G.5)     Amended and Restated Declaration of Trust, dated as of December
             11, 1996, among Bruno A. Marszowski and Robert J. Fitzsimmons, as
             Regular Trustees, First Union Bank of Delaware, as Delaware
             Trustee, Fleet National Bank, as Property Trustee, and FINOVA
             (incorporated by reference from the December 1996 8-K, Exhibit
             4.2).

 (4.G.6)     Preferred Security Guarantee, dated as of December 11, 1996,
             between FINOVA and Fleet National Bank, as trustee (incorporated
             by reference from the December 1996 8-K, Exhibit 4.3).

 (4.G.7)     Form of 5 1/2% Convertible Subordinated Debenture (incorporated by
             reference from the December 1996 8-K, Exhibit 4.4).

 (4.G.8)     Form of Preferred Security (TOPrS) (incorporated by reference from
             the December 1996 8-K, Exhibit 4.5).

 (4.H)       Form of Indenture, dated as of March 20, 1998, between FINOVA,
             FINOVA Capital and The First National Bank of Chicago as Trustee
             (incorporated by reference from FINOVA and FINOVA Capital's
             registration statement on Form S-3, Registration No. 333-38171,
             Exhibit 4.8).

 (4.I)       Announcement of 2-for-1 Stock Split (incorporated by reference
             from FINOVA's August 14, 1998 8-K, Exhibit 28).

 (4.I.1)     Letter to shareowners regarding FINOVA's 2-for-1 Stock Split
             (incorporated by reference from FINOVA's October 1, 1998 8-K,
             Exhibit 28.A)

 (4.I.2)     Letter to holders of Preferred Securities regarding the 2-for-1
             common stock split and resulting adjustment in conversion price
             applicable to the Convertible Trust Originated Preferred
             Securities of FINOVA Finance Trust (incorporated by reference from
             FINOVA's October 1, 1998 8-K, Exhibit 28.B).

 (4.J)       1992 Stock Incentive Plan, as amended through the date of this
             filing (incorporated by reference FINOVA's Report on Form 10-Q for
             the quarter ended September 30, 2000 ("Third Quarter 2000 10-Q")
             Exhibit 4.)+

 (4.K)       Sirrom Capital Corporation Amended and Restated 1994 Stock Option
             Plan (incorporated by reference from FINOVA's report on Form 10-
             K/A for the year ended December 31, 1998 (the "1998 10-K/A")
             Exhibit 4.K).

</TABLE>

                                       23
<PAGE>

<TABLE>
<CAPTION>
 Exhibit No.
 -----------
 <C>         <S>
 (4.L)       Sirrom Capital Corporation Amended and Restated Stock Option Plan
             for Non-employee Directors (incorporated by reference from the
             1998 10-K/A, Exhibit 4.L).

 (4.M)       Director resolutions dated February 11, 1999, regarding adoption
             of the Sirrom stock option plans (incorporated by reference from
             the 1998 10-K/A, Exhibit 4.N).

 (4.N)       Sirrom Capital Corporation Amended and Restated 1996 Incentive
             Stock Option Plan (incorporated by reference from the 1998 10-K,
             Exhibit 4.M).

 (4.O)       Commitment Letter dated February 26, 2001 among FINOVA, FINOVA
             Capital, Berkshire Hathaway Inc., Leucadia National Corporation
             and Berkadia, LLC (incorporated by reference from FINOVA's Report
             on Form 8-K dated February 26, 2001 (the "February 26, 2001 8-K"),
             Exhibit 10.A.

 (10.A)      Sixth Amendment and Restatement dated as of May 16, 1994 of the
             Credit Agreement, dated as of May 31, 1976 among FINOVA Capital
             and the lender parties thereto, and Bank of America National Trust
             and Savings Association, Bank of Montreal, Chemical Bank,
             Citibank, N.A. and National Westminister Bank USA, as agents (the
             "Agents") and Citibank, N.A., as Administrative Agent
             (incorporated by reference from FINOVA's report on Form 8-K dated
             May 23, 1994, Exhibit 10.1).

 (10.A.1)    First Amendment dated as of September 30, 1994, to the Sixth
             Amendment and Restatement, noted in 10.A above (incorporated by
             reference from the 1994 10-K, Exhibit 10.A.1).

 (10.A.2)    Second Amendment dated as of May 11, 1995 to the Sixth Amendment
             and Restatement noted in 10.A above (incorporated by reference
             from FINOVA's Quarterly Report on Form 10-Q for the period ending
             September 30, 1995 (the "3Q95 10-Q"), Exhibit 10.A).

 (10.A.3)    Third Amendment dated as of November 1, 1995 to Sixth Amendment
             noted in 10.A above (incorporated by reference from the 3Q95 10-Q,
             Exhibit 10.B).

 (10.A.4)    Fourth Amendment dated as of May 15, 1996, to Sixth Amendment
             noted in 10.A above (incorporated by reference from the 1996 10-K,
             Exhibit 10.A.4).

 (10.A.5)    Fifth Amendment dated as of May 20, 1997 to Sixth Amendment noted
             in 10.A above (incorporated by reference from the 1997 10-K,
             Exhibit 10.A.5).

 (10.A.6)    Sixth Amendment dated as of May 17, 1999 to Sixth Amendment and
             Restatement of Credit Agreement dated as of May 16, 1994
             (incorporated by reference from the 1999 10-K, Exhibit 10.A.6).

 (10.B)      Credit Agreement (Short-Term Facility) dated as of May 16, 1994
             among FINOVA Capital, the Lender parties thereto, the Agents and
             Citibank, N.A., as Administrative Agent (incorporated by reference
             from FINOVA's report on Form 8-K dated May 23, 1994, Exhibit
             10.2).

 (10.B.1)    First Amendment dated as of September 30, 1994 to the Credit
             Agreement noted in 10.B above (incorporated by reference from the
             1994 10-K, Exhibit 10.B.1).

 (10.B.2)    Second Amendment to Short-Term Facility noted in 10.B above
             (incorporated by reference from the 3Q95 10-Q, Exhibit 10.C).

 (10.B.3)    Third Amendment to Short-Term Facility noted in 10.B above
             (incorporated by reference from the 3Q95 10-Q, Exhibit 10.D).

 (10.B.4)    Fourth Amendment to Short-Term Facility noted in 10.B above
             (incorporated by reference from 1996 10-K, Exhibit B.4).

 (10.B.5)    Fifth Amendment to Short-Term Facility noted in 10.B above
             (incorporated by reference from the 1997 10-K, Exhibit 10.B.5).

 (10.B.6)    Sixth Amendment to Short-Term Facility noted in 10.B above.
             (incorporated by reference from the 2000 10-K, Exhibit 10.B.6).

 (10.C)      Employment Agreement for Matthew M. Breyne dated April 1, 2000
             (incorporated by reference from FINOVA's Quarterly Report on Form
             10-Q for the period ended June 30, 2000 (the "Second Quarter 2000
             10-Q")), Exhibit 10.A.+

</TABLE>

                                       24
<PAGE>

<TABLE>
<CAPTION>
 Exhibit No.
 -----------
 <C>         <S>
 (10.D)      Executive Retention Plan adopted May 26, 2000 (incorporated by
             reference from the Second Quarter 2000 10-Q, Exhibit 10.B).+

 (10.E.1)    Compensation Agreement and Release for William J. Hallinan dated
             March 19, 2001.*+

 (10.E.2)    Compensation Agreement and Release for Derek C. Bruns dated March
             14, 2001.*+

 (10.E.3)    Compensation Agreement and Release for Jack Fields III dated March
             17, 2001.*+

 (10.E.4)    Compensation Agreement and Release for Bruno A. Marszowski dated
             March 16, 2001.*+

 (10.E.5)    Compensation Agreement and Release for William C. Roche dated
             March 20, 2001.*+

 (10.E.6)    Compensation Agreement and Release for Stuart A. Tashlik dated
             March 15, 2001.*+

 (10.F.1)    Severance Agreement and Release for Matthew M. Breyne dated March
             6, 2001.*+

 (10.F.2)    Severance Agreement and Release for John J. Bonano dated March 6,
             2001.*+

 (10.F.3)    Severance Agreement and Release for Gregory C. Smalis dated March
             8, 2001.*+

 (10.F.4)    Severance Agreement and Release for Robert M. Korte dated March 6,
             2001.*+

 (10.F.5)    Severance Agreement and Release for Meilee Smythe dated March 6,
             2001.*+

 (10.F.6)    1998-2000 Performance Share Incentive Plan (incorporated by
             reference from the 1997 10-K, Exhibit 10.E.4).+

 (10.G.1)    1999-2001 Performance Share Incentive Plan (incorporated by
             reference from the 1998 10-K, Exhibit 10.E.4). +

 (10.G.2)    2000-2002 Performance Share Incentive Plan (incorporated by
             reference from the 1999 10-K, Exhibit 10.E.4).+

 (10.H)      Employment Agreement with Samuel L. Eichenfield dated March 16,
             1996 (incorporated by reference from the 1995 10-K, Exhibit
             10.F.3).+

 (10.I.1)    Amendment to Employment Agreement referenced in 10.F above
             (incorporated by reference from the 1996 10-K, Exhibit 10.F.2).+

 (10.I.2)    Second Amendment to Employment Agreement referenced in 10.F above
             (incorporated by reference from the 2Q97 10-Q, Exhibit 10).+

 (10.J)      Amended and Restated Supplemental Pension Plan, (incorporated by
             reference from the 1996 10-K, Exhibit 10.1).+

 (10.K)      A description of FINOVA's policies regarding compensation of
             directors is incorporated by reference from the 2001 Proxy
             Statement. +

 (10.L)      Directors Deferred Compensation Plan (incorporated by reference
             from the 1992 10-K, Exhibit 10.O).+

 (10.M)      Directors' Retirement Benefit Plan (incorporated by reference from
             FINOVA's report on Form 10-K for the year ended December 31, 1993
             (the "1993 10-K") Exhibit 10.OO).+

 (10.N)      Directors' Charitable Awards Program (incorporated by reference
             from the 1994 10-K, Exhibit 10.CC).+

 (10.O)      Bonus KEYSOP Plan (incorporated by reference from the 1997 10-K,
             Exhibit 10.N).+

 (10.O.1)    Bonus KEYSOP Trust Agreement (incorporated by reference from the
             1997 10-K, Exhibit 10.N.1).+

 (10.P)      Letter Agreement with Robert M. Korte, dated March 6, 2001.*+

 (10.Q)      FINOVA's Executive Officer Loan Program Policies and Procedures,
             (incorporated by reference from the 1996 10-K, Exhibit 10.U).+

</TABLE>

                                       25
<PAGE>

<TABLE>
<CAPTION>
 Exhibit No.
 -----------
 <C>         <S>
 (10.R.1)    FINOVA's Executive Severance Plan for Tier 1 Employees
             (incorporated by reference from the 1995 10-K, Exhibit 10.C.1).+

 (10.R.2)    FINOVA's Executive Severance Plan for Tier 2 Employees
             (incorporated by reference from the 1995 10-K, Exhibit 10.C.2).+

 (10.S)      Value Sharing Plan for Executive Officers and Key Employees
             (incorporated by reference from the 3Q95 10-Q, Exhibit 10-K).+

 (10.T)      Management Agreement dated February 26, 2001 among FINOVA,
             Leucadia National Corporation and Leucadia International
             Corporation (incorporated by reference from the February 26, 2001
             8-K, Exhibit 10.B).+

 (10.T.1)    Amended and Restated Management Services Agreement dated as of
             April 3, 2001 among FINOVA Group, Leucadia National Corporation
             and Leucadia International Corporation.*+

 (12)        Computation of Ratio of (Losses) Income to Fixed Charges and
             Preferred Stock Dividends.*

 (21)        Subsidiaries.*

 (23)        Consent of Independent Auditors from Ernst & Young LLP.*

 (23.1)      Independent Auditors' Consent from Deloitte & Touche LLP.*

 (24)        Powers of Attorney.*
</TABLE>
--------
*  Previously filed with the 2000 10-K.
+  Relating to management compensation

  4. Reports on Form 8-K.

  A report on Form 8-K was filed on December 22, 2000, which reported under
Item 5 on the agreement between FINOVA and Leucadia National Corporation.

  A report on Form 8-K was filed on January 29, 2001, which reported under
Item 5 the termination of the agreement with Leucadia National Corporation
noted above.

  A report on Form 8-K was filed on February 28, 2001, which reported under
Item 5 the agreements among FINOVA, FINOVA Capital, Berkshire Hathaway Inc.,
Leucadia National Corporation, Berkadia LLC and Leucadia International
Corporation.

  A report on Form 8-K was filed on March 13, 2001 which reported under Item 5
the filing by FINOVA, FINOVA Capital and seven subsidiaries for protection
pursuant to Chapter 11, Title 11, United States Code in the United States
Bankruptcy Court, changes in executive management and other matters.

  A report on Form 8-K, dated April 2, 2001, was filed by FINOVA which
reported under Items 5 and 7 the unaudited revenues, net income and selected
financial information for fourth quarter and year ended December 31, 2000.

                                      26
<PAGE>

                                  SIGNATURES

  Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the registrant has duly caused this amendment to report to be signed on
its behalf by the undersigned, thereunto duly authorized in the capacities
indicated, in Scottsdale, Arizona on April 26, 2001.

                                          The FINOVA Group Inc.

                                                  /s/ William J. Hallinan
                                          By: _________________________________
                                                    William J. Hallinan
                                               President and Chief Executive
                                             Officer (Chief Executive Officer)

                                                  /s/ Bruno A. Marszowski
                                          By: _________________________________
                                                    Bruno A. Marszowski
                                             Senior Vice President--Controller
                                                and Chief Financial Officer
                                              (Chief Accounting and Financial
                                                          Officer)

                                      27
<PAGE>

                                    ANNEX A

                             THE FINOVA GROUP INC.

                  INDEX TO CONSOLIDATED FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
<S>                                                                       <C>
Management's Discussion and Analysis of Financial Condition and Results
 of Operations...........................................................  A-1

Quantitative and Qualitative Disclosure about Market Risk................ A-19

Consolidated Financial Statements

  Report of Independent Auditors......................................... A-20

  Independent Auditors' Report........................................... A-21

  Consolidated Balance Sheets............................................ A-22

  Statements of Consolidated Operations.................................. A-23

  Statements of Consolidated Shareowners' Equity......................... A-24

  Statements of Consolidated Cash Flows.................................. A-25

  Notes to Consolidated Financial Statements............................. A-26

  Supplemental Selected Financial Data (unaudited)....................... A-65
</TABLE>
<PAGE>

                             THE FINOVA GROUP INC.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

  The following discussion relates to The FINOVA Group Inc. and its
subsidiaries (collectively "FINOVA" or the "Company"), including FINOVA
Capital Corporation and its subsidiaries ("FINOVA Capital"). The FINOVA Group
Inc. is a financial services holding company. Through its principal operating
subsidiary, FINOVA Capital, the Company has provided a broad range of
financing and capital markets products, primarily to mid-size businesses.
FINOVA Capital has been in operation since 1954.

  On March 7, 2001, The FINOVA Group Inc., FINOVA Capital Corporation and
seven of their subsidiaries filed for protection pursuant to Chapter 11, Title
11, of the United States Code to enable them to restructure their debt (the
"Reorganization Proceedings"). Historically, the Company has relied upon
borrowed funds together with internal cash flow to finance its operations.
Profit has largely been recorded from the spread between the cost of borrowing
and the rates paid by its customers, less operating costs. The Company also
generates revenues through loan servicing and related activities and the sale
of assets. Beginning late in the first quarter of 2000, a series of events
impeded FINOVA's access to lower cost capital in the public and private
markets. These events are generally described below.

Recent Developments and Business Outlook

  On March 27, 2000, FINOVA announced the retirement of its Chairman,
President and Chief Executive Officer, Samuel L. Eichenfield, for personal and
health reasons. Following Mr. Eichenfield's retirement as a director and
officer, FINOVA's board of directors elected Matthew M. Breyne as a director,
President and Chief Executive Officer of FINOVA and Chairman, President and
Chief Executive Officer and a director of FINOVA Capital. FINOVA also
announced that it would take an $80 million pre-tax charge to earnings in the
first quarter of 2000 to increase loss reserves and provide for payment of
deferred compensation and executive severance. The additional loss reserves
related to the replenishment of reserves after a write-off of a loan to a
single customer in the Distribution & Channel Finance line of business which
had previously been partially reserved. The remainder of the charge was used
to provide for payment of deferred compensation and executive severance to Mr.
Eichenfield. Following these announcements, some of the credit rating agencies
downgraded or placed on credit watch FINOVA Capital's senior debt and
commercial paper ratings.

  In May 2000, $2.1 billion of FINOVA's 364-day revolving credit agreements
were scheduled to expire. These agreements were part of the Company's $4.7
billion bank facilities, which were in place to provide a back-up mechanism
for its commercial paper program. On May 5, 2000, FINOVA's banks renewed a
$500 million facility but committed to renewing only approximately $1.1
billion of the $1.6 billion of back-up facilities that expired on May 15,
2000. Historically, a significant portion of FINOVA's business was financed
with commercial paper, which was reissued when it matured. The Company also
borrowed funds in the form of publicly traded debt securities with staggered
maturities. Without full coverage after May 15 for outstanding commercial
paper under the domestic back-up bank facilities, FINOVA drew down on
approximately $4.5 billion of domestic back-up bank lines to meet maturing
commercial paper obligations and other debt obligations. This resulted in
additional debt rating downgrades.

  In May 2000, FINOVA structured a 364-day commitment with a bank to sell at
FINOVA's option up to $375 million of commercial equipment loans and direct
financing lease receivables on a revolving basis.

  On May 8, 2000, FINOVA announced that it had engaged Credit Suisse First
Boston to assist in the exploration of strategic alternatives with financial,
strategic and other potential partners. Alternatives included a sale of the
Company or obtaining a significant equity investment.

                                      A-1
<PAGE>

                             THE FINOVA GROUP INC.

  During July 2000, FINOVA structured a sale with an independent third party
acting as structuring agent, which included a commitment to purchase
beneficial interests up to $500 million in corporate finance loans on a
revolving basis. In February 2001, FINOVA purchased the outstanding beneficial
interests.

  During the third quarter of 2000, FINOVA discontinued and offered for sale
its Corporate Finance (including Business Credit and Growth Finance) and
Distribution & Channel Finance businesses. On August 28, 2000, FINOVA
completed the sale of substantially all the assets of its Commercial Services
division to GMAC Commercial Credit LLC, a wholly owned subsidiary of General
Motors Corporation, for approximately $235 million.

  In October 2000, FINOVA engaged Jay Alix & Associates to assist in
connection with the development of strategic and financial planning, including
re-negotiation of its bank debt. The engagement was generally concluded in
March 2001, following the execution of the agreements with Berkshire Hathaway
Inc. ("Berkshire Hathaway"), Leucadia National Corporation ("Leucadia") and
Berkadia, LLC ("Berkadia"), noted below.

  On November 9, 2000, the board of directors voted to suspend the Company's
quarterly common stock dividend.

  On November 10, 2000, FINOVA announced that it entered into a letter
agreement with Leucadia with respect to an equity investment in the Company. A
Securities Purchase Agreement was entered into on December 20, 2000. On
January 20, 2001, FINOVA and Leucadia mutually agreed to terminate the
Securities Purchase Agreement.

  On February 1, 2001, FINOVA sold approximately $309 million of Corporate
Finance assets to Guaranty Business Credit Corporation at a discount of $9.2
million.

  On February 26, 2001, FINOVA and FINOVA Capital entered into a commitment
letter with Berkshire Hathaway, Leucadia and Berkadia, an entity jointly owned
by Leucadia and Berkshire Hathaway, pursuant to which Berkadia committed to
lend $6.0 billion to FINOVA Capital, to facilitate a Chapter 11 restructuring
of the outstanding debt of FINOVA and its principal subsidiaries. The $6.0
billion five-year term loan will be secured by substantially all of the assets
of FINOVA Capital and its subsidiaries and guaranteed on a secured basis by
FINOVA Group and substantially all of the subsidiaries of FINOVA Capital (the
"Berkadia Loan"). The balance of FINOVA Capital's bank and bond indebtedness
will be restructured into approximately $5 billion of new ten-year senior
notes of FINOVA Group (the "New Senior Notes"). Berkadia's commitment is
subject to various conditions, including Berkadia's satisfaction with FINOVA's
Chapter 11 Plan and bankruptcy court and necessary creditor approvals. In
connection with the commitment letter, FINOVA also entered into a Management
Services Agreement with Leucadia and its subsidiary, Leucadia International
Corporation, which has been amended and restated. The terms of this commitment
letter and the management services agreement are described more fully below in
"Berkadia Commitment--Proposed Restructuring Plan."

  On February 27, 2001, FINOVA Capital announced a moratorium on repayment of
principal on its outstanding bank and bond debt. The purpose of the moratorium
was to enable all creditors to be treated equitably in the debt restructuring
process. In connection with that moratorium, FINOVA Capital did not make a $50
million principal payment due on February 27, 2001 with respect to its 5.98%
notes due 2001, which constituted an event of default under the trust
indenture related to those notes and a cross default under substantially all
of FINOVA Capital's $11 billion of bank and bond indebtedness. The event of
default also affected the interest rate swaps and securitizations the Company
had entered into by allowing for immediate termination or other modifications,
and substantially all of the Company's swaps were terminated. In the first
quarter of 2001, in conjunction with the Reorganization Proceedings, the
Company suspended paying dividends on the TOPrS and interest on the underlying
convertible debentures.

                                      A-2
<PAGE>

                             THE FINOVA GROUP INC.

  On March 5, 2001, FINOVA announced that Matthew M. Breyne resigned as a
director and the Company's President and Chief Executive Officer. John W.
Teets retired as Chairman, but will remain on the board. The board of
directors elected board member G. Robert "Bull" Durham as Chairman and elected
General Counsel and Secretary William J. Hallinan to the additional positions
of President and Chief Executive Officer of FINOVA and the President, Chief
Executive Officer and General Counsel of FINOVA Capital.

  On March 6, 2001, one of FINOVA's subsidiaries, FINOVA (Canada) Capital
Corporation, had a petition for Receiving Order filed against it in Ontario,
Canada. That action has not been served on FINOVA. See "Legal Proceedings" for
more information on this matter.

  On March 7, 2001, FINOVA Group, FINOVA Capital and seven of their
subsidiaries filed for protection pursuant to Chapter 11, Title 11, of the
United States Code, in the United States Bankruptcy Court for the District of
Delaware to enable them to restructure their debt (the "Reorganization
Proceedings").

  The bankruptcy court approved first-day orders pertaining to, among other
items, customers, employees and vendors. The purpose of the first-day orders
was to allow FINOVA and its subsidiaries to continue conducting their
businesses substantially without hindrance from the Reorganization
Proceedings. FINOVA has been authorized to continue honoring all customer
commitments, and to pay certain prepetition claims (excluding, among other
items, all amounts related to its $11 billion of bank and bond debt), in its
discretion, including those to employees (other than executive officers with
certain exceptions), taxing and other governmental authorities, claims
essential to the ability to honor commitments, and to foreign trade vendors.
See "Legal Proceedings" for more information on the Reorganization
Proceedings.

  In light of these events, FINOVA has effectively eliminated new business
development activities, and for the foreseeable future, intends to focus on
managing and maximizing the value of its existing portfolio. These activities
will include the continued collection of its portfolio pursuant to contractual
terms and may include efforts to retain certain customer relationships,
restructure or terminate other relationships or sell certain assets if buyers
can be found at attractive prices. The Company also expects to continue to
focus on negotiating appropriate rates and fee structures with its customers.
While it is possible that new business opportunities may present themselves in
the future, no assurance can be given as to the Company's ability to take
advantage of those opportunities.

Berkadia Commitment--Proposed Restructuring Plan

  The following describes the Berkadia Commitment as set forth in the
Commitment Letter signed on February 26, 2001, Consummation of the Berkadia
Loan and related transactions contemplated by the Commitment Letter is subject
to approval of the bankruptcy court, necessary creditor approvals, and other
material conditions, including Berkadia's satisfaction with the Company's
Chapter 11 Plan. There can be no assurance that those approvals will be
obtained or that the other conditions will be satisfied.

  The commitment expires on August 31, 2001, or earlier, if certain conditions
are not satisfied, or certain events occur. The commitment provides that the
$6 billion Berkadia Loan will be made to FINOVA. Berkadia's commitment for the
loan has been guaranteed 90% by Berkshire Hathaway and 10% by Leucadia, with
Berkshire Hathaway providing a secondary guarantee of the obligations
guaranteed by Leucadia. Berkadia expects to finance its funding commitment and
Berkshire Hathaway will provide Berkadia's lenders with a 90% primary
guarantee of that financing, with Leucadia providing a 10% primary guarantee
and Berkshire Hathaway providing a secondary guarantee of Leucadia's
guarantee. Upon completion of the Plan as currently contemplated, Berkadia (or
Berkshire Hathaway and Leucadia in the aggregate) will receive common stock
representing up to 51% of FINOVA's outstanding shares on a fully diluted basis
and the existing shareowners of FINOVA will retain their existing shares.
Berkadia will be entitled to designate a majority of FINOVA's board of

                                      A-3
<PAGE>

                             THE FINOVA GROUP INC.

directors upon effectiveness of the Plan. The Berkadia Loan will be guaranteed
on a secured basis by FINOVA and substantially all subsidiaries of FINOVA and
FINOVA Capital.

  The Berkadia Loan will bear interest at an annual rate equal to the greater
of 9% or LIBOR on each day plus 3%. Interest on the Berkadia Loan will be
calculated daily and will be payable quarterly pursuant to the terms of the
Berkadia Loan. In addition, an annual facility fee will be payable monthly at
the rate of 25 basis points on the outstanding principal amount of the
Berkadia Loan. After payment of interest on the Berkadia Loan, payment of
operating expenses and taxes and establishing reserves for customer
commitments and other corporate expenses, any remaining available cash (as
determined under the Berkadia Loan) will then be used for payment of interest
due on the New Senior Notes. Thereafter, 100% of any available cash flow and
net proceeds from asset sales will be used to pay principal on the Berkadia
Loan without premium. Any remaining principal and accrued and unpaid interest
on the Berkadia Loan will be due at maturity, which will be five years from
funding.

  Subject to necessary approval of creditors and the bankruptcy court and
various other conditions, pursuant to the proposed Plan, FINOVA Capital will
use the proceeds of the Berkadia Loan to pay down its existing bank and
publicly traded indebtedness on a pro rata basis. The balance of FINOVA
Capital's bank and bond indebtedness (approximately $5.3 billion) will be
restructured into ten-year New Senior Notes of FINOVA.

  The New Senior Notes will bear interest at the weighted average rate of
FINOVA Capital's outstanding bank and bond debt (excluding default interest
and penalties, if any) and will be secured by a second priority security
interest in the stock of FINOVA Capital. Enforcement of the New Senior Note
security interests will not be allowed until the Berkadia Loan is paid in
full. Interest on the New Senior Notes will be payable semi-annually only out
of available cash, if any, determined in accordance with the terms of the New
Senior Notes. No payments of principal will be made on the New Senior Notes
until the Berkadia Loan is paid in full. After payment in full of the Berkadia
Loan, available cash flow from FINOVA Capital, after paying operating expenses
and taxes and establishing reserves for customer commitments and other
corporate expenses, will first be used for payment of interest on the New
Senior Notes. Thereafter, available cash determined in accordance with the
terms of the New Senior Notes will be used first to pay or to fund a reserve
to pay interest on FINOVA's outstanding 5 1/2% Convertible Subordinated
Debentures due 2016 (which will be distributed upon consummation of the
proposed Plan to the holders of the FINOVA Trust Originated Preferred
Securities) and then to make semi-annual prepayments of principal on the New
Senior Notes and distributions (or reserves for distributions) to FINOVA
common shareowners with a total of 95% of the remaining available cash to be
used for principal payments on the New Senior Notes and 5% to be used for
distributions to shareowners. After payment in full of the outstanding
principal of the New Senior Notes, 95% of any available cash of FINOVA Capital
will be used to pay contingent cash flow rights to holders of the New Senior
Notes in an aggregate amount up to $100 million.

  Completion of the transactions contemplated by the Berkadia Commitment
Letter is subject to a number of conditions, including the negotiation and
approval of definitive loan documentation, Berkadia's approval of the terms
and conditions of FINOVA and FINOVA Capital's Plan, bankruptcy court and
necessary creditor approval of the Plan, the issuance of up to 51% of FINOVA's
common stock to Berkshire, Leucadia or their designees, and designation by
Berkadia of a majority of directors as noted above.

  Berkadia has received a $60 million commitment fee and subject to bankruptcy
court approval, will receive an additional $60 million fee upon funding or if
the commitment is not funded (except in certain limited circumstances). In
addition, FINOVA Capital has agreed to reimburse Berkadia, Berkshire Hathaway
and Leucadia for all fees and expenses incurred in connection with Berkadia's
commitment and the financing of its funding obligation under the commitment.

  In connection with the commitment letter, the Company entered into a ten-
year management agreement with Leucadia pursuant to which, prior to the
effective date of the Plan, Leucadia will provide advice and assistance

                                      A-4
<PAGE>

                             THE FINOVA GROUP INC.

to FINOVA related to the restructuring and management of FINOVA's asset
portfolio, subject to oversight by the Board of Directors of FINOVA Group or a
special committee of the Board. After the effective date, Leucadia will have
responsibility for the general management of FINOVA, subject to the authority
of the Board. For these services, Leucadia will receive an annual fee of $8
million, the first of which was paid in 2001 when the agreement was signed.

  For further details, see FINOVA's Report on Form 8-K filed on February 28,
2001. There can be no assurance these transactions will be consummated on the
proposed terms or otherwise.

Results of Operations

  The following table summarizes FINOVA's operating results for the years
ended December 31, 2000, 1999 and 1998:

<TABLE>
<CAPTION>
                           2000     1999    1998
                          -------  ------  ------
                          (Dollars in millions)
<S>                       <C>      <C>     <C>
Interest margins
 earned.................  $ 453.6  $473.2  $379.8
Volume-based fees.......      1.3    10.3    24.8
                          -------  ------  ------
Operating margin........    454.9   483.5   404.6
Provision for credit
 losses.................   (643.0)  (22.4)  (48.5)
(Losses) gains on
 investments and
 disposal of assets.....   (168.6)   67.9    27.9
Operating expenses......   (399.4) (168.7) (147.1)
Income tax benefit
 (expense)..............    213.2  (138.3)  (90.4)
Preferred dividends,
 net....................     (3.8)   (3.8)   (3.8)
                          -------  ------  ------
(Loss) income from
 continuing operations..   (546.7)  218.2   142.7
(Loss) income from
 discontinued
 operations.............    (55.4)   (3.0)   17.6
Loss on disposal of
 discontinued
 operations.............   (337.7)
                          -------  ------  ------
Net (loss) income.......  $(939.8) $215.2  $160.3
                          =======  ======  ======
</TABLE>

  The following description of FINOVA's business includes a discussion of the
Company's historical business activities. Since the Company's filing for
bankruptcy protection, FINOVA has effectively eliminated new business
development activities, and for the foreseeable future, intends to focus on
managing and maximizing the value of its existing portfolio. These activities
will include the continued collection of its portfolio pursuant to contractual
terms and may include efforts to retain certain customer relationships,
restructure or terminate other relationships or sell certain assets if buyers
can be found at attractive prices. The Company will also continue to focus on
negotiating appropriate rates and fee structures with its customers. While it
is possible that new business opportunities may present themselves in the
future, no assurance can be given as to the Company's ability to take
advantage of those opportunities. Accordingly, the description is presented to
provide an understanding of the Company's current assets, liabilities and
results of operations but should not be interpreted to mean that the Company
can continue to make such investments.

2000 Compared to 1999

  The results for 2000 were adversely impacted by a number of events, which
are generally listed in chronological order in the section of this report
captioned "Recent Developments and Business Outlook." As the year progressed,
the U.S. economy began to show signs of weakening and FINOVA's portfolio of
leases and loans began to experience higher levels of delinquencies and
nonaccruing assets. The impact of these events and current economic conditions
resulted in increased levels of problem accounts and higher cost of funds
(resulting in lower interest margins earned), higher reserve requirements,
higher write-offs, losses on investments and

                                      A-5
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                             THE FINOVA GROUP INC.

disposal of assets, impairment of intangible assets, reduced tax benefits, and
the decision to exit certain businesses.

  The impact of these adverse developments resulted in FINOVA reporting a loss
from continuing operations of $546.7 million and a loss from discontinued
operations of $393.1 million for a total net loss of $939.8 million for the
year 2000. The comparable results for 1999 were net income of $218.2 million
from continuing operations and a net loss of $3.0 million from discontinued
operations, resulting in net income of $215.2 million. A discussion of the
major variances in the individual profit and loss categories follows:

Continuing Operations

  Loss from Continuing Operations. The decrease from continuing operations in
2000 when compared to 1999 was primarily due to the following:

  .  Higher loss provisions to bolster the reserve for credit losses.

  .  Higher write-offs of financing contracts.

  .  Losses on investments and assets held for sale.

  .  Increases in the Company's cost of funds due to

    -- Several reductions in credit ratings

    -- Higher costs associated with borrowing under the Company's domestic
       commercial paper back-up bank facilities

  .  An increase in the level of nonaccruing assets due in part to the
     weakening economy.

  .  The costs to exit the origination and sale of commercial real estate
     loans to the Commercial Mortgaged Back Securities ("CMBS") market in the
     second quarter of 2000.

  .  Higher operating expenses, including employee retention and severance
     expenses and the charge-off of unamortized goodwill that was determined
     to be impaired.

  .  The inability to fully recognize all federal and state income tax
     benefits during 2000.

  Interest Margins Earned. Interest margins earned represents the difference
between (a) interest, fee, lease and other income earned from financing
transactions and (b) interest expense and depreciation on operating leases.
Interest margins earned declined by $19.6 million to $453.6 million in 2000
from $473.2 million in 1999. Interest margins earned as a percent of average
earning assets also declined in 2000 to 4.7% from 5.4% in 1999. The decreases
were due primarily to higher cost of funds caused by the events of 2000,
increased levels of nonaccruing assets and investments and lower nonrecurring
income. Various downgrades of its senior debt ratings and the elimination of
its commercial paper program (caused by the inability to renew its back-up
bank facilities and resulting draw downs under those facilities) resulted in
FINOVA's annual cost of funds (in the form of the all in spread over LIBOR)
applicable to the $4.5 billion term-out of its domestic commercial paper back-
up bank facilities, to increase by 1.16%.

  The negative impact to income from higher cost of funds more than offset the
income effects from the higher level of average earning assets during 2000
which were up $890 million over 1999 ($9.604 billion in 2000 vs. $8.714
billion in 1999). The increase in average earning assets was much higher than
the increase in ending managed assets which totaled $10.5 billion at December
31, 2000 compared to $10.4 billion at year-end 1999. The size of the portfolio
has been declining since March of 2000 due to lower volumes of new business
during the latter quarters of 2000. New business for 2000 was $2.9 billion
compared to $4.1 billion in 1999, with fourth quarter 2000 volume declining to
$518 million from $1.3 billion in the fourth quarter of 1999. New business
volume is expected to be minimal as the Company focuses on managing and
maximizing the value of its existing portfolio by funding existing commitments
to its customers and providing extensions or modifying

                                      A-6
<PAGE>

                             THE FINOVA GROUP INC.

loans to existing customers. The backlog, which includes commitments for
existing revolving lines of credit of $576 million, declined to $1.3 billion
at December 31, 2000.

  Volume-Based Fees. Volume-based fees historically were generated by FINOVA's
Distribution & Channel Finance, Commercial Services and Realty Capital lines
of business. Since Distribution & Channel Finance and Commercial Services are
discontinued operations, the fees included in continuing operations applied
only to Realty Capital. Those fees are predominately related to volume-
originated business rather than the balance of outstanding financing
transactions during the period. Volume-based fees for 2000 were $1.3 million,
down from $10.4 million reported in 1999. The decline in 2000 was due to
Realty Capital exiting from the origination and sale of commercial real estate
loans to the CMBS market in April 2000.

  Provision for Credit Losses. The provision for credit losses on continuing
operations was significantly higher in 2000 compared to 1999 ($643.0 million
vs. $22.4 million) due to the need to bolster loss reserves in light of
increasing problem accounts and higher net write-offs in 2000 ($239.6 million
compared to $22.6 million in 1999). The largest component of net write-offs in
2000 was from multiple customers in Mezzanine Capital totaling $86.0 million,
$59.6 million in Healthcare Finance, $40.5 million in Transportation Finance,
$19.9 million in Commercial Equipment Finance, $19.2 million in Rediscount
Finance and the balance of $14.4 million spread over six other businesses. Net
write-offs as a percent of average managed assets was 2.25% in 2000, up from
0.24% in 1999. A discussion of the increase in problem accounts is included
under "Financial Condition, Liquidity and Capital Resources."

  FINOVA monitors developments affecting loans and leases in its portfolio,
taking into account each borrower's financial developments and prospects, the
estimated value of collateral, legal developments and other available
information. Based upon that information, FINOVA adjusts its loan loss
reserves and when considered appropriate, writes down the values of the loans.
Depending on developments, there is the possibility that the loan loss
reserves and/or write-downs will increase in the future.

  (Losses) Gains on Investments and Disposal of Assets. Losses of $168.6
million in 2000 were primarily due to the write-off of equity positions in the
Resort Finance, Communications Finance and Mezzanine Capital businesses,
charges to write-down repossessed assets in Resort Finance and residual
positions in Transportation Finance and a charge to write-down the assets in
Realty Capital to estimated fair value in connection with designating that
business as being held for sale. The most significant charge was in Resort
Finance which wrote-off a $54.8 million equity investment in a major timeshare
developer that experienced a decline in earnings and a significant reduction
in its net worth. The write-down of residual positions in Transportation
Finance totaled $40.4 million and principally related to assets held for sale
or lease. The write-down of Realty Capital's assets to fair value approximated
$43.2 million. The total charges of $249.5 million from the write-off of
investments, repossessed assets and assets held for sale or lease were
partially offset by gains of $80.9 million, the largest of which was $20.7
million from the sale of Healtheon WebMD stock.

  The timing and amount of gains and losses from asset dispositions are
sporadic in nature. There can be no assurance FINOVA will recognize gains in
the future, depending, in part, on market conditions at the time of sale.
FINOVA recognized losses on dispositions of assets in 2000 and attempted to
sell some of its more marketable assets (held for sale, investments and assets
coming off lease) to generate liquidity during 2000. As a result, the ability
to recognize gains in future periods is more uncertain.

  Operating Expenses. Operating expenses were $399.4 million in 2000 compared
to $168.7 million in 1999. The 2000 amount included a charge of $193.3 million
representing the charge-off of unamortized goodwill that was considered
impaired as a result of evaluating the cash flow analyses prepared using the
information and assumptions resulting from the recent developments. Excluding
the charges for impaired goodwill, operating expenses in 2000 were $206.1
million, an increase of $37.4 million over 1999. The increases in 2000 were
primarily due to increased professional services of $24.4 million, consisting
of consulting, accounting and legal

                                      A-7
<PAGE>

                             THE FINOVA GROUP INC.

expenses incurred in connection with unsuccessful negotiations to sell the
Company, restructuring debt obligations with creditors and litigation matters
and $11.8 million of costs incurred to exit the origination and sale of
commercial real estate loans to the CMBS market in the second quarter of 2000.
Operating efficiency, which is the ratio of operating expenses to operating
margins, was 45.3% in 2000 excluding the charges from writing-off goodwill,
compared to 34.9% in 1999.

  Income Taxes. The effective income tax expense (benefit) rates in 2000 were
(28.2%) compared to 38.4% in 1999 for continuing operations and (30%) in 2000
compared to (40%) in 1999 for discontinued operations. The lower rates in 2000
were due to a valuation allowance established for the potential inability to
fully utilize both federal and state net operating loss carryforwards, and to
certain non-deductible expenses for tax purposes, such as the write-off of
goodwill and certain professional expenses incurred in connection with the
attempted sale of the Company. For the year ended December 31, 2000, a
valuation allowance of $97.8 million has been recorded due to the uncertainty
over the Company's ability to fully utilize its net operating loss
carryforwards. The difference in effective income tax rates between continuing
and discontinued operations is principally due to a small amount of income
exempt from income taxes in continuing operations and to a greater amount of
expenses, not deductible for tax purposes.

  Preferred Dividends. Dividends, net of tax, paid on $115 million of
outstanding Company-obligated mandatory redeemable convertible preferred
securities ("TOPrS") were $3.8 million in 2000 and 1999. During the first
quarter of 2001, in conjunction with the Reorganization Proceedings, the
Company suspended paying dividends on the TOPrS and interest in the underlying
convertible debentures.

Discontinued Operations

  During the third quarter of 2000, FINOVA's Board of Directors approved the
sale or liquidation of some of its more broad based businesses so the Company
could focus more on its niche-based businesses. The businesses included in
discontinued operations consist of Commercial Services (substantially sold
during the third quarter of 2000), Corporate Finance (which includes Business
Credit and Growth Finance) and Distribution & Channel Finance. In December
2000, $46.4 million of Distribution & Channel Finance's assets were sold.
During the first quarter of 2001, $309 million of Corporate Finance assets
were sold. Sales of additional assets could occur for all or portions of the
discontinued business assets. To the extent assets are not sold, the Company
intends to liquidate the remaining assets in an orderly manner.

  Losses from discontinued operations in 2000 totaled $393.1 million (after-
tax) and primarily consisted of charges to value the assets to be sold or
liquidated at estimated net realizable amounts, a write-off of unamortized
goodwill, accrual of retention and severance payments for employees of those
businesses, higher nonaccruing assets and operating losses. The additional
losses of $140.1 million in the fourth quarter of 2000 were primarily
attributable to a further deterioration in those portfolios, caused in part by
the impact of the weakening economy on FINOVA's customers. Nonaccruing assets
in discontinued operations were $486.2 million at December 31, 2000. Also
during the fourth quarter, the Company received a recovery of approximately
$4.0 million from the sale of a portion of the collateral supporting the $70
million transaction written-off in the Distribution & Channel Finance line of
business in March 2000. See Note T of Notes to Consolidated Financial
Statements in Annex A for more information on discontinued operations.

1999 Compared to 1998--Continuing Operations

  Net income for 1999 increased 53% to $218.2 million from $142.7 million in
1998. The increase was due to 27% growth in average earning assets, higher
gains on disposal of assets and a lower provision for credit losses, partially
offset by lower volume-based fees and higher operating expenses in 1999. Net
income in 1999 included activity from the Sirrom Capital Corporation
("Sirrom") and Preferred Business Credit acquisitions, which were acquired
during the first quarter of 1999 and to a much lesser extent, the Fremont
Financial

                                      A-8
<PAGE>

                             THE FINOVA GROUP INC.

Corporation acquisition, which occurred late in the fourth quarter of 1999.
See Note S of Notes to Consolidated Financial Statements for further
discussion.

  Interest Margins Earned. Interest margins earned increased 25% to $473.2
million in 1999 from $379.8 million in 1998, due primarily to the growth in
average earning assets.

  Average earning assets, which represents the average of FINOVA's investment
in financing transactions less nonaccruing assets and deferred taxes related
to leveraged leases, increased to $8.71 billion in 1999 from $6.86 billion in
1998. The increase was primarily due to an increase in funded new business to
$4.13 billion from $3.5 billion in 1998 and $411.3 million of average earning
assets added through acquisitions in 1999, partially offset by normal
amortization of the portfolio and prepayments during the year.

  Volume-Based Fees. Volume-based fees were generated by Realty Capital on the
volume of purchased accounts receivable and mortgage loan originations
transacted during the year. Due to the short-term nature of volume-originated
business, these fees are recognized as income in the period of origination.

  Volume-based fees were down by $14.4 million to $10.4 million in 1999 from
$24.8 million in 1998 due to lower fee-based volume in 1999. Fee-based volume
was down by $740 million to $2.07 billion in 1999 from $2.81 billion in 1998
primarily due to lower volume originated by Realty Capital. Realty Capital
curtailed its CMBS volume in 1999, which declined to $757.8 million from $1.76
billion in 1998; while its structured finance volume increased to $1.31
billion from $1.05 billion in 1998. The shift in product mix resulted in a
decline in Realty Capital's average commission rate to 0.50% from 0.88% in
1998. Structured finance deals carry a lower net rate than CMBS transactions.

  Operating Margin. Lower volume-based fees in 1999 was the major reason for
the decrease in FINOVA's operating margin as a percentage of average earning
assets to 5.5% in 1999 from 5.9% in 1998. The interest rate spread portion of
this margin decreased slightly to 5.4% in 1999 from 5.5% in 1998 primarily due
to the effects of competitive pricing pressures and increased debt costs
related to the strategic decisions to utilize a global debt offering, which
increased debt costs in the short-term, but was anticipated to help control
costs in future periods, and the extension of maturities on commercial paper
over year-end 1999, thereby avoiding potential liquidity issues associated
with year 2000 concerns. The liquidity issues anticipated ultimately did not
materialize in the marketplace. The proceeds from the global debt offering
were used to pay down lower costing commercial paper.

  Provision for Credit Losses. The provision for credit losses was $22.4
million in 1999 compared to $48.5 million in 1998. Provisions for credit
losses are made to maintain the reserve for credit losses at a level deemed by
management to be adequate to cover inherent losses in the portfolio.

  The provision for credit losses was affected by net write-offs, which
amounted to $22.6 million in 1999 compared to $11.0 million in 1998. As a
percent of average managed assets, net write-offs in 1999 were 0.24% compared
to 0.15% in 1998. The increase in net write-offs was primarily due to $8.2
million of net write-offs for the Mezzanine Capital (Sirrom) portfolio which
was acquired in the first quarter of 1999.

  Gains on Investments and Disposal of Assets. Gains on disposal of assets
were $68.0 million in 1999 compared to $27.9 million in 1998. Gains in 1999
included $20.6 million from the sale of residuals coming off lease, $35.6
million from the sale of investments and $11.8 million of CMBS gains as
compared to 1998 gains which were predominately related to residual sales and
included a net loss of $7.2 million on CMBS transactions.

  Operating Expenses. Operating expenses, which include selling,
administrative and other expenses, were generally higher in all major
categories and increased to $168.7 million in 1999 compared to $147.1 million
in 1998. Personnel costs increased due to the acquisition of Sirrom Capital
Corporation (included in Mezzanine Capital and Harris Williams & Co.) in March
1999 and due to higher sales incentive compensation related to the

                                      A-9
<PAGE>

                             THE FINOVA GROUP INC.

increased new business levels in 1999. Problem account costs increased in 1999
due to increases in nonearning and impaired accounts. Additions to deferred
acquisition costs increased in 1999 due to acquisitions and the deferral of
expenses incurred to book new business. Operating expenses as a percentage of
operating margin was 34.9% in 1999, an improvement from 36.4% in 1998. See
Note P of Notes to Consolidated Financial Statements for additional detail.

  Income Taxes. Income taxes were $138.3 million in 1999 compared to $90.4
million in 1998. The increase was primarily due to higher pre-tax income in
1999. See Note K of Notes to Consolidated Financial Statements for further
discussion of income taxes.

  Preferred Dividends. Dividends, net of tax, paid on $111.6 million of
outstanding Company-obligated mandatory redeemable convertible preferred
securities ("TOPrS") were $3.8 million in 1999 and in 1998.

Financial Condition, Liquidity and Capital Resources

  The following primarily relates to continuing operations, except as noted.

  Managed assets were $10.54 billion at December 31, 2000 compared to $10.44
billion at December 31, 1999. Included in managed assets at December 31, 2000
were $10.18 billion in funds employed and $357.5 million of securitized
assets. The small increase in managed assets was due to funded new business of
$2.88 billion for the year ended December 31, 2000 (compared to $4.13 billion
in 1999), offset by prepayments, asset sales and normal portfolio
amortization. Total assets of FINOVA declined to $12.09 billion at December
31, 2000 from $13.89 billion at December 31, 1999, primarily due to the
reduction in net assets in discontinued operations, which declined to $1.16
billion at December 31, 2000 from $2.70 billion at December 31, 1999.

  The reserve for credit losses increased to $578.8 million at December 31,
2000 from $178.3 million at December 31, 1999, primarily due to higher levels
of nonaccruing and other problem accounts.

  The higher level of problem accounts in 2000 was caused by a number of
factors, including the continued weakening of the overall U.S. economy. As has
been widely reported, many U.S. banks have witnessed significant increases in
borrower defaults, and those banks, having a lower cost of funds than
FINOVA's, serve a customer base that typically has a better credit profile
than FINOVA's traditional middle-market borrower.

  While customers of FINOVA's Corporate Finance and Mezzanine Capital
divisions were most affected by the country's general economic weakening,
industry-specific problems were more to blame for financial problems
experienced by FINOVA borrowers in the airline, information technology,
nursing home and wireless messaging sectors, which are served, respectively,
by FINOVA's Transportation Finance, Distribution & Channel Finance, Healthcare
Finance and Communications Finance divisions. Other FINOVA divisions, notably
Resort Finance, Rediscount Finance and Franchise Finance, experienced higher
levels of problem account classifications due to defaults, or identified
potential near-term defaults, of a small number of relatively large borrowers.

  Account classifications were significantly influenced by the weakening of
the economy during the latter part of 2000. Additionally, in the fourth
quarter of 2000, FINOVA moved several accounts to nonaccruing status before
the 90th day of delinquency, since it was determined to be more likely than
not that those borrowers would ultimately become more than 90 days delinquent.
Prior to the fourth quarter of 2000, FINOVA typically reclassified accounts to
nonaccruing status in the quarter that interest payments became more than 90
days past-due. As of December 31, 2000, approximately $336.9 million of
FINOVA's total $921.4 million of nonaccruing transactions were paying at least
the interest portion of their payment obligation.

  The reserve for credit losses increased substantially in dollar terms;
however, it declined as a percent of nonaccruing assets from 101.9% at
December 31, 1999 to 62.8% at December 31, 2000, due to the significant
increase in accounts classified as nonaccruing. Accounts classified as
nonaccruing assets increased to $921.4

                                     A-10
<PAGE>

                             THE FINOVA GROUP INC.

million or 8.7% of ending managed assets at December 31, 2000, from $175.0
million or 1.7% at the end of 1999. The largest increases to the nonaccruing
classification during 2000 occurred in Healthcare Finance ($224.1 million),
Transportation Finance ($138.0 million), Resort Finance ($120.0 million),
Rediscount Finance ($119.3 million), Communications Finance ($82.5 million)
and Franchise Finance ($42.3 million).

  The $224.1 million increase in nonaccruing assets in FINOVA's Healthcare
Finance division was driven primarily by the reclassification to nonaccruing
status of loans totaling $205 million to several nursing home and senior
living operators and developers. The Healthcare problems are industry wide and
have resulted from the government's change in medical insurance reimbursement
policies. The largest components of nonaccruing assets in that sector at
December 31, 2000 were mortgage-secured loans totaling $54.7 million to three
special-purpose corporations affiliated with a large operator of assisted
living facilities that filed for bankruptcy in November 2000; three mortgage-
secured loans totaling $40.3 million to another developer of assisted-living
facilities; four loans totaling $24.9 million to four unrelated borrowers
secured by nursing home facilities leased to a large nursing-home operator
which filed for bankruptcy in February 2000; two mortgage-secured loans
totaling $13.1 million to subsidiaries of the aforementioned nursing home
operator; the $14.1 million combined carrying amount of FINOVA's
participations in two bank-led syndicated loan facilities for the affiliated
borrowers, both of which filed for bankruptcy in June 2000; a $12.7 million
mortgage-secured loan to a special-purpose corporation owned by a large
national senior-living developer, for which FINOVA financed the development of
an assisted living facility; a $12.4 million mortgage-secured loan to a
special-purpose corporation affiliated with another large senior-living
developer, for which FINOVA financed the development of an assisted living
center; and FINOVA's $11.8 million participation in a large bank-led
syndicated loan to a special-purpose corporation to finance development of a
"continuous care" retirement community. The Healthcare Finance Division's
largest nonaccruing loan outside of the nursing home and assisted living
sector was a combined $17.7 million working capital and term loan to a home-
health services provider. At December 31, 2000, FINOVA had written off $60.2
million and established specific reserves totaling $79.4 million related to
the remaining $266.3 million of nonaccruing accounts in Healthcare Finance.

  The $138 million increase in nonaccruing assets in Transportation Finance
was attributable to ten aircraft-secured transactions, eight of which,
totaling $116.8 million, were added to nonaccrual status in the fourth quarter
of 2000. The increase in nonaccruing assets in Transportation Finance was due
to the effects of higher fuel prices on the financial condition of some of
FINOVA's customers as well as to an overall weakening of the economy. The
largest components of Transportation Finance's nonaccruals at year-end 2000
were a $21.4 million investment in two re-engined B727-200 aircraft leased to
a charter carrier; FINOVA's $20.7 million exposure on one B747-100 freighter
and two B747-200 passenger aircraft which FINOVA repossessed in 2000 from a
bankrupt borrower; a $20.5 million loan to a U.K. special-purpose corporation
secured by a mortgage on one DC10-30 freighter aircraft leased to a
financially troubled cargo airline; a loan of $17.5 million to a financially
troubled midwest-based scheduled airline, secured primarily by mortgages on
three Stage 3 B737-200 passenger aircraft; FINOVA's $16.8 million carrying
amount in a loan to a special-purpose corporation, secured by one B747-300
passenger aircraft which, subsequent to year end, is off-lease after being
returned by its former operator, a European flag carrier; a $13.3 million
conditional sale to a special-purpose operating lessor, secured by two MD-81
aircraft which are presently being remarketed by the lessor after being
returned by their former operator, another European flag carrier; a $13.0
million loan to a special-purpose corporation, secured by one MD-82 aircraft
leased to a large domestic borrower, which filed for bankruptcy in January
2001; and a $12.8 million loan to a U.S. operating lessor, secured by
mortgages on four Stage 3 DC9-32 passenger aircraft leased to a financially
troubled scheduled carrier. At December 31, 2000, FINOVA had written off $40.5
million and established specific reserves totaling $6.8 million related to the
remaining $138.0 million of nonaccruing accounts in Transportation Finance.

  Resort Finance's increase in nonaccruing assets in 2000 were due principally
to the addition of the working capital components of FINOVA's loans to seven
related special-purpose project development entities, and loans

                                     A-11
<PAGE>

                             THE FINOVA GROUP INC.

totaling approximately $116.3 million to an unrelated developer. The seven
working capital loans totaled $20.6 million at December 31, 2000, and each is
cross-secured with its related mortgage and receivables loans. Those working
capital loans were classified as nonaccruing due to concerns over each
borrower's financial condition and FINOVA's potential collateral shortfall if
there were to be a default and forced liquidation. The seven borrowing
entities are all special-purpose subsidiaries of a major resort developer in
which FINOVA has a $54.8 million equity investment that was written off in the
third quarter. The unrelated borrower filed for bankruptcy in the second
quarter of 2000, and became 90 days delinquent on FINOVA's loans in the third
quarter. The unrelated borrower's loans are secured by marketable assets,
including completed but unsold timeshare intervals at 13 of its approximately
90 resorts operated by the developer and a portfolio of consumer notes
receivable serviced by the developer. At December 31, 2000, FINOVA had written
off $61 thousand and established specific reserves totaling $36.9 million
relating to the remaining $142.0 million of non-earning accounts in Resort
Finance.

  The $119.3 million increase in nonaccruing assets in Rediscount Finance was
driven principally by the addition of an $88.7 million loan to a sub-prime
automobile finance company and a $25.3 million loan to an unrelated sub-prime
automobile finance company. Both loans are secured by portfolios of consumer
notes, and both were moved to nonaccruing status in the fourth quarter when
FINOVA established that it had the possibility of significant collateral
shortfalls in the event of forced liquidation. At December 31, 2000, FINOVA
had written off $19.2 million and established specific reserves totaling $43.9
million relating to the remaining $123.4 million of non-earning accounts in
Rediscount Finance.

  The $82.5 million increase in nonaccruing assets in Communications Finance
was attributable to the addition of seven accounts, six of which were moved
into nonaccruing status in the fourth quarter. The increase in nonaccruing
assets in Communications Finance was due to collection problems with customers
in the paging industry, which is experiencing a significant downturn resulting
from more innovative and efficient products replacing pagers. The largest
component of this division's nonaccruals at December 31, 2000 were three loans
totaling $74.3 million to unrelated providers of wireless messaging services.
At December 31, 2000, FINOVA had written off $4.0 million and established
specific reserves totaling $39.5 million covering those three loans, as well
as the $18.5 million of other nonaccruals in Communications Finance.

  The $42.3 million increase in nonaccruing assets in Franchise Finance was
driven principally by the addition of two accounts totaling $38.3 million,
which were moved into nonaccrual status in the fourth quarter of 2000. The
first is a $21.4 million loan to a franchisee which owns and operates a chain
of casual-dining restaurants. The second is FINOVA's $16.9 million share of a
syndicated loan to a major restaurant franchiser, which owns and franchises
casual-dining restaurants throughout the U.S. At December 31, 2000, FINOVA had
written off $245 thousand and established specific reserves totaling $13.5
million for those two loans.

  Discontinued operations, with total net assets of $1.2 billion at December
31, 2000, also carried $486.2 million of nonaccruing assets at year-end,
primarily from the Corporate Finance division.

  Earning impaired assets increased during the twelve months ended December
31, 2000 to $235.8 million, or 2.2% of ending managed assets, from $108.8
million, or 1.0% of ending managed assets at December 31, 1999. The largest
additions to earning impaired assets were in Resort Finance ($133.9 million)
and Rediscount Finance ($32.4 million). Additions of $133.9 million in Resort
Finance represent the balances of the obligations, other than the working
capital loans, owed by five of the seven related project developers mentioned
above. These impaired but still accruing loans are secured by receivables and
real property which FINOVA believes are sufficient to repay the loans with
interest. The loans are considered impaired because the parent company of the
special-purpose obligors has experienced a decline in earnings and a
significant reduction in its net worth, which could conceivably cause FINOVA
to have to manage the underlying resort projects without support from the
parent company. The increase in earning impaired loans in Rediscount Finance
relates to two loans totaling $32.4 million ($20.7 million and $11.7 million,
respectively) to two unrelated operators of rental-purchase stores. Both of
those borrowers were current in their payments as of December 31, 2000;
however, FINOVA believes there is

                                     A-12
<PAGE>

                             THE FINOVA GROUP INC.

significant doubt concerning their ability to continue to pay principal and
interest in accordance with contractual terms. In addition to the Resort and
Rediscount Finance accounts noted above, four loans totaling $61.1 million in
Transportation Finance were recognized as earning impaired in the fourth
quarter. Those accounts are all loans to related special-purpose corporations,
secured by mortgages on a total of five MD-80 series aircraft leased to a
large domestic carrier which filed for bankruptcy in January 2001. The rents,
and thus the underlying mortgage payments to FINOVA, were contractually
current as of year-end 2000; however, the bankruptcy filing was seen as
lending doubt to whether the borrowers would be able to continue to pay in
accordance with contractual terms.

  For all of the above accounts, as well as its other nonaccruing and earning
impaired assets, FINOVA believes it is engaging in appropriate activities to
enforce its contractual rights and remedies and to mitigate its losses;
however, there can be no assurance on the outcome of any collection or workout
effort. Likewise, while FINOVA believes its specific reserves accurately
reflect the best estimate of its potential future loss exposure in the
respective accounts, there can be no assurance that actual losses will be
limited to the reserved amounts.

  The carrying amount of FINOVA's accounts that were 31-90 days delinquent in
payment at December 31, 2000 increased to 1.2% of managed assets, from 0.6% of
managed assets at the end of 1999. The increases in 31-90 day delinquent
accounts were in Transportation Finance ($33.5 million), Commercial Equipment
Finance ($26.8 million), Communications Finance ($22.9 million) and Healthcare
Finance ($18.4 million).

  At December 31, 2000, FINOVA had $11.0 billion of debt outstanding,
including $111.6 million of TOPrS, representing 16.5 times the Company's
common equity base of $672.9 million. As a result of its moratorium on debt
payments, its subsequent filing of Bankruptcy under Chapter 11 and defaults
under various financial covenants under its bank agreements, FINOVA Capital is
in default under its debt agreements.

  FINOVA's internally generated funds, available credit lines and asset sales
financed new business and liquidity during the twelve months ended December
31, 2000. During May and June 2000, FINOVA drew down $4.5 billion against
domestic commercial paper back-up bank facilities and used the proceeds
primarily for repayment of commercial paper, maturing debt and to fund general
operations. Of this amount, $2.1 billion was due on or before May 15, 2001,
although $500 million could have been extended had a default not existed at
the time. The other $2.4 billion was scheduled to be repaid between 2002 to
2003. FINOVA also had $150 million (Canadian) scheduled to be due under a bank
facility that matured in July 2001. Term debt maturities over the next twelve
months by quarter included $242.0 million in the first quarter of 2001, $2.4
billion in the second quarter of 2001 (included $2.1 billion of bank
facilities), $449.2 million in the third quarter of 2001 and $345.7 million in
the fourth quarter of 2001. During 2000, FINOVA issued $225 million of new
public notes and repaid $1.4 billion of long-term borrowings. FINOVA's credit
ratings were reduced several times during 2000.

  The Reorganization Proceedings seek to enable FINOVA to restructure the debt
maturities, among other items. No principal or interest payments will be made
on the debt until the Plan defining repayment terms has been approved by the
court.

  On February 27, 2001, FINOVA announced a moratorium on repayments of
principal on its outstanding bank and bond debt. On March 7, 2001, FINOVA
filed for protection from its creditors as noted above to enable it to
restructure the timing of its debt repayments. See "Recent Developments and
Business Outlook" for further discussion of the rating agency downgrades, the
moratorium on the repayment of debt and the Reorganization Proceedings.

Derivative Financial Instruments

  Substantially all of FINOVA's derivative financial instruments were
terminated subsequent to December 31, 2000 as a result of the Reorganization
Proceedings. Historically, FINOVA entered into derivative transactions as part
of its interest rate risk management policy of match funding its assets and
liabilities. The derivative

                                     A-13
<PAGE>

                             THE FINOVA GROUP INC.

instruments used were straightforward. FINOVA continually monitored its
derivative position and used derivative instruments for non-trading and non-
speculative purposes only.

  At December 31, 2000, FINOVA Capital had outstanding interest rate
conversion agreements with notional principal amounts totaling $1.7 billion.
Agreements with notional principal amounts of $100 million were arranged to
effectively convert certain floating interest rate obligations into fixed
interest rate obligations. These agreements required interest payments on the
stated principal amount at rates ranging from 6.67% to 6.73% in return for
receipts calculated on the same notional amounts at floating interest rates.
Agreements with notional principal amounts of $1.625 billion were arranged to
effectively convert certain fixed interest rate obligations into floating
interest rate obligations. They required interest payments on the stated
principal amount at the three-month or six-month London interbank offered
rates ("LIBOR") in return for receipts calculated on the same notional amounts
at fixed interest rates of 5.70% to 7.40%. FINOVA also entered into a fixed-
rate foreign currency-denominated borrowing (Japanese Yen ("JPY") 5 billion)
maturing in 2002. Two derivatives are associated with this borrowing, a
receive fixed-rate swap (JPY 5 billion) versus three-month JPY LIBOR and a
cross-currency basis swap, converting JPY LIBOR to US Dollar ("USD") LIBOR,
both of which mature in 2002. The receive side of the basis swap had a
notional amount of JPY 5 billion paying three-month JPY LIBOR and the pay side
had a notional amount of USD $43.6 million paying three-month USD LIBOR. See
Note G of Notes to Consolidated Financial Statements for further discussion of
FINOVA's derivatives. See "Qualitative and Quantitative Disclosure About
Market Risk" below.

  Substantially all of the interest rate swaps derivatives were terminated in
2001, and had an estimated fair value of approximately $70 million at
termination. Pursuant to the Company's various agreements, the institutions
exercised their right to offset the amounts due the Company upon the
termination of the swaps against the amount due by the Company on the debt
outstanding.

                                     A-14
<PAGE>

                             THE FINOVA GROUP INC.

Segment Reporting

  Information for FINOVA's reportable segments that are part of continuing
operations reconciles to FINOVA's consolidated totals as follows:

<TABLE>
<CAPTION>
                                                        2000         1999
                                                     -----------  -----------
<S>                                                  <C>          <C>
Total net revenue:
  Specialty Finance................................. $   187,297  $   384,789
  Commercial Finance................................      59,889       51,708
  Capital Markets...................................      56,443      101,414
  Corporate and other...............................     (17,317)      13,515
                                                     -----------  -----------
Consolidated total.................................. $   286,312  $   551,426
                                                     ===========  ===========
(Loss) income before income taxes, preferred
 dividends and allocations:
  Specialty Finance................................. $    (9,577) $   307,377
  Commercial Finance................................      30,890       38,244
  Capital Markets...................................    (139,308)      31,235
  Corporate and other, overhead and unallocated
   provision for credit losses......................    (638,105)     (16,517)
                                                     -----------  -----------
(Loss) income from continuing operations before
 income taxes and preferred dividends............... $  (756,100) $   360,339
                                                     ===========  ===========
Managed assets:
  Specialty Finance................................. $ 8,475,515  $ 8,251,642
  Commercial Finance................................   1,218,463    1,076,617
  Capital Markets...................................     800,331    1,051,367
  Corporate and other...............................      43,566       63,510
                                                     -----------  -----------
Consolidated total.................................. $10,537,875  $10,443,136
Less securitizations................................    (357,471)    (121,322)
                                                     -----------  -----------
Investment in financing transactions................ $10,180,404  $10,321,814
                                                     ===========  ===========
</TABLE>

  FINOVA's business is organized into three market groups, which are also its
reportable segments: Specialty Finance, Commercial Finance and Capital
Markets. Management has not yet determined whether its reportable segments
will be reorganized as a result of the recent announcement to discontinue
several lines of business and pending Reorganization Proceedings. Management
relies principally on total revenue, income before allocations and managed
assets in evaluating the business performance of each reportable segment.

  Total net revenue is the sum of operating margin and (losses) gains on
investments and disposal of assets. Income before allocations is income before
income taxes, preferred dividends, corporate overhead expenses and the
unallocated portion of the provision for credit losses. Managed assets include
each segment's investment in financing transactions plus securitizations. The
Company expects that managed assets in all segments will decline significantly
over the next several years as available cash flow will be used principally
for debt service rather than the funding of new business.

  Specialty Finance. Specialty Finance provides a wide variety of lending
products such as leases, loans, accounts receivable and cash flow based
financing, as well as servicing and collection services to a number of highly
focused industry specific niches.

  Total net revenue was $187.3 million in 2000 compared to $384.8 million in
1999. The decrease in net revenue was primarily due to the write-off of equity
positions in Resort Finance and Communications Finance as well as charges to
write-down repossessed assets in Resort Finance and the value of residual
positions in both Transportation Finance and to a lesser extent in Specialty
Real Estate Finance. The most significant charge was

                                     A-15
<PAGE>

                             THE FINOVA GROUP INC.

in Resort Finance, which wrote-off a $54.8 million equity investment in a
major developer that has experienced a decline in earnings and a significant
reduction in net worth. The write-down of residual positions amounted to $35.7
million in Transportation Finance and $11.7 million in Specialty Real Estate
Finance. Also contributing to the decline in net revenue was an increase of
$602 million in nonaccruing assets, the effects of higher cost of funds and
lower gains from the disposal of assets. These reductions were partially
offset by increases in income due to a higher level of managed assets in 2000.
The largest increases in nonaccruing assets were in Healthcare Finance, which
increased by $224.1 million in 2000, followed by a $138.0 million increase in
Transportation Finance, $120.0 million in Resort Finance and $82.5 million in
Communications Finance. The lower gains were primarily attributable to the
timing of assets coming off lease and the Company's inability to re-lease
assets at end of term. While in the aggregate FINOVA has historically
recognized gains on disposals, the timing and amount of these gains are
sporadic in nature. No assurance can be made that the Company will continue to
recognize gains on disposal. Additionally, certain business units within this
segment will sometimes receive equity interests to complement their financing
arrangements. Depending on various factors, including management's discretion,
FINOVA may opt to exercise and sell its position in these equities when
permitted to do so. As of year-end 2000, FINOVA had recorded $24.4 million of
pre-tax gains from the sale of these equity positions in 2000 and also
recorded pre-tax unrealized gains of $23.5 million through other comprehensive
income on the balance sheet related to the market value of equities held.

  The segment reported a loss before allocations for the year of $9.6 million
compared to income of $307.4 million for 1999. The decrease was primarily due
to the charge-offs mentioned above, increased nonaccruing assets, a higher
cost of funds, lower gains and an increase in net write-offs of financing
contracts, which rose to $131.3 million in 2000 from $11.1 million in 1999.
The bulk of the write-offs were in Healthcare Finance ($59.6 million) and
Transportation Finance ($40.5 million).

  Managed assets grew to $8.476 billion in 2000 from $8.252 billion in 1999,
an increase of 2.7%. The growth in managed assets was only 2.7% because new
business in 2000 of $2.5 billion was down from $3.3 billion in 1999. The
reduced volume was in line with the Company's decision to conserve cash during
the last half of 2000 by only funding outstanding commitments. The largest new
business volume in this segment came from Resort Finance ($1.0 billion) and
Transportation Finance ($379 million). The group as a whole experienced a
decrease in backlog to $1.1 billion at December 31, 2000 from $1.6 billion at
December 31, 1999. The largest portion of backlog consisted of $668.7 million
of revolving loan commitments in Resort Finance.

  Commercial Finance. Commercial Finance currently includes only the
Rediscount Finance business unit, which provides financing through revolving
credit facilities to finance companies. This segment previously included
traditional asset-based businesses that provided financing through revolving
credit facilities and term loans secured by assets such as receivables and
inventory, as well as providing factoring and management services. In the
third quarter of 2000, FINOVA announced that the Corporate Finance/Business
Credit/Growth Finance and Distribution & Channel Finance business units would
be discontinued. The Company also completed the sale of its Commercial
Services business line to GMAC Commercial Credit LLC in the third quarter. For
further discussion on activity previously reported within the Commercial
Finance segment, see "Discontinued Operations."

  Total net revenue was $59.9 million in 2000 compared to $51.7 million in
1999, an increase of 15.8%. The increase was primarily due to a 13.2% increase
in managed assets over the last twelve months, partially offset by the effects
of higher cost of funds and higher nonaccruing assets. The level of
nonaccruing assets increased to $123.4 million in 2000 from $4.1 million in
1999, primarily attributable to two customers with carrying amounts of $88.7
million and $25.3 million, respectively. The level of assets considered
impaired but revenue-accruing increased to $32.4 million in 2000 from zero in
1999.

  Income before allocations decreased to $30.9 million in 2000 from $38.2
million in 1999 primarily due to an increase in nonaccruing assets, higher net
write-offs and a higher cost of funds, partially offset by a higher

                                     A-16
<PAGE>

                             THE FINOVA GROUP INC.

level of managed assets. Net write-offs for the unit totaled $19.2 million in
2000 compared to $3.5 million in 1999. The majority of the net write-offs in
2000 were concentrated among three finance companies which have been adversely
impacted by the weakening economy, especially its impact on sub-prime auto
lenders. Net write-offs as a percent of average managed assets were 1.7%
compared to 0.4% in 1999.

  Managed assets grew to $1.22 billion over the last twelve months from $1.07
billion, an increase of 13.2%. The growth in managed assets was primarily due
to increased net utilization under existing revolving commitments.

  Capital Markets. Capital Markets, in conjunction with institutional
investors, provides debt and equity capital funding, third-party loan
administration services and provided commercial mortgage banking services
until those operations were terminated.

  Total net revenue was $56.4 million in 2000 compared to $101.4 million in
1999, a decrease of 44.3%. The decrease was primarily due to $31.6 million of
losses on various equity and warrant positions compared to $28.7 million in
gains from the sale of equity and warrant positions in 1999. The 2000 loss was
primarily due to a $43.2 million Realty Capital charge to write-down its
assets to estimated fair value in connection with designating that business as
being held for sale. Partially offsetting the charge was $14.7 million of net
gains on sales of investments in Mezzanine Capital.

  Also contributing to the decline in revenue was the Company's decision in
April 2000 to exit from the origination and sale of commercial real estate
loans to the CMBS market, which resulted in a reduction of volume-based fees
to $1.3 million in 2000 from $10.4 million in 1999. Additionally, the decline
in net revenue was partially attributable to a higher level of nonaccruing
assets, which increased to $63.6 million in 2000 from $38.7 million in 1999.

  Losses before allocations in 2000 were $139.3 million compared to income of
$31.2 million in 1999. The reduction was primarily attributable to the
aforementioned decline in net revenue, increased net write-offs in Mezzanine
Capital of $86.0 million in 2000 compared to $8.2 million in 1999, the write-
down of goodwill created by the acquisition of Sirrom Capital and the costs
incurred to exit the CMBS market in 2000.

  The segment's managed assets decreased to $800.3 million in 2000 from $1.05
billion in 1999. This is primarily due to FINOVA's exit from the CMBS
marketplace and to lower new business volumes. See "Recent Developments and
Business Outlook" for further discussion.

  Corporate. The $638.1 million loss from continuing operations before income
taxes and preferred dividends in 2000 was significantly higher than the 1999
loss of $16.5 million. The increased loss was primarily attributable to higher
unallocated provision for credit losses due to the need to bolster loss
reserves in light of increasing problem accounts. Also contributing to the
increased loss were higher corporate operating expenses, which included
employee retention and severance programs, increased professional services
related to the current state of events and the charge-off of unallocated
impaired goodwill.

New Accounting Standards

  In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes new accounting and
reporting standards for derivative instruments. In June 1999, the FASB issued
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities--
Deferral of the Effective Date of FASB Statement No. 133," and in June 2000,
the FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments
and Certain Hedging Activities--An Amendment of FASB Statement No. 133." SFAS
133, as amended, establishes accounting and reporting standards requiring that
derivative instruments, including certain derivative instruments embedded in
other contracts, be recorded in the statement

                                     A-17
<PAGE>

                             THE FINOVA GROUP INC.

of financial position as either an asset or liability measured at its fair
value. SFAS 133 requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met.

  FINOVA adopted the provisions of SFAS 133, as amended, on January 1, 2001,
which resulted in an immaterial impact on FINOVA's consolidated results of
operations and financial position.

  FINOVA adopted the disclosure provisions of SFAS 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities," as of December 31, 2000. These provisions required additional
disclosures about the Company's receivables transfers, servicing
responsibilities, retained interests, and key assumptions made in its
valuations. The implementation of the disclosure provisions of SFAS 140 did
not have a material impact on FINOVA's consolidated results of operations and
financial position. The remaining provisions of SFAS 140, related to the
accounting requirements for transfers of financial assets, are effective for
transfers after March 31, 2001 and may impact FINOVA's treatment of any future
transfers of receivables, including gain or loss recognition on sales.

                                     A-18
<PAGE>

                             THE FINOVA GROUP INC.

           QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

  FINOVA's primary market risk has been exposure to the volatility of interest
rates. FINOVA sought to manage interest rate risk and preserve income through
a diversified borrowing base and a matched funding policy. A diversified
borrowing base consisted of short and long-term debt with a fixed or variable
rate. FINOVA's matched funding policy, approved by the Board of Directors or
Audit Committee and administered by the Finance Committee, required that
floating-rate assets be financed with similar floating-rate liabilities and
fixed-rate assets be financed with similar fixed-rate liabilities. Under the
matched funding policy, the difference between floating-rate assets and
floating-rate liabilities was managed to not exceed 3% of total assets for any
extended period.

  As a result of the developments described earlier in "Recent Developments
and Business Outlook," the Company can not determine the nature of its
borrowing base or achieve a matched funding policy. In addition, substantially
all of the Company's interest rate swap agreements were terminated as a result
of the bankruptcy filing. During the pendancy of the bankruptcy, the interest
rate which will be applied to the Company's debt obligations is also
uncertain.

  Since approximately 50% of the Company's assets earn at a floating-rate, any
decline in market rates could adversely affect the Company since it would earn
less on its assets while the nature of its financing cost is uncertain.
Alternatively, any increase in market rates would increase its return on
floating-rate assets; however, if its financing costs also become floating any
potential increases in asset returns could be offset by rising costs of
capital. Until such time as a plan of reorganization is approved and its
financing costs determined, the Company will not be able to identify a
strategy to mitigate its exposure to changes in interest rates.

  Under the terms of Berkadia's commitment, the New Senior Notes will be
fixed-rate obligations, at the weighted average rate of the existing debt
(excluding default interest or penalties, if any). If LIBOR is above 6%, the
Berkadia Loan will be a floating-rate loan; if LIBOR is below 6%, the Berkadia
Loan will be fixed at 9%. If this transaction is consummated, a successful
strategy to mitigate the Company's exposure to changes in market interest
rates could be developed; however, no assurance can be given that the Company
will be able to implement any such strategy at an acceptable cost. In
addition, no assurance can be given that the transaction will be consummated.

                                     A-19
<PAGE>

                        REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareowners of The FINOVA Group Inc.

  We have audited the accompanying consolidated balance sheets of The FINOVA
Group Inc. and subsidiaries as of December 31, 2000 and 1999, and the related
statements of consolidated operations, shareowners' equity, and cash flows for
the years then ended. These financial statements are the responsibility of The
FINOVA Group Inc.'s management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

  In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of The FINOVA
Group Inc. and subsidiaries at December 31, 2000 and 1999 and the consolidated
results of their operations and their cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States.

  The accompanying consolidated financial statements have been prepared
assuming that The FINOVA Group Inc. will continue as a going concern. As more
fully described in Note A, the Company has incurred a substantial operating
loss, is in default of its debt covenants, and filed for relief under Chapter
11 of the United States Bankruptcy Code on March 7, 2001. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. The consolidated financial statements do not include any adjustments
to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.

Ernst & Young LLP

Phoenix, Arizona
March 30, 2001

                                     A-20
<PAGE>

                         INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareowners of The FINOVA Group Inc.

  We have audited the accompanying consolidated statements of operations,
shareowners' equity and cash flows of The FINOVA Group Inc. and subsidiaries
for the year ended December 31, 1998. These financial statements are the
responsibility of The FINOVA Group Inc.'s management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

  In our opinion, such consolidated financial statements present fairly, in
all material respects, the results of operations and cash flows of The FINOVA
Group, Inc. and subsidiaries for the year ended December 31, 1998 in
conformity with accounting principles generally accepted in the United States
of America.

/s/ Deloitte & Touche LLP
_____________________________________
Deloitte & Touche LLP
Phoenix, Arizona

April 23, 1999

                                     A-21
<PAGE>

                             THE FINOVA GROUP INC.

                          CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                         2000         1999
                                                      -----------  -----------
<S>                                                   <C>          <C>
ASSETS
Cash and cash equivalents............................ $   699,228  $   100,344
Investment in financing transactions:
  Loans and other financing contracts................   7,835,698    8,235,850
  Leveraged leases...................................     803,581      837,083
  Direct financing leases............................     557,471      493,615
  Operating leases...................................     561,698      587,283
  Financing contracts held for sale..................     421,956      167,983
                                                      -----------  -----------
                                                       10,180,404   10,321,814
  Less reserve for credit losses.....................    (578,750)    (178,266)
                                                      -----------  -----------
Net investment in financing transactions.............   9,601,654   10,143,548
Investments..........................................     285,934      442,662
Goodwill, net of accumulated amortization............      45,417      264,014
Other assets.........................................     294,630      237,085
Net assets of discontinued operations................   1,162,223    2,702,236
                                                      -----------  -----------
                                                      $12,089,086  $13,889,889
                                                      ===========  ===========
LIABILITIES AND SHAREOWNERS' EQUITY
Liabilities:
  Accounts payable and accrued expenses.............. $   128,311  $   153,276
  Interest payable...................................     129,402      114,397
  Senior debt........................................  10,997,687   11,407,767
  Deferred income taxes, net.........................      49,202      439,518
                                                      -----------  -----------
                                                       11,304,602   12,114,958
                                                      -----------  -----------
Commitments and contingencies
Company-obligated mandatory redeemable convertible
 preferred securities of subsidiary trust solely
 holding convertible debentures of FINOVA, net of
 expenses ("TOPrS")..................................     111,550      111,550
Shareowners' equity:
  Common stock, $0.01 par value, 400,000,000 shares
   authorized, 64,849,000 shares issued..............         648          648
  Additional capital.................................   1,107,575    1,109,521
  Retained (deficit) income..........................    (283,435)     689,466
  Accumulated other comprehensive income.............      15,154       33,812
  Common stock in treasury, 3,554,000 and 3,597,000
   shares, respectively..............................    (167,008)    (170,066)
                                                      -----------  -----------
                                                          672,934    1,663,381
                                                      -----------  -----------
                                                      $12,089,086  $13,889,889
                                                      ===========  ===========
</TABLE>

                See notes to consolidated financial statements.

                                      A-22
<PAGE>

                             THE FINOVA GROUP INC.

                     STATEMENTS OF CONSOLIDATED OPERATIONS
                 (Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                Years Ended December 31,
                                            ----------------------------------
                                               2000        1999        1998
                                            ----------  ----------  ----------
<S>                                         <C>         <C>         <C>
Interest, fees and other income...........  $  947,848  $  795,954  $  611,697
Financing lease income....................      95,018      96,241      95,772
Operating lease income....................     105,457     114,083     115,822
                                            ----------  ----------  ----------
Income earned from financing
 transactions.............................   1,148,323   1,006,278     823,291
Interest expense..........................     628,839     465,256     373,581
Operating lease depreciation..............      65,919      67,835      69,954
                                            ----------  ----------  ----------
Interest margins earned...................     453,565     473,187     379,756
Volume-based fees.........................       1,336      10,353      24,759
                                            ----------  ----------  ----------
Operating margin..........................     454,901     483,540     404,515
Provision for credit losses...............     643,000      22,390      48,470
                                            ----------  ----------  ----------
Net interest margins earned...............    (188,099)    461,150     356,045
(Losses) gains on investments and disposal
 of assets................................    (168,589)     67,886      27,912
                                            ----------  ----------  ----------
                                              (356,688)    529,036     383,957
Operating expenses........................     399,412     168,697     147,128
                                            ----------  ----------  ----------
(Loss) income from continuing operations
 before income taxes and preferred
 dividends................................    (756,100)    360,339     236,829
Income tax benefit (expense)..............     213,173    (138,316)    (90,386)
                                            ----------  ----------  ----------
(Loss) income from continuing operations
 before preferred dividends...............    (542,927)    222,023     146,443
Preferred dividends, net of tax...........       3,782       3,782       3,782
                                            ----------  ----------  ----------
(Loss) income from continuing operations..    (546,709)    218,241     142,661
Discontinued operations (net of tax
 benefit of $18,198 and $1,998 for 2000
 and 1999, respectively, and tax expense
 of $11,787 for 1998).....................     (55,397)     (2,997)     17,680
Net loss on disposal of operations (net of
 tax benefit of $150,664).................    (337,711)
                                            ----------  ----------  ----------
Net (loss) income.........................  $ (939,817) $  215,244  $  160,341
                                            ==========  ==========  ==========
Basic (loss) earnings per share:
(Loss) income from continuing operations..  $    (8.96) $     3.64  $     2.55
(Loss) income from discontinued
 operations...............................       (6.45)      (0.05)       0.32
                                            ----------  ----------  ----------
Net (loss) income per share...............  $   (15.41) $     3.59  $     2.87
                                            ==========  ==========  ==========
Adjusted weighted average shares
 outstanding..............................  60,994,000  59,880,000  55,946,000
                                            ==========  ==========  ==========
Diluted (loss) earnings per share:
(Loss) income from continuing operations..  $    (8.96) $     3.45  $     2.41
(Loss) income from discontinued
 operations...............................       (6.45)      (0.04)       0.29
                                            ----------  ----------  ----------
Net (loss) income per share...............  $   (15.41) $     3.41  $     2.70
                                            ==========  ==========  ==========
Adjusted weighted average shares
 outstanding..............................  60,994,000  64,300,000  60,705,000
                                            ==========  ==========  ==========
Dividends per common share................  $     0.54  $     0.68  $     0.60
                                            ==========  ==========  ==========
</TABLE>

                See notes to consolidated financial statements.

                                      A-23
<PAGE>

                             THE FINOVA GROUP INC.

                 STATEMENTS OF CONSOLIDATED SHAREOWNERS' EQUITY
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                         Accumulated
                                            Retained        Other        Common
                         Common Additional  (Deficit)   Comprehensive   Stock in   Shareowners' Comprehensive
                         Stock   Capital     Income    Income/(Deficit) Treasury      Equity       Income
                         ------ ----------  ---------  ---------------- ---------  ------------ -------------
<S>                      <C>    <C>         <C>        <C>              <C>        <C>          <C>
Balance, January 1,
 1998...................  $585  $  764,525  $ 388,465      $   (10)     $ (61,311)  $1,092,254
                          ----  ----------  ---------      -------      ---------   ----------
Comprehensive income:
 Net income.............                      160,341                                  160,341    $ 160,341
                                                                                                  ---------
 Net change in
  unrealized holding
  gains.................                                                                                904
 Net change in foreign
  currency translation..                                                                               (208)
                                                                                                  ---------
 Other comprehensive
  income................                                       696                         696          696
                                                                                                  ---------
Comprehensive income....                                                                          $ 161,037
                                                                                                  =========
Net change in
 unamortized amount of
 restricted stock.......            (1,053)                                             (1,053)
Dividends...............                      (33,749)                                 (33,749)
Purchase of shares......                                                  (63,271)     (63,271)
Shares issued in
 connection with
 employee benefit
 plans..................             1,578                                 10,435       12,013
                          ----  ----------  ---------      -------      ---------   ----------
Balance, December 31,
 1998...................   585     765,050    515,057          686       (114,147)   1,167,231
                          ----  ----------  ---------      -------      ---------   ----------
Comprehensive income:
 Net income.............                      215,244                                  215,244    $ 215,244
                                                                                                  ---------
 Net change in
  unrealized holding
  gains.................                                                                             37,054
 Net change in foreign
  currency translation..                                                                             (3,928)
                                                                                                  ---------
 Other comprehensive
  income................                                    33,126                      33,126       33,126
                                                                                                  ---------
Comprehensive income....                                                                          $ 248,370
                                                                                                  =========
Net change in
 unamortized amount of
 restricted stock.......            (4,825)                                             (4,825)
Issuance of common
 stock..................    63     354,960                                             355,023
Dividends...............                      (40,835)                                 (40,835)
Purchase of shares......                                                  (89,272)     (89,272)
Shares issued in
 connection with
 employee benefit
 plans..................            (5,664)                                33,353       27,689
                          ----  ----------  ---------      -------      ---------   ----------
Balance, December 31,
 1999...................   648   1,109,521    689,466       33,812       (170,066)   1,663,381
                          ----  ----------  ---------      -------      ---------   ----------
Comprehensive loss:
 Net loss...............                     (939,817)                                (939,817)   $(939,817)
                                                                                                  ---------
 Net change in
  unrealized holding
  gains.................                                                                            (22,709)
 Net change in foreign
  currency translation..                                                                              4,051
                                                                                                  ---------
 Other comprehensive
  loss..................                                   (18,658)                    (18,658)     (18,658)
                                                                                                  ---------
Comprehensive loss......                                                                          $(958,475)
                                                                                                  =========
Net change in
 unamortized amount of
 restricted stock.......               941                                                 941
Dividends...............                      (33,084)                                 (33,084)
Shares issued in
 connection with
 employee benefit
 plans..................            (2,887)                                 3,058          171
                          ----  ----------  ---------      -------      ---------   ----------
Balance, December 31,
 2000...................  $648  $1,107,575  $(283,435)     $15,154      $(167,008)  $  672,934
                          ====  ==========  =========      =======      =========   ==========
</TABLE>

                See notes to consolidated financial statements.

                                      A-24
<PAGE>

                             THE FINOVA GROUP INC.

                     STATEMENTS OF CONSOLIDATED CASH FLOWS
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                 Years Ended December 31,
                                             ----------------------------------
                                                2000        1999        1998
                                             ----------  ----------  ----------
<S>                                          <C>         <C>         <C>
OPERATING ACTIVITIES:
Net (loss) income..........................  $ (939,817) $  215,244  $  160,341
Discontinued operations, net of tax
 benefit...................................      55,397       2,997     (17,680)
Net loss on disposal of operations, net of
 tax benefit...............................     337,711
                                             ----------  ----------  ----------
(Loss) income from continuing operations...    (546,709)    218,241     142,661
Adjustments to reconcile (loss) income from
 continuing operations to net cash provided
 by continuing operations:
 Provision for credit losses...............     643,000      22,390      48,470
 Gains on disposal of assets...............     (62,592)    (70,633)    (30,520)
 Impairment write-down on leases and other
  owned assets.............................      89,784
 Impairment write-down on investments......      98,188       2,613       2,608
 Valuation adjustment on loans held for
  sale.....................................      43,209
 Depreciation and amortization.............      89,607      89,854      85,815
 Impairment charge-off of goodwill.........     193,337
 Deferred income taxes, net................    (374,800)    114,886      66,296
 Other amortization........................      43,790      21,195      19,557
Change in assets and liabilities, net of
 effects from companies purchased:
 Increase in other assets..................     (12,998)    (16,167)    (23,461)
 Decrease in accounts payable and accrued
  expenses.................................     (24,965)    (49,342)    (33,214)
 Increase in interest payable..............      15,005      46,564      11,399
                                             ----------  ----------  ----------
 NET CASH PROVIDED BY CONTINUING OPERATING
  ACTIVITIES...............................     193,856     379,601     289,611
                                             ----------  ----------  ----------
INVESTING ACTIVITIES:
Proceeds from disposal of leases and other
 owned assets..............................     112,556     132,958     125,612
Proceeds from sales of investments.........     147,672      61,378       2,930
Proceeds from securitizations..............     302,751                  99,967
Proceeds from sales of commercial mortgage
 backed securities ("CMBS")................     110,676     504,138     869,296
Principal collections on financing
 transactions..............................   1,963,831   2,538,862   1,850,906
Expenditures for investments and other
 income producing activities...............     (57,098)    (59,653)    (81,933)
Expenditures for CMBS transactions.........                (529,232) (1,005,373)
Expenditures for financing transactions....  (2,882,589) (4,132,150) (3,495,160)
Cash received in acquisition...............                 (85,278)    (61,164)
Recoveries of loans previously written-
 off.......................................       1,018       1,830       1,174
                                             ----------  ----------  ----------
 NET CASH USED BY INVESTING ACTIVITIES.....    (301,183) (1,567,147) (1,693,745)
                                             ----------  ----------  ----------
FINANCING ACTIVITIES:
Proceeds from draw down on back-up
 facilities................................   4,690,990
Net change in commercial paper and short
 term borrowings...........................  (3,876,971)   (305,030)    739,515
Proceeds from issuance of term notes.......     225,000   3,443,592   1,580,000
Repayment of term notes....................  (1,446,800)   (809,245)   (689,176)
Proceeds from exercise of stock options....         171      27,689      12,013
Common stock purchases for treasury........                 (89,272)    (63,271)
Dividends..................................     (33,084)    (40,835)    (33,749)
                                             ----------  ----------  ----------
 NET CASH (USED) PROVIDED BY FINANCING
  ACTIVITIES...............................    (440,694)  2,226,899   1,545,332
                                             ----------  ----------  ----------
 NET CASH PROVIDED (USED) BY DISCONTINUED
  OPERATIONS...............................   1,146,905    (988,527)   (124,870)
                                             ----------  ----------  ----------
INCREASE IN CASH AND CASH EQUIVALENTS......     598,884      50,826      16,328
CASH AND CASH EQUIVALENTS, beginning of
 period....................................     100,344      49,518      33,190
                                             ----------  ----------  ----------
CASH AND CASH EQUIVALENTS, end of period...  $  699,228  $  100,344  $   49,518
                                             ==========  ==========  ==========
</TABLE>

                See notes to consolidated financial statements.

                                      A-25
<PAGE>

                             THE FINOVA GROUP INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
            (Dollars in thousands in tables, except per share data)

Note A Organization, Basis of Presentation and Significant Business
Developments

Organization and Basis of Presentation

  The consolidated financial statements present the financial position,
results of operations and cash flows of The FINOVA Group Inc. and its
subsidiaries (collectively, "FINOVA" or the "Company"), including FINOVA
Capital Corporation and its subsidiaries (collectively, "FINOVA Capital").
FINOVA is a Delaware Corporation. All significant intercompany balances have
been eliminated in consolidation.

  The FINOVA Group Inc. is a financial services holding company engaged,
through its subsidiaries, principally in providing collateralized financing
products to commercial enterprises focusing on mid-size businesses in various
market niches, primarily in the United States.

Going Concern

  The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States. During the year
ended December 31, 2000, the Company experienced a significant deterioration
in the credit quality of its portfolio, the loss of its investment grade
credit ratings and the resulting loss in access to capital and increase in
cost of funds. The Company was not in compliance with its debt covenants as of
December 31, 2000 and filed for protection from its creditors under Chapter 11
of the United States Bankruptcy Code on March 7, 2001.

  These conditions and events, more fully described below raise substantial
doubt about the Company's ability to continue as a going concern. The ability
of the Company to continue as a going concern is dependent on many factors
including the confirmation of a plan of reorganization (the "Plan") and
successful execution of management's plans for the collection of its portfolio
pursuant to contractual terms and negotiation of appropriate rates and fee
structures with its customers. The accompanying consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of asset amounts or the amounts and classification of
liabilities that might be necessary should the Company be unable to continue
as a going concern.

Significant Business Developments

  On March 27, 2000, FINOVA announced the retirement of its Chairman,
President and Chief Executive Officer, Samuel L. Eichenfield, for personal and
health reasons. Following Mr. Eichenfield's retirement as a director and
officer, FINOVA's board of directors elected Matthew M. Breyne as a director,
President and Chief Executive Officer of FINOVA and Chairman, President and
Chief Executive Officer and a director of FINOVA Capital. FINOVA also
announced that it would take an $80 million pre-tax charge to earnings in the
first quarter of 2000 to increase loss reserves and provide for payment of
deferred compensation and executive severance. The additional loss reserves
related to the replenishment of reserves after a write-off of a loan to a
single customer in the Distribution & Channel Finance line of business which
had previously been partially reserved. The remainder of the charge was used
to provide for payment of deferred compensation and executive severance to Mr.
Eichenfield. Following these announcements, some of the credit rating agencies
downgraded or placed on credit watch FINOVA Capital's senior debt and
commercial paper ratings.

  In May 2000, $2.1 billion of FINOVA's 364-day revolving credit agreements
were scheduled to expire. These agreements were part of the Company's $4.7
billion bank facilities, which were in place to provide a back-up mechanism
for its commercial paper program. On May 5, 2000, FINOVA's banks renewed a
$500 million facility but committed to renewing only approximately $1.1
billion of the $1.6 billion of back-up facilities that expired on May 15,
2000. Historically, a significant portion of FINOVA's business was financed
with commercial

                                     A-26
<PAGE>

                             THE FINOVA GROUP INC.

paper, which was reissued when it matured. The Company also borrowed funds in
the form of publicly traded debt securities with staggered maturities. Without
full coverage after May 15 for outstanding commercial paper under the domestic
back-up bank facilities, FINOVA drew down on approximately $4.5 billion of
domestic back-up bank lines to meet maturing commercial paper obligations and
other debt obligations. This resulted in additional debt rating downgrades.

  In May 2000, FINOVA structured a 364-day commitment with a bank to sell at
FINOVA's option up to $375 million of commercial equipment loans and direct
financing lease receivables on a revolving basis.

  On May 8, 2000, FINOVA announced that it had engaged an independent third
party to assist in the exploration of strategic alternatives with financial,
strategic and other potential partners. Alternatives included a sale of the
Company or obtaining a significant equity investment.

  During July 2000, FINOVA structured a sale with an independent third party
acting as structuring agent, which included a commitment to purchase
beneficial interests up to $500 million in corporate finance loans on a
revolving basis. In February 2001, FINOVA purchased the outstanding beneficial
interests.

  During the third quarter of 2000, FINOVA discontinued and offered for sale
its Commercial Services, Corporate Finance (including Business Credit and
Growth Finance) and Distribution & Channel Finance businesses. On August 28,
2000, FINOVA completed the sale of substantially all the assets of its
Commercial Services division to an independent third party for approximately
$235 million.

  In October 2000, FINOVA engaged an independent third party to assist in
connection with the development of strategic and financial planning, including
re-negotiation of its bank debt. The engagement was generally concluded in
March 2001, following the execution of the agreements with Berkshire Hathaway
Inc. ("Berkshire Hathaway"), Leucadia National Corporation ("Leucadia") and
Berkadia, LLC ("Berkadia"), noted below.

  On November 9, 2000, the board of directors voted to suspend the Company's
quarterly common stock dividend.

  On November 10, 2000, FINOVA announced that it entered into a letter
agreement with Leucadia with respect to an equity investment in the Company. A
Securities Purchase Agreement was entered into on December 20, 2000. On
January 20, 2001, FINOVA and Leucadia mutually agreed to terminate the
Securities Purchase Agreement.

  On February 1, 2001, FINOVA sold approximately $309 million of Corporate
Finance assets to an independent third party at a discount of $9.2 million.

  On February 26, 2001, FINOVA and FINOVA Capital entered into a commitment
letter with Berkshire Hathaway, Leucadia and Berkadia, an entity jointly owned
by Leucadia and Berkshire Hathaway pursuant to which Berkadia committed to
lend $6.0 billion to FINOVA Capital, to facilitate a Chapter 11 restructuring
of the outstanding debt of FINOVA and its principal subsidiaries. The $6.0
billion five-year term loan will be secured by substantially all of the assets
of FINOVA Capital and its subsidiaries and guaranteed on a secured basis by
FINOVA Group and substantially all of the subsidiaries of FINOVA Capital (the
"Berkadia Loan"). The balance of FINOVA Capital's bank and bond indebtedness
will be restructured into approximately $5 billion of new ten-year senior
notes of FINOVA (the "New Senior Notes"). Berkadia's commitment is subject to
various conditions, including Berkadia's satisfaction with FINOVA's Chapter 11
Plan and bankruptcy court and necessary creditor approvals. In connection with
the commitment letter, FINOVA also entered into a Management Services
Agreement with Leucadia and its subsidiary, Leucadia International
Corporation, which has been amended and restated. The terms of this commitment
letter and the management services agreement are described more fully below in
"Berkadia Commitment--Proposed Restructuring Plan."

                                     A-27
<PAGE>

                             THE FINOVA GROUP INC.

  On February 27, 2001, FINOVA Capital announced a moratorium on repayment of
principal on its outstanding bank and bond debt. The purpose of the moratorium
was to enable all creditors to be treated equitably in the debt restructuring
process. In connection with that moratorium, FINOVA Capital did not make a $50
million principal payment due on February 27, 2001 with respect to its 5.98%
notes due 2001, which constituted an event of default under the trust
indenture related to those notes and a cross default under substantially all
of FINOVA Capital's $11 billion of bank and bond indebtedness. The event of
default also affected the interest rate swaps and securitizations the Company
had entered into by allowing for immediate termination or other modifications,
and substantially all of the Company's swaps were terminated. In the first
quarter of 2001, in conjunction with the Reorganization Proceedings, the
Company suspended paying dividends on the TOPrS and interest on the underlying
convertible debentures.

  On March 5, 2001, FINOVA announced that Matthew M. Breyne resigned as a
director and the Company's President and Chief Executive Officer. John W.
Teets retired as Chairman, but will remain on the board. The board of
directors elected board member G. Robert "Bull" Durham as Chairman and elected
General Counsel and Secretary William J. Hallinan to the additional positions
of President and Chief Executive Officer of FINOVA and the President, Chief
Executive Officer and General Counsel of FINOVA Capital.

  On March 6, 2001, one of FINOVA's subsidiaries, FINOVA (Canada) Capital
Corporation, had a petition for Receiving Order filed against it in Ontario,
Canada. That action has not been served on FINOVA. See "Legal Proceedings" for
more information on this matter.

  On March 7, 2001, FINOVA Group, FINOVA Capital and seven of their
subsidiaries filed for protection pursuant to Chapter 11, Title 11, of the
United States Code, in the United States Bankruptcy Court for the District of
Delaware to enable them to restructure their debt (the "Reorganization
Proceedings").

  The bankruptcy court approved first-day orders pertaining to, among other
items, customers, employees and vendors. The purpose of the first-day orders
was to allow FINOVA and its subsidiaries to continue conducting their
businesses substantially without hindrance from the Reorganization
Proceedings. FINOVA has been authorized to continue honoring all customer
commitments, and to pay certain prepetition claims (excluding, among other
items, all amounts related to its $11 billion of bank and bond debt), in its
discretion, including those to employees (other than executive officers with
certain exceptions), taxing and other governmental authorities, claims
essential to the ability to honor commitments, and to foreign trade vendors.

  In light of these events, FINOVA has effectively eliminated new business
development activities, and for the foreseeable future, intends to focus on
managing and maximizing the value of its existing portfolio. These activities
will include the continued collection of its portfolio pursuant to contractual
terms and may include efforts to retain certain customer relationships,
restructure or terminate other relationships or sell certain assets if buyers
can be found at attractive prices. The Company also expects to continue to
focus on negotiating appropriate rates and fee structures with its customers.
While it is possible that new business opportunities may present themselves in
the future, no assurance can be given as to the Company's ability to take
advantage of those opportunities.

Berkadia Commitment--Proposed Restructuring Plan

  The following describes the Berkadia Commitment as set forth in the
Commitment Letter signed on February 26, 2001. Consummation of the Berkadia
Loan and related transactions contemplated by the Commitment Letter is subject
to approval of the bankruptcy court, necessary creditor approvals, and other
material conditions, including Berkadia's satisfaction with the Company's
Chapter 11 Plan. There can be no assurance that those approvals will be
obtained or that the other conditions will be satisfied.

  The commitment expires on August 31, 2001, or earlier, if certain conditions
are not satisfied, or certain events occur. The commitment provides that the
$6 billion Berkadia Loan will be made to FINOVA. Berkadia's

                                     A-28
<PAGE>

                             THE FINOVA GROUP INC.

commitment for the loan has been guaranteed 90% by Berkshire Hathaway and 10%
by Leucadia, with Berkshire Hathaway providing a secondary guarantee of the
obligations guaranteed by Leucadia. Berkadia expects to finance its funding
commitment and Berkshire Hathaway will provide Berkadia's lenders with a 90%
primary guarantee of that financing, with Leucadia providing a 10% primary
guarantee and Berkshire Hathaway providing a secondary guarantee of Leucadia's
guarantee. Upon completion of the Plan as currently contemplated, Berkadia (or
Berkshire Hathaway and Leucadia in the aggregate) will receive common stock
representing up to 51% of FINOVA's outstanding shares on a fully diluted basis
and the existing shareowners of FINOVA will retain their existing shares.
Berkadia will be entitled to designate a majority of FINOVA's board of
directors upon effectiveness of the Plan. The Berkadia Loan will be guaranteed
on a secured basis by FINOVA and substantially all subsidiaries of FINOVA and
FINOVA Capital.

  The Berkadia Loan will bear interest at an annual rate equal to the greater
of 9% or LIBOR on each day plus 3%. Interest on the Berkadia Loan will be
calculated daily and will be payable quarterly pursuant to the terms of the
Berkadia Loan. In addition, an annual facility fee will be payable monthly at
the rate of 25 basis points on the outstanding principal amount of the
Berkadia Loan. After payment of interest on the Berkadia Loan, payment of
operating expenses and taxes and establishing reserves for customer
commitments and other corporate expenses, any remaining available cash (as
determined under the Berkadia Loan) will then be used for payment of interest
due on the New Senior Notes. Thereafter, 100% of available cash flow and net
proceeds from asset sales will be used to pay principal on the Berkadia Loan
without premium. Any remaining principal and accrued and unpaid interest on
the Berkadia Loan will be due at maturity, which will be five years from
funding.

  Subject to necessary approval of creditors and the bankruptcy court and
various other conditions, pursuant to the proposed Plan, FINOVA Capital will
use the proceeds of the Berkadia Loan to pay down its existing bank and
publicly traded indebtedness on a pro rata basis. The balance of FINOVA
Capital's bank and bond indebtedness (approximately $5.3 billion) will be
restructured into ten-year New Senior Notes of FINOVA.

  The New Senior Notes will bear interest at the weighted average rate of
FINOVA Capital's outstanding bank and bond debt (excluding default interest
and penalties, if any) and will be secured by a second priority security
interest in the stock of FINOVA Capital. Enforcement of the New Senior Note
security interests will not be allowed until the Berkadia Loan is paid in
full. Interest on the New Senior Notes will be payable semi-annually only out
of available cash, if any, determined in accordance with the terms of the New
Senior Notes. No payments of principal will be made on the New Senior Notes
until the Berkadia Loan is paid in full. After payment in full of the Berkadia
Loan, available cash flow from FINOVA Capital, after paying operating expenses
and taxes and establishing reserves for customer commitments and other
corporate expenses, will first be used for payment of interest on the New
Senior Notes. Thereafter, available cash determined in accordance with the
terms of the New Senior Notes will be used first to pay or to fund a reserve
to pay interest on FINOVA's outstanding 5 1/2% Convertible Subordinated
Debentures due 2016 (which will be distributed upon consummation of the
proposed Plan to the holders of the FINOVA Trust Originated Preferred
Securities) and then to make semi-annual prepayments of principal on the New
Senior Notes and distributions (or reserves for distributions) to FINOVA
common shareowners with a total of 95% of the remaining available cash to be
used for principal payments on the New Senior Notes and 5% to be used for
distributions to shareowners. After payment in full of the outstanding
principal of the New Senior Notes, 95% of any available cash of FINOVA Capital
will be used to pay contingent cash flow rights to holders of the New Senior
Notes in an aggregate amount up to $100 million.

  Completion of the transactions contemplated by the Berkadia Commitment
Letter is subject to a number of conditions, including the negotiation and
approval of definitive loan documentation, Berkadia's approval of the terms
and conditions of the FINOVA and FINOVA Capital Plan, bankruptcy court and
necessary creditor approval of the Plan, the issuance of up to 51% of FINOVA's
common stock to Berkshire, Leucadia or their designees and designation by
Berkadia of a majority of directors as noted above.

                                     A-29
<PAGE>

                             THE FINOVA GROUP INC.

  Berkadia has received a $60 million commitment fee and subject to bankruptcy
court approval, will receive an additional $60 million fee upon funding or if
the commitment is not funded (except in certain limited circumstances). In
addition, FINOVA Capital has agreed to reimburse Berkadia, Berkshire Hathaway
and Leucadia for all fees and expenses incurred in connection with Berkadia's
commitment and the financing of its funding obligation under the commitment.

  In connection with the commitment letter, the Company entered into a ten-
year management agreement with Leucadia pursuant to which, prior to the
effective date of the Plan, Leucadia will provide advice and assistance to
FINOVA related to the restructuring and management of FINOVA's asset
portfolio, subject to oversight by the Board of Directors of FINOVA Group or a
special committee of the Board. After the effective date, Leucadia will have
responsibility for the general management of FINOVA, subject to the authority
of the Board. For these services, Leucadia will receive an annual fee of $8
million, the first of which was paid in 2001 when the agreement was signed.

Note B Significant Accounting Policies

  Described below are those accounting policies particularly significant to
FINOVA, including those selected from acceptable alternatives:

  Discontinued Operations--Certain reclassifications have been made to reflect
discontinued operations. These reclassifications resulted from the Company's
decision in the third quarter of 2000 to sell or liquidate some of its more
broad based businesses and focus on providing financing through its niche-
based businesses. The businesses discontinued include Corporate Finance,
Business Credit, Growth Finance (all of which are included under the caption
"Corporate Finance"), Distribution & Channel Finance and Commercial Services.
See Note T for more information on discontinued operations.

  Use of Estimates--The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Such estimates and assumptions could
change as more information becomes available, which could impact the amounts
reported and disclosed herein.

  Revenue Recognition--For loans and other financing contracts, earned income
is recognized over the life of the contract, using the interest method.

  Leases that are financed by nonrecourse borrowings and meet certain other
criteria are classified as leveraged leases. For leveraged leases, aggregate
rental receivables are reduced by the related nonrecourse debt service
obligation including interest ("net rental receivables"). The difference
between (a) the net rental receivables and (b) the cost of the asset less
estimated residual value at the end of the lease term is recorded as unearned
income. Earned income is recognized over the life of the lease at a constant
rate of return on the positive net investment, which includes the effects of
deferred income taxes.

  For operating leases, earned income is recognized on a straight-line basis
over the lease term and depreciation is taken on a straight-line basis over
the estimated useful lives of the leased assets.

  Origination fees, net of direct origination costs, are deferred and
amortized over the life of the originated asset as an adjustment to yield.

  Original issue discounts are established when equity interests are received
in connection with a funded loan based on the fair value of the equity
interest. The assigned value is amortized to income over the term of the loan
as an adjustment to yield.

                                     A-30
<PAGE>

                             THE FINOVA GROUP INC.

  Fees received in connection with loan commitments are deferred until the
loan is advanced and are then recognized as income over the term of the loan
as an adjustment to the yield. Fees on commitments that expire unused are
recognized at expiration.

  Fees are also generated on the volume of purchased accounts receivable and
commercial mortgage loan originations. Fees on the volume of purchased
accounts receivable were generated by FINOVA's Commercial Services and
Distribution & Channel Finance divisions, which were discontinued in the third
quarter of 2000, and represent discounts or commissions to FINOVA in return
for handling the accounts receivable collection process. These fees are
recognized as income in the period the receivables are purchased due to the
short-term nature of the accounts receivable, which are generally collected
from one to three months after purchase. FINOVA's commercial mortgage
operation originates and sells loans and typically would only retain assets on
the balance sheet for a short period of time. Fees on mortgage loan
originations represent broker commissions on the loan originations and are
recognized as income in the period of origination. FINOVA ceased operation of
its commercial mortgage operation in the second quarter of 2000.

  Income recognition is generally suspended for leases, loans and other
financing contracts at the earlier of the date at which payments become 90
days past due or when, in the opinion of management, a full recovery of income
and principal becomes doubtful. Income recognition is resumed when the loan,
lease or other financing contract becomes contractually current and
performance is demonstrated to be resumed or when foreclosed or repossessed
assets generate a reasonable rate of return.

  Cash Equivalents--FINOVA classifies highly liquid investments with original
maturities of three months or less from date of purchase as cash equivalents.

  The December 31, 2000 Statement of Consolidated Cash Flows excluded the non-
cash activity for the transfers of $38.2 million from the purchase of assets
previously held in a joint venture with a third party from investments to
other assets, $44.8 million in convertible debt investment securities from
investment in financing contracts to investments, that were subsequently
written-off, and $13.7 million of assets coming off lease from investment in
financing contracts to other assets. The December 31, 1999 Statement of
Consolidated Cash Flows excluded the non-cash activity for the transfers of
$61.8 million of debt investment securities from investment in financing
contracts to investments and $59.6 million of assets coming off lease from
investment in financing contracts to other assets.

  Financing Contracts Held for Sale--Financing contracts held for sale are
composed of assets held for sale. Assets held for sale are carried at lower of
cost or market with adjustment, if any, recorded in operations. During 2000,
the Company designated loans generated by the Realty Capital line of business
as being held for sale and recorded a loss of $43.2 million to write-down the
assets to fair value.

  Reserve for Credit Losses--The reserve for credit losses is available to
absorb credit losses and is not provided for financing contracts held for sale
and other owned assets, including assets on operating lease and residuals. The
provision for credit losses is the charge to operations to increase the
reserve for credit losses to the level that management estimates to be
adequate considering delinquencies, loss experience and collateral. Other
factors considered include changes in geographic and product diversification,
size of the portfolio and current economic conditions. Accounts are either
written off or written down when the loss is considered probable and
determinable, after giving consideration to the customer's financial condition
and the value of the underlying collateral, including any guarantees. Any
deficiency between the carrying amount of an asset and the net sales price of
repossessed collateral is charged to operations as incurred. Recoveries of
amounts previously written off as uncollectible are credited to the reserve
for credit losses.

  Impaired Loans--Impaired loans represent loans with probable significant
delays in collection of all of the scheduled principal and interest payments
in accordance with the original contractual terms. The amount of the

                                     A-31
<PAGE>

                             THE FINOVA GROUP INC.

specific impairment reserve is equal to the difference between the current
carrying amount of a loan and the greater of (a) the net present value of
expected cash flows from the borrower, discounted at the original effective
interest rate of the transaction, or (b) the net fair value of collateral.
Accruing impaired loans are paying in accordance with the current modified
loan agreement or have adequate collateral protection.

  Repossessed Assets--Repossessed assets are carried at the lower of cost or
fair value less estimated selling expenses.

  Residual Values--FINOVA has a significant investment in residual values in
its leasing portfolios. These residual values represent estimates of the value
of leased assets at the end of the contract terms and are initially recorded
based upon appraisals and estimates. Residual values are periodically reviewed
to determine that recorded amounts are appropriate. Actual residual values
realized could differ from these estimates and updates.

  Investments--The Company's investments include debt securities, equity
securities and partnership interests.

  Certain marketable securities, as discussed in Note E, are considered
trading securities and are stated at fair value with gains or losses recorded
in operations in the period they occur.

  Equity securities that are being held for an indefinite period of time are
designated as available for sale and carried at fair value using the specific
identification method.

  Partnership interests are accounted for under either the cost or equity
method depending on the Company's level of influence in the investee. Under
the equity method, the Company recognizes its share of income or losses of the
partnership in the period in which they are earned. Under the cost method, the
Company recognizes income based on distributions received.

  The carrying value of equity securities and partnership interests are
periodically reviewed for impairment which, if identified, is recorded as a
charge to operations.

  Other Assets--Included in other assets are aircraft either undergoing
conversion from passenger to cargo configuration or otherwise available for
lease of approximately $231.2 million and $98.4 million at December 31, 2000
and 1999, respectively. Conversion costs are capitalized as incurred.

  Goodwill--FINOVA amortizes the excess of cost over the fair value of net
assets acquired ("goodwill") on a straight-line basis primarily over 20 to 25
years. Amortization totaled $16.3 million ($11.0 million after-tax), $16.1
million ($10.3 million after-tax) and $11.1 million ($7.0 million after-tax)
for the years ended December 31, 2000, 1999 and 1998, respectively. FINOVA
periodically evaluates the carrying value of its intangible assets for
impairment. This evaluation is based on projected, undiscounted cash flows
generated by the underlying assets. Management evaluated the impairment of all
goodwill at December 31, 2000, and $193.3 million ($146.3 million was tax
deductible) of the Company's goodwill was considered impaired and was written
off to amortization expense. Additionally, in connection with adjusting the
discontinued business to net realizable value, $107.3 million ($95.7 million
was tax deductible) of goodwill associated with discontinued operations was
written off and is included in the loss on disposal of operations. At December
31, 2000, approximately $29.5 million of goodwill (net of amortization), or
69% of the original goodwill balance, was deductible for federal income tax
purposes over 15 years.

  Pension and Other Benefits--Trusteed, noncontributory pension plans cover
substantially all employees. Benefits are based primarily on final average
salary and years of service. Funding policies provide that payments to pension
trusts shall be at least equal to the minimum funding required by applicable
regulations.

                                     A-32
<PAGE>

                             THE FINOVA GROUP INC.

  Other post-retirement benefit costs are recorded during the period the
employees provide service to FINOVA. Post-retirement benefit obligations are
funded as benefits are paid.

  Post-employment benefits are any benefits other than retirement benefits.
Generally, FINOVA records post-employment benefit costs if the obligation
attributable to the employee's services have been rendered, the employee's
rights to those benefits have accumulated or vested, payment of the benefits
is probable, and the amount of the benefits can be reasonably estimated.

  Employees are covered by one of several severance arrangements with the
Company. Severance accruals are recorded when management approves the
termination, which specifically identifies the employees to be terminated. At
December 31, 2000, the Company accrued $4.1 million in severance related costs
in continuing operations for 80 employees terminated in the first quarter of
2001.

  Employees included as part of the Company's continuing operations were also
covered by retention plans in place as of December 31, 2000. The cost
associated with a retention plan is charged to operations over the period of
service for the corresponding plan. The Company recorded $21.6 million in
retention expense during 2000.

  Savings Plan--FINOVA maintains The FINOVA Group Inc. Savings Plan (the
"Savings Plan"), a qualified 401(k) program. The Savings Plan is available to
substantially all employees. The employee may elect voluntary wage reductions
ranging from 0% to 15% of taxable compensation. The Company's matching
contributions are based on employee pre-tax salary reductions, up to a maximum
of 100% of the first 6% of salary contributions, the first 3% of which were
matched in FINOVA stock through the Employee Stock Ownership Plan ("ESOP"),
discussed below, until year-end. Thereafter, the ESOP was terminated and
merged into the Savings Plan.

  Employee Stock Ownership Plan--Employees of FINOVA were eligible to
participate in the Employee Stock Ownership Plan in the month following the
first 12 consecutive month period during which they have at least 1,000 hours
of service with FINOVA. Company contributions were made in the form of
matching stock contributions of 100% of the first 3% of salary reduction
contributions made by participants of the Savings Plan. Effective January 1,
2001, up to the entire 6% of salary is matched and invested at the employees
discretion, and the ESOP was terminated and merged into the Savings Plan.

  Expenses under the Savings Plan and Employee Stock Ownership Plan were $4.4
million, $4.0 million and $3.1 million in 2000, 1999 and 1998, respectively.

  Income Taxes--Deferred tax assets and liabilities are recognized for the
estimated future tax effects attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax law.

  (Loss) Earnings Per Share--Basic (loss) earnings per share exclude the
effects of dilution and are computed by dividing (loss) income available to
common shareowners by the weighted average amount of common stock outstanding
for the period. Diluted earnings per share reflect the potential dilution that
could occur if options, convertible preferred stock or other contracts to
issue stock were exercised or converted into common stock. These calculations
are presented for the years ended December 31, 2000, 1999 and 1998 on the
Statements of Consolidated Operations and are more fully discussed in Note M.

  Derivative Financial Instruments--As more fully described in Note G, FINOVA
has used derivative financial instruments as part of its interest rate risk
management policy of match funding its assets and liabilities. The derivative
instruments used include interest rate swaps and, to a lesser extent, treasury
locks, options, futures and swaptions, which are subject to hedge accounting
determination.

                                     A-33
<PAGE>

                             THE FINOVA GROUP INC.

  Each derivative used as a hedge was matched with an asset or liability with
which it had a high correlation. Historically, during 2000 the swap agreements
were generally held to maturity and FINOVA did not use derivative financial
instruments for trading or speculative purposes.

  As of December 31, 2000, the interest rate swaps were generally not
recognized on the balance sheet. However, the receipts and disbursements on
the interest rate swaps were generally accrued as earned or incurred in the
results of operations.

  Receivable Sales--In accordance with SFAS No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities," when
the Company sells receivables, it may retain subordinated interests, which are
retained interests in the transferred receivables. These receivable transfers
are accounted for as sales when legal and effective control of the transferred
receivables is surrendered. Gain or loss on sale of the receivables depends in
part on the previous carrying amount of the financial assets involved in the
transfer, allocated between the receivables sold and the retained interests
based on their relative fair value at the date of transfer. Active markets
with quoted prices for retained interests generally do not exist. Therefore,
the Company estimates fair value based on the present value of future expected
cash flows estimated using management's best estimates of the key assumptions
i.e., net credit losses, prepayment speeds and discount rates commensurate
with the risks involved. In general, the servicing fees earned are
approximately equal to the cost of servicing; therefore, no material servicing
assets or liabilities have been recognized in those transactions.

  FINOVA's retained interests in transferred receivables are generally treated
as assets available for sale, which are carried at estimated fair value using
the specific identification method with unrealized gains and losses being
recorded as a component of accumulated other comprehensive income within the
equity section of the balance sheet; however, if a decline in value is
considered other than temporary, the valuation adjustment is recorded through
the statement of operations. These retained interests are on the balance sheet
within investment in financing transactions.

  FINOVA's retained interests in transferred receivables that relate to
discontinued operations are recorded within discontinued operations.

  FINOVA adopted the disclosure provisions of SFAS 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities," as of December 31, 2000. These provisions required additional
disclosures about the Company's receivables transfers, servicing
responsibilities, retained interests, and key assumptions made in its
valuations. The implementation of the disclosure provisions of SFAS 140 did
not have a material impact on FINOVA's consolidated results of operations and
financial position. The remaining provisions of SFAS 140, related to the
accounting requirements for transfers of financial assets, are effective for
transfers after March 31, 2001 and may impact FINOVA's treatment of any future
transfers of receivables, including gain or loss recognition on sales.

  Reclassifications--Certain reclassifications have been made to the prior
years financial statements to conform with the 2000 presentation.

                                     A-34
<PAGE>

                             THE FINOVA GROUP INC.

Note C Investment in Financing Transactions

  FINOVA provides secured financing to commercial and real estate enterprises
principally under financing contracts (such as loans and other financing
contracts, direct financing leases, operating leases, leveraged leases and
financing contracts held for sale). The following discussion excludes
discontinued operations. At December 31, 2000 and 1999, the carrying amount of
the investment in financing transactions, including the estimated residual
value of leased assets upon lease termination, was $10.2 billion and $10.3
billion (before reserve for credit losses), respectively, and consisted of the
following percentage of carrying amount by segment and line of business:

<TABLE>
<CAPTION>
                                                                 Percent of
                                                                    Total
                                                               Carrying Amount
                                                               ----------------
                                                                2000     1999
                                                               -------  -------
   <S>                                                         <C>      <C>
   Specialty Finance Group
     Transportation Finance...................................    23.5%    24.1%
     Resort Finance...........................................    18.0     15.7
     Commercial Equipment Finance.............................     5.1      8.2
     Franchise Finance........................................     9.0      7.6
     Specialty Real Estate Finance............................     6.9      7.5
     Healthcare Finance.......................................     8.4      7.4
     Communications Finance...................................     7.0      6.7
     Public Finance...........................................     1.8      1.6
                                                               -------  -------
                                                                  79.7%    78.8%
                                                               -------  -------
   Commercial Finance Group
     Rediscount Finance.......................................    12.0     10.4
                                                               -------  -------
                                                                  12.0%    10.4%
                                                               -------  -------
   Capital Markets Group
     Realty Capital...........................................     4.2      5.7
     Mezzanine Capital........................................     3.3      4.3
     Investment Alliance......................................     0.4      0.2
                                                               -------  -------
                                                                   7.9%    10.2%
                                                               -------  -------
   Other......................................................     0.4      0.6
                                                               -------  -------
                                                                 100.0%   100.0%
                                                               =======  =======
</TABLE>

  FINOVA's loan and lease portfolio as indicated in the above table is
concentrated in several specialized businesses and accordingly is subject to
both the normal lending risk of general economic downturns and additional risk
of economic downturn in individual sectors of the economy. Additionally, the
Company may complete multiple lending or leasing transactions to individual
borrowers and their affiliates resulting in an increase in the risk
concentration to economic events affecting such single borrowers and their
affiliates. At December 31, 2000, FINOVA's portfolio includes aggregate
exposures to 12 borrowers and their affiliates exceeding $100 million each and
aggregating to approximately $1.8 billion.

                                     A-35
<PAGE>

                             THE FINOVA GROUP INC.

  Aggregate installments on investments in financing transactions at December
31, 2000 (excluding nonaccruing repossessed assets of $25.1 million and
estimated residual values of $1,023.3 million) are contractually due or
anticipated during each of the years during December 31, 2001 to 2005 and
thereafter as follows:

<TABLE>
<CAPTION>
                             2001       2002       2003       2004      2005   Thereafter
                          ---------- ---------- ---------- ---------- -------- ----------
<S>                       <C>        <C>        <C>        <C>        <C>      <C>
Loans and other
 financing contracts:
  Fixed interest rate...  $  718,920 $  471,874 $  544,391 $  387,034 $276,316 $  867,298
  Floating interest
   rate.................   1,348,052  1,055,528  1,108,394    706,943  155,355    170,504
Leases, primarily at
 fixed interest rate:
  Operating leases......     197,494    151,223     63,708     64,662   27,736     56,875
  Leveraged leases......      14,762      4,707     14,292     15,848   21,001    357,439
  Direct financing
   leases...............     102,425     76,823     63,455     65,280   45,576    321,331
Financing contracts held
 for sale...............     194,423    100,582     23,888     71,633    1,374     30,056
                          ---------- ---------- ---------- ---------- -------- ----------
                          $2,576,076 $1,860,737 $1,818,128 $1,311,400 $527,358 $1,803,503
                          ========== ========== ========== ========== ======== ==========
</TABLE>

  The investment in operating leases at December 31 consisted of the
following:

<TABLE>
<CAPTION>
                                                             2000       1999
                                                           ---------  ---------
<S>                                                        <C>        <C>
Cost of assets............................................ $ 711,835  $ 720,617
Accumulated depreciation..................................  (150,137)  (133,334)
                                                           ---------  ---------
Investment in operating leases............................ $ 561,698  $ 587,283
                                                           =========  =========
</TABLE>

  The net investment in leveraged leases at December 31 consisted of the
following:

<TABLE>
<CAPTION>
                                                        2000         1999
                                                     -----------  -----------
<S>                                                  <C>          <C>
Rental receivables.................................. $ 2,991,130  $ 2,987,277
Less principal and interest payable on nonrecourse
 debt...............................................  (2,563,081)  (2,517,839)
                                                     -----------  -----------
Net rental receivables..............................     428,049      469,438
Estimated residual values...........................     874,334      848,236
Less unearned income................................    (498,802)    (480,591)
                                                     -----------  -----------
Investment in leveraged leases......................     803,581      837,083
Less deferred taxes from leveraged leases...........    (483,319)    (411,642)
                                                     -----------  -----------
Net investment in leveraged leases.................. $   320,262  $   425,441
                                                     ===========  ===========
</TABLE>

  The components of income from leveraged leases, after the effects of
interest on nonrecourse debt and other related expenses, for the years ended
December 31 were as follows:

<TABLE>
<CAPTION>
                                                         2000    1999    1998
                                                        ------- ------- -------
<S>                                                     <C>     <C>     <C>
Lease and other income, net............................ $46,251 $60,936 $60,484
Income tax expense.....................................  16,832  24,136  24,063
</TABLE>

  The investment in direct financing leases at December 31 consisted of the
following:

<TABLE>
<CAPTION>
                                                             2000       1999
                                                           ---------  ---------
<S>                                                        <C>        <C>
Rental receivables........................................ $ 674,890  $ 574,874
Estimated residual values.................................   148,926    150,483
Unearned income...........................................  (266,345)  (231,742)
                                                           ---------  ---------
Investment in direct financing leases..................... $ 557,471  $ 493,615
                                                           =========  =========
</TABLE>

                                     A-36
<PAGE>

                             THE FINOVA GROUP INC.

  FINOVA has a substantial number of loans and leases with payments that
fluctuate with changes in index rates, primarily prime interest rates and the
London interbank offered rates ("LIBOR"). The investment in loans and leases
with floating interest rates (excluding nonaccruing contracts and repossessed
assets) was $4.6 billion and $4.5 billion at December 31, 2000 and 1999,
respectively.

  Income earned from financing transactions with floating interest rates was
approximately $505 million in 2000, $356 million in 1999 and $295 million in
1998. The adjustments which arise from changes in index rates can have a
significant effect on income earned from financing transactions.

  FINOVA had loans and leases of $2.74 billion in 2000 and $1.87 billion in
1999 collateralized by real estate.

  At December 31, 2000, FINOVA had a committed backlog of business of
approximately $1.3 billion compared to $1.9 billion at December 31, 1999. The
committed backlog includes unused lines of credit totaling $576 million and
$710 million at December 31, 2000 and 1999, respectively. There can be no
assurance that FINOVA will book all or any part of the backlog. Loan
commitments and lines of credit have generally the same credit risk as
extending loans to borrowers. These commitments are generally subject to the
same credit quality and collateral requirements involved in lending
transactions. Commitments generally have a fixed expiration and usually
require payment of a fee.

  Historically, the amount reported as committed backlog was FINOVA's estimate
of expected draw downs of the total commitments outstanding, especially the
revolving unused lines of credit. That amount at December 31, 2000 was $1.3
billion for continuing operations, and assumed a percentage of the outstanding
commitments would not be drawn down. Assuming full utilization, the total
amount of unused lines of credit at December 31, 2000, was $2.7 billion,
included outstanding commitments in discontinued operations.

  In light of the significant business developments described in Note A,
FINOVA has effectively eliminated new business development activities, and for
the foreseeable future, intends to focus on managing and maximizing the value
of its existing portfolio.

Sales of Receivables

  Commercial Equipment Finance--In the second quarter of 2000, the Commercial
Equipment Finance unit completed the sale of $322.1 million of commercial
equipment loans and direct financing lease receivables for cash proceeds of
$302.8 million. The structure of the transaction included a 364-day commitment
to sell at FINOVA's option up to $375 million of receivables on a revolving
basis. The Company also receives annual servicing fees approximating 50 basis
points on the outstanding balance of the receivables and the right to future
cash flows after investors have received the return for which they have
contracted. There is no recourse to the Company's other assets for failure of
debtors to pay when due. The Company's retained interests are subordinate to
investors' interests. The value of the retained interests is subject to
credit, prepayment, and interest rate risks on the transferred financial
assets.

  At sale dates, the Company recognized a pre-tax gain of $0.2 million. In the
determination of the gain, the Company assumed an annual prepayment rate of
6.0%, weighted average life of approximately 3.5 years, an annual net credit
loss rate of 1.5%, delinquencies of 5.0% and a discount rate of 15%.

  At December 31, 2000, the outstanding balance of the sold receivables
totaled $267.7 million. A revaluation of the retained interest resulted in a
$6.2 million unrealized holding loss based on the following revised
assumptions: an annual prepayment rate of 8.0%, weighted average life of
approximately 3.0 years, an annual net credit loss rate of 1.5%, delinquencies
of 6.3%, and a discount rate of 20%. The unrealized holding loss is included
in other comprehensive income. The retained interests had an estimated fair
value, net of the valuation adjustment, totaling $25.6 million at December 31,
2000 and are included in loans and other financing contracts.

                                     A-37
<PAGE>

                             THE FINOVA GROUP INC.

  In connection with the retained interests, a hypothetical analysis was
performed to determine the impact of a 10% and 20% adverse change in any
individual assumption from the expected levels. Based on this analysis, a 10%
and 20% adverse change in the level of prepayments would result in a $0.5
million and $1.0 million reduction in its value, respectively. A 10% and 20%
adverse change in the level of net credit losses would result in a $0.3
million and $0.6 million reduction in its value, respectively. A 10% and 20%
adverse change in the level of delinquencies would result in a $0.04 million
and $0.1 million reduction in its value, respectively. A 10% and 20% adverse
change in the discount rate would result in a $1.5 million and $2.9 million
reduction in its value, respectively. These sensitivities are hypothetical and
should be used with caution. As the figures indicate, changes in fair value
based on a percentage variation in assumptions generally cannot be
extrapolated because the relationship of the change in assumption to the
change in fair value may not be linear. Also, the effect of a variation in a
particular assumption on the fair value of the retained interest is calculated
without changing any other assumption; in reality, changes in one factor may
result in changes in another (for example, increases in market interest rates
may result in lower prepayments and increased credit losses), which might
magnify or counteract the sensitivities.

  At December 31, 2000, the total funds employed in Commercial Equipment
Finance's portfolio were $515.1 million, total delinquencies were $48.1
million and annual net credit losses equaled $19.9 million.

  On February 27, 2001, FINOVA Capital announced a moratorium on repayment of
principal on its outstanding bank and bond debt, which constitutes an event of
default and a cross default under substantially all of FINOVA Capital's bank
and bond indebtedness. The debt default triggered a cross default under this
sale and servicing agreement. As a result, the revolving feature was
terminated and FINOVA was required to obtain a backup servicer in the event
that FINOVA would not be able to perform its servicing duties. The backup
servicer was retained in the first quarter of 2001.

  Corporate Finance (included in discontinued operations)--In the third
quarter of 2000, FINOVA's Corporate Finance division sold $827 million of
loans, on a revolving basis. Cash proceeds to FINOVA aggregated approximately
$475 million. The Company also received annual servicing fees approximating
200 basis points on the outstanding balance of the receivables and the right
to future cash flows after investors have received the return for which they
have contracted. There is no recourse to the Company's other assets for
failure of debtors to pay when due. The Company's retained interests are
subordinate to the investors' interests. The value of the retained interests
is subject to credit, prepayment, and interest rate risks on the transferred
financial assets.

  During 2000, the Company recognized a pre-tax loss of $13.1 million,
including transaction fees. At December 31, 2000, the outstanding balance of
the sold loans totaled $708.8 million. At December 31, 2000, the Company's
retained interests had an estimated value totaling $419.3 million. The Company
used the following assumptions in determining the value of its retained
interests: an annual prepayment rate of 28.6%, annual net credit loss rate of
2.1% and a discount rate of 12%. On February 1, 2001, FINOVA negotiated an
agreement and purchased the outstanding beneficial interests.

  In February 2000, FINOVA repurchased the $300 million outstanding undivided
proportionate interests in a revolving loan portfolio originated in 1996 and
1995. The revolving loan portfolio totaled $717.9 million as of December 31,
1999.

  Franchise Finance--Previously in 1998 and 1997, the Company sold receivables
totaling $140.0 million with limited recourse. At December 31, 2000 and 1999,
the outstanding balance of the sold loans totaled $116.8 million and $123.2
million, respectively. In these securitizations, the Company retained
servicing responsibilities and subordinated interests. As of December 31, 2000
and 1999, the Company continued to service these assets and held subordinated
interests totaling $8.2 million and $14.4 million, respectively. The value of
the retained interests is subject to credit, prepayment, and interest rate
risks on the transferred financial assets.

                                     A-38
<PAGE>

                             THE FINOVA GROUP INC.

Note D Reserve for Credit Losses

  The following is an analysis of the reserve for credit losses for the years
ended December 31:

<TABLE>
<CAPTION>
                                                    2000       1999      1998
                                                  ---------  --------  --------
<S>                                               <C>        <C>       <C>
Balance, beginning of year....................... $ 178,266  $141,579  $ 99,008
Provision for credit losses......................   643,000    22,390    48,470
Write-offs.......................................  (240,655)  (24,422)  (12,161)
Recoveries.......................................     1,018     1,830     1,174
Acquisitions and other...........................    (2,879)   36,889     5,088
                                                  ---------  --------  --------
Balance, end of year............................. $ 578,750  $178,266  $141,579
                                                  =========  ========  ========
</TABLE>

  Net write-offs by segment and line of business for the years ended December
31 are as follows:

<TABLE>
<CAPTION>
                                                     2000     1999     1998
                                                   --------  -------  -------
<S>                                                <C>       <C>      <C>
Specialty Finance Group
  Commercial Equipment Finance.................... $ 19,891  $ 5,773  $ 3,645
  Communications Finance..........................    3,953    3,100      494
  Healthcare Finance..............................   59,637    1,188      960
  Franchise Finance...............................      (81)     240    2,780
  Public Finance                                      4,648
  Resort Finance..................................       61      656
  Transportation Finance..........................   40,500
  Specialty Real Estate Finance...................    2,646      129    1,785
                                                   --------  -------  -------
                                                    131,255   11,086    9,664
                                                   --------  -------  -------
Commercial Finance Group
  Rediscount Finance..............................   19,208    3,472    1,500
                                                   --------  -------  -------
                                                     19,208    3,472    1,500
                                                   --------  -------  -------
Capital Markets Group
  Mezzanine Capital...............................   85,995    8,154
  Realty Capital..................................    3,000
                                                   --------  -------  -------
                                                     88,995    8,154
                                                   --------  -------  -------
Other.............................................      179     (120)    (177)
                                                   --------  -------  -------
Total net write-offs.............................. $239,637  $22,592  $10,987
                                                   --------  -------  -------
Net write-offs as a percentage of average managed
 assets...........................................     2.25%    0.24%    0.15%
                                                   ========  =======  =======
</TABLE>

  An analysis of nonaccruing assets included in the investment in financing
transactions at December 31 is as follows:

<TABLE>
<CAPTION>
                                                             2000      1999
                                                           --------  --------
<S>                                                        <C>       <C>
Contracts................................................. $896,262  $122,893
Repossessed assets........................................   25,089    52,100
                                                           --------  --------
Total nonaccruing assets.................................. $921,351  $174,993
                                                           --------  --------
Nonaccruing assets as a percentage of ending managed
 assets...................................................      8.7%      1.7%
                                                           ========  ========
</TABLE>

  In addition to the repossessed assets included in the above table, FINOVA
had repossessed assets with a total carrying amount of $40.9 million and $74.9
million at December 31, 2000 and 1999, respectively, which earned income of
$5.2 million and $5.5 million during 2000 and 1999, respectively.

                                     A-39
<PAGE>

                             THE FINOVA GROUP INC.

  At December 31, 2000, the total carrying amount of impaired loans in
continuing operations was $1.1 billion, of which $235.8 million were revenue
accruing. A specific impairment reserve for credit losses of $246.4 million
has been established for $697.0 million of nonaccruing impaired loans and $1.8
million has been established for $34.7 million of accruing impaired loans.
Additionally, $2.2 million was established for other accounts. As a result,
43.3% of FINOVA's reserve for credit losses was allocated to specific
reserves. The remaining $328.4 million or 56.7% of the reserve for credit
losses is designated for general purposes and represents management's best
estimate of inherent losses in the remaining portfolio considering
delinquencies, loss experience and collateral. At December 31, 1999, the total
amount of impaired loans was $222.7 million, of which $108.8 million were
revenue accruing. The specific impairment reserve for credit losses at
December 31, 1999 was $35.4 million for $89.0 million of nonaccruing impaired
loans and $25.3 million for $52.0 million of accruing impaired loans. Actual
results could differ from estimates and values, and there can be no assurance
that the reserves will be sufficient to cover portfolio losses. Additions to
the general and specific reserves are reflected in current operations.
Management may transfer reserves between the general and specific reserves as
considered necessary.

  At December 31, 2000, discontinued operations included $486.2 million of
nonaccruing assets, of which $421.9 million were in Corporate Finance. Since
the assets of the discontinued operations have been written down to estimated
net realizable value, no reserve for credit losses are carried against those
assets. Net realizable value write-downs for the year ended December 31, 2000
were $347.5 million.

  For the three years ended December 31, 2000, 1999 and 1998, the average
carrying amount of impaired loans in continuing operations was $507 million,
$184.8 million and $99.7 million, respectively. Income earned on accruing
impaired loans was approximately $2.5 million in 2000, $7.9 million in 1999
and $3.3 million in 1998. Income earned on impaired loans is recognized in the
same manner as it is on other accruing loans. Cash collected on all
nonaccruing loans is applied to the carrying amount.

  Had all nonaccruing assets outstanding at December 31, 2000, 1999 and 1998
in continuing operations remained accruing, pre-tax income earned would have
increased by approximately $36 million, $16 million and $12 million,
respectively.

Note E Investments

  Debt and equity securities that are being held for an indefinite period of
time, including those securities which may be sold in response to needs for
liquidity, are classified as securities available for sale and are carried at
fair value using the specific identification method with unrealized gains and
losses, net of deferred taxes, reported as a component of accumulated other
comprehensive income in the equity section of the balance sheet. A summary of
securities classified as available for sale at December 31 is as follows:

<TABLE>
<CAPTION>
                                                                 2000     1999
                                                               -------- --------
<S>                                                            <C>      <C>
Partnership interests......................................... $135,284 $121,995
Equity securities.............................................   94,418  179,795
Debt securities...............................................            54,553
Other.........................................................            15,798
                                                               -------- --------
                                                               $229,702 $372,141
                                                               ======== ========
</TABLE>

  The net unrealized holding gains were $15.2 million and $38.0 million (net
of deferred tax liability of $8.1 million and $25.2 million) at December 31,
2000 and 1999, respectively. The decline in the unrealized gains during 2000
was due primarily to the realization of gains through the sale of certain
investment securities, including Healtheon/WebMD stock ($20.7 million). Net
gains of $57.4 million and $35.4 million were recognized on sales of
marketable investments in 2000 and 1999, respectively.

                                     A-40
<PAGE>

                             THE FINOVA GROUP INC.

  FINOVA also carried investments held for trading of $56.2 million and $70.5
million at December 31, 2000 and 1999, respectively, in a trust for
nonqualified compensation plans. The Company's investments in trading
securities are marked to market on a quarterly basis through current
operations.

  FINOVA maintains no investments that are classified as held to maturity at
December 31, 2000 and 1999.

Note F Debt

  FINOVA's internally generated funds, available credit lines and asset sales
financed new business and liquidity during the twelve months ended December
31, 2000. During May and June 2000, FINOVA drew down $4.5 billion against
domestic commercial paper back-up bank facilities and used the proceeds
primarily for repayment of commercial paper, maturing debt and to fund general
operations. Of this amount, $2.1 billion was due on or before May 15, 2001,
although $500 million could have been extended had a default not existed at
the time. The other $2.4 billion was scheduled to be repaid between 2002 to
2003. FINOVA also had $150 million (Canadian) scheduled to be due under a bank
facility that matured in July 2001. Term debt maturities over the next twelve
months by quarter included $242.0 million in the first quarter of 2001, $2.4
billion in the second quarter of 2001 (included $2.1 billion of bank
facilities), $449.2 million in the third quarter of 2001 and $345.7 million in
the fourth quarter of 2001. During 2000, FINOVA issued $225 million of new
public notes and repaid $1.4 billion of long-term borrowings. FINOVA's credit
ratings were reduced several times during 2000.

  As noted in Notes A and N, FINOVA, FINOVA Capital and seven of their
affiliates filed for protection of the courts under Chapter 11, Title 11, of
the United States Code, (the "Reorganization Proceedings") to enable them to
restructure the debt maturities, among other items. No principal or interest
payments will be made on the debt until the Plan defining repayment terms has
been approved by the court.

  The following information pertains to commercial paper, bank and other
short-term borrowings, issued by FINOVA Capital for the years ended December
31:

<TABLE>
<CAPTION>
                                                        Commercial   Bank and
                                                          Paper       Other
                                                          (1)(2)    Borrowings
                                                        ----------  ----------
<S>                                                     <C>         <C>
2000
  Maximum amount of borrowings outstanding at any
   month-end........................................... $4,403,096  $2,201,090
  Average borrowings outstanding during year...........  1,716,853   1,418,069
  Weighted average interest rate on borrowings
   outstanding at year-end.............................       None         8.6%
  Weighted average interest rate on borrowings
   outstanding during year.............................        6.0%        8.4%
1999
  Maximum amount of borrowings outstanding at any
   month-end........................................... $4,390,656  $   70,630
  Average borrowings outstanding during year...........  3,976,509      28,352
  Weighted average interest rate on borrowings
   outstanding at year-end.............................        6.1%        5.3%
  Weighted average interest rate on borrowings
   outstanding during year.............................        5.4%        5.2%
1998
  Maximum amount of borrowings outstanding at any
   month-end........................................... $3,898,243  $   65,162
  Average borrowings outstanding during year...........  3,524,162      31,159
  Weighted average interest rate on borrowings
   outstanding at year-end.............................        5.6%        5.5%
  Weighted average interest rate on borrowings
   outstanding during year.............................        5.7%        5.3%
</TABLE>
--------
(1)  Included in outstanding balances at December 31, 1999 were commercial
     paper obligations of a foreign subsidiary in Canada of $162.1 million.
     There were no commercial paper obligations of the Company or the foreign
     subsidiary at December 31, 2000.
(2)  Exclusive of the cost of maintaining bank lines in support of outstanding
     commercial paper and the effects of interest rate conversion agreements.
     The Company used various mechanisms to manage interest rate risks. See
     Note G.

                                     A-41
<PAGE>

                             THE FINOVA GROUP INC.

  Senior debt at December 31 was as follows:

<TABLE>
<CAPTION>
                                                            2000        1999
                                                         ----------- -----------
<S>                                                      <C>         <C>
Commercial paper and bank loans, less unamortized
 discount, 5.7% to 5.8% (1)(2).........................  $ 4,690,990 $ 4,126,955
Medium term notes due to 2010, 5.7% to 10.2% (2).......    2,128,772   2,353,091
Senior notes due to 2009, 5.9% to 16.0%, less
 unamortized discount (2)..............................    4,172,112   4,919,218
Nonrecourse installment notes due to 2002, 10.6%
 (assets of $9,381 and $21,877 respectively, pledged as
 collateral) (2).......................................        5,813       8,503
                                                         ----------- -----------
                                                         $10,997,687 $11,407,767
                                                         =========== ===========
</TABLE>
--------
(1)  Includes commercial paper back-up facilities.
(2)  Interest rates are included at the contractual rates absent a default.
     The agreements provide for increased interest rates in the event of a
     default. Subsequent to year-end, grounds to declare a default existed,
     but no defaults were declared under these facilities prior to the
     institution of the Reorganization Proceedings, which have prevented
     declarations of a default without court authorization. The plan of
     reorganization may provide for payment of a different interest rate than
     the contractual rate.

  Annual maturities of senior debt outstanding at December 31, 2000 due
through 2010 were approximately $3.43 billion (2001), $1.91 billion (2002),
$2.79 billion (2003), $1.8 billion (2004), and $115.0 million (2005) and
$960.0 million (thereafter). The senior debt balances are net of an
unamortized discount of $8.9 million and $11.2 million at December 31, 2000
and 1999, respectively. The unamortized discount relates to costs directly
associated with the issuance of the debt and is amortized as an adjustment to
interest expense over the period of the corresponding debt.

  The agreements pertaining to senior debt and revolving credit agreements
include various restrictive covenants and require the maintenance of certain
defined financial ratios with which FINOVA and FINOVA Capital were not in
compliance at December 31, 2000. Due to the noncompliance, the failure to
repay certain debt in 2001 and the Reorganization Proceedings, the Company is
in default under all of its debt arrangements.

  Total interest paid, including amounts allocated to discontinued operations,
was $767.2 million, $521.9 million and $455.4 million for the years ended
December 31, 2000, 1999 and 1998, respectively. Presently while FINOVA has
filed for bankruptcy protection, no interest payments are being made.

Note G Derivative Financial Instruments

  FINOVA entered into interest rate swap, basis swap, foreign currency
exchange, swaption and futures agreements as part of its interest rate risk
management policy. Interest rate swap, basis swap, and swaption agreements
were primarily used to match fund assets and liabilities. Currency swaps were
used to convert both principal and interest payments on debt issued from one
currency to the appropriate functional currency. Futures contracts were used
to target index returns, lock funding costs, and for portfolio hedging. The
Company continually monitored its derivative position and used derivative
instruments for non-trading and non-speculative purposes only.

  FINOVA has used derivative instruments to minimize its exposure to
fluctuations in interest rates, reduce debt expense and lock funding costs
over predetermined periods of time. FINOVA attempted to minimize its overall
debt costs while limiting the short-term variability of interest expense and
funds required for debt service. To achieve this objective, FINOVA had
diversified its borrowing sources (short and long-term debt with a fixed or a
variable rate) and sought to maintain a portfolio that was match funded.
FINOVA's matched funding policy generally required that floating-rate assets
be financed with floating-rate liabilities and fixed-rate assets be financed
with fixed-rate liabilities, measured as a percent of total assets, were not
to vary by more than 3% for any extended period.

                                     A-42
<PAGE>

                             THE FINOVA GROUP INC.

  The notional amounts of derivatives did not represent amounts exchanged by
the parties and, thus, are not a measure of FINOVA's exposure through its use
of derivatives. The amounts exchanged were determined by reference to the
notional amounts and the other terms of the derivatives.

  Under interest rate swap agreements, FINOVA agreed to exchange with the
other party, at specified intervals, the payment streams calculated on a
specified notional amount, with at least one stream based on a floating
interest rate. Generic swap notional amounts did not change for the life of
the contract. Basis swaps involve the exchange of floating-rate indices, such
as the prime rate, the commercial paper composite rate and LIBOR and were used
primarily to protect FINOVA's margins on floating-rate transactions by locking
in the spread between FINOVA's lending and borrowing rates.

  FINOVA's off-balance sheet derivative instruments involved credit and
interest rate risks. Credit risk included the nonperformance by counterparties
to the financial agreements. All financial agreements were executed with major
financial institutions to mitigate the credit risk from transactions. There
was no assurance that any such institution would perform under its agreement.
FINOVA's derivative policy stipulated that the maximum exposure to any one
counterparty relative to the derivative products was limited on a net basis to
10% of FINOVA's outstanding debt at the time of that transaction. Interest
rate risks related to changes in interest rates and the impact on earnings.

  The use of derivatives decreased interest expense by $1.0 million in 2000, a
decrease in the aggregate cost of funds of 0.02%. The use of derivatives in
1999 decreased interest expense by $5.1 million, a decrease in the aggregate
cost of funds of 0.07%, and the use of derivatives in 1998 decreased interest
expense by $5.3 million, a decrease in the aggregate cost of funds of 0.07%.
These changes in interest expense from off-balance sheet derivatives
effectively altered on-balance sheet costs and must be viewed as total
interest rate management.

  Subsequent to December 31, 2000, substantially all of FINOVA's interest rate
swaps were terminated, as a result of the Reorganization Proceedings.
Therefore, FINOVA's asset and liabilities are not match funded going forward.
At termination, the interest rate swaps had an estimated value of
approximately $70 million. Pursuant to the Company's various agreements, the
institutions exercised their right to offset the amounts due to the Company
upon the termination of the swaps against the amount due by the Company on the
debt outstanding.

  The following table provides annual maturities and weighted-average interest
rates for each significant derivative product type in place at December 31,
2000. The rates presented are as of December 31, 2000. To the extent that
rates change, variable interest information will change:

<TABLE>
<CAPTION>
                              Outstanding at    Maturities of Derivative
                               December 31              Products
                              -------------- ----------------------------------
                                   2000      2001  2002  2003  2004  Thereafter
                              -------------- ----  ----  ----  ----  ----------
                                          (Dollars in millions)
<S>                           <C>            <C>   <C>   <C>   <C>   <C>
Receive fixed-rate swaps:
  Notional value............      $1,625     $150  $300  $100  $475     $600
  Weighted average receive
   rate.....................        6.68%    6.66% 6.20% 6.54% 6.57%    6.82%
  Weighted average pay
   rate.....................        6.77%    6.71% 6.82% 6.68% 6.75%    7.02%
Pay fixed-rate swaps:
  Notional value............      $  100     $100
  Weighted average receive
   rate.....................        6.70%    6.70%
  Weighted average pay
   rate.....................        6.62%    6.62%
                                  ------     ----  ----  ----  ----     ----
TOTAL NOTIONAL VALUE........      $1,725     $250  $300  $100  $475     $600
                                  ------     ----  ----  ----  ----     ----
Total weighted average rates
 on Swaps:
  Receive rate..............        6.68%    6.65% 6.20% 6.54% 6.57%    6.82%
                                  ======     ====  ====  ====  ====     ====
  Pay rate..................        6.77%    6.71% 6.82% 6.68% 6.75%    7.02%
                                  ======     ====  ====  ====  ====     ====
</TABLE>

                                     A-43
<PAGE>

                             THE FINOVA GROUP INC.

  For the benefit of its customers, FINOVA also entered into (sold) interest
rate cap agreements. The total notional amount of these agreements at December
31, 2000 was $131.1 million. FINOVA also entered into (purchased) offsetting
interest rate cap agreements with financial institutions. At December 31,
2000, none of the caps were in a receive or pay position. These agreements
will mature as follows: $75.1 million in 2001, $21 million in 2002 and $35
million in 2003.

  FINOVA has also entered into a fixed-rate foreign currency-denominated
borrowing (Japanese Yen ("JPY") 5 billion) maturing in 2002. Two derivatives
are associated with this borrowing, a receive fixed-rate swap (JPY 5 billion)
versus three-month JPY LIBOR and a basis swap, converting JPY LIBOR to US
Dollar ("USD") LIBOR, both of which mature in 2002. The receive side of the
basis swap has a notional amount of JPY 5 billion paying three-month JPY LIBOR
and the pay side has a notional amount of USD 43.6 million paying three-month
USD LIBOR. These derivatives are not reflected in the table above.

  Derivative product activity for the three years ended December 31, 2000 is
as follows:

<TABLE>
<CAPTION>
                                Receive      Pay             Interest
                               Fixed-Rate Fixed-Rate Basis  Rate Hedge
                                 Swaps      Swaps    Swaps  Agreements  TOTAL
                               ---------- ---------- -----  ---------- -------
                                           (Dollars in millions)
<S>                            <C>        <C>        <C>    <C>        <C>
Balance January 1, 1998.......   $1,402     $ 550    $ 628   $         $ 2,580
Expired.......................     (325)     (200)    (628)             (1,153)
Additions.....................                350                217       567
                                 ------     -----    -----   -------   -------
Balance December 31, 1998.....    1,077       700                217     1,994
Expired.......................     (427)     (500)            (1,254)   (2,181)
Additions.....................    1,275                 75     1,168     2,518
                                 ------     -----    -----   -------   -------
Balance December 31, 1999.....    1,925       200       75       131     2,331
Expired.......................     (300)     (100)     (75)     (131)     (606)
Additions.....................
                                 ------     -----    -----   -------   -------
Balance December 31, 2000.....   $1,625     $ 100    $       $         $ 1,725
                                 ======     =====    =====   =======   =======
</TABLE>

  The table above does not include the JPY 5 billion receive fixed-rate swap
or a basis swap converting JPY LIBOR to USD LIBOR. The receive side of the
basis swap has a notional of JPY 5 billion and the pay side has a notional of
USD 43.6 million.

  In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes new accounting and
reporting standards for derivative instruments. In June 1999, the FASB issued
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities--
Deferral of the Effective Date of FASB Statement No. 133," and in June 2000,
the FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments
and Certain Hedging Activities--An Amendment of FASB Statement No. 133." SFAS
133, as amended, establishes accounting and reporting standards requiring that
derivative instruments, including certain derivatives embedded in other
contracts, be recorded in the statement of financial position as either an
asset or liability measured at its fair value. SFAS 133 requires that changes
in the derivative's fair value be recognized currently in earnings, unless
specific hedge accounting criteria are met.

  FINOVA adopted the provisions of SFAS 133, as amended, on January 1, 2001,
which resulted in an immaterial impact on FINOVA's consolidated results of
operations and financial position.

                                     A-44
<PAGE>

                             THE FINOVA GROUP INC.

Note H Company-Obligated Mandatory Redeemable Convertible Preferred Securities
of Subsidiary Trust Solely Holding Convertible Debentures of FINOVA

  In December 1996, FINOVA Finance Trust, a subsidiary trust sponsored and
wholly owned by FINOVA, issued (a) 2,300,000 shares of convertible trust
originated preferred securities (the "Preferred Securities" or "TOPrS") to the
public for gross proceeds of $115 million (before transaction costs of $3.5
million) and (b) 71,135 shares of common securities to FINOVA. The gross
proceeds from these transactions were invested by the trust in $118.6 million
aggregate principal amount of 5 1/2% convertible subordinated debentures due
2016 (the "Debentures") newly issued by FINOVA. The Debentures represent all
of the assets of the trust. The proceeds from the issuance of the Debentures
were contributed by FINOVA to FINOVA Capital, which used the proceeds to repay
commercial paper and other indebtedness.

  The Preferred Securities accrue and pay cash distributions quarterly when
declared by FINOVA at a rate of 5 1/2% per annum of the stated liquidation
amount of $50 per preferred security. FINOVA has guaranteed, on a subordinated
basis, distributions and other payments due on the Preferred Securities (the
"Guarantee"). The Guarantee, when taken together with FINOVA's obligations
under the Debentures, the indenture under which the Debentures were issued and
FINOVA's obligations under the Amended and Restated Declaration of Trust
governing the trust, provides a full and unconditional guarantee on a
subordinated basis of amounts due on the Preferred Securities. FINOVA can
defer making distributions on the Debentures for up to 20 consecutive
quarters, and has done so after year-end as discussed below. The Preferred
Securities are mandatorily redeemable upon the maturity of the Debentures on
December 31, 2016, or earlier to the extent of any redemption by FINOVA of any
Debentures. The redemption price in either case will be $50 per share plus
accrued and unpaid distributions to the date fixed for redemption.

  Prior to their maturity, the Preferred Securities are convertible into
FINOVA's common stock at the election of the holders of the Preferrred
Securities individually. Each debenture is convertible into 1.2774 shares of
FINOVA's common stock (equivalent to a conversion price of $39.14 per share),
subject to adjustment in specified circumstances. FINOVA can terminate the
conversion rights noted above on 30 days notice on or after December 31, 2000
if it is current on its payments for the Debentures and the closing prices of
its common stock trade at or above 120% of the conversion price of the
Preferred Securities ($46.97, assuming no adjustments).

  Subsequent to year-end, FINOVA suspended payment on the Debentures, so
dividends on the TOPrS are also suspended. FINOVA Finance Trust is one of the
filing entities in the Reorganization Proceedings.

Note I Shareowners' Equity

  At December 31, 2000, 1999 and 1998, FINOVA had 64,849,000, 64,849,000 and
58,555,000 shares of common stock issued, with 61,295,000, 61,252,000 and
55,721,000 shares of common stock outstanding, respectively. Approximately
6,613,000, 5,926,000 and 6,917,000 common shares were reserved for issuance
under the 1992 Stock Incentive Plan at December 31, 2000, 1999 and 1998,
respectively.

  In addition to the convertible preferred securities issued by FINOVA Finance
Trust in 1996, FINOVA has 20,000,000 shares of preferred stock authorized,
none of which was issued at December 31, 2000. The Board of Directors is
authorized to provide for the issuance of shares of preferred stock in series,
to establish the number of shares to be included in each series and to fix the
designation, powers, preferences and rights of the shares of each series. In
connection with FINOVA's stock incentive plan, 250,000 shares of preferred
stock are reserved for issuance of awards under that plan.

  Each outstanding share of FINOVA's common stock has a tandem junior
participating preferred stock purchase right ("Right") attached to it. The
Rights contain provisions to protect shareowners in the event of an
unsolicited acquisition or attempted acquisition of 20% or more of FINOVA's
common stock that is not believed by the Board of Directors to be in the best
interest of shareowners. The Board of Directors amended the Rights

                                     A-45
<PAGE>

                             THE FINOVA GROUP INC.

Agreement to provide that the transactions with Leucadia (subsequently
terminated) and Berkadia will not trigger the rights. The Rights are
represented by the common share certificates and are not exercisable or
transferable apart from the common stock until such a situation arises. The
Rights may be redeemable by FINOVA at $0.01 per right prior to the time any
person or group has acquired 20% or more of FINOVA's shares. FINOVA has
reserved 600,000 shares of Junior Participating Preferred Stock for issuance
in connection with the Rights.

  FINOVA periodically repurchases its securities on the open market to fund
its obligations pursuant to employee stock options, benefit plans and similar
obligations. During the years ended December 31, 1999 and 1998, FINOVA
repurchased 1,833,200 and 1,299,200 shares, respectively. No shares were
repurchased in 2000. The program may be discontinued at any time and is
prohibited by the Berkadia commitment.

  In 1999 the shareowners approved an amendment to FINOVA's certificate of
incorporation that increased the authorized common stock from 100 million to
400 million shares and the preferred stock from 5 million to 20 million
shares.

Note J Stock Options

  During 1992, the Board of Directors of FINOVA adopted The FINOVA Group Inc.
1992 Stock Incentive Plan for the grant of options, restricted stock and stock
appreciation rights to officers, directors and employees. The Stock Incentive
Plan provides for the following types of awards: (a) stock options (both
incentive and non-qualified stock options), (b) stock appreciation rights and
(c) restricted stock. The Stock Incentive Plan generally authorizes the
issuance of awards for up to 2 1/2% of the total number of shares of common
stock outstanding as of the first day of each year, with some modifications.
In addition, 250,000 shares of preferred stock are reserved for awards under
the Stock Incentive Plan.

  The stock options outstanding at December 31, 2000 were granted for terms of
10 years and generally become exercisable between one month to five years from
the date of grant. Stock options are issued at market value at the date of
grant, unless a higher exercise price is established. Since 1993, the Board
has issued multi-year, multi-priced stock options to senior executives. The
exercise price of those option grants range in price from the fair market
value on the grant date to prices up to 58.7% in excess of the grant date
value. Those option grants are intended to cover anticipated grants during the
years the grants are scheduled to vest, although the Board may issue
additional grants at its discretion. In 1999, premium-priced options were
granted with exercise prices ranging from $41.56 to $50.29, none of these
options were granted in 2000.

                                     A-46
<PAGE>

                             THE FINOVA GROUP INC.

  Information with respect to options granted and exercised under the Stock
Incentive Plan for the three years ended December 31, 2000 is as follows:

<TABLE>
<CAPTION>
                                                                 Average Option
                                                       Shares    Price Per Share
                                                      ---------  ---------------
<S>                                                   <C>        <C>
Options outstanding at January 1, 1998............... 3,585,143      $24.45
  Granted............................................ 1,197,032       58.22
  Exercised..........................................  (626,853)      18.13
  Canceled...........................................  (197,680)      42.00
                                                      ---------      ------
Options outstanding at December 31, 1998............. 3,957,642       34.79
  Granted............................................ 1,125,443       42.81
  Exercised..........................................  (258,004)      21.35
  Canceled...........................................  (248,335)      51.86
                                                      ---------      ------
Options outstanding at December 31, 1999............. 4,576,746       36.56
  Granted............................................   149,941       21.69
  Exercised..........................................  (117,098)       9.67
  Canceled...........................................  (754,048)      43.32
                                                      ---------      ------
Options outstanding at December 31, 2000............. 3,855,541      $35.50
                                                      =========      ======
</TABLE>

  At December 31, 2000, stock options with respect to 3,855,541 common shares
were outstanding at exercise prices ranging from $6.88 to $83.21 per share.

  The following table summarizes information about stock options outstanding
under the Stock Incentive Plan at December 31, 2000:

<TABLE>
<CAPTION>
                              Weighted
 Range of      Number         Average         Weighted        Number        Weighted
 Exercise  Outstanding at    Remaining        Average     Exercisable at    Average
  Prices      12/31/00    Contractual Life Exercise Price    12/31/00    Exercise Price
 --------  -------------- ---------------- -------------- -------------- --------------
 <S>       <C>            <C>              <C>            <C>            <C>
 $ 6.88-
  $18.44       876,305          3.59           $14.06         803,014        $14.16
  18.50-
   32.75       907,324          5.13            24.96         866,974         24.63
  32.84-
   42.75     1,008,527          7.89            40.99         541,264         40.99
  43.50-
   57.66       788,151          7.21            52.60         513,810         52.75
  57.78-
   83.21       275,234          6.10            69.42         146,938         64.41
 -------     ---------          ----           ------       ---------        ------
 $ 6.88-
  $83.21     3,855,541          6.00           $35.50       2,872,000        $31.85
 =======     =========          ====           ======       =========        ======
</TABLE>

  Since April 1992, the Board of Directors has granted performance-based
restricted stock to employees only. Performance-based restricted stock awards
(no shares in 2000, 113,500 shares in 1999 and 78,985 shares in 1998), vest
generally over five years from the date of grant. The holder of the
performance-based restricted stock, like restricted stock, has the right to
receive dividends and vote the target number of shares but may not sell,
assign, transfer, pledge or otherwise encumber the performance-based
restricted stock. All performance-based restricted stock grants since 1992
were based on FINOVA share performance and may result in greater or lesser
numbers of shares ultimately being delivered to the holder, depending on that
performance. The target number of shares are deemed received on the grant
date. Additional vesting over the target is reported as new grants as of the
vesting dates. Vestings below target are reported as a forfeiture of amounts
below the target number of shares. The balance of unamortized restricted stock
was $11.3 million at December 31, 2000. There are no stock appreciation rights
outstanding at December 31, 2000.

  The Company applies APB Opinion 25 and related interpretations in accounting
for its plans. No compensation cost has been recognized for its fixed stock
option plans because FINOVA grants options at or

                                     A-47
<PAGE>

                             THE FINOVA GROUP INC.

above market price on the date of grant. Vesting criteria for restricted stock
was not met in 2000 and 1999. Therefore, no compensation expense was charged
against income in 2000 and 1999. The compensation cost charged against income
for performance-based plans in 1998 was $5.5 million. Had compensation cost
for the Company's stock based compensation plans been determined based on the
fair value at the grant dates for awards under those plans consistent with the
fair market value method, FINOVA's net (loss) income would have been $(949.2)
million, $212.9 million and $153.4 million for 2000, 1999 and 1998,
respectively. Basic (loss) earnings per share would have been $(15.56), $3.56
and $2.74 and diluted (loss) earnings per share would have been $(15.56),
$3.37 and $2.59 for 2000, 1999 and 1998, respectively.

  The fair value of the options was estimated on the date of grant using the
Black Scholes option pricing model with the following weighted-average
assumptions used for grants in 2000, 1999 and 1998, respectively: dividend
yield of 0.0%, 2.12% and 1.75%, expected volatility of 392%, 27%, and 26%,
risk-free interest rates on options with expected lives of five years of 5.2%,
5.4% and 5.7% and risk-free interest rates on options with expected lives of
seven years of 5.3%, 5.5% and 5.8%. The weighted average grant date fair value
of options issued for 2000, 1999 and 1998 were $21.69, $13.25 and $17.45,
respectively.

  With the acquisition of Sirrom Capital Corporation in March 1999, the Board
of Directors of FINOVA adopted Sirrom's three existing stock option plans (the
"Sirrom Plans"). Each option outstanding under the Sirrom Plans at the time of
the acquisition was converted into an option exercisable for 0.1634 shares of
FINOVA common stock. No new options are expected to be issued under these
plans. Options from the Sirrom Plans were not included in the tables above.
During the year ended December 31, 2000, 13,253 and 85,502 options with a
weighted average price of $21.80 were exercised and cancelled, respectively.

  The following table summarizes information about stock options outstanding
under the Sirrom Plans at December 31, 2000:
<TABLE>
<CAPTION>
                                                       Weighted
                                                        Average
                                Number                 Remaining                Number
                              Outstanding             Contractual             Exercisable
      Exercise Prices         at 12/31/00                Life                 at 12/31/00
      ---------------         -----------             -----------             -----------
      <S>                     <C>                     <C>                     <C>
          $15.30                 5,237                   7.76                    5,237
           21.80                59,647                   6.71                   59,647
           32.51                 1,634                   7.88                    1,634
      ---------------           ------                   ----                   ------
      $15.30 - $32.51           66,518                   6.82                   66,518
      ===============           ======                   ====                   ======
</TABLE>

                                     A-48
<PAGE>

                             THE FINOVA GROUP INC.

Note K Income Taxes

  The consolidated (benefit) provision for income taxes consists of the
following for the years ended December 31:

<TABLE>
<CAPTION>
                                                     2000       1999     1998
                                                   ---------  --------  -------
<S>                                                <C>        <C>       <C>
Current:
United States:
  Federal......................................... $ (19,696) $  7,493  $12,031
  State...........................................       784      (612)   5,539
Foreign...........................................    11,043     4,637    1,870
                                                   ---------  --------  -------
                                                      (7,869)   11,518   19,440
                                                   =========  ========  =======
Deferred:
United States:
  Federal.........................................  (189,635)  101,550   55,248
  State...........................................   (14,237)   20,781    7,748
Foreign...........................................    (1,433)    4,467    7,950
                                                   ---------  --------  -------
                                                    (205,305)  126,798   70,946
                                                   ---------  --------  -------
(Benefit) provision for income taxes.............. $(213,174) $138,316  $90,386
                                                   =========  ========  =======
</TABLE>

  For continuing operations, net income taxes were paid in 2000 and were
approximately zero; income taxes paid in 1999 and 1998 were approximately $6
million and $10 million, respectively.

  The federal statutory income tax rate applied to (loss) income before taxes
is reconciled to the effective income tax rate as follows:

<TABLE>
<CAPTION>
                                                             2000    1999  1998
                                                            ------   ----  ----
<S>                                                         <C>      <C>   <C>
Federal statutory income tax rate.......................... (35.0)%  35.0% 35.0%
State income taxes.........................................   (2.7)   3.6   3.8
Foreign tax effects........................................                 0.1
Valuation allowance........................................    7.5
Municipal and ESOP income..................................   (0.6)  (1.3) (1.6)
Non-deductible goodwill....................................    2.3
Other......................................................    0.3    1.1   1.1
                                                            ------   ----  ----
(Benefit) provision for income taxes.......................  (28.2)% 38.4% 38.4%
                                                            ======   ====  ====
</TABLE>

                                     A-49
<PAGE>

                             THE FINOVA GROUP INC.

  The significant components of deferred tax liabilities and deferred tax
assets at December 31, 2000 and 1999 consisted of the following:

<TABLE>
<CAPTION>
                                                               2000      1999
                                                             --------  --------
<S>                                                          <C>       <C>
Deferred tax liabilities:
  Deferred income from leveraged leases..................... $558,400  $511,233
  Deferred income from lease financing......................  146,645   135,889
  Other comprehensive income................................    7,942    23,467
  Deferred acquisition costs................................   15,099    19,963
  Foreign taxes.............................................   14,495     8,458
  Other.....................................................   11,329    14,751
                                                             --------  --------
Gross deferred tax liability................................  753,910   713,761
                                                             --------  --------
Deferred tax assets:
  Reserve for credit losses.................................  263,107    84,596
  Goodwill..................................................   55,381   (42,335)
  Alternative minimum tax...................................   55,516    66,259
  Net operating loss carryforward...........................  185,079    62,965
  Basis difference in loans/investments.....................   66,090    23,324
  Accrued expenses..........................................    6,568    18,054
  Discontinued operations...................................  145,303    34,861
  Other.....................................................   25,445    26,519
                                                             --------  --------
Gross deferred tax asset....................................  802,489   274,243
Valuation allowance.........................................  (97,781)
                                                             --------  --------
Net deferred tax asset......................................  704,708   274,243
                                                             --------  --------
Net deferred tax liability.................................. $ 49,202  $439,518
                                                             ========  ========
</TABLE>

  The effective income tax rates in 2000 were 28.2% benefit compared to 38.4%
provision in 1999 for continuing operations and 30% benefit in 2000 compared
to 40% benefit in 1999 for discontinued operations. The lower rates in 2000
were due to the possibility that the Company may not be able to utilize all of
the deferred tax assets created during the year to reduce federal or state tax
liabilities in future years. Besides potential Section 382 limitations
discussed below, the reasons the Company may not be able to utilize all the
deferred tax assets created during the year include: a variety of loss or
other tax attribute carryover limitations in the various jurisdictions in
which the Company files tax returns; uncertainty about the amount of future
earnings; and, uncertainty about the timing of the reversal of deferred tax
liabilities.

  The deferred tax benefit related to the Company's net operating losses
("NOLs") from continuing operations is $185 million. Subject to certain
material limitations, NOLs are available as an offset against income earned in
tax years following the creation of the NOLs. The federal net operating loss
carryforwards expire beginning 2014 through 2020. The state net operating loss
carryforwards expire beginning 2003 through 2020. The Company's ability to
preserve and utilize the benefits of the NOLs and other built-in losses
depends among other things, on the potential for application of Section 382 of
the Internal Revenue Code of 1986 (the "Tax Code").

  Section 382 of the Tax Code generally provides that if a corporation
undergoes an ownership change, the amount of taxable income that the
corporation may offset after the date of the ownership change (the "change
date") with net operating loss carryforwards and certain built-in losses
existing on the change date will be subject to an annual limitation. In
general, the annual limitation equals the product of (i) the fair market value
of the corporation's equity on the change date (with certain adjustments) and
(ii) a long-term tax exempt bond rate of

                                     A-50
<PAGE>

                             THE FINOVA GROUP INC.

return published by the Internal Revenue Service. This limitation may be
either increased or decreased, but not both, if a corporation has net
unrealized built-in gains or losses at the change date and recognizes such
built-in gains or losses within a specified timeframe after the change date.

  The Company believes that no "ownership change" has occurred to place a
limitation on the use of the NOLs or other built-in losses. However, in the
future, there can be no assurance that there will not be an "ownership change"
which could place a limitation on the use of the NOLs or other built-in
losses. If there is an "ownership change" in connection with the plan of
reorganization for the Company to emerge from bankruptcy, several significant
variables will impact the amount of any NOLs and other deferred tax assets
which may be utilized in future periods. These variables include: the debt
forgiveness rules of Section 108 of the Tax Code; the ability of a decision by
the Company to elect the special rules under Section 382(I)(5) of the Tax Code
for calculating Section 382 limitations applicable to a corporation under the
jurisdiction of a court pursuant to Chapter 11 of the Bankruptcy Act; and, the
application of similar rules in the many jurisdictions in which the Company is
subject to taxation. These variables which cannot currently be determined or
quantified could materially impact the availability of the Company's
prebankruptcy NOLs and other deferred tax assets.

Note L Pension and Other Benefits

  The Company sponsors a trusteed, noncontributory pension plan that covers
substantially all of its employees. Benefits are based primarily on final
average salary and years of service. Post retirement health benefits are any
benefits other than retirement benefits and are recorded at the time employees
leave active service. The Company's funding policy for the pension plan is to
make the minimum annual contribution required by applicable regulations. Post
retirement benefits are funded as benefits are paid.

Change in Benefit Obligations

<TABLE>
<CAPTION>
                                                                    Post
                                                                 retirement
                                                 Pension           health
                                                benefits          benefits
                                             ----------------  ---------------
                                              2000     1999     2000     1999
                                             -------  -------  -------  ------
<S>                                          <C>      <C>      <C>      <C>
Benefit obligation at end of prior year..... $44,770  $41,345  $ 5,352  $4,804
Service cost................................   3,535    3,485      341     459
Interest cost...............................   3,273    2,758      210     293
Curtailment gain............................  (2,563)             (519)
Actuarial loss/(gain).......................   2,645   (1,364)  (1,744)   (192)
Benefits paid...............................  (2,204)  (1,454)    (257)    (12)
                                             -------  -------  -------  ------
End of year benefit obligation (1).......... $49,456  $44,770  $ 3,383  $5,352
                                             =======  =======  =======  ======
</TABLE>

                                     A-51
<PAGE>

                             THE FINOVA GROUP INC.

Change in Qualified Plan Assets

<TABLE>
<CAPTION>
                                                                     Post
                                                                  retirement
                                                    Pension         health
                                                   benefits        benefits
                                                ----------------  ------------
                                                 2000     1999    2000   1999
                                                -------  -------  -----  -----
<S>                                             <C>      <C>      <C>    <C>
Fair value of plan assets at beginning of
 year.......................................... $34,225  $33,155  $      $
Actual return on plan assets...................  (3,577)   2,059
Employer contributions.........................   1,012      465    257    12
Benefits paid..................................  (2,203)  (1,454)  (257)  (12)
                                                -------  -------  -----  ----
Fair value of plan assets (2).................. $29,457  $34,225  $      $
                                                =======  =======  =====  ====
</TABLE>
--------
(1)  End of year benefit obligation includes obligations of $16.909 million and
     $14.905 million at December 31, 2000 and 1999, respectively, representing
     obligations of an unfunded non-qualified Supplemental Retirement Plan
     ("SERP") for certain highly compensated employees, which is not covered by
     the qualified plan assets presented above.
(2)  Plan assets include 90,348 shares of FINOVA stock which had a fair value
     at December 31, 2000 of approximately $90.348 thousand.

Funded Status of Plan

<TABLE>
<CAPTION>
                                                             Post retirement
                                         Pension benefits    health benefits
                                         ------------------  ----------------
                                           2000      1999     2000     1999
                                         --------  --------  -------  -------
<S>                                      <C>       <C>       <C>      <C>
Plan assets less than benefit
 obligation............................. $(19,999) $(10,545) $(3,383) $(5,352)
Unrecognized net (gain) loss............    9,248       492   (2,574)    (983)
Unrecognized prior service cost.........      783       537      647      986
Unrecognized net obligation (asset).....      (20)      (82)     607      935
                                         --------  --------  -------  -------
Net amount recognized................... $ (9,988) $ (9,598) $(4,703) $(4,414)
                                         ========  ========  =======  =======
</TABLE>

Weighted Average Assumptions Used

<TABLE>
<CAPTION>
                                            Pension         Post retirement
                                            benefits        health benefits
                                         ----------------  -------------------
                                         2000  1999  1998  2000   1999   1998
                                         ----  ----  ----  -----  -----  -----
<S>                                      <C>   <C>   <C>   <C>    <C>    <C>
Discount rate..........................  7.25% 7.50% 7.00%  7.50%  7.50%  7.00%
Expected long term rate of return on
 plan assets...........................  9.50% 9.50% 9.50%   n/a    n/a    n/a
Rate of increase in future compensation
 levels................................  3.75% 4.00% 3.50%   n/a    n/a    n/a
Current year's rate....................   n/a   n/a   n/a   5.00%  5.00%  6.00%
Ultimate year's rate...................   n/a   n/a   n/a   5.00%  5.00%  5.00%
Ultimate year..........................   n/a   n/a   n/a   2000   2000   2000
</TABLE>

                                      A-52
<PAGE>

                             THE FINOVA GROUP INC.

Components of Net Periodic Benefit Cost

<TABLE>
<CAPTION>
                                                             Post retirement
                                     Pension benefits        health benefits
                                  -------------------------  -----------------
                                   2000     1999     1998    2000   1999  1998
                                  -------  -------  -------  -----  ----  ----
<S>                               <C>      <C>      <C>      <C>    <C>   <C>
Service cost....................  $ 3,535  $ 3,485  $ 2,548  $ 341  $459  $324
Interest cost...................    3,273    2,758    2,369    210   293   280
Expected return on plan assets..   (2,813)  (2,471)  (2,173)
Recognized net actuarial (gain)
 loss...........................      279      283      168   (152)  (39)  (41)
Amortization of prior service
 cost...........................      171      171      171     66    66    66
Amortization of transition
 obligation or (asset)..........      (62)     (62)     (62)    72    72    72
                                  -------  -------  -------  -----  ----  ----
Net periodic benefit cost.......    4,383    4,164    3,021    537   851   701
SFAS 88 credits.................   (2,980)                      10
                                  -------  -------  -------  -----  ----  ----
Total benefit cost..............  $ 1,403  $ 4,164  $ 3,021  $ 547  $851  $701
                                  =======  =======  =======  =====  ====  ====
</TABLE>

  Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A 1% point change in assumed
health care cost trend rates would have the following effects:

<TABLE>
<CAPTION>
                                                 One Percentage One Percentage
                                                 Point Increase Point Decrease
                                                 -------------- --------------
<S>                                              <C>            <C>
Effect on total of service and interest cost
 components.....................................      $ 14          $ (13)
Effect on post retirement benefit obligation....       157           (149)
</TABLE>

                                     A-53
<PAGE>

                             THE FINOVA GROUP INC.

NOTE M (LOSS) EARNINGS PER SHARE

  Basic (loss) earnings per share exclude the effects of dilution and are
computed by dividing (loss) income available to common shareowners by the
weighted average amount of common stock outstanding for the period. Diluted
(loss) earnings per share reflect the potential dilution that could occur if
options, convertible preferred stock or other contracts to issue stock were
exercised or converted into common stock. These per share calculations are
presented for the years ended December 31, 2000, 1999 and 1998 on the
Statements of Consolidated Operations and are detailed below:

<TABLE>
<CAPTION>
                                           2000         1999         1998
                                        -----------  -----------  -----------
<S>                                     <C>          <C>          <C>
Basic (Loss) Earnings Per Share
 Computation:
(Loss) income from continuing
 operations............................ $  (546,709) $   218,241  $   142,661
                                        ===========  ===========  ===========
Weighted average shares outstanding....  61,272,000   60,173,000   56,232,000
Contingently issued shares.............    (278,000)    (293,000)    (286,000)
                                        -----------  -----------  -----------
Adjusted weighted average shares.......  60,994,000   59,880,000   55,946,000
                                        ===========  ===========  ===========
Basic (loss) income from continuing
 operations per share.................. $     (8.96) $      3.64  $      2.55
                                        ===========  ===========  ===========
Diluted (Loss) Earnings Per Share
 Computation:
(Loss) income from continuing
 operations............................ $  (546,709) $   218,241  $   142,661
Preferred dividends, net of tax........                    3,782        3,782
                                        -----------  -----------  -----------
(Loss) income from continuing
 operations before preferred dividends
 available to common shareowner........ $  (546,709) $   222,023  $   146,443
                                        ===========  ===========  ===========
Weighted average shares outstanding....  61,272,000   60,173,000   56,232,000
Contingently issued shares.............    (278,000)    (293,000)    (171,000)
Incremental shares from assumed
 conversions:
Stock options..........................                1,482,000    1,706,000
Convertible preferred securities.......                2,938,000    2,938,000
                                        -----------  -----------  -----------
Total potential dilutive common
 shares................................                4,420,000    4,644,000
                                        -----------  -----------  -----------
Adjusted weighted average shares.......  60,994,000   64,300,000   60,705,000
                                        ===========  ===========  ===========
Diluted (loss) income from continuing
 operations per share.................. $     (8.96) $      3.45  $      2.41
                                        ===========  ===========  ===========
</TABLE>

Note N Litigation and Claims

  FINOVA is a party either as plaintiff or defendant to various actions,
proceedings and pending claims, including legal actions, some of which involve
claims for compensatory, punitive or other damages in significant amounts.
Litigation often results from FINOVA's attempts to enforce its lending
agreements against borrowers and other parties to those transactions.
Litigation is subject to many uncertainties. It is possible that some of the
legal actions, proceedings or claims could be decided against FINOVA. Other
than the matters described below, FINOVA believes that any resulting liability
for their litigation matters should not materially affect FINOVA's financial
position, results of operations or cash flows. One or more of the following
matters, for which nominal accruals have been made, could have a material
adverse impact on FINOVA's financial position, results of operations or cash
flow.

  Between March 29 and May 23, 2000, five shareowner lawsuits were filed
against FINOVA and Samuel Eichenfield, FINOVA's former chairman, president,
and chief executive officer; two of the lawsuits also named FINOVA Capital as
a defendant, and one named three other executive officers. All of the lawsuits
purport to be on behalf of the named plaintiffs (William K. Steiner, Uri
Borenstein, Jerry Krim, Mark Kassis, and the Louisiana School Employees
Retirement System), and others who purchased FINOVA common stock during the
class

                                     A-54
<PAGE>

                             THE FINOVA GROUP INC.

period of July 15, 1999, through either March 26, 2000, or May 7, 2000. The
suit brought by the Louisiana School Employees Retirement System also purports
to be on behalf of all those who purchased FINOVA Capital 7.25% Notes which
are due November 8, 2004, pursuant to the registration statement and
prospectus supplement dated November 1, 1999.

  In an order by the U.S. District Court for the District of Arizona dated
August 30, 2000, these five lawsuits were consolidated and captioned In re:
FINOVA Group, Inc. Securities Litigation. The court also selected the
Louisiana School Employees Retirement System ("LSERS") as the lead plaintiff
in the consolidated cases. LSERS filed its Amended Consolidated Complaint on
September 29, 2000, naming FINOVA, FINOVA Capital, Samuel Eichenfield, Matthew
Breyne, and Bruno Marszowski as defendants. The consolidated amended complaint
generally alleges that the defendants made materially misleading statements
regarding FINOVA's loss reserves, and otherwise violated the federal
securities laws in an effort to bolster FINOVA's stock price, among other
reasons. Among other things, the complaint seeks unspecified damages for
losses incurred by shareowners, plus interest, and other relief, and
rescission with regard to the notes purchased.

  Since consolidation of the original five shareowner lawsuits, other related
lawsuits have been initiated against the Company and current and former
officers and directors. Three shareowner lawsuits were filed in the United
States District Court for the Middle District of Tennessee, in which the named
plaintiffs (John Cartwright, Sirrom Partners and Sirrom G-1, and Caldwell
Travel) assert claims relating to the Company's acquisition in 1999 of Sirrom
Capital Corporation, and the exchange of shares of Sirrom stock for shares of
FINOVA stock. The Cartwright complaint purports to be a class action lawsuit
on behalf of all Sirrom shareowners that exchanged their Sirrom stock for
FINOVA stock as a result of the acquisition. The defendants named are Sirrom
Capital Corporation, Samuel Eichenfield, John W. Teets, Constance Curran, G.
Robert Durham, James L. Johnson, Kenneth Smith, Shoshana Tancer, Bruno
Marszowski, and FINOVA Group. The complaints allege that the defendants made
materially misleading statements regarding FINOVA's loss reserves, and
otherwise violated the federal securities laws in an effort to reduce the
total consideration provided to Sirrom shareowners at the time of the
acquisition. The complaints seek unspecified damages for losses incurred by
shareowners, plus interest, and other relief.

  On January 4, 2001, the United States District Court for the Middle District
of Tennessee granted a motion brought by FINOVA and the other defendants to
transfer the Cartwright and Sirrom Partners cases to the United States
District Court for the District of Arizona. The plaintiff in Caldwell Travel
agreed to dismiss that case without prejudice. Pursuant to a Stipulation and
Order entered in March 2001, the Cartwright case has been consolidated for all
purposes with the previous five cases in the FINOVA Group Securities
Litigation, and the Sirrom Partners case has been consolidated for all pre-
trial purposes. In April 2001, the lead plaintiffs are scheduled to file a
Second Amended Consolidated Complaint.

  There have also been two shareowners' derivative lawsuits filed against
current and former officers and directors of FINOVA Group, one in the United
States District Court for the District of Arizona, and one in the Court of
Chancery for Newcastle County, Delaware. Both complaints were filed on
September 11, 2000, and both purport to be brought by the named plaintiffs
(William Kass and Cindy Burkholter) derivatively on behalf of the Company
against the officers and directors, alleging generally breaches of fiduciary
and other duties as directors. These actions seek unspecified money damages
and other relief. As with the consolidated securities litigation, the
allegations center generally on claims that there were materially misleading
statements regarding FINOVA's loss reserves. In both of these actions, the
plaintiffs have agreed to a stay of all proceedings pending the final
determination of the motion to dismiss in the consolidated securities
litigation.

  Finally, another shareowner's derivative lawsuit was filed on September 13,
2000, in the Circuit Court for Davidson County, Tennessee, by Ronald Benkler,
purportedly on behalf of Sirrom Capital Corporation, against several former
officers of Sirrom Capital Corporation. The complaint alleges that the Sirrom
officers breached various duties to Sirrom in connection with the acquisition
of Sirrom by the Company in 1999, and the exchange

                                     A-55
<PAGE>

                             THE FINOVA GROUP INC.

of Sirrom stock for FINOVA stock as a result of the acquisition. The
plaintiffs have agreed to a stay of discovery in this case, pending the final
determination of the motion to dismiss the consolidated securities litigation.

  FINOVA believes the claims in all of these securities and derivative cases
are without merit. FINOVA and the other defendants intend to vigorously defend
against these claims.

  On March 6, 2001, one of FINOVA Capital's subsidiaries, FINOVA (Canada)
Capital Corporation, had an involuntary Petition for Receiving Order filed
against it in the Ontario, Canada, Superior Court of Justice in Bankruptcy.
The action was filed by the Bank of Nova Scotia, as agent for the lenders on a
$150 million (Canadian) bank facility. That same day, the courts in Canada
issued a temporary injunction prohibiting transfers of assets out of the
Canadian subsidiary to its other affiliates. FINOVA has not received service
of process in those proceedings, but has agreed to refrain from transferring
assets to its affiliates without court order.

  On March 7, 2001, FINOVA, FINOVA Capital and seven of their subsidiaries
filed voluntary petitions for protection from creditors pursuant to Chapter
11, Title 11, United States Code, in the United States Bankruptcy Court for
the District of Delaware. The other subsidiaries were FINOVA (Canada) Capital
Corporation, FINOVA Capital plc, FINOVA Loan Administration Inc., FINOVA
Mezzanine Capital Inc., FINOVA Portfolio Services, Inc., FINOVA Technology
Finance Inc., and FINOVA Finance.

  FINOVA obtained orders from the bankruptcy court on the first day permitting
FINOVA to continue its operations in the ordinary course including honoring
its obligations to borrowers. The orders also permit the Filing Entities to
pay certain prepetition expenses and claims, such as to employees (other than
executive officers, with exceptions), taxing authorities and foreign trade
vendors. The cases will be jointly administered.

Note O Fair Value of Financial Instruments

  The following disclosure of the estimated fair value of financial
instruments has been determined by FINOVA using market information obtained by
FINOVA and the valuation methodologies described below. Fair value is defined
as the amount at which a financial instrument could be exchanged in a current
transaction between willing parties in other than a forced sale or
liquidation. These values do not present the liquidation value of the Company.
Considerable judgment is required in interpreting market data to develop the
estimates of fair value. Accordingly, the estimates presented herein may not
be indicative of the amounts that FINOVA could realize in a current market
exchange. The use of different market assumptions or valuation methodologies
may have a material effect on the estimated fair value amounts.

  The carrying amounts and estimated fair values of FINOVA's financial
instruments are as follows for the years ended December 31:

<TABLE>
<CAPTION>
                                         2000                   1999
                                ---------------------- ----------------------
                                 Carrying   Estimated   Carrying   Estimated
                                  Amount    Fair Value   Amount    Fair Value
                                ----------- ---------- ----------- ----------
<S>                             <C>         <C>        <C>         <C>
Balance Sheet--Financial
 Instruments:
Assets:
  Loans and other financing
   contracts................... $ 6,891,878 $6,771,318 $ 8,027,207 $7,890,021
Liabilities:
  Senior debt..................  10,997,687        N/A  11,407,767        N/A
Convertible preferred
 securities....................     111,550     20,700     111,550    115,000
Off-Balance Sheet--Financial
 Instruments assets
 (liabilities):
  Interest rate swaps..........                 47,472                (18,306)
  Interest rate hedge
   agreements..................                                         2,681
</TABLE>

                                     A-56
<PAGE>

                             THE FINOVA GROUP INC.

  The carrying values of cash and cash equivalents, investments, net assets of
discontinued operations, financing contracts held for sale, accounts payable
and accrued expenses and interest payable (including accrued amounts related
to interest rate swaps and interest rate hedge agreements) approximate fair
values due to the short-term maturity of the on-balance sheet valuation of net
realizable value of these items.

  The methods and assumptions used to estimate the fair values of other
financial instruments are summarized as follows:

Loans and other financing contracts:

  The fair value of loans and other financing contracts was estimated by
discounting expected cash flows using the current rates at which loans of
similar credit quality, size and remaining maturity would be made as of
December 31, 2000 and 1999. Management believes that the risk factor embedded
in the current interest rates on performing loans results in a fair valuation
of performing loans. As of December 31, 2000 and 1999, the fair value of
nonaccruing impaired contracts with a carrying amount of $877.8 million (total
nonaccruing impaired contracts of $893.7 million included $15.9 million of
financing contracts held for sale for Realty Capital) and $113.9 million,
respectively, was not estimated because it is not practical to reasonably
assess the credit adjustment that would be applied in the marketplace for such
loans. As of December 31, 2000 and 1999, the carrying amount of loans and
other financing contracts excludes repossessed assets with a total carrying
amount of $66.0 million and $127.0 million, respectively.

Senior debt:

  The fair value of senior debt estimated by discounting future cash flows
using rates currently available for debt of similar terms and remaining
maturities is not meaningful in light of the uncertainties described in Note
A. Senior debt is actively trading at substantial discounts to its carrying
amount.

Convertible preferred securities (TOPrS):

  The fair value of the TOPrS was determined based on quoted market prices for
the publicly traded security.

Interest rate swaps:

  The fair values of interest rate swaps are based on quoted market prices
obtained from participating banks and dealers.

Interest rate hedge agreements:

  The fair value of interest rate hedge agreements in place at December 31,
1999 was based on quoted market prices obtained from participating loans and
dealers for transactions of similar remaining durations.

  The fair value estimates presented herein were based on information obtained
by FINOVA as of December 31, 2000 and 1999. Although management is not aware
of any factors that would significantly affect the estimated fair values, such
values have not been updated since December 31, 2000 and 1999. Therefore,
subsequent estimates of fair value may differ significantly from the amounts
presented herein.

                                     A-57
<PAGE>

                             THE FINOVA GROUP INC.

Note P Operating Expenses

  The following represents a summary of the major components of operating
expenses for the three years ended December 31:

<TABLE>
<CAPTION>
                           2000      %       1999      %       1998      %
                         --------  -----   --------  -----   --------  -----
<S>                      <C>       <C>     <C>       <C>     <C>       <C>
Salaries and employee
 benefits............... $112,519   54.6%  $112,388   66.6%    96,082   65.3%
Professional services...   32,048   15.5%     7,646    4.5%     6,275    4.3%
Other operating
 expenses...............   22,159   10.8%    24,206   14.3%    21,896   14.9%
Goodwill amortization
 (1)....................   16,300    7.9%    16,062    9.5%    11,101    7.5%
Occupancy expenses......   12,374    6.0%     8,986    5.3%     8,335    5.7%
Problem account costs...   11,865    5.8%     8,317    4.9%     7,466    5.1%
Travel and
 entertainment..........   10,837    5.3%    13,372    7.9%    10,953    7.4%
Depreciation/leasehold
 amortization...........    7,425    3.6%     5,957    3.5%     4,760    3.2%
Deferred acquisition
 costs..................  (19,415)  (9.5%)  (28,237) (16.5%)  (19,740) (13.4%)
                         --------  -----   --------  -----   --------  -----
Total operating
 expenses............... $206,112  100.0%  $168,697  100.0%  $147,128  100.0%
                         ========  =====   ========  =====   ========  =====
</TABLE>
--------
(1) Excludes the write-down of impaired goodwill of $193.3 million in 2000.

Note Q Other Comprehensive Income

  Accumulated other comprehensive income activity for the three years ended
December 31, 2000 was as follows:

<TABLE>
<CAPTION>
                                                   Net Unrealized  Accumulated
                                                   Holding Gains      Other
                                  Foreign Currency  (Losses) on   Comprehensive
                                    Translation      Securities   Income (Loss)
                                  ---------------- -------------- -------------
<S>                               <C>              <C>            <C>
Balance, January 1, 1998.........     $   (10)        $             $    (10)
Change during 1998...............        (208)             904           696
                                      -------         --------      --------
Balance, December 31, 1998.......        (218)             904           686
Change during 1999...............      (3,928)          37,054        33,126
                                      -------         --------      --------
Balance, December 31, 1999.......      (4,146)          37,958        33,812
Change during 2000...............       4,051          (22,709)      (18,658)
                                      -------         --------      --------
Balance, December 31, 2000.......     $   (95)        $ 15,249      $ 15,154
                                      =======         ========      ========
</TABLE>

  For 2000 and 1999, the changes in foreign currency translation were net of
income tax benefits of $0.1 million and $2.1 million, respectively. Net
unrealized holding gains were net of income tax expenses of $8.1 million in
2000 and $25.6 million in 1999.

Note R Segment Reporting

Management's policy for identifying reportable segments

  FINOVA's reportable business segments are strategic business units that
offer distinctive products and services that are marketed through different
channels.

Types of products and services

  FINOVA's business is organized into three market groups, which are also its
reportable segments: Specialty Finance, Commercial Finance and Capital
Markets. Management relies principally on total net revenue, (loss)

                                     A-58
<PAGE>

                             THE FINOVA GROUP INC.

income before income taxes, preferred dividends and allocations, and managed
assets in evaluating the business reportable segment.

  Specialty Finance provides a wide variety of lending products such as
leases, loans, accounts receivable and cash flow based financing, as well as
servicing and collection services to a number of highly focused industry
specific niches. This segment includes the following lines of business:
Commercial Equipment Finance, Communications Finance, Franchise Finance,
Healthcare Finance, Portfolio Services, Public Finance, Resort Finance,
Specialty Real Estate Finance and Transportation Finance.

  Commercial Finance currently includes only the Rediscount Finance business
unit, which provides financing through revolving credit facilities to finance
companies. This segment previously included traditional asset-based businesses
that provided financing through revolving credit facilities and term loans
secured by assets such as receivables and inventory, as well as providing
factoring and management services. In the third quarter of 2000, FINOVA
announced that the Corporate Finance/Business Credit/Growth Finance and
Distribution & Channel Finance business units would be discontinued. The
Company also completed the sale of its Commercial Services business line in
the third quarter. For further discussion on activity previously reported
within the Commercial Finance segment, see "Discontinued Operations."

  Capital Markets, in conjunction with institutional investors, provides debt
and equity capital funding, third-party loan administration services and
provided commercial mortgage banking services until those operations were
terminated. This segment includes: Realty Capital, Investment Alliance, Loan
Administration, Mezzanine Capital and Harris Williams & Co. The latter was
sold in the second quarter 2000. During 2000, the Company designated loans
generated by the Realty Capital line of business as being held for sale.

Reconciliation of segment information to consolidated amounts

  Management evaluates the business performance of each group based on total
net revenue, income before allocations and managed assets. Total net revenue
is operating margin plus (losses) gains on investments and disposal of assets.
Income before allocations is income before income taxes and preferred
dividends, excluding allocation of corporate overhead expenses and the
unallocated portion of provision for credit losses. Managed assets includes
each segment's investment in financing transactions plus securitizations and
participations sold.

                                     A-59
<PAGE>

                             THE FINOVA GROUP INC.

  Information for FINOVA's reportable segments reconciles to FINOVA's
consolidated totals as follows:

<TABLE>
<CAPTION>
                                              2000         1999        1998
                                           -----------  -----------  --------
<S>                                        <C>          <C>          <C>
Total net revenue:
  Specialty Finance....................... $   187,297  $   384,789  $344,541
  Commercial Finance......................      59,889       51,708    38,954
  Capital Markets.........................      56,443      101,414    24,170
  Corporate and other.....................     (17,317)      13,515    24,762
                                           -----------  -----------  --------
Consolidated total........................ $   286,312  $   551,426  $432,427
                                           ===========  ===========  ========
(Loss) income before income taxes,
 preferred dividends and allocations:
  Specialty Finance....................... $    (9,577) $   307,377  $273,674
  Commercial Finance......................      30,890       38,244    28,450
  Capital Markets.........................    (139,308)      31,235    (2,775)
  Corporate and other, overhead and
   unallocated provision for credit
   losses.................................    (638,105)     (16,517)  (62,520)
                                           -----------  -----------  --------
(Loss) income from continuing operations
 before income taxes and preferred
 dividends................................ $  (756,100) $   360,339  $236,829
                                           ===========  ===========  ========
Managed assets:
  Specialty Finance....................... $ 8,475,515  $ 8,251,642
  Commercial Finance......................   1,218,463    1,076,617
  Capital Markets.........................     800,331    1,051,367
  Corporate and other.....................      43,566       63,510
                                           -----------  -----------
Consolidated total........................ $10,537,875  $10,443,136
Less securitizations......................    (357,471)    (121,322)
                                           -----------  -----------
Investment in financing transactions...... $10,180,404  $10,321,814
                                           ===========  ===========
</TABLE>

Geographic information

  FINOVA attributes managed assets to geographic areas based on the location
of the asset. Managed assets at December 31, 2000 and 1999 by geographic area
were as follows:

<TABLE>
<CAPTION>
                                              2000       %       1999       %
                                           ----------- -----  ----------- -----
<S>                                        <C>         <C>    <C>         <C>
United States............................. $ 9,224,439  87.5% $ 9,165,796  87.8%
Europe....................................     728,604   6.9%     806,678   7.7%
Other foreign.............................     584,832   5.6%     470,662   4.5%
                                           ----------- -----  ----------- -----
                                           $10,537,875 100.0% $10,443,136 100.0%
                                           =========== =====  =========== =====
</TABLE>

  Other foreign includes customer relationships in geographic areas which, on
an individual basis represent less than 2.0% of the total. Currently, it is
impracticable to report revenues attributed to foreign countries.

Major customer information

  FINOVA has no single customer that accounts for 10% or more of revenue.

Note S Acquisitions

  FINOVA had no acquisitions in 2000. During 1999, FINOVA acquired various
businesses and portfolios under the purchase method with initial managed
assets totaling $1.15 billion.

                                     A-60
<PAGE>

                             THE FINOVA GROUP INC.

  In December 1999, FINOVA acquired Fremont Financial Corporation ("Fremont"),
the commercial lending subsidiary of Fremont General Corporation,
headquartered in Santa Monica, California. Fremont, which provides secured
working capital and term loans averaging $2 million to $4 million to mid-size
businesses throughout the U.S., was added to FINOVA's Commercial Finance
Group. The purchase price was approximately $131 million, paid in cash. Total
assets acquired were $723 million, including $23 million in goodwill and
assumed liabilities of $592 million. Managed assets purchased were $662
million. Goodwill was being amortized over 20 years; however, the balance was
written off when it was classified as a discontinued operation.

  In March 1999, FINOVA acquired Sirrom Capital Corporation, a specialty
finance company headquartered in Nashville, Tennessee. The purchase price was
approximately $343 million in FINOVA common stock, excluding converted stock
options. Total assets acquired were $621 million, including $67 million in
goodwill with $278 million in assumed liabilities and transaction costs.
Managed assets acquired were $469 million. Goodwill was being amortized over
25 years; however, the balance was considered impaired and written off at
year-end 2000.

  In February 1999, FINOVA acquired Preferred Business Credit, a Los Angeles-
based provider of accounts receivable loans to small and mid-size businesses
for $12 million in FINOVA common stock. It is functioning as the West Coast
operation for the Growth Finance division, acquired in October 1998. Total
assets purchased were $30 million, including $12 million in goodwill that was
being amortized over 25 years; however, the balance was written off when it
was classified as a discontinued operation.

Note T Discontinued Operations

  During the third quarter of 2000, FINOVA's Board of Directors approved a
plan to discontinue and offer for sale its Corporate Finance, Distribution &
Channel Finance and Commercial Services lines of business. As a result, the
Company has reported these divisions as discontinued operations in accordance
with Accounting Principles Board Opinion ("APB") No. 30, Reporting the Results
of Operations--Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and Transactions.

  The consolidated financial statements of the Company have been reclassified
to reflect the disposition of these businesses as discontinued operations for
all years presented. Accordingly, the revenues, costs and expenses, assets and
liabilities expected to be assumed by an acquiring entity, and cash flows of
these discontinued operations have been excluded from the respective captions
in the consolidated balance sheet and statements of consolidated operations
and cash flows for all years presented.

  Management believes that net assets of discontinued operations represents a
reasonable estimate of the net realizable values of such businesses. This
estimate is subject to change based on market conditions, interest rates and
other factors that could cause the ultimate amount to be significantly
different.

  On August 28, 2000 FINOVA Capital completed the sale of substantially all of
the assets of its Commercial Services division to an independent third party
for approximately $235 million. The Commercial Services division provided
factoring and accounts receivable management services for entrepreneurial and
larger firms primarily in the textile and apparel industry. The sale and
additional net realizable mark-downs made in the fourth quarter resulted in an
after-tax loss from disposition of $7.0 million, which included a $16.7
million after-tax charge for unamortized goodwill. Upon completion of the
sale, the Company retained a small portfolio, which after the write-downs,
totaled $11.1 million at December 31, 2000. The Company estimates the
remaining portfolio will be liquidated within six to nine months. For the
twelve months ended December 31, 2000, the Company recorded $13.0 million in
after-tax losses from Commercial Services discontinued operations and
maintained an accrual for future operating losses totaling $2.9 million.

                                     A-61
<PAGE>

                             THE FINOVA GROUP INC.

  The Corporate Finance division includes the Corporate Finance, Business
Credit and Growth Finance lines of business. Corporate Finance provided cash
flow-oriented, asset based term and revolving loan products. Business Credit
offered collateral-oriented revolving credit facilities and term loans, while
Growth Finance provided collateral-based working capital financing primarily
secured by accounts receivable. The Company's formal plan, which is estimated
to take approximately one year to complete, includes finding a buyer, or if a
buyer is not located a substantial liquidation of the assets is estimated to
be accomplished within the year. At December 31, 2000, the Company had net
Corporate Finance assets in discontinued operations of $1.0 billion and had
recorded after-tax losses in 2000 of $21.4 million from Corporate Finance, as
part of discontinued operations. The Corporate Finance division is estimated
to operate near breakeven during the next nine to twelve months. FINOVA sold
approximately $309 million of Corporate Finance assets to an independent third
party on February 1, 2001. These assets were adjusted to net realizable value
as of December 31, 2000.

  Distribution & Channel Finance provided inbound and outbound inventory
financing. The Company's formal plan of disposal, which is estimated to take
up to one year to complete, included finding a buyer, or if a buyer was not
located a liquidation of the assets. On December 29, 2000, FINOVA sold $46.4
million of Distribution & Channel Finance receivables at par to an independent
third party which resulted in remaining net assets in discontinued operations
of $132.1 million as of December 31, 2000. For the year ended December 31,
2000, FINOVA had recorded after-tax losses of $21.0 million from Distribution
& Channel Finance, as part of discontinued operations. The Company has assumed
Distribution & Channel Finance will operate near breakeven during the next six
to nine months.

  At December 31, 2000, FINOVA had total net assets of discontinued operations
of $1.16 billion, which includes the following:

<TABLE>
<CAPTION>
                                            Distribution
                                Corporate    & Channel   Commercial
                                 Finance      Finance     Services    TOTAL
                                ----------  ------------ ---------- ----------
<S>                             <C>         <C>          <C>        <C>
Investment in financing
 transactions.................  $1,042,489    $168,494    $16,496   $1,227,479
Investments...................       7,282                               7,282
Accounts payable and accrued
 expenses (1).................     (29,852)     (4,517)    (5,407)     (39,776)
Due to clients (2)............        (898)    (31,864)                (32,762)
                                ----------    --------    -------   ----------
Net assets of discontinued op-
 erations.....................  $1,019,021    $132,113    $11,089   $1,162,223
                                ==========    ========    =======   ==========
</TABLE>
--------
(1) FINOVA has assumed that all liabilities directly relate to the remaining
    assets of the corresponding discontinued business and will be assumed by
    an acquiring entity. The amounts include accruals for future operating
    losses. A substantial portion of the balance at December 31, 2000 relates
    to the various cash incentive, retention and severance plans developed for
    the employees of the discontinued lines of business.
(2) Due to clients represents the amount due to third party vendors on behalf
    of our customers.

                                     A-62
<PAGE>

                             THE FINOVA GROUP INC.

  Loss from discontinued operations in the Consolidated Statement of
Operations for the year ended December 31, 2000 includes the following:

<TABLE>
<CAPTION>
                                             Distribution
                                  Corporate   & Channel   Commercial
                                   Finance     Finance     Services   TOTAL
                                  ---------  ------------ ---------- --------
<S>                               <C>        <C>          <C>        <C>
Income from financing
 transactions.................... $200,520     $ 14,394    $ 17,034  $231,948
Interest expense (1)............. (137,417)     (25,053)    (13,184) (175,654)
Volume based fees................      538       27,494       7,839    35,871
Losses on disposal (2)...........  (11,441)                 (15,723)  (27,164)
Net write-offs (2)...............  (25,665)     (33,551)     (2,120)  (61,336)
Operating expenses...............  (50,925)     (13,642)    (12,692)  (77,259)
                                  --------     --------    --------  --------
Loss from operations.............  (24,390)     (30,358)    (18,846)  (73,594)
Income tax benefit...............    2,981        9,402       5,814    18,197
                                  --------     --------    --------  --------
Discontinued operations, net of
 tax............................. $(21,409)    $(20,956)   $(13,032) $(55,397)
                                  ========     ========    ========  ========
</TABLE>
--------
(1) Interest expense was allocated to discontinued operations based on the
    debt identified to the discontinued business and the Company's applicable
    cost of funds.
(2) These charges to discontinued operations occurred prior to the measurement
    date.

  The net loss on disposal of assets for the year ended December 31, 2000 is
comprised of the following adjustments from September 30, 2000:

<TABLE>
<CAPTION>
                               Corporate  Distribution &  Commercial
                                Finance   Channel Finance  Services    TOTAL
                               ---------  --------------- ---------- ---------
<S>                            <C>        <C>             <C>        <C>
As of September 30, 2000 on a
 pre-tax basis:
  Net realizable value mark-
   downs.....................  $(215,760)    $(17,000)     $         $(232,760)
  Goodwill written off.......    (54,729)     (24,940)      (27,669)  (107,338)
  Proceeds in excess of
   assets sold...............                                29,172     29,172
  Accrued expenses...........    (28,922)      (5,198)      (10,377)   (44,497)
  Income tax benefit.........    118,417       18,643         3,510    140,570
                               ---------     --------      --------  ---------
Net loss on disposal of
 operations as of September
 30, 2000....................   (180,994)     (28,495)       (5,364)  (214,853)
  Additional net realizable
   value mark-downs..........   (112,543)        (893)       (1,315)  (114,751)
  Additional accrued
   expenses..................    (13,385)      (4,815)                 (18,200)
  Income tax benefit
   (expense).................     12,800       (2,337)         (370)    10,093
                               ---------     --------      --------  ---------
Net loss on disposal of
 operations as of December
 31, 2000....................  $(294,122)    $(36,540)     $ (7,049) $(337,711)
                               =========     ========      ========  =========
</TABLE>

  The additional losses in the fourth quarter of 2000 were primarily
attributable to a further deterioration in the portfolios caused in part by
the weakening economy.

  The income tax benefit on discontinued operations has been computed using
the effective tax rate at September 30, 2000 and December 31, 2000, which is,
in part, based on the Company's ability to utilize the deferred tax assets.
See Note K for further explanation.

                                     A-63
<PAGE>

                             THE FINOVA GROUP INC.

Note U Operating Leases

  The Company leases various office properties under operating leases expiring
through 2014.

  Minimum future rental payments under non-cancelable operating leases having
remaining terms in excess of one year as of December 31, 2000 are:

<TABLE>
   <S>                                                                 <C>
   2001............................................................... $ 15,499
   2002...............................................................   13,840
   2003...............................................................   12,945
   2004...............................................................   11,591
   2005...............................................................    8,661
   Thereafter.........................................................   46,157
                                                                       --------
   Total minimum future rental payments............................... $108,693
                                                                       ========
</TABLE>

  Total minimum future rental payments have not been reduced by $9,653 of
sublease rentals to be received in the future under non-cancelable subleases.

  Rent expenses, net of sublease rentals of $1.8 million, $2.4 million and
$1.9 million was $12.4 million, $9.0 million and $8.3 million for the years
ended December 31, 2000, 1999 and 1998, respectively.

                                     A-64
<PAGE>

                             THE FINOVA GROUP INC.

                     SUPPLEMENTAL SELECTED FINANCIAL DATA
                    CONDENSED QUARTERLY RESULTS (UNAUDITED)
                 (Dollars in thousands, except per share data)

  The following represents the condensed quarterly results for the three years
ended December 31, 2000, 1999 and 1998:

<TABLE>
<CAPTION>
                                          First    Second   Third     Fourth
                                         Quarter  Quarter  Quarter   Quarter
                                         -------- -------- --------  --------
<S>                                      <C>      <C>      <C>       <C>
Income earned from financing
 transactions:
  2000.................................. $293,378 $288,777 $292,941  $273,227
  1999..................................  222,560  241,950  262,470   279,298
  1998..................................  187,419  201,656  205,846   228,370
                                         -------- -------- --------  --------
Interest expense:
  2000..................................  141,813  151,043  161,565   174,418
  1999..................................  103,384  109,558  117,738   134,576
  1998..................................   84,918   88,778   95,248   104,637
                                         -------- -------- --------  --------
Gains (losses) on investments and
 disposal of assets:
  2000..................................   21,031   13,462  (90,042) (113,040)
  1999..................................   12,370   18,627   14,880    22,009
  1998..................................    1,526    7,432    6,471    12,483
                                         -------- -------- --------  --------
Non-interest expenses:
  2000..................................   93,562   62,382  156,677   795,710
  1999..................................   55,847   57,727   73,099    72,249
  1998..................................   55,175   64,918   64,415    81,044
                                         -------- -------- --------  --------
Income (loss) from continuing
 operations:
  2000..................................   47,581   55,677  (71,011) (578,956)
  1999..................................   46,748   57,925   54,892    58,676
  1998..................................   34,632   36,525   35,014    36,490
                                         -------- -------- --------  --------
Net income (loss):
  2000..................................   10,412   42,933 (274,061) (719,101)
  1999..................................   50,057   53,663   54,905    56,619
  1998..................................   39,741   40,535   41,838    38,227
                                         -------- -------- --------  --------
Basic income (loss) from continuing
 operations per share:
  2000..................................     0.78     0.91    (1.16)    (9.49)
  1999..................................     0.83     0.94     0.90      0.96
  1998..................................     0.62     0.65     0.62      0.66
                                         -------- -------- --------  --------
Diluted income (loss) from continuing
 operations per share (1):
  2000..................................     0.77     0.89    (1.16)    (9.49)
  1999..................................     0.78     0.89     0.86      0.92
  1998..................................     0.58     0.61     0.59      0.63
                                         -------- -------- --------  --------
</TABLE>
--------
(1) Diluted income (loss) from continuing operations per share are computed
    independently for each of the quarters presented. Therefore, the sum of
    the quarterly diluted income (loss) from continuing operations per share
    for 2000 does not equal the total computed for the year due to the
    dilution affecting the first quarter and second quarter computations.

                                     A-65
<PAGE>

    AVERAGE BALANCES/OPERATING MARGIN/AVERAGE ANNUAL RATES (UNAUDITED) (1)
                            (Dollars in thousands)

  The following represents the breakdown of FINOVA's average balance sheet,
operating margin and average annual rates for the years ended December 31,
2000 and 1999:

<TABLE>
<CAPTION>
                                        2000                                   1999
                          -----------------------------------    -----------------------------------
                                        Interest &                             Interest &
                            Average    Volume-Based   Average      Average    Volume-Based   Average
                            Balance        Fees        Rate        Balance        Fees        Rate
                          -----------  ------------   -------    -----------  ------------   -------
<S>                       <C>          <C>            <C>        <C>          <C>            <C>
ASSETS
 Cash and cash
  equivalents...........  $   410,573   $                        $    70,247   $
 Investment in financing
  transactions..........   10,372,539    1,083,740(2)  11.3%(3)    9,212,153     948,795(2)   10.9%(3)
 Less reserve for credit
  losses................     (230,824)                              (162,358)
                          -----------                            -----------
 Net investment in
  financing
  transactions..........   10,141,715                              9,049,795
 Investments............      417,635                                293,415
 Goodwill and other
  assets................      541,238                                419,788
 Net assets of
  discontinued
  operations............    2,246,337                              2,008,469
                          -----------                            -----------
                          $13,757,498                            $11,841,714
                          ===========                            ===========
LIABILITIES AND
 SHAREOWNERS' EQUITY
 Liabilities:
 Other liabilities......  $   258,844   $                        $   222,151   $
 Senior debt............   11,466,141      628,839      5.5%       9,646,010     465,256       4.8%
 Deferred income taxes,
  net...................      379,627                                370,201
                          -----------                            -----------
                           12,104,612                             10,238,362
Company-obligated
 mandatory redeemable
 convertible preferred
 securities of
 subsidiary trust solely
 holding convertible
 debentures of FINOVA...      111,550                                111,550
Shareowners' equity.....    1,541,336                              1,491,802
                          -----------                            -----------
                          $13,757,498                            $11,841,714
                          ===========                            ===========
Interest income and
 volume based
 fees/average earning
 assets (3).............                $1,083,740     11.3%                   $ 948,795      10.9%
Less: interest
 expense/average earning
 assets (3) (4).........                  (628,839)     6.6%                    (465,256)      5.3%
                                        ----------     ----                    ---------      ----
Operating margin (4)....                $  454,901      4.7%                   $ 483,539       5.6%
                                        ==========     ====                    =========      ====
</TABLE>
--------
(1) Averages are calculated based on monthly balances.
(2) For the years ended December 31, 2000 and 1999 interest income is shown
    net of operating lease depreciation.
(3) The average rate is calculated based on average earning assets ($9,603,774
    and $8,713,535 for 2000 and 1999, respectively) which are net of average
    deferred taxes on leveraged leases and average nonaccruing assets.
(4) For the year ended December 31, 2000, excluding the impact of derivatives,
    interest expense would have been $627,517 or 6.5% of average earning
    assets and operating margin would have been $453,579 or 4.7% of average
    earning assets. For the year ended December 31, 1999, excluding the impact
    of derivatives, interest expense would have been $469,228 or 5.39% of
    average earning assets and operating margin would have been $487,512 or
    5.59% of average earning assets.

                                     A-66
<PAGE>

                                                                      EXHIBIT 12

            COMPUTATION OF RATIO OF (LOSSES) INCOME TO FIXED CHARGES
                         AND PREFERRED STOCK DIVIDENDS
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                            Year Ended December 31,
                                 ----------------------------------------------
                                   2000       1999     1998     1997     1996
                                 ---------  -------- -------- -------- --------
<S>                              <C>        <C>      <C>      <C>      <C>
(Loss) income before from
 continuing operations before
 income taxes and preferred
 dividends...................... $(756,100) $360,339 $236,829 $211,068 $161,024
Add fixed charges:
  Interest expense..............   628,839   465,256  373,581  325,467  286,486
  One-third of rent expense.....     4,125     2,995    2,778    2,059    1,842
                                 ---------  -------- -------- -------- --------
Total fixed charges.............   632,964   468,251  376,359  327,526  288,328
                                 ---------  -------- -------- -------- --------
Net (loss) income as adjusted... $(123,136) $828,590 $613,188 $538,594 $449,352
                                 ---------  -------- -------- -------- --------
Ratio of (loss) income to fixed
 charges........................     (0.19)     1.77     1.63     1.64     1.56
                                 =========  ======== ======== ======== ========
Preferred stock dividends on a
 pre-tax basis.................. $   6,325  $  6,325 $  6,325 $  6,676 $
Total fixed charges and
 preferred stock dividends...... $ 639,289  $474,576 $382,684 $334,202 $288,328
                                 ---------  -------- -------- -------- --------
Ratio of (loss) income to fixed
 charges and preferred stock
 dividends......................     (0.19)     1.75     1.60     1.61     1.56
                                 =========  ======== ======== ======== ========
</TABLE>

                                      A-67
<PAGE>

                                    ANNEX B

                            INFORMATION ON DIRECTORS

                             AND EXECUTIVE OFFICERS
<PAGE>

                                    CONTENTS

<TABLE>
<S>                                                                         <C>
The Board of Directors.....................................................  B-1

Board Information..........................................................  B-3

Human Resources Committee Report on Executive Compensation (1).............  B-6

Executive Compensation and Other Information............................... B-11

Employment Agreements...................................................... B-15

Compensation Committee Interlocks and Insider Participation................ B-19

Related Party Transactions................................................. B-20

Section 16(a) Beneficial Ownership Reporting Compliance.................... B-20

FINOVA Share Ownership..................................................... B-20
</TABLE>
--------
(1) The Human Resources Committee report will not be incorporated by reference
    into any present or future filings we make with the SEC, even if those
    reports incorporate all or any part of this Annex or the Report on SEC Form
    10-K.
<PAGE>
                             THE BOARD OF DIRECTORS
<TABLE>
<S>             <C>              <C>
Board             The Board currently has seven members. The directors are
Structure:        divided into three classes. At each annual meeting, the term
                  of one class expires. Directors in each class serve for three
                  year terms.

   Terms Expire  James L.          Chairman Emeritus of GTE Corporation (a diversified
    at the 2001  Johnson           telecommunications company) since 1993. Before that he was
Annual Meeting:                    its Chairman and Chief Executive Officer. Director of The
                                   MONY Group Inc. (formerly Mutual Life Insurance Company of
                                   New York), Harte/Hanks Communications Co., Inc., Cell Star
                                   Corporation, Valero Energy Corporation and Walter
                                   Industries, Inc. Board member since 1992. Age 73.

                 John W. Teets
                                   Chairman and Chief Executive Officer of J.W. Teets
                                   Enterprises, L.L.C. since 1997. Before that he was the
                                   Chairman and Chief Executive Officer or similar positions of
                                   Viad Corp, formerly The Dial Corp, for more than 5 years.
                                   Board member since 1992 and Chairman from 2000 until March
                                   2001. Age 67.

   Terms Expire  Constance R.      President of Cardinal Health Consulting Services since 2000.
    at the 2002  Curran            Previously was President and Chief Executive Officer of
Annual Meeting:                    CurranCARE, Inc. (a nationwide healthcare management
                                   company) since 1995. Vice Chairman and National Director of
                                   APM, Patient Care Services from 1990-1995. Formerly Vice
                                   President of the American Hospital Association and Dean, the
                                   Medical College of Wisconsin. Editor of Nursing Economic$
                                   since 1990. Board member since 1998. Age 53.

                 G. Robert
                 Durham            Chairman of FINOVA since March 2001. Retired Chairman and
                                   Chief Executive Officer of Walter Industries, Inc. (a
                                   homebuilding and financing, building materials, natural
                                   resources and industrial manufacturing company) since 1996.
                                   He served as Chairman and Chief Executive Officer from 1991
                                   to 1996. Former Chairman, President and Chief Executive
                                   Officer of Phelps Dodge Corporation (a mining company).
                                   Director of The MONY Group Inc. (formerly Mutual Life
                                   Insurance Company of New York), Amphenol Corp. and Earle M.
                                   Jorgensen Co. Board member since 1992. Age 72.
</TABLE>
                                      B-1
<PAGE>

                       THE BOARD OF DIRECTORS (Continued)

Kenneth R         Eller Distinguished Service Professor of Economics since
Smith             1980, Dean of the Karl Eller Graduate School of Management
                  and the Eller College of Business and Public Administration
                  from 1980 to 1995, and Vice Provost from 1992 to 1995 of The
                  University of Arizona. Chairman since 1996 and a director
                  since 1990 of Apache Nitrogen Products, Inc. Chairman of
                  GroupSystems.com, Inc. Former director of Southwest Gas
                  Corporation. Board member since 1992. Age 58.

    Terms Expire
     at the 2003
 Annual Meeting:

Robert H.         Chairman since 1999, Chief Executive Officer since 1993,
Clark, Jr.        President since 1983 and a director since 1968 of Case,
                  Pomeroy & Company, Inc. (real estate, oil and gas and
                  investment activities). Also a director of Homestake Mining
                  Company. Board member since 1997. Age 60.

Shoshana B.       Professor Emeritus of International Studies since 2001 and a
Tancer            Professor for more than five years and Director of the North
                  American Free Trade Agreement Center since 1993 of
                  Thunderbird, The American Graduate School of International
                  Management. Also, principal of Tancer Law Firm, PLC since
                  2000. Formerly of-counsel to the law firm of Ryley, Carlock
                  & Applewhite, P.A. since 1999. Previously of-counsel to
                  O'Connor, Cavanagh, Anderson, Killingsworth & Beshears for
                  more than five years. Former director of Mountain Bell (the
                  predecessor of U.S. West, Inc.) and three subsidiaries of
                  Merabank, a Federal Savings Bank. Board member since 1994.
                  Age 65.

                                      B-2
<PAGE>

                               BOARD INFORMATION
Board Meetings:

In 2000, in light of its consideration of FINOVA's strategic alternatives, the
Board held a total of 36 Board and 11 committee meetings, plus a number of
meetings of the Special Committee. Each director attended at least 75% of his
or her Board and committee meetings. In October 2000, the Board voluntarily
suspended meeting fees for meetings conducted primarily by telephone for the
rest of that year. As a result, directors were not compensated for attendance
at 3 Board and 2 Audit Committee meetings.

Board Committees:

The Executive Committee exercises all the powers of the Board when the Board is
not in session, except as limited by law. The Executive Committee held no
meetings but reviewed a number of transactions by unanimous written action
without a meeting last year. Members: Messrs. Durham, Johnson and Smith and
Ms. Tancer.

The Audit Committee recommends appointment of the Company's independent
auditors. It also approves audit reports and plans, accounting policies,
financial statements, internal audit reports, internal controls, Ethics
Committee actions, audit fees and certain other expenses. It supervises our
corporate compliance program and the Ethics Committee. The Audit Committee held
5 meetings in 2000. All members are non-employee directors. Members: Mr. Clark,
Chairman, Ms. Curran, Mr. Johnson, Ms. Tancer and Mr. Teets.

The Human Resources Committee exercises all the powers of the Board in
authorizing and approving executive succession plans and compensation of and
agreements with executives and employees. As part of those duties, the
Committee administers all compensation, incentive and severance plans of FINOVA
and its subsidiaries, including the 1992 Stock Incentive Plan, along with
awards under those plans. The committee delegated to the Chief Executive
Officer the authority to set compensation for non-executive officers, subject
to the committee's supervision. The committee evaluates the competitiveness of
FINOVA's compensation and the performance of the Chief Executive Officer. It
held 6 meetings in 2000. All members of the committee are non-employee
directors. Members: Mr. Smith, Chairman, Ms. Curran and Messrs. Clark, Durham
and Teets.

The Special Committee was appointed in November 2000 to assist the Board in
supervising the review of strategic alternatives, including the monitoring of
negotiations relating to possible equity investments in FINOVA or other
restructuring transactions. Members: Mr. Durham and Mr. Smith.

The Board does not have a nominating committee. The entire Board performs those
duties.

                                      B-3
<PAGE>
BOARD COMPENSATION

Retainer and Fees:

Directors may
elect to
receive their
retainer in
cash, shares
or options.

Non-employee directors receive a $30,000 annual retainer. To encourage
directors to own our shares, they may elect to receive their retainers in cash,
restricted stock or stock options The director generally cannot sell or
transfer the restricted stock and the options do not vest (become exercisable)
until the day before the next annual meeting of shareowners. If the director
stops being a Board member before that date, the director forfeits the shares
or options, with certain exceptions. Special Committee members are paid an
additional retainer of $10,000 per month of service.

Directors also receive $1,500 for each Board, committee or other meeting
attended. Board members receive $100 for each matter considered without a
meeting. We reimburse directors for any expenses related to their Board service
and have provided at company expense transportation and lodging benefits
through company facilities on an occasional basis to directors and their
families.

Option Grants:

Under the terms of the 1992 Stock Incentive Plan, non-employee directors
automatically receive options to purchase 4,000 shares when they become
directors and another 3,000 each year of their term. The exercise price of the
options is the fair market value of our shares on the grant date.

Deferred Compensation and Option Plans:

Non-employee directors may defer all or part of their retainer and fees under
the Directors' Deferred Compensation Plan. Deferred amounts earn interest at an
industrial bond rate in effect each quarter. The director may generally
determine when the funds are to be paid. There were no participants in this
plan as of the end of 2000.

Directors also may defer receipt of their cash compensation from FINOVA through
our Bonus KEYSOP Program. Officers who are eligible to receive FINOVA
restricted stock also may participate in that program. Under the KEYSOP
program, participants receive options in lieu of their cash income. The options
are exercisable anytime between 6 months and 20 years after the grant date,
with certain exceptions, such as termination of employment.

The KEYSOP program deposits the compensation that would have been paid into a
trust. The trust invests the compensation until the participant elects to
exercise the options. The KEYSOP accounts are invested in up to nine designated
mutual funds, and are adjusted for any income or loss on those investments.
Dividends in the KEYSOP are reinvested in the funds selected by the
participant.

To exercise a KEYSOP option, the participant must pay 25% of the option's fair
market value on the option grant date or the exercise date, whichever is
greater. We grant KEYSOP options for more than the deferred compensation to
cover the initial exercise price, so that the participants are not unduly
disadvantaged by participating in that program. This mark-up in KEYSOP option
grants results in no greater compensation to the

                                      B-4
<PAGE>

                         BOARD COMPENSATION (Continued)

participant than would have occurred had he or she not elected to participate
in the program. However, participants could receive less compensation if the
accounts lose value, since the exercise price is always no less than 25% of the
fair market value on the grant date. When the KEYSOP options are exercised, the
participant receives the securities relating to his or her account. There were
no participants in this plan as of the end of 2000.

Retirement Plan:

Non-employee directors participate in the Directors' Retirement Benefit Plan.
If a director is at least 62 on his or her retirement date and has at least
five years of service on the Board, we will pay the director an annual pension
equal to the retainer in effect on the retirement date. That pension will
continue during the life of the director for up to the number of years the
director served on the Board.

Charitable Awards
        Programs:

As part of our overall support for charities, and to help attract directors
with outstanding experience and ability, the Board implemented the Directors'
Charitable Awards Program. It enables each director to contribute $100,000 per
year for ten years following his or her death to a charity or foundation
selected by the director. To fund the program, we purchase, at minimal cost,
life insurance on each eligible director, payable to FINOVA as beneficiary.
Future directors elected to the Board are not eligible to participate in the
program unless the Board otherwise determines.

                                      B-5
<PAGE>

                        HUMAN RESOURCES COMMITTEE REPORT
                           ON EXECUTIVE COMPENSATION

The Committee:

The Human Resources Committee is comprised only of independent directors as
defined by the SEC and IRS. The committee exercises the Board's powers in
compensating executive officers of FINOVA and its subsidiaries. We also
administer FINOVA's incentive plans, including the 1992 Stock Incentive Plan.
We make every effort to assure our compensation program is consistent with
FINOVA's values and furthers its business strategy.

The Year 2000:

The year 2000 brought the early retirement of our former Chairman, President
and Chief Executive Officer at the end of the first quarter. At the same time,
but in an unrelated circumstance, FINOVA announced a $70 million charge to
increase loss reserves following the write-off of a loan. We then were unable
to renew in full our bank facilities that provided a back up to our commercial
paper program, which resulted in credit rating agency downgrades. In May 2000,
we engaged financial advisors to assist us in exploring strategic alternatives,
including a sale of FINOVA. In light of this situation, the committee and the
Board focused on implementing retention and incentive plans for the entire
workforce, including our senior management.

Due to the impact on FINOVA following those events, the Committee did not grant
stock option and restricted stock awards to employees (except for standard
initial grants to newly hired and promoted employees). Neither did it implement
any new long-term incentive plans other than the retention plans discussed
below. Executive officers did not receive salary merit adjustments in 2000.
Furthermore, because substantial portions of compensation have been
performance-based, including bonus, stock and option awards, compensation paid
to the senior executives in 2000 was substantially below that of previous
years.

Retention Plans:

To help retain our workforce while FINOVA explored its strategic alternatives,
the Board adopted retention plans during the year. One of FINOVA's core
strengths has been the quality of its workforce. As a result, the Board deemed
it critical to implement retention plans designed to help preserve FINOVA's
franchise value.

General Retention Plan:

All permanent employees, other than the executive officers, participate in the
general employee retention plan. That plan originally provided for payment of
one-third of a bonus to the participant upon a change-of-control, as defined in
that plan, and the remainder six months after that event, provided the employee
continued to remain an active employee in good standing. When a change-of-
control did not occur by August, the Board amended the plan to commence monthly
payouts of 10% of the retention bonus, with the last 40% to be paid in April
2001, assuming no change-in-control. The Board terminated the 2000 Management
Incentive Plan for general retention plan participants. The Company adopted new
retention plans for the remainder of 2001, which must be approved by the
Bankruptcy Court.

                                      B-6
<PAGE>

                        HUMAN RESOURCES COMMITTEE REPORT
                     ON EXECUTIVE COMPENSATION (Continued)

Executive Officer
Retention Plan:

For the same reasons noted above, and in consultation with outside consultants,
in May 2000 the Board implemented a retention plan for the executive officers.
Under that plan, the executive officers were to be paid specified amounts
ranging from $3 million, for the Chief Executive Officer, to $1 or $2 million
for the other participants. The retention amounts were to be paid two years
from the grant date (May 2002), six months after a change-in-control, as
defined, or upon involuntary termination other than for cause, whichever
occurred first. No portions of those retention amounts were paid to
participants in 2000. Due to FINOVA's filing for protection from creditors in
March 2001 under Chapter 11, Title 11 of the United States Code, the Board and
the participants in that retention plan agreed to terminate those plans in
exchange for reduced levels of severance or continuing compensation, as
applicable. Six of the twelve participants in that plan terminated employment
at that time, including Mr. Breyne.

Succession Planning:

Each year, the Committee has undertaken succession planning for key positions,
to help assure continuity for FINOVA. In March 2000, the Board elected Mr.
Breyne as President and Chief Executive Officer and a director of FINOVA. He
also became Chairman and Chief Executive Officer in addition to being President
of FINOVA Capital. The Committee approved an employment agreement for Mr.
Breyne after receiving advice from its compensation consultants, Hewitt
Associates. In March 2001, Mr. Breyne was succeeded by our General Counsel and
Secretary, William J. Hallinan, who assumed the additional duties as President
and Chief Executive Officer.

   Executive
Compensation
  Generally:

We review executives' pay each year. Compensation depends on many factors,
including individual performance and responsibilities, future challenges and
objectives and how the executive might contribute to our future success. We
also look at FINOVA's financial performance and the compensation levels at
comparable companies.

        Total
Compensation:

In past years, we targeted total compensation levels for the executives to fall
between the average and the top 25% levels of the other similar companies,
adjusted in light of FINOVA's and the executive's performance. Our primary
objective has been to place more compensation at risk in the form of short-term
and long-term compensation than our competitors, on average. In 2000, we
focused instead on retention issues.

Base Salary:

We did not adjust salaries in 2000 from the prior year's levels for the
executive officers.

We did not
adjust
salaries for
our
executives in
2000.

Annual Incentives:

Our annual cash bonus plans, the Management Incentive Plans ("MIPs"), reward
key employees for meeting challenging annual goals. We establish MIP target
awards for each participant as a percentage of salary, generally 40-55% for the
executives whose

                                      B-7
<PAGE>

                        HUMAN RESOURCES COMMITTEE REPORT
                     ON EXECUTIVE COMPENSATION (Continued)

No MIP
bonuses were
paid in 2000.

names appear in the Summary Compensation Table included in this Annex B. We can
adjust those awards based on individual and corporate performance, resulting in
an award of between 0-200% of the target. Because the performance goals were
not met, no MIP awards were made based on performance in 2000. We retained, but
did not exercise, our discretion to make awards regardless of performance.

For employees of the parent company, FINOVA, the 2000 performance goals and
their relative importance for plan purposes were earnings per share (30%), net
income from continuing operations (30%), return on average equity (30%) and
relative shareowner performance (10%). In 2000, FINOVA's overall performance
fell below the minimum performance targets for each of the criteria.

Annual bonuses for most of our employees were to have been based on FINOVA
Capital's performance. Those goals for 2000 were net income from continuing
operations (40%), return on average equity (40%) and average managed assets
(20%). FINOVA Capital's performance fell below the minimum permitted levels for
each of the categories.

Long-Term Incentives:

We grant
options only at
or above the
market price of
our shares on
the grant date.

We have provided long-term incentives through stock options, performance-based
restricted stock and the Performance Share Incentive Plans, discussed below.
These plans help focus top management on specific long-term goals and link
their incentives to increases in our share price.

Executives did
not receive
option awards
in 2000, with
one minor
exception.

Options give executives an opportunity to buy our shares. We grant options
under the 1992 Stock Incentive Plan only at or above the market price on the
grant date. As a result, the options have value only to the extent the share
price increases. The options to employees exempt from the overtime pay laws
generally vest over at least three years from the grant date. We make every
effort to balance the dilution to shareowners with the motivation for the
employees. With the exception of one 500 share option grant to one executive to
reward 1999 performance, we did not award stock options to executives in 2000.

No employees
received
restricted
stock grants in
2000.

Although we could grant restricted stock to executives that, for example, might
vest with the mere passage of time or continued employment, we have chosen
instead since mid-1992 to grant only performance-based restricted shares that
have more stringent performance goals. Those goals require that FINOVA perform
at least as well as the market (as measured by the S&P 500 or S&P Financial
indices) before that year's portion of the award vests. Because those grants
vest over five years, the awards help retain and motivate executives during
that period and so long as they hold those shares afterwards. While we have
discretion to waive performance requirements, we did not do so in 2000.

                                      B-8
<PAGE>

                        HUMAN RESOURCES COMMITTEE REPORT
                     ON EXECUTIVE COMPENSATION (Continued)

As you know, FINOVA's stock performance in 2000 was abysmal. As a result, the
performance-based restricted stock scheduled to vest on January 1, 2001 was
forfeited by each of the officers holding that stock, except as noted below.
For performance-based restricted stock awards granted in 1998 and later,
performance below the minimum thresholds in one year can be offset by
performance above the maximum levels in the next vesting year. Thus, those
portions of the awards granted in 1998 that were scheduled to vest on January
1, 2001 were not forfeited, and vesting will depend on FINOVA's relative share
performance this year.

No PSIP awards
were paid in
2000.

We did not
create a
2001-2003 PSIP.

The Performance Share Incentive Plans ("PSIPs") focus management on long-term
operational goals in addition to share appreciation. For the 1999-2001 and
2000-2002 FINOVA PSIP, those goals relate to net income from continuing
operations (35%), earnings per share (35%) and return on average equity (30%).
FINOVA Capital's 1999-2001 and 2000-2002 PSIP goals are net income from
continuing operations (35%), return on average equity (35%) and economic profit
(30%). PSIPs measure performance over three years.

The number of PSIP share units awarded to participants is based on percentages
of their salaries (between 40% and 60% for the officers identified in the
Summary Compensation Table). Those percentages of salary are divided by the
December average share price before the beginning of the PSIP plan, to result
in the number of PSIP shares awarded to that participant. Final awards are paid
at the December average share price at the end of the PSIP plan, creating an
incentive to seek further increases in our share price.

Awards to those who manage our operating divisions depend on both the
performance of FINOVA Capital (25%) and their particular business unit (75%).
In that way, we link their incentive compensation to overall and divisional
performance.

We review final award sizes and eligibility and can adjust payments within
specified amounts if we believe circumstances warrant a change. Because
FINOVA's performance was below the minimum expectations, no payments were made
under the 1998-2000 PSIP.

Tax Code Concerns:

Section 162(m) of the Internal Revenue Code disallows a corporate income tax
deduction for executive compensation paid to senior executives in excess of $1
million per year, unless that income meets permitted exceptions. One exception
is if the pay is based on performance, under stringent tests established by
that section. Shareholders approved amendments in 1997 to the 1992 Stock
Incentive Plan continuing that plan's qualification under Section 162(m).
Therefore, we are eligible to receive a tax deduction for compensation under
those awards, to the extent we are able to take deductions for those amounts.

                                      B-9
<PAGE>

                        HUMAN RESOURCES COMMITTEE REPORT
                     ON EXECUTIVE COMPENSATION (Continued)

For our other short- and long-term performance plans, compliance with Section
162(m) would eliminate our flexibility to adjust the plans if FINOVA's business
incurs a significant change. Section 162(m) prohibits adjustment of performance
goals after the first part of the year. Our experience since FINOVA became
independently owned demonstrates the advantages of having that flexibility to
continue to motivate and reward our key personnel. In past years, we have
adjusted performance goals later in the year, in light of unusual changes in
our business or acquisitions or dispositions that have occurred. Those
adjustments would not have been allowed under Section 162(m). Thus, FINOVA
decided to forego the exemption to the extent compensation paid under those
plans exceeds the threshold. Based on compensation levels for 2000, however, we
do not anticipate that FINOVA will lose any tax deductions due to Section
162(m) limitations for that year. We continue to review our position from time
to time with respect to this issue.

CEO Compensation:

As noted above, Mr. Breyne was elected in March 2000 to serve as President and
Chief Executive Officer, following the retirement of our former Chairman. We
entered into an employment agreement with him shortly following his election to
office, after receiving recommendations from our outside compensation
consultants, Hewitt & Associates. He received no discretionary awards, bonuses,
stock or option grants under that agreement in 2000.

As discussed above, the majority of Mr. Breyne's compensation was placed at
risk because it was tied to performance goals, including our share price. As
with our other officers, he forfeited his MIP, PSIP and performance-based
restricted shares scheduled to vest on January 1, 2001, except as noted above.
He also did not receive any option grants in 2000, notwithstanding his election
to serve as President and Chief Executive Officer. Those actions demonstrate
our commitment to tying pay and performance.

Conclusion:

We believe the executive team provided dedicated service to FINOVA during this
critical period. We will work to assure the executive compensation programs
continue to meet our strategic goals as well as the overall objectives
discussed above.

                Kenneth R. Smith, Chairman
                Robert H. Clark, Jr.
                Constance R. Curran
                G. Robert Durham
                John W. Teets
                Members, Human Resources Committee

                                      B-10
<PAGE>

                  EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of
Compensation:

The following table summarizes the compensation we paid our President and Chief
Executive Officer in 2000 (who resigned in March 2001), each of the four other
most highly compensated executive officers as of the end of 2000, based on
salary, and to the former Chief Executive Officer, who retired in March 2000.
No annual bonuses were paid in 2000 to any executive officers.
                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                       Annual Compensation                        Long-Term Compensation
                          --------------------------------------------- ------------------------------------------
                                                                                   Awards               Payouts
                                                                        ----------------------------- ------------
                                                                          Performance     Securities
                                                                        Based Restricted  Underlying
     Name and                                           Other Annual         Stock       Options/SARs     LTIP
 rincipalPPosition   Year Salary(/1/) Bonus(/1/)(/2/) Compensation(/3/) Awards(/4/)(/5/)     (#)      Payouts(/1/)
------------------   ---- ----------- --------------- ----------------- ---------------- ------------ ------------
 <S>                 <C>  <C>         <C>             <C>               <C>              <C>          <C>
 Matthew M Breyne    2000  $500,750      $      0                          $        0      $     0    $         0
 Former President
  and                1999   370,167       326,342                           1,074,949       35,000        178,457
 Chief Executive
  Officer            1998   266,667       211,200                             266,448          500        297,560
 William J.
 Hallinan            2000   317,000             0                                   0            0              0
 President and
 CEO (as             1999   307,667       217,828                             419,836       17,500        278,183
 of March 2001),     1998   294,333       207,210                             281,044            1        527,345
 General Counsel
 and Secretary
 John J. Bonano      2000   313,500             0          $42,141                  0            0              0
 Former Executive
  Vice               1999   304,500       153,125           47,019            326,824       23,000         88,486
 President FINOVA    1998   266,667       204,000           55,068            415,964            0        230,778
 Capital Corp.
 Jack Fields III     2000   313,500             0                                   0          500              0
 Executive Vice
  President          1999   304,500       252,811                             738,675       29,000        176,972
 FINOVA Capital
  Corp.              1998   266,667       224,400                             380,998          500        307,704
 Gregory C.
  Smalis             2000   273,000             0                                   0            0              0
 Former Executive
  Vice               1999   265,000       195,570                             339,741       23,000        208,094
 President FINOVA    1998   253,667       178,582                             294,346                     361,806
 Capital Corp.
 Samuel L.
  Eichenfield        2000   163,750             0          145,026                  0            0     18,848,705
 Former Chairman,    1999   636,333       619,470          184,459          2,249,080            0        830,481
 President and       1998   609,000       589,512          157,854          1,586,936      250,000      1,559,390
 Chief Executive
 Officer
<CAPTION>
     Name and            All Other
 rincipalPPosition   Compensation(/6/)
------------------   -----------------
 <S>                 <C>               <C>
 Matthew M Breyne         $9,600
 Former President
  and                      9,600
 Chief Executive
  Officer                  9,600
 William J.
 Hallinan                  9,600
 President and
 CEO (as                   9,600
 of March 2001),           9,600
 General Counsel
 and Secretary
 John J. Bonano            9,600
 Former Executive
  Vice                     9,600
 President FINOVA          9,600
 Capital Corp.
 Jack Fields III           9,600
 Executive Vice
  President                9,600
 FINOVA Capital
  Corp.                    9,600
 Gregory C.
  Smalis                   9,600
 Former Executive
  Vice                     9,600
 President FINOVA          9,600
 Capital Corp.
 Samuel L.
  Eichenfield              9,600
 Former Chairman,          9,600
 President and             9,600
 Chief Executive
 Officer
</TABLE>
--------
(/1/) Includes deferred compensation, if any. LTIP payouts to Mr. Eichenfield in
      2000 are discussed in "Employment Agreements--Mr. Eichenfield" below.

(/2/) Bonus payments depend on both FINOVA's and the individual's performance.
      No bonus is paid under the Management Incentive Plan unless we achieve set
      performance levels.

(/3/) Includes personal benefits we paid, including tax gross-up payments in
      2000 of $16,646 for Mr. Bonano and accrued vacation pay for Mr.
      Eichenfield of $62,981.

(/4/) The number of shares to vest depends on our share price and dividend
      performance during each of the five years after the grant date, compared
      to either the S&P 500 or S&P Financial indices. Performance-based
      restricted stock ("PBRS") awards are valued in the table at the fair
      market value of our unrestricted shares at the grant date (for initial
      grants) and vesting date (for shares vesting above target). Those values
      have not been reduced for any performance requirements or transfer
      restrictions.

                                      B-11
<PAGE>

            EXECUTIVE COMPENSATION AND OTHER INFORMATION (Continued)

  The PBRS granted by FINOVA vest over five years. If our performance equals
  the lesser of the S&P 500 or S&P Financial indices, the target amount vests
  for that year. If we do not at least match one of those, then the person
  forfeits to FINOVA that year's award of 20% of the shares, except as noted
  below. Performance in excess of the lower index results in vestings of up
  to 1.7 times that year's target award. For awards granted in 1998 or later,
  PBRS shares that would otherwise be forfeited will be awarded in the
  following year to the extent that performance in that subsequent year
  exceeds the maximum targets established for that year.

  The named officers received the following target awards of PBRS:

<TABLE>
<CAPTION>
                        2000  1999   1998
                        ---- ------ ------
       <S>              <C>  <C>    <C>
       Mr. Breyne         0   2,000  3,000
       Mr. Hallinan       0   4,000  2,500
       Mr. Bonano         0   6,000  6,000
       Mr. Fields         0   8,000  5,000
       Mr. Smalis         0   6,000  3,000
       Mr. Eichenfield    0  20,000 12,000
</TABLE>

  The directors have discretion to amend the terms of the PBRS grants to
  conform to changes in the tax laws or otherwise. Holders of PBRS receive
  dividends on and may vote the target shares before they vest.

(/5/) The total number of target restricted shares held by each officer named
      above, all of which are PBRS, and their value based on our closing share
      price at December 31, 2000, were: Mr. Breyne--19,248 shares ($19,248); Mr.
      Hallinan--10,748 ($10,748); Mr. Bonano--16,248 ($16,248); Mr. Fields--
      16,940 ($16,940), Mr. Smalis--13,608 ($13,608) and Mr. Eichenfield--56,240
      ($56,240).

(/6/) Matching payments made by FINOVA under the Employee Stock Ownership Plan
      or Savings Plan.

Stock
Options and
Stock
Appreciation
Rights:

Options only
have value if
our share
price
increases.

The following table lists our grants during 2000 of stock options and tandem
stock appreciation rights ("SARs") to the officers named in the Summary
Compensation Table. The amounts shown as potential realizable values rely on
arbitrarily assumed increases in value required by the SEC. In assessing those
amounts, please note that the ultimate value of the options, as well as your
shares, depends on actual future share prices. Market conditions and the
efforts of the directors, the officers and others to foster the future success
of FINOVA can influence those future share values.

                                      B-12
<PAGE>

            EXECUTIVE COMPENSATION AND OTHER INFORMATION (Continued)

                     OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                               Individual Grants
            --------------------------------------------------------
                                                                       Potential
                                                                       Realizable
                                                                        Value at
                                                                     Assumed Annual
                                                                     Rates of Share
                               Percent of                                Price
                Number of        Total                                Appreciation
               Securities     Options/SARs                             for Option
               Underlying      Granted to   Exercise or                   Term
              Options/ SARs   Employees in   Base Price   Expiration --------------
Name        Granted(/2/)(/1/) Fiscal Year  ($/Share)(/2/)    Date      5%     10%
----        ----------------- ------------ -------------- ---------- ------ -------
<S>         <C>               <C>          <C>            <C>        <C>    <C>
Mr. Fields         500           .4231        $30.5625      2/9/10   $9,607 $24,344
</TABLE>
--------
(/1/) The options vest 34% after 1 year and 33% after each of years 2 and 3. The
      options have limited stock appreciation rights exercisable within 60 days
      after a change in control, subject to earlier expiration upon termination
      of employment. The limited SARs entitle the person to receive cash, if
      desired, for the difference between the then-current market value and the
      exercise price. In total, the option holders can exercise options or SARs
      equal to the number of options granted.

(/2/) The listed options are all non-qualified options. The holder can pay the
      exercise price and tax withholding obligations with already owned shares
      or with shares vesting at that time.

2000 Option and SAR
Holdings:

The following table lists the number of shares acquired and the value realized
as a result of option exercises during 2000 for the listed officers. It also
includes the number and value of their exercisable and non-exercisable options
and SARs as of December 31, 2000. The table contains values for "in the money"
options, meaning a positive spread between the year-end share price of $1.00
and the exercise price. These values have not been, and may never be, realized.
The options might never be exercised, and the value, if any, will depend on the
share price on the exercise date.
            AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
                       FISCAL YEAR-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                            Number of Securities
                                           Underlying Unexercised   Value of Unexercised In-
                                            Option/SARs at Fiscal   The-Money Options/SARs at
                                                  Year-End               Fiscal Year-End
                 Shares Acquired  Value   ------------------------- -------------------------
Name             on Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
----             --------------- -------- ----------- ------------- ----------- -------------
<S>              <C>             <C>      <C>         <C>           <C>         <C>
Mr. Eichenfield      69,418      $639,513   535,070      93,750         $ 0          $ 0
Mr. Breyne            4,000        21,250    52,569      29,931           0            0
Mr. Fields            2,000        41,023    61,393      34,943           0            0
Mr. Hallinan          4,792        15,245    82,069      23,349           0            0
Mr. Bonano                                   42,434      27,966           0            0
Mr. Smalis                                   62,102      29,298           0            0
</TABLE>

                                      B-13
<PAGE>
            EXECUTIVE COMPENSATION AND OTHER INFORMATION (Continued)

Retirement
Plans:

The following table shows the estimated annual retirement benefit payable to
participants, including the officers named in this proxy statement, for the
average annual earnings and years of service indicated. It assumes retirement
at age 65. We pay the retirement benefits under FINOVA's Pension Plan and the
Supplemental Executive Retirement Plan--participants do not pay for those
benefits. Only certain senior employees participate in the supplemental plan.
The table includes the supplemental benefit formula.
                               PENSION PLAN TABLE

<TABLE>
<CAPTION>
                      Estimated Annual Retirement Benefits For Years Of
                                    Service(/2/)(/3/)(/4/)
                     ------------------------------------------------------------
 Average Annual
Compensation(/1/)       15           20           25           30        35(/5/)
-----------------    --------     --------     --------     --------     --------
<S>                  <C>          <C>          <C>          <C>          <C>
   $  125,000        $ 32,810     $ 43,750     $ 54,690     $ 65,630     $ 76,560
      150,000          39,380       52,500       65,630       78,750       91,880
      175,000          45,940       61,250       76,560       91,880      107,190
      200,000          52,500       70,000       87,500      105,000      122,500
      225,000          59,060       78,750       98,440      118,130      137,810
      250,000          65,630       87,500      109,380      131,250      153,130
      300,000          78,750      105,000      131,250      157,500      183,750
      400,000         105,000      140,000      175,000      210,000      245,000
      450,000         118,130      157,500      196,880      236,250      275,630
      500,000         131,250      175,000      218,750      262,500      306,250
      750,000         196,880      262,500      328,130      393,750      459,380
    1,000,000         262,500      350,000      437,500      525,000      612,500
    1,250,000         328,130      437,500      546,880      656,250      765,630
    1,500,000         393,750      525,000      656,250      787,500      918,750
</TABLE>
--------
(/1/) Consists of the employee's average salary and bonus during the highest 5
      years during the past 10 years before retirement. Salary and bonus for
      1997-99 for the officers named in the Summary Compensation Table is listed
      in that table. At year-end, the current average compensation for plan
      purposes was $484,830 for Mr. Breyne; $496,418 for Mr. Hallinan, $412,917
      for Mr. Fields; $391,130 for Mr. Bonano, $409,001 for Mr. Smalis, and
      $1,239,660 for Mr. Eichenfield.

(/2/) Years of credited service: Mr. Breyne (14), Mr. Fields (18), Mr. Hallinan
      (28), Mr. Bonano (11), Mr. Smalis (23) and Mr. Eichenfield (35). To permit
      Mr. Eichenfield to retire at age 65 with the maximum years of service
      under the supplemental plan, he received five additional years of credited
      service in 1992 and received three years of service each year thereafter,
      to the plan maximum of 35 years, including sufficient vesting after his
      retirement to reach 35 years of service.

(/3/) Benefits are computed on a single-life annuity basis. The benefits under
      the plan reflect a reduction to recognize some of the Social Security
      benefits expected to be received by the employee. The plans also provide
      for the payment of benefits to an employee's surviving spouse. The table
      excludes adjustments for joint and survivorship provisions, which would
      reduce the amounts shown. Benefits generally vest after five years of
      service. The plans provide for reduced early retirement benefits. Prior
      plan formulas provide for different benefits. Employees accruing benefits
      under the prior or the prior and current formulas, and participants
      accruing benefits under only the Pension Plan, may receive benefits
      different from those listed in the table above.

(/4/) Federal law limits the annual benefits that can be paid from a tax-
      qualified retirement plan. As permitted by that law, the supplemental plan
      pays benefits above the permitted limits. Some of those excess benefits
      are held in a trust, the assets of which are available to FINOVA's
      creditors.

(/5/) The Pension Plan and the normal supplemental plan benefit formula limit
      the years of service for plan purposes to a maximum of 35 years.

                                      B-14
<PAGE>

                             EMPLOYMENT AGREEMENTS

Mr. Eichenfield:

Mr. Eichenfield was engaged as the Chairman, President and Chief Executive
Officer of FINOVA until his retirement in March 2000. He also served as the
Chairman and Chief Executive Officer of FINOVA Capital. At the time of his
retirement, his employment agreement engaged him to serve until March 15, 2001
and would have been extended automatically unless terminated by the Board or
Mr. Eichenfield. The Board could have terminated him for cause, as defined in
the agreement, at any time. He served as a member of the Board, per his
agreement, subject to reelection by the shareowners.

Mr. Eichenfield's base salary at the time of his retirement was $655,000,
subject to adjustment by the Board or the Human Resources Committee. He
participated in our incentive, retirement, health, and other fringe benefit
programs, as long as those benefits were at least as favorable as specified
minimums. His participation in awards under the 1992 Stock Incentive Plan was
at the sole discretion of the Human Resources Committee.

If Mr. Eichenfield was terminated, actually or constructively, in violation of
his agreement, he would have been entitled to receive his base, incentive,
stock-based and change in control compensation and specified benefits during
the remainder of the agreement. Those amounts could not be less than an amount
equal to one year of service plus the sum of the highest bonus, stock,
Performance Share Incentive Plan and other performance related payments during
the two years before that termination. He would have been entitled to
additional payments discussed below if a change-in-control occurs. All stock
option vestings and pension plan accruals under the supplemental plan were to
continue during those periods.

When Mr. Eichenfield retired in March 2000, the Board agreed to permit the
continued vesting of his awards under the 1992 Stock Incentive Plan (options
and PBRS) through his 65th birthday, which was his normal retirement date. The
Board agreed to provide him with pro rated bonuses under the 2000 MIP and
1998-2000 and 1999-2001 PSIPs. Because those bonuses were to be based on actual
or target performance, whichever was less, he received no payments under the
first two plans. Whether he receives payment under the 1999-2001 PSIP will
depend on company performance through the end of 2001. His right to benefits
under any other change of control plans (except for rights under the 1992 Stock
Incentive Plan) were terminated as of his retirement date. He was permitted to
purchase his automobile at its FINOVA book value. He continued to receive
certain fringe benefits, such as financial counseling and an annual physical
examination, for a period following retirement, and was permitted to retain
certain personal effects including his computer. He was credited with service
under the supplemental pension plan to permit him to reach 35 years of service,
as he would have achieved had he retired at age 65.

                                      B-15
<PAGE>

                       EMPLOYMENT AGREEMENTS (Continued)
                                              Executive Compensation Agreements:
Mr. Eichenfield's employment agreement originally provided that he was to have
been paid approximately $6.3 million and $9.45 million if FINOVA's share price
exceeded specified thresholds. Before the first of those thresholds was met in
1997, Mr. Eichenfield deferred receipt of the former amount until his
retirement. He also amended his employment agreement to provide that he would
not be entitled to receive the latter amount unless he remained an active
employee until his 65th birthday, absent his death or disability. Those
deferred funds would accrue interest and earnings based on specified funds in
the interim. When he retired, the Board agreed to waive the requirement that he
remain until his 65th birthday, and paid him the accrued amounts. The payments
reflected in the summary compensation table under long-term bonuses include the
earnings on the $6.3 million on the former payment and the full amount of the
latter payment, including earnings.

The executive officers, Messrs. Hallinan, Bruns, Fields, Marszowski, Roche and
Tashlik, are each engaged under a compensation agreement executed in March
2001. Provided the bankruptcy court approves those agreements, each executive
will forfeit rights to bonuses that were to have been paid under the executive
retention plan (of $2 million each for Messrs. Hallinan, Fields and Marszowski,
and $1 million each for Messrs. Bruns, Roche and Tashlik) and severance
compensation under the executive severance plans, noted below. Mr. Hallinan
also terminated his rights under his employment agreement. In exchange, the
executives received an increased salary and retention bonuses, as noted in the
following table, as well as other benefits noted below.

<TABLE>
<CAPTION>
                                                 January
                   Annual     Approval Emergence   2002
Executive:         Salary:     Bonus:   Bonus:    Bonus:
----------      ------------- -------- --------- --------
<S>             <C>           <C>      <C>       <C>
Mr. Hallinan    $557,000(/1/) $300,000 $150,000  $150,000
Mr. Bruns             200,000  150,000   75,000    75,000
Mr. Fields            400,000  250,000  125,000   125,000
Mr. Marszowski        300,000  150,000   75,000    75,000
Mr. Roche             200,000  100,000   50,000    50,000
Mr. Tashlik           225,000  150,000   75,000    75,000
</TABLE>
--------
(/1/Mr.)Hallinan receives the salary noted while serving as President and CEO.
    For periods served only as General Counsel and Secretary, his annual salary
    is $400,000.

The increased salaries were made retroactive to January 1, 2001. The approval
bonus amounts are to be paid following bankruptcy court approval of the plans.
The emergence bonuses are to be paid on adoption of a plan of reorganization.
In addition, each executive is eligible to receive a discretionary bonus based
on individual performance in the Board's discretion of between 0% and 150% of
the executive's salary. Mr. Hallinan's contract provides that his discretionary
bonus is to be based on the lower salary noted in the footnote above.

Each executive is eligible to receive severance benefits if he is terminated
involuntarily other than for cause, in exchange for a

                                      B-16
<PAGE>

                       EMPLOYMENT AGREEMENTS (Continued)
                                                           Severance Agreements:
release of liability. The executive would be paid one year's base salary and
would receive financial counseling, outplacement services, and health and life
insurance benefits for one year. If,
however, the executive is terminated without cause before the payment of the
bonuses noted above, including the discretionary bonus, the executive would be
guaranteed three years' severance compensation, less the amount of any bonuses
paid under the agreement. One of those years could be paid under a consulting
agreement.

If the bankruptcy court does not approve these agreements, the executives will
be restored to their rights under the retention plan, executive severance plans
and Mr. Hallinan's employment agreement.

As noted above, five executive officers were terminated in March 2001, and we
entered into severance agreements with each of them. Those officers were
Messrs. Breyne, Bonano, Korte and Smalis and Ms. Smythe. Provided the
bankruptcy court authorizes payments under those agreements, each executive
will forfeit rights to bonuses that were to have been paid under the executive
retention plan (of $3 million for Mr. Breyne, $2 million each for Messrs.
Bonano, Korte and Smalis, and $1 million for Ms. Smythe) and severance
compensation under the executive severance plans, noted below. Mr. Breyne also
terminated his rights under his employment agreement. In exchange, the
executives received a cash payment of two year's base salary, plus a one year
consulting agreement at the same rate as the base salary in effect just before
termination, which were as follows: Mr. Breyne--$525,000, Mr. Bonano--$313,500,
Mr. Korte--$261,000, Mr. Smalis--$273,000 and Ms. Smythe--$159,000. The
consulting agreement for Mr. Smalis is for 15 months. The executives also
received health and life insurance benefits and outplacement and financial
counseling services during the consulting period. For executives with
outstanding loans under the executive officer loan program noted below, they
would be permitted to repay those loans over three years provided the executive
paid down the outstanding balance by 20% on the effective date of the
agreement. Otherwise, the loans would be due within 6 months of termination.
Each executive executed a release of liability in favor of FINOVA and its
personnel.

FINOVA placed the funds to pay the severance and consulting compensation noted
above, less loan repayments and applicable tax withholding, into an escrow
prior to the filing of the reorganization proceedings. Mr. Korte received a
special bonus of $300,000, less applicable taxes. He was required to pay down
his loan balance by at least $300,000 by the effective date of the agreement.
FINOVA, the former executives and the escrow agent are seeking court approval
to permit it to disburse those funds to the former executives. If the
bankruptcy court does not authorize those disbursements, the executives' rights
to their retention

                                      B-17
<PAGE>

                       EMPLOYMENT AGREEMENTS (Continued)

bonus, executive severance compensation and employment agreement benefits will
be restored.

Mr. Breyne:

Prior to his termination in 2001, Mr. Breyne was engaged as President and Chief
Executive Officer of FINOVA for a three-year term through March 2003. He could
be terminated for cause at any time. His base salary was $525,000, subject to
adjustment by the Human Resources Committee. He was eligible to receive
incentive awards of MIP at a target level of 55% of base salary, PSIP
participation at a target level of 60% of base salary, and awards under the
1992 Stock Incentive Plan at the Committee's discretion. He also received
fringe benefits, such as insurance, supplemental retirement, club and other
benefits no less beneficial than those previously provided to him.

In the event he was terminated due to death or disability, we was entitled to
be paid a pro rata portion of his incentive awards. As noted above, Mr. Breyne
has agreed to forfeit his rights under this agreement provided the bankruptcy
court authorizes payment under his severance agreement.

Executive
Severance
Plans:

No payments
have been made
to executive
officers under
these severance
plans

All officers named in this proxy statement participated in one of FINOVA's
Executive Severance Plans (Tier I or Tier II). Those plans entitle participants
to immediate vesting of restricted stock and performance-based restricted
stock, and vesting and exercisability of options if we incur a change in
control. The Tier I plan includes Messrs. Breyne and Hallinan and included Mr.
Eichenfield until his retirement. It entitles the participant to receive a lump
sum payment of three times their highest salary, bonus and Performance Share
Incentive Plan payments if they are discharged without cause. If specified
events occur, they would receive two times their salary, bonus and PSIP
payments if they voluntarily leave during a period following a change in
control. The plan provides a tax gross up feature to cover certain taxes the
officer may have to pay resulting from the plan. Benefits paid are reduced by
other severance benefits paid by FINOVA. The officer is also credited with
enough years of service to assure vesting under the retirement plans or the
number of years of salary paid under the severance plan, whichever is less.

Messrs. Fields and Smalis, along with other executive officers, participate in
the Tier II plan, which has the same terms as the Tier I plan, except as noted
below. Tier II participants would be paid a lump sum of two times their highest
annual salary, bonus and PSIP payments, and they cannot require payment if they
voluntarily leave following a change in control.

We placed funds in a trust to pay benefits to certain officers under the
Executive Severance and other plans.

As noted above, if the bankruptcy court approves the compensation agreements
with the continuing executives and authorizes disbursements under the severance
agreements with the former executives, no executive officers would continue to
have rights pursuant to the executive severance plans.

                                      B-18
<PAGE>

                       EMPLOYMENT AGREEMENTS (Continued)

Value Sharing Plans:

No payments
have been made
under these
value sharing
plans.

To recognize the significant contributions made to FINOVA and its shareowners
by executive officers and key employees, and to reward them in the event of a
change in control, the Human Resources Committee adopted two change in control
Value Sharing Plans. One plan was for the Chief Executive Officer and one for
the other executive officers and key employees. The CEO Value Sharing Plan was
terminated in March 2000. Both plans would provide benefits only if a change in
control occurs and if shareowner value is created. Participants other than the
CEO will share in a pool equal to 2.5% of the change in control shareowner
value created. That value generally is the difference between the acquisition
value at the time of the change in control and the market capitalization using
a base price of $20/share, which was in excess of the closing price of $19.38
on the day the plans were adopted.

The CEO was to be paid 0.75% of the change in control shareowner value created
if the change was for $27.50/share or less, 1.5% if it was for $42.50/share or
more, and was to be prorated between those amounts for change in control prices
between those share prices. Initial payments credited to Mr. Eichenfield under
his employment agreement Value Sharing Plan discussed in the 1998 Proxy
Statement would have been deducted from any to be made under this change-in-
control CEO Value Sharing Plan, so that he would not be paid twice for the same
increases in shareowner value. Payments made under both Value Sharing Plans
would be grossed up for certain taxes incurred by participants who participate
in FINOVA's Executive Severance Plans. Per share values have been and will be
adjusted for certain events such as stock dividends or splits, mergers,
reorganizations or recapitalizations.

          COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

GroupSystems.Com,
Inc.:

Mr. Smith serves as Chairman of GroupSystems.com, Inc., formerly known as
Ventana Corporation, which markets interactive computer systems software and
services. Mr. Breyne served on its board of directors during 2000. FINOVA
Capital owns 600,000 shares of GroupSystem's common stock. Those shares
constitute less than 13% of its common stock. In addition, FINOVA Capital
granted GroupSystems a $1,000,000 line of credit, which was converted in 2000
into a term loan for $870,000. That loan has an outstanding balance of
approximately $723,000 as of April 18, 2001. The line of credit to GroupSystems
and the purchase of shares were granted before Mr. Smith became a member of our
board or Mr. Breyne joined its board. The line of credit was made in the
ordinary course of business on substantially the same terms, including interest
rate and collateral, as those prevailing at the time for comparable
transactions with other persons. GroupSystems was current on its payment
obligations to FINOVA under the term loan.

                                      B-19
<PAGE>

                       TRANSACTIONS WITH RELATED PARTIES
Putnam Investments:

During 2000, Putnam Investments, Inc. was one of our largest shareowners and at
times during the year owned more than 8% of our shares. Putnam is owned by
Marsh & McClennan, which acquired J & H Marsh & McClennan, Inc. in 1997. J & H
Marsh & McClennan is FINOVA's primary insurance broker. FINOVA paid it
approximately $2.3 million during 2000, most of which was used to purchase the
underlying insurance. We believe those transactions were at rates competitive
with those available from other brokers.

Management
Indebtedness:

To assist officers and key employees in increasing their share ownership, we
implemented an Executive Officer Loan Program. Under that program, FINOVA will
loan or will guarantee a loan from an approved bank to the officer for amounts
needed to exercise stock options and to pay taxes due on those options or other
awards under the 1992 Stock Incentive Plan. The loans carry a variable rate of
interest at the prime rate less 3/4 of 1%. Interest is due monthly, and the
principal is due in one year, unless extended or accelerated at FINOVA's
discretion. Smaller loans are secured with FINOVA shares worth at least 25% of
the value of the loan. Loans above the officer's salary and prior year's bonus
must be secured 100% with FINOVA shares. The following current or former
executive officers have borrowed under this program: Robert M. Korte: $523,248
(all now repaid); Jack Fields: $137,117; Derek C. Bruns $51,850, Stuart A.
Tashlik: $70,073 (all now repaid) and Matthew M. Breyne: $217,433 (currently
$173,946).

            SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Based on a review of reports filed by our directors, executive officers and
beneficial holders of 10% or more of our shares, and upon representations from
those persons, all SEC stock ownership reports required to be filed by those
reporting persons during 2000 were timely made.

                             FINOVA SHARE OWNERSHIP

The following tables list our share ownership for the persons or groups
specified. Ownership includes direct and indirect (beneficial) ownership, as
defined by SEC rules. To our knowledge, each person, along with his or her
spouse, has sole voting and investment power over the shares unless otherwise
noted. Information in the first table is as of the latest reports by those
entities received by us. That table lists the beneficial owners of at least 5%
of our shares. Information in the second table is as of April 9, 2001.

                                      B-20
<PAGE>

                           CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
                                                    Amount and
                                               Nature of Beneficial Percentage
Name and Address of Beneficial Owner              Ownership(/1/)    of Shares
------------------------------------           -------------------- ----------
<S>                                            <C>                  <C>
Legg Mason, Inc. and affiliates                     6,225,806         10.16%
100 Light Street
Baltimore, MD 21202

James D. Bennett                                    3,468,100          5.66%
Bennett Management Corporation and affiliates
2 Stamford Plaza, Suite 1501
 281 Tresser Blvd.
Stamford, CT 06901
</TABLE>
--------
(/1/) The information is based on reported ownership on the date of SEC filings.
      The owners report they hold the shares for themselves and their
      affiliates, advisory clients and investors. The entities may disclaim that
      they constitute a "group" for purposes of owning these shares.

                        DIRECTORS AND EXECUTIVE OFFICERS

<TABLE>
<CAPTION>
                                                                 Amount and Nature of
                                                                      Beneficial         Percentage of
Name(/1/)                             Position(s)               Ownership(/2/,/3/,/4/) Outstanding Shares
---------                -------------------------------------- ---------------------- ------------------
<S>                      <C>                                    <C>                    <C>
Robert H. Clark,
 Jr.(/5/)                Director                                       96,645                   *
Constance R. Curran      Director                                       14,390                   *
G. Robert Durham         Director                                       66,797                   *
James L. Johnson         Director                                       53,333                   *
Kenneth R. Smith         Director                                       40,391                   *
Shoshana B. Tancer       Director                                       30,691                   *
John W. Teets            Director                                      141,000                   *
William J. Hallinan      President and Chief Executive                 153,413                   *
                         Officer, General Counsel and Secretary
Jack Fields III          Executive Vice President                      124,330                   *
                         FINOVA Capital Corporation
Directors and Executive
Officers, as a group                                                   969,696                1.59%
</TABLE>
--------
*  Less than one percent.

(/1/) Table excludes shares owned by former executive officers, on whom current
      ownership information was not available.

(/2/) Includes shares the director has a right to acquire within 60 days through
      the exercise of options: Mr. Clark--18,939 shares, Ms. Curran--11,184
      shares, Mr. Durham--18,636 shares, Mr. Johnson--14,333 shares, Mr. Smith--
      31,891 shares, Ms. Tancer--25,552 shares, and Mr. Teets--28,000 shares.

(/3/) Includes options to purchase shares that can be exercised within 60 days
      of 64,368 shares for Mr. Fields, 82,894 shares for Mr. Hallinan and
      414,785 shares for all directors and executive officers as a group.

(/4/) Includes performance-based restricted shares owned by those persons, for
      which they have voting power but do not yet have dispositive power, in the
      amounts of 13,960 shares for Mr. Fields and 8,112 shares for Mr. Hallinan.
      The number of shares to be awarded under the PBRS grants may vary based on
      FINOVA's stock performance. Reported amounts include all vested awards and
      target awards for future vestings. Reported amounts also include holdings
      in FINOVA's Savings and Employee Stock Ownership Plans as of March 31,
      2001, according to reports of the plan administrators.

(/5/) Includes shares owned by Case Pomeroy & Company, Inc., of which Mr. Clark
      is Chairman, President and Chief Executive Officer, a director and, with
      members of his family, a principal shareholder.

                                      B-21
<PAGE>

                                                                      EXHIBIT K
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON D.C. 20594

                               ----------------

                                   FORM 10-Q

  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
  SECURITIES EXCHANGE ACT OF 1934

  For the Quarterly Period Ended March 31, 2001

                        Commission File Number 1-11011

                               ----------------

                             THE FINOVA GROUP INC.
            (Exact Name of Registrant as Specified in Its Charter)

               Delaware                              86-0695381
                                        (I.R.S. Employer Identification No.)
    (State or Other Jurisdictionof
    Incorporation or Organization)

4800 North Scottsdale Road Scottsdale,               85251-7623
                  AZ                                 (Zip Code)
    (Address of Principal Executive
               Offices)

       Registrant's Telephone Number, Including Area Code: 480-636-4800

                               ----------------

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

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

  As of May 11, 2001, approximately 61,154,000 shares of Common Stock ($0.01
par value) were outstanding.

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>

                             THE FINOVA GROUP INC.

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                      Page No.
                                                                      --------
 <C>        <S>                                                       <C>
 Part I     Financial Information...................................      3

    Item 1. Financial Statements....................................      3

            Condensed Consolidated Balance Sheets...................      3
            Condensed Statements of Consolidated Operations.........      4
            Condensed Statements of Consolidated Cash Flows.........      5
            Notes to Interim Condensed Consolidated Financial
             Information............................................      6

    Item 2. Management's Discussion and Analysis of Financial
            Condition and Results of Operations.....................     16

    Item 3. Quantitative and Qualitative Disclosure About Market
             Risk...................................................     22

 Part II    Other Information.......................................     24

    Item 1. Legal Proceedings.......................................     24

    Item 6. Exhibits and Reports on Form 8-K........................     25
 Signatures.........................................................     26
</TABLE>

                                       2
<PAGE>

                          PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

                             THE FINOVA GROUP INC.

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                             (Dollars in Thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                       March 31,   December 31,
                                                         2001          2000
                                                      -----------  ------------
<S>                                                   <C>          <C>
                       ASSETS
                       ------
Cash and cash equivalents............................ $ 1,624,207  $   699,228
Investment in financing transactions:
  Loans and other financing contracts................   7,357,965    7,835,698
  Leveraged leases...................................     774,728      803,581
  Operating leases...................................     535,404      561,698
  Direct financing leases............................     519,748      557,471
  Financing contracts held for sale..................     375,293      421,956
                                                      -----------  -----------
                                                        9,563,138   10,180,404
  Less reserve for credit losses.....................    (618,005)    (578,750)
                                                      -----------  -----------
Net investment in financing transactions.............   8,945,133    9,601,654
Investments..........................................     271,869      285,934
Goodwill, net of accumulated amortization............      44,637       45,417
Other assets.........................................     469,146      294,630
Net assets of discontinued operations................     741,875    1,162,223
                                                      -----------  -----------
                                                      $12,096,867  $12,089,086
                                                      ===========  ===========
         LIABILITIES AND SHAREOWNERS' EQUITY
         -----------------------------------
Liabilities not subject to Chapter 11 proceedings:
  Accounts payable and accrued expenses.............. $    21,741  $
Liabilities subject to Chapter 11 proceedings at
 March 31, 2001:
Secured:
  Fixed rate nonrecourse notes.......................       5,813        5,813
Unsecured:
  Accounts payable and accrued expenses..............     153,090      128,311
  Interest payable...................................     198,067      129,402
  Senior debt........................................  10,987,327   10,991,874
  Deferred income taxes, net.........................      38,359       49,202
                                                      -----------  -----------
                                                       11,404,397   11,304,602
                                                      -----------  -----------
Commitments and contingencies
Company-obligated mandatory redeemable convertible
 preferred securities of subsidiary trust solely
 holding convertible debentures of FINOVA, net of
 expenses ("TOPrS")..................................     111,550      111,550
Shareowners' equity:
  Common stock, $0.01 par value, 400,000,000 shares
   authorized, 64,849,000 shares issued..............         648          648
  Additional capital.................................   1,113,064    1,107,575
  Retained (deficit) income..........................    (359,181)    (283,435)
  Accumulated other comprehensive (loss) income......      (1,115)      15,154
  Common stock in treasury, 3,693,000 and 3,597,000
   shares, respectively..............................    (172,496)    (167,008)
                                                      -----------  -----------
                                                          580,920      672,934
                                                      -----------  -----------
                                                      $12,096,867  $12,089,086
                                                      ===========  ===========
</TABLE>
       See notes to interim consolidated condensed financial statements.

                                       3
<PAGE>

                             THE FINOVA GROUP INC.

                CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
                 (Dollars in Thousands, except per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                       Three Months Ended
                                                            March 31,
                                                     ------------------------
                                                        2001         2000
                                                     -----------  -----------
<S>                                                  <C>          <C>
Interest, fees and other income..................... $   215,633  $   241,011
Financing lease income..............................      20,336       25,130
Operating lease income..............................      23,407       27,237
                                                     -----------  -----------
Income earned from financing transactions...........     259,376      293,378
Interest expense....................................     172,550      141,815
Operating lease depreciation........................      20,831       15,838
                                                     -----------  -----------
Interest margins earned.............................      65,995      135,725
Volume-based fees...................................                    1,054
                                                     -----------  -----------
Operating margin....................................      65,995      136,779
Provision for credit losses.........................      61,750       20,898
                                                     -----------  -----------
Net interest margins earned.........................       4,245      115,881
Gains on investments and disposal of assets.........       6,651       21,030
                                                     -----------  -----------
                                                          10,896      136,911
Operating expenses..................................      54,988       56,825
Reorganization items................................       9,619
                                                     -----------  -----------
(Loss) income from continuing operations before
 income taxes and preferred
dividends...........................................     (53,711)      80,086
Income tax expense..................................      (2,343)     (31,560)
                                                     -----------  -----------
(Loss) income from continuing operations before
 preferred dividends................................     (56,054)      48,526
Preferred dividends, net of tax.....................         946          946
                                                     -----------  -----------
(Loss) income from continuing operations............     (57,000)      47,580
Discontinued operations (net of tax expense of $685
 and a net tax benefit of
$24,790 for 2001 and 2000, respectively)............      (5,946)     (37,168)
Net loss on disposal of operations..................     (12,800)
                                                     -----------  -----------
Net (loss) income................................... $   (75,746) $    10,412
                                                     ===========  ===========
Basic (loss) earnings per share:
(Loss) income from continuing operations............ $     (0.93) $      0.78
(Loss) income from discontinued operations..........       (0.31)       (0.61)
                                                     -----------  -----------
Net (loss) income per share......................... $     (1.24) $      0.17
                                                     ===========  ===========
Adjusted weighted average shares outstanding........  61,065,000   60,903,000
                                                     ===========  ===========
Diluted (loss) earnings per share:
(Loss) income from continuing operations............ $     (0.93) $      0.77
(Loss) income from discontinued operations..........       (0.31)       (0.60)
                                                     -----------  -----------
Net (loss) income per share......................... $     (1.24) $      0.17
                                                     ===========  ===========
Adjusted weighted average shares outstanding........  61,065,000   61,635,000
                                                     ===========  ===========
Dividends per common share.......................... $            $      0.18
                                                     ===========  ===========
</TABLE>

       See notes to interim consolidated condensed financial statements.

                                       4
<PAGE>

                             THE FINOVA GROUP INC.

                CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
                             (Dollars in Thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                              March 31,
                                                         ---------------------
                                                            2001       2000
                                                         ----------  ---------
<S>                                                      <C>         <C>
NET CASH PROVIDED BY CONTINUING OPERATING ACTIVITIES.... $   18,275  $  21,603
                                                         ----------  ---------
INVESTING ACTIVITIES:
  Proceeds from disposal of leases and other owned
   assets...............................................      5,720      2,834
  Proceeds from sales of investments....................     26,019     31,400
  Proceeds from sales of commercial mortgage backed
   securities...........................................               113,737
  Principal collections on financing transactions.......    781,127    594,987
  Expenditures for investments and other income
   producing activities.................................    (21,683)   (21,532)
  Expenditures for financing transactions...............   (277,446)  (913,991)
  Recoveries of loans previously written-off............        232         73
                                                         ----------  ---------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES........    513,969   (192,492)
                                                         ==========  =========
FINANCING ACTIVITIES:
  Net change in commercial paper and short term
   borrowings...........................................     (8,867)   675,329
  Proceeds from issuance of term notes..................               120,000
  Repayment of term notes...............................              (461,260)
  Proceeds from exercise of stock options...............                   275
  Dividends.............................................               (11,016)
                                                         ----------  ---------
NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES........     (8,867)   323,328
                                                         ----------  ---------
NET CASH PROVIDED (USED) BY DISCONTINUED OPERATIONS.....    401,602   (214,088)
                                                         ----------  ---------
INCREASE IN CASH AND CASH EQUIVALENTS...................    924,979    (61,649)
CASH AND CASH EQUIVALENTS, beginning of period..........    699,228    100,344
                                                         ----------  ---------
CASH AND CASH EQUIVALENTS, end of period................ $1,624,207  $  38,695
                                                         ==========  =========
</TABLE>

       See notes to interim consolidated condensed financial statements.

                                       5
<PAGE>

                             THE FINOVA GROUP INC.

         NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
            (Dollars in thousands in tables, except per share data)

NOTE A ORGANIZATION AND BASIS OF PREPARATION

  The consolidated financial statements present the financial position,
results of operations and cash flows of The FINOVA Group Inc. and its
subsidiaries (collectively, "FINOVA" or the "Company"), including FINOVA
Capital Corporation and its subsidiaries (collectively, "FINOVA Capital"). All
significant intercompany balances have been eliminated in consolidation.

  The interim condensed consolidated financial information is unaudited. In
the opinion of management all adjustments, consisting of normal recurring
items, necessary to present fairly the financial position as of March 31,
2001, and the results of operations and cash flows for the quarter ended March
31, 2001 and 2000, have been included. Interim results of operations are not
necessarily indicative of the results of operations for the full year. The
enclosed financial statements should be read in connection with the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K/A for the year ended December 31, 2000, which
describes significant business developments chronology culminating in the
March 2001 filing for protection pursuant to Chapter 11, Title 11, of the
United States Code, in the United States Bankruptcy Court for the District of
Delaware.

  Certain reclassifications have been made to reflect discontinued operations.
These reclassifications resulted from the Company's decision in the third
quarter of 2000 to sell or liquidate some of its more broad based businesses
and focus on its niche based businesses. The businesses discontinued include
Corporate Finance, Business Credit, Growth Finance (all of which are included
under the caption "Corporate Finance"), Distribution & Channel Finance and
Commercial Services. See Note F for more information on discontinued
operations.

 Going Concern

  The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States. During the year
ended December 31, 2000, the Company experienced a significant deterioration
in the credit quality of its portfolio, the loss of its investment grade
credit ratings and the resulting loss of access to capital and increase in
cost of funds. The Company was not in compliance with its debt covenants as of
December 31, 2000 and filed for protection from its creditors under Chapter 11
of the United States Bankruptcy Code on March 7, 2001.

  These conditions and events raise substantial doubt about the Company's
ability to continue as a going concern. The ability of the Company to continue
as a going concern is dependent on many factors including the confirmation of
a plan of reorganization (the "Plan") and successful execution of management's
plans for the collection of its portfolio pursuant to contractual terms and
negotiation of appropriate rates and fee structures with its customers. The
accompanying condensed consolidated financial statements do not include any
adjustments relating to the recoverability and classification of asset amounts
or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.

 Bankruptcy Accounting

  Entering a reorganization, although a significant event, does not ordinarily
affect or change the application of generally accepted accounting principles
("GAAP") followed by a company. The accompanying financial statements have
been prepared assuming that FINOVA will continue as a going concern in
accordance with Statement of Position 90-7, "Financial Reporting by Entities
in Reorganization under the Bankruptcy Code" ("SOP 90-7"). As such, asset and
liability carrying amounts do not purport to represent realizable or
settlement values as contemplated by the Bankruptcy Code.

                                       6
<PAGE>

 Liabilities Subject to Chapter 11 Proceedings

  Liabilities subject to Chapter 11 proceedings, including claims that become
known after the petition date, are reported at their expected allowed claim
amount in accordance with Statement of Financial Accounting Standards ("SFAS")
No. 5, "Accounting for Contingencies." To the extent that the amounts of
claims change as a result of actions in the bankruptcy case or other factors,
the recorded amount of liabilities subject to Chapter 11 proceedings will be
adjusted. The results of these adjustments are recorded as reorganization
items.

 Reorganization Items

  Reorganization items are income and expenses that are realized or incurred
by FINOVA because it is in reorganization. For the three months ended March
31, 2001, reorganization items were a charge of $9.6 million. The components
of reorganization items are as follows:

<TABLE>
<CAPTION>
                                                                  Three Months
                                                                     Ended
                                                                   March 31,
                                                                      2001
                                                                  ------------
<S>                                                               <C>
Unamortized gains on terminated and cash settled interest rate
 swaps...........................................................   $ 22,197
Interest income earned on unpaid interest and debt payments......        804
Unamortized debt origination costs...............................    (15,095)
Professional service fees........................................     (9,599)
Unamortized debt discounts.......................................     (7,926)
                                                                    --------
  Total reorganization items.....................................   $ (9,619)
                                                                    ========
</TABLE>

  The financial statements of the Company are substantially the same as the
financial statements of the entities in bankruptcy.

NOTE B SIGNIFICANT ACCOUNTING POLICIES

  The Company reports other comprehensive income (loss) in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." Total comprehensive (loss) income was $(92.0) million
and $0.1 million for the three months ended March 31, 2001 and 2000,
respectively. The primary component of comprehensive (loss) income other than
net income was a change in net unrealized gains on securities.

 New Accounting Standards

  In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes new accounting and
reporting standards for derivative instruments. In June 1999, the FASB issued
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities--
Deferral of the Effective Date of FASB Statement No. 133," and in June 2000,
the FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments
and Certain Hedging Activities--An Amendment of FASB Statement No. 133." SFAS
133, as amended, establishes accounting and reporting standards requiring that
derivative instruments, including certain derivative instruments embedded in
other contracts, be recorded in the statement of financial position as either
an asset or liability measured at its fair value. SFAS 133 requires that
changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met.

  FINOVA adopted the provisions of SFAS 133, as amended, on January 1, 2001,
which resulted in an immaterial impact on FINOVA's consolidated results of
operations and financial position.

NOTE C SEGMENT REPORTING

  FINOVA's business is organized into three market groups, which are also its
reportable segments: Specialty Finance, Commercial Finance and Capital
Markets. Management has not yet determined whether its reportable

                                       7
<PAGE>

segments will be reorganized as a result of the decision to discontinue
several lines of business and pending reorganization proceedings. Management
relies principally on total revenue, income before allocations and managed
assets in evaluating the business performance of each reportable segment.

  Total net revenue is the sum of operating margin and (losses) gains on
investments and disposal of assets. Income before allocations is income before
income taxes, preferred dividends, corporate overhead expenses and the
unallocated portion of the provision for credit losses. Managed assets include
each segment's investment in financing transactions plus securitizations. The
Company expects that managed assets in all segments will decline significantly
over the next several years as available cash flow will be used principally
for debt service rather than the funding of new business.

  Information for FINOVA's reportable segments that are part of continuing
operations reconciles to FINOVA's consolidated totals as follows:

<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                              March 31,
                                                        -----------------------
                                                           2001        2000
                                                        ----------  -----------
<S>                                                     <C>         <C>
Total net revenue:
  Specialty Finance...................................  $   67,956  $    99,063
  Commercial Finance..................................      11,653       14,040
  Capital Markets.....................................       9,667       44,909
  Corporate and other.................................     (16,630)        (203)
                                                        ----------  -----------
  Consolidated total..................................  $   72,646  $   157,809
                                                        ----------  -----------
(Loss) income before income taxes, preferred dividends
 and allocations:
  Specialty Finance...................................  $   53,042  $    77,180
  Commercial Finance..................................       2,348       10,922
  Capital Markets.....................................      (6,983)      21,727
  Corporate and other, overhead and unallocated
   provision for credit losses........................    (104,461)     (61,303)
                                                        ----------  -----------
(Loss) income from continuing operations before
 preferred dividends..................................  $  (56,054) $    48,526
                                                        ----------  -----------

<CAPTION>
                                                           As of March 31,
                                                        -----------------------
                                                           2001        2000
                                                        ----------  -----------
<S>                                                     <C>         <C>
Managed assets:
  Specialty Finance...................................  $7,941,139  $ 8,483,819
  Commercial Finance..................................   1,185,247    1,064,359
  Capital Markets.....................................     720,699      925,696
  Corporate and other.................................      37,615       64,336
                                                        ----------  -----------
Consolidated total....................................  $9,884,700  $10,538,210
Less securitizations..................................     321,562      118,686
                                                        ----------  -----------
Investment in financing transactions..................  $9,563,138  $10,419,524
                                                        ==========  ===========
</TABLE>

                                       8
<PAGE>

NOTE D (LOSS) EARNINGS PER SHARE

  Basic earnings or losses per share exclude the effects of dilution and are
computed by dividing income available to common shareowners by the weighted
average amount of common stock outstanding for the period. Diluted earnings or
losses per share reflect the potential dilution that could occur if options,
convertible preferred stock or other contracts to issue stock were exercised
or converted into common stock, at assumed rates of conversion. Basic and
diluted earnings per share calculations are presented for the three months
ended March 31, 2001 and 2000 on the Condensed Statements of Consolidated
Operations and are detailed below:

<TABLE>
<CAPTION>
                                                    Three Months Ended
                                                         March 31,
                                                  ------------------------
                                                     2001         2000
                                                  -----------  -----------
<S>                                               <C>          <C>          <C>
Basic (Loss) Earnings Per Share Computation:
(Loss) income from continuing operations........  $  (57,000)  $    47,580
                                                  ===========  ===========
Weighted average shares outstanding.............   61,204,000   61,197,000
Contingently issued shares......................     (139,000)    (294,000)
                                                  -----------  -----------
Adjusted weighted average shares................   61,065,000   60,903,000
                                                  ===========  ===========
  Basic (loss) income from continuing operations
   per share....................................  $    (0.93)  $      0.78
                                                  ===========  ===========
Diluted (Loss) Earnings Per Share Computation:
(Loss) income from continuing operations........  $   (57,000) $    47,580
Weighted average shares outstanding.............   61,204,000   61,197,000
Contingently issued shares......................     (139,000)    (291,000)
                                                  -----------  -----------  ---
Incremental shares from assumed conversion of
 stock options..................................                   729,000
                                                  -----------  -----------
Adjusted weighted average shares................   61,065,000   61,635,000
                                                  ===========  ===========
Diluted (loss) income from continuing operations
 per share......................................  $    (0.93)  $      0.77
                                                  ===========  ===========
</TABLE>

NOTE E PORTFOLIO QUALITY

  The following table presents a distribution (by line of business) of the
Company's investment in financing transactions before the reserve for credit
losses at March 31, 2001.

                                       9
<PAGE>

                     INVESTMENT IN FINANCING TRANSACTIONS
                              BY LINE OF BUSINESS
                                March 31, 2001
                            (Dollars in Thousands)

<TABLE>
<CAPTION>
                                   Revenue Accruing                   Nonaccruing
                          ---------------------------------- ------------------------------
                          Performing at                                                        Total
                           Contractual           Repossessed            Repossessed Lease &  Carrying
                              Terms     Impaired   Assets     Impaired    Assets     Other    Amount      %
                          ------------- -------- ----------- ---------- ----------- ------- ----------- -----
<S>                       <C>           <C>      <C>         <C>        <C>         <C>     <C>         <C>
Specialty Finance Group
 Transportation
  Finance...............   $2,017,131   $          $         $  223,108   $         $       $ 2,240,239  23.4
 Resort Finance.........    1,381,883    157,042    12,685      136,971     5,025             1,693,606  17.7
 Franchise Finance......      824,567      8,503                 50,396     2,224        29     885,719   9.3
 Healthcare Finance.....      523,985     28,680     1,433      247,497               5,895     807,490   8.4
 Specialty Real Estate
  Finance...............      628,958      6,019    25,460       10,194     7,724               678,355   7.1
 Communications
  Finance...............      517,276      4,285                137,968                         659,529   6.9
 Commercial Equipment
  Finance...............      417,473      4,405                 62,838     5,959     3,956     494,631   5.2
 Public Finance.........      154,891                             5,117                         160,008   1.7
                           ----------   --------   -------   ----------   -------   ------- ----------- -----
                            6,466,164    208,934    39,578      874,089    20,932     9,880   7,619,577  79.7
                           ----------   --------   -------   ----------   -------   ------- ----------- -----
Commercial Finance Group
 Rediscount Finance.....      986,093     63,493       449      131,900     3,312             1,185,247  12.4
                           ----------   --------   -------   ----------   -------   ------- ----------- -----
                              986,093     63,493       449      131,900     3,312             1,185,247  12.4
                           ----------   --------   -------   ----------   -------   ------- ----------- -----
Capital Markets Group
 Realty Capital.........      326,321     22,502                 24,488     1,982               375,293   3.9
 Mezzanine Capital......      199,838     13,125                 94,346                         307,309   3.2
 Investment Alliance....       32,570                             5,526                          38,096   0.4
                           ----------   --------   -------   ----------   -------   ------- ----------- -----
                              558,729     35,627                124,360     1,982               720,698   7.5
                           ----------   --------   -------   ----------   -------   ------- ----------- -----
Other...................       37,616                                                            37,616   0.4
                           ----------   --------   -------   ----------   -------   ------- ----------- -----
Total Continuing
 Operations (1).........    8,048,602    308,054    40,027    1,130,349    26,226     9,880   9,563,138 100.0
                           ----------   --------   -------   ----------   -------   ------- ----------- =====
Discontinued
 Operations.............      338,579                           423,426     5,496     4,257     771,758
                           ----------   --------   -------   ----------   -------   ------- -----------
TOTAL...................   $8,387,181   $308,054   $40,027   $1,553,775   $31,722   $14,137 $10,334,896
                           ==========   ========   =======   ==========   =======   ======= ===========
</TABLE>

NOTES:
(1) Excludes $321.6 million of assets sold which the Company manages, $209.6
million in Commercial Equipment Finance and $112.0 million in Franchise
Finance.

                                      10
<PAGE>

Reserve for Credit Losses

  The reserve for credit losses at March 31, 2001 represents 6.5% of the
Company's investment in financing transactions and securitized assets. Changes
in the reserve for credit losses were as follows:

<TABLE>
<CAPTION>
                                                               Three Months
                                                              Ended March 31,
                                                             ------------------
                                                               2001      2000
                                                             --------  --------
<S>                                                          <C>       <C>
Balance, beginning of period................................ $578,750  $178,266
Provision for credit losses.................................   61,750    20,898
Write-offs..................................................  (22,661)  (13,866)
Recoveries..................................................      232        71
Other.......................................................      (66)      227
                                                             --------  --------
  Balance, end of period.................................... $618,005  $185,596
                                                             ========  ========
</TABLE>

  At March 31, 2001, the total carrying amount of impaired loans was $1.4
billion, of which $308.1 million were revenue accruing. A specific impairment
reserve for credit losses of $320 million has been established for $808.2
million of nonaccruing impaired loans. Additionally, $5.8 million was
established for other accounts. As a result, 53% of FINOVA's reserve for
credit losses was allocated to specific reserves. The remaining $292.2 million
or 47% of the reserve for credit losses is designated for general purposes and
represents management's best estimate of inherent losses in the remaining
portfolio considering delinquencies, loss experience and collateral. Actual
results could differ from estimates and values, and there can be no assurance
that the reserves will be sufficient to cover portfolio losses. Additions to
the general and specific reserves are reflected in current operations.
Management may transfer reserves between the general and specific reserves as
considered necessary.

  At March 31, 2001, discontinued operations included $433.2 million of
nonaccruing assets, of which $365.8 million were in Corporate Finance. Since
the assets of the discontinued operations have been written down to estimated
net realizable value, no reserves for credit losses are carried against those
assets. The balance of net realizable value write-downs was $332.6 million at
March 31, 2001.

NOTE F DISCONTINUED OPERATIONS

  During the third quarter of 2000, FINOVA's Board of Directors approved a
plan to discontinue and offer for sale its Corporate Finance, Distribution &
Channel Finance and Commercial Services lines of business. As a result, the
Company has reported these divisions as discontinued operations in accordance
with Accounting Principles Board Opinion ("APB") No. 30, Reporting the Results
of Operations--Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and Transactions.

  At March 31, 2001, FINOVA had total net assets of discontinued operations of
$742 million, which includes the following:

<TABLE>
<CAPTION>
                                  Corporate  Distribution &  Commercial
                                   Finance   Channel Finance  Services   Total
                                  ---------  --------------- ---------- --------
<S>                               <C>        <C>             <C>        <C>
Investment in financing
 transactions.................... $740,465       $24,940      $ 6,353   $771,758
Investments......................    8,266         9,000                  17,266
Accounts payable and accrued
 expenses........................  (41,691)       (3,479)      (1,805)   (46,975)
Due to clients...................      156          (331)                   (174)
                                  --------       -------      -------   --------
  Net assets of discontinued
   operations.................... $707,196       $30,130      $ 4,548   $741,875
                                  ========       =======      =======   ========
</TABLE>

                                      11
<PAGE>

  Loss from discontinued operations in the Consolidated Statement of
Operations for the quarter ended March 31, 2001 includes the following:

<TABLE>
<CAPTION>
                               Corporate  Distribution &  Commercial
                                Finance   Channel Finance  Services   Total
                               ---------  --------------- ---------- --------
<S>                            <C>        <C>             <C>        <C>
Discontinued operations, net
 of tax....................... $ (3,766)     $ (2,163)      $ (17)   $ (5,946)
                               ========      ========       =====    ========
</TABLE>

  The cumulative net loss on disposal of assets is comprised of the following
adjustments from September 30, 2000:

<TABLE>
<CAPTION>
                               Corporate  Distribution &  Commercial
                                Finance   Channel Finance  Services    Total
                               ---------  --------------- ---------- ---------
<S>                            <C>        <C>             <C>        <C>
As of September 30, 2000 on a
 pre-tax basis:
  Net realizable value mark-
   downs.....................  $(215,760)    $(17,000)     $         $(232,760)
  Goodwill written off.......    (54,729)     (24,940)     (27,669)   (107,338)
  Proceeds in excess of
   assets sold...............                               29,172      29,172
  Accrued expenses...........    (28,922)      (5,198)     (10,377)    (44,497)
  Income tax benefit.........    118,417       18,643        3,510     140,570
                               ---------     --------      -------   ---------
Net loss on disposal of
 operations as of September
 30, 2000....................   (180,994)     (28,495)      (5,364)   (214,853)
  Additional net realizable
   value mark-downs..........   (112,543)        (893)      (1,315)   (114,751)
  Additional accrued
   expenses..................    (13,385)      (4,815)                 (18,200)
  Income tax benefit
   (expense).................     12,800       (2,337)        (370)     10,093
                               ---------     --------      -------   ---------
Net loss on disposal of
 operations as of December
 31, 2000....................   (294,122)     (36,540)      (7,049)   (337,711)
  Additional net realizable
   value mark-downs..........                 (12,800)                 (12,800)
                               ---------     --------      -------   ---------
    Net loss on disposal of
     operations as of
     March 31, 2001..........  $(294,122)    $(49,340)     $(7,049)  $(350,511)
                               =========     ========      =======   =========
</TABLE>

  The additional losses in the first quarter of 2001 were primarily
attributable to a further deterioration in the Distribution & Channel Finance
portfolio.

NOTE G SUBSEQUENT EVENT

  On May 2, 2001, FINOVA and eight of its subsidiaries, including FINOVA
Capital Corporation, filed a proposed Joint Plan of Reorganization and a
Disclosure Statement with the United States Bankruptcy Court for the District
of Delaware. The Plan contemplates implementation of a comprehensive
restructuring transaction with Berkadia LLC, a joint venture of Berkshire
Hathaway Inc. and Leucadia National Corporation, that was first announced on
February 27, 2001.

  As more fully described in the Plan, Berkadia has committed to make a $6
billion loan to FINOVA Capital, subject to conditions. The loan proceeds,
together with cash on hand, will fund a cash disbursement to general unsecured
creditors of FINOVA Capital equal to 60% of their claims, an increase from the
approximately 54% cash payment originally proposed. In addition, FINOVA will
issue ten-year New Senior Notes equal to 40% of the general unsecured claims
against FINOVA Capital. The New Senior Notes will be secured by a second lien
on the stock of FINOVA Capital. Interest on the New Senior Notes will be
payable semi-annually out of available cash (calculated as provided in the
Plan documents), after payment of quarterly interest on the Berkadia loan.
Principal on the New Senior Notes will be paid out of available cash, after
payment in full of the Berkadia loan, except as described in the following
sentence. While the Berkadia loan is outstanding and not in default, a
liquidity feature of the Plan that was not included in the original proposal
will require FINOVA to commit $75 million of available cash quarterly (up to a
maximum of $1.5 billion in total) to repurchase New Senior Notes at

                                      12
<PAGE>

a price not to exceed par plus accrued interest (subject to availability of
New Senior Notes at or below the maximum price). After payment in full of the
Berkadia loan, 95% of available cash will be used to pay the New Senior Notes
and 5% will be used for payments to FINOVA stockholders. The New Senior Notes
also provide for payment under certain circumstances of up to $100 million in
the aggregate of additional interest to holders of the New Senior Notes.
Holders of general unsecured claims against FINOVA Capital will also receive a
cash payment of post petition interest upon the effective date of the Plan.

  Berkshire Hathaway owns approximately $1.4 billion of existing FINOVA
Capital bank and bond debt and therefore is expected to be a significant
holder of New Senior Notes. Berkshire Hathaway will participate in FINOVA's
quarterly repurchase of New Senior Notes pro rata to its interest in the New
Senior Notes at the weighted average price paid in each quarterly repurchase.

  All other terms of the Plan are substantially the same as previously
disclosed in FINOVA's February 28, 2001 filing on Form 8-K.

  The Bankruptcy Court has not approved the proposed Plan or the Disclosure
Statement. The solicitation process will not begin until the Bankruptcy Court
approves the Disclosure Statement and authorizes FINOVA to solicit the votes
of creditors and stockholders in connection with the Plan. Thereafter, FINOVA
will send the proposed Plan and Disclosure Statement to all creditors and
stockholders who are entitled to vote on the Plan.

NOTE H COMMITMENT & CONTINGENCIES

 Legal Proceedings

  FINOVA is a party either as plaintiff or defendant to various actions,
proceedings and pending claims, including legal actions, some of which involve
claims for compensatory, punitive or other damages in significant amounts.
Litigation often results from FINOVA's attempts to enforce its lending
agreements against borrowers and other parties to those transactions.
Litigation is subject to many uncertainties. It is possible that some of the
legal actions, proceedings or claims could be decided against FINOVA. Other
than the matters described below, FINOVA believes that any resulting liability
for their litigation matters should not materially affect FINOVA's financial
position, results of operations or cash flows. One or more of the following
matters, for which nominal accruals have been made, could have a material
adverse impact on FINOVA's financial position, results of operations or cash
flow.

  Between March 29, 2000 and May 23, 2000, five shareowner lawsuits were filed
against FINOVA and Samuel Eichenfield, FINOVA's former chairman, president,
and chief executive officer; two of the lawsuits also named FINOVA Capital as
a defendant, and one named three other executive officers. All of the lawsuits
purport to be on behalf of the named plaintiffs (William K. Steiner, Uri
Borenstein, Jerry Krim, Mark Kassis, and the Louisiana School Employees
Retirement System), and others who purchased FINOVA common stock during the
class period of July 15, 1999, through either March 26, 2000, or May 7, 2000.
The suit brought by the Louisiana School Employees Retirement System also
purports to be on behalf of all those who purchased FINOVA Capital's 7.25%
Notes which are due November 8, 2004, pursuant to the registration statement
and prospectus supplement dated November 1, 1999.

  In an order by the U.S. District Court for the District of Arizona dated
August 30, 2000, these five lawsuits were consolidated and captioned In re:
FINOVA Group Inc. Securities Litigation. The court also selected the Louisiana
School Employees Retirement System ("LSERS") as the lead plaintiff in the
consolidated cases. LSERS filed its Amended Consolidated Complaint on
September 29, 2000, naming FINOVA, FINOVA Capital, Samuel Eichenfield, Matthew
Breyne, and Bruno Marszowski as defendants. The consolidated amended complaint
generally alleges that the defendants made materially misleading statements
regarding FINOVA's loss reserves, and otherwise violated the federal
securities laws in an effort to bolster FINOVA's stock price, among other
reasons. Among other things, the complaint seeks unspecified damages for
losses incurred by shareowners, plus interest, and other relief, and
rescission with regard to the notes purchased.

                                      13
<PAGE>

  Since consolidation of the original five shareowner lawsuits, other related
lawsuits have been initiated against the Company and current and former
officers and directors. Three shareowner lawsuits were filed in the United
States District Court for the Middle District of Tennessee, in which the named
plaintiffs (John Cartwright, Sirrom Partners and Sirrom G-1, and Caldwell
Travel) assert claims relating to the Company's acquisition in 1999 of Sirrom
Capital Corporation, and the exchange of shares of Sirrom stock for shares of
FINOVA stock. The Cartwright complaint purports to be a class action lawsuit
on behalf of all Sirrom shareowners that exchanged their Sirrom stock for
FINOVA stock as a result of the acquisition. The defendants named are Sirrom
Capital Corporation, Samuel Eichenfield, John W. Teets, Constance Curran, G.
Robert Durham, James L. Johnson, Kenneth Smith, Shoshana Tancer, Bruno
Marszowski, and FINOVA Group. The complaints allege that the defendants made
materially misleading statements regarding FINOVA's loss reserves, and
otherwise violated the federal securities laws in an effort to reduce the
total consideration provided to Sirrom shareowners at the time of the
acquisition. The complaints seek unspecified damages for losses incurred by
shareowners, plus interest, and other relief.

  On January 4, 2001, the United States District Court for the Middle District
of Tennessee granted a motion brought by FINOVA and the other defendants to
transfer the Cartwright and Sirrom Partners cases to the United States
District Court for the District of Arizona. The plaintiff in Caldwell Travel
agreed to dismiss that case without prejudice. Pursuant to a Stipulation and
Order entered in March 2001, the Cartwright case has been consolidated for all
purposes with the previous five cases in the FINOVA Group Securities
Litigation, and the Sirrom Partners case has been consolidated for all pre-
trial purposes. The lead plaintiffs are scheduled to file a Second Amended
Consolidated Complaint in May 2001, though the deadline may be extended.

  There have also been two shareowners' derivative lawsuits filed against
current and former officers and directors of FINOVA Group, one in the United
States District Court for the District of Arizona, and one in the Court of
Chancery for Newcastle County, Delaware. Both complaints were filed on
September 11, 2000, and both purport to be brought by the named plaintiffs
(William Kass and Cindy Burkholter) derivatively on behalf of the Company
against the officers and directors, alleging generally breaches of fiduciary
and other duties as directors. These actions seek unspecified money damages
and other relief. As with the consolidated securities litigation, the
allegations center generally on claims that there were materially misleading
statements regarding FINOVA's loss reserves. In both of these actions, the
plaintiffs have agreed to a stay of all proceedings pending the final
determination of the motion to dismiss in the consolidated securities
litigation.

  Finally, another shareowner's derivative lawsuit was filed on September 13,
2000, in the Circuit Court for Davidson County, Tennessee, by Ronald Benkler,
purportedly on behalf of Sirrom Capital Corporation, against several former
officers of Sirrom Capital Corporation. The complaint alleges that the Sirrom
officers breached various duties to Sirrom in connection with the acquisition
of Sirrom by the Company in 1999, and the exchange of Sirrom stock for FINOVA
stock as a result of the acquisition. The plaintiffs have agreed to a stay of
discovery in this case, pending the final determination of the motion to
dismiss the consolidated securities litigation.

  FINOVA believes the claims in all of these securities and derivative cases
are without merit. FINOVA and the other defendants intend to vigorously defend
against these claims.

  On March 6, 2001, one of FINOVA Capital's subsidiaries, FINOVA (Canada)
Capital Corporation, had an involuntary Petition for Receiving Order filed
against it in the Ontario, Canada, Superior Court of Justice in Bankruptcy.
The action was filed by the Bank of Nova Scotia, as agent for the lenders on a
$150 million (Canadian) bank facility. That same day, the courts in Canada
issued a temporary injunction prohibiting transfers of assets out of the
Canadian subsidiary to its other affiliates. FINOVA has not received service
of process in those proceedings, but has agreed to refrain from transferring
assets to its affiliates without court order.

  On March 7, 2001, FINOVA, FINOVA Capital and seven of their subsidiaries
filed voluntary petitions for protection from creditors pursuant to Chapter
11, Title 11, United States Code, in the United States Bankruptcy Court for
the District of Delaware. The other subsidiaries were FINOVA (Canada) Capital
Corporation, FINOVA Capital plc, FINOVA Loan Administration Inc., FINOVA
Mezzanine Capital Inc., FINOVA Portfolio Services, Inc., FINOVA Technology
Finance Inc., and FINOVA Trust Finance.

                                      14
<PAGE>

  FINOVA obtained orders from the bankruptcy court on the first day permitting
FINOVA to continue its operations in the ordinary course including honoring
its obligations to borrowers. The orders also permit the Filing Entities to
pay certain prepetition expenses and claims, such as to employees (other than
executive officers, with exceptions), taxing authorities and foreign trade
vendors. The cases will be jointly administered.

  On May 2, 2001, FINOVA and the other filing subsidiaries filed a proposed
Joint Plan of Reorganization and Disclosure Statement which are currently
pending before the Bankruptcy Court.

                                      15
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS.

              COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2001
                   TO THE THREE MONTHS ENDED MARCH 31, 2000

  The following discussion relates to The FINOVA Group Inc. and its
subsidiaries (collectively "FINOVA" or the "Company"), including FINOVA
Capital Corporation and its subsidiaries ("FINOVA Capital"). The FINOVA Group
Inc. is a financial services holding company. Through its principal operating
subsidiary, FINOVA Capital, the Company has provided a broad range of
financing and capital markets products, primarily to mid-size businesses.
FINOVA Capital has been in operation since 1954.

  On March 7, 2001, The FINOVA Group Inc., FINOVA Capital Corporation and
seven of their subsidiaries filed for protection pursuant to Chapter 11, Title
11, of the United States Code to enable them to restructure their debt (the
"Reorganization Proceedings"). Historically, the Company has relied upon
borrowed funds together with internal cash flow to finance its operations.
Profit has largely been recorded from the spread between the cost of borrowing
and the rates paid by its customers, less operating costs. The Company also
generates revenues through loan servicing and related activities and the sale
of assets. Beginning late in the first quarter of 2000, a series of events
impeded FINOVA's access to lower cost capital in the public and private
markets. Those events have generally been described in The FINOVA Group Inc.
Form 10-K/A for the year ended December 31, 2000 (the "2000 10-K/A") that has
been filed with the Securities and Exchange Commission.

Recent Developments and Business Outlook

  On May 2, 2001, FINOVA and its subsidiaries that filed for protection
pursuant to Chapter 11 filed a proposed Joint Plan of Reorganization and a
Disclosure Statement (the "Plan") with the United States Bankruptcy Court for
the District of Delaware. The Plan contemplates implementation of a
comprehensive restructuring transaction with Berkadia LLC, a joint venture of
Berkshire Hathaway Inc. and Leucadia National Corporation, that was first
announced on February 27, 2001.

  As more fully described in the Plan, Berkadia has committed to make a $6
billion loan to FINOVA Capital, subject to conditions. The loan proceeds,
together with cash on hand, will fund a cash disbursement to general unsecured
creditors of FINOVA Capital equal to 60% of their claims, an increase from the
approximately 54% cash payment originally proposed. In addition, FINOVA will
issue ten-year New Senior Notes equal to 40% of the general unsecured claims
against FINOVA Capital. The New Senior Notes will be secured by a second lien
on the stock of FINOVA Capital. Interest on the New Senior Notes will be
payable semi-annually out of available cash (calculated as provided in the
Plan documents), after payment of quarterly interest on the Berkadia loan.
Principal on the New Senior Notes will be paid out of available cash, after
payment in full of the Berkadia loan, except as described in the following
sentence. While the Berkadia loan is outstanding and not in default, a
liquidity feature of the Plan that was not included in the original proposal
will require FINOVA to commit $75 million of available cash quarterly (up to a
maximum of $1.5 billion in total) to repurchase New Senior Notes at a price
not to exceed par plus accrued interest (subject to availability of New Senior
Notes at or below the maximum price). After payment in full of the Berkadia
loan, 95% of available cash will be used to pay the New Senior Notes and 5%
will be used for payments to FINOVA stockholders. The New Senior Notes also
provide for payment under certain circumstances of up to $100 million in the
aggregate of additional interest to holders of the New Senior Notes. Holders
of general unsecured claims against FINOVA Capital will also receive a cash
payment of post petition interest upon the effective date of the Plan.

  Berkshire Hathaway owns approximately $1.4 billion of existing FINOVA
Capital bank and bond debt and therefore is expected to be a significant
holder of New Senior Notes. Berkshire Hathaway will participate in FINOVA's
quarterly repurchase of New Senior Notes pro rata to its interest in the New
Senior Notes at the weighted average price paid in each quarterly repurchase.

                                      16
<PAGE>

  All other terms of the Plan are substantially the same as previously
disclosed in FINOVA's February 28, 2001 filing on Form 8-K.

  The Bankruptcy Court has not approved the proposed Plan or the Disclosure
Statement. The solicitation process will not begin until the Bankruptcy Court
approves the Disclosure Statement and authorizes FINOVA to solicit the votes
of their creditors and stockholders in connection with the Plan. Thereafter,
FINOVA will send the proposed Plan and Disclosure Statement to all creditors
and stockholders who are entitled to vote on the Plan.

Results of Operations

  The results for the first quarter of 2001 reflected a continuation of trends
noted in the 2000 10-K/A. These results were adversely impacted by some of the
events of 2000 and a continued softening of the U.S. economy. The more
significant impacts were increases in delinquencies and nonaccruing assets,
higher cost of funds (resulting in lower interest margins earned), increased
operating costs and the inability to recognize tax benefits.

  For the first quarter of 2001, FINOVA reported a loss of $75.7 million or
$1.24 per diluted share compared to net income of $10.4 million or $0.17 per
diluted share in the first quarter of 2000. The results for the first quarter
of 2001 included a net loss from continuing operations of $57.0 million or
$0.93 per diluted share compared to net income of $47.6 million or $0.77 per
diluted share in the first quarter of 2000, and a net loss from discontinued
operations in the 2001 quarter of $18.7 million or $0.31 per diluted share
compared to a net loss of $37.2 million or $0.60 per diluted share in the
first quarter of 2000. A discussion of the largest variances in the individual
profit and loss categories is as follows:

Continuing Operations

  Loss from Continuing Operations. The decline in results in the first quarter
of 2001 when compared to the same quarter in 2000 was primarily due to the
following:

  . Higher loss provisions to bolster the reserve for credit losses.

  . A higher level of nonaccruing assets.

  . Lower gains on investments and disposal of assets.

  . Increases in the Company's cost of funds.

  . An increase in the level of nonaccruing assets due in part to the
    weakening economy.

  . Higher expenses primarily related to the Reorganization Proceedings.

  . The inability to recognize any federal and state income tax benefits in
    2001.

  Interest margins earned. Interest margins earned represents the difference
between (a) interest, fee, lease and other income earned from financing
transactions and (b) interest expense and depreciation on operating leases.
Interest margins earned in the first quarter of 2001 dropped by $69.7 million
to $66.0 million from $135.7 million in the first quarter of 2000 due to a
higher level of nonaccruing assets, a higher cost of funds and a reduction in
the managed assets. Interest margins earned as a percentage of average earning
assets declined to 3.1% in the first quarter of 2001 from 5.6% in the
comparable 2000 quarter. The higher cost of funds was the result of the events
of 2000, primarily the various downgrades of FINOVA Capital's senior debt and
the elimination of its commercial paper program resulting in draw downs under
its back-up bank facilities. This caused the Company's cost of funds
applicable to $4.5 billion of bank debt to increase by 1.16% (over the
comparable 2000 period) up to March 7, 2001, the bankruptcy filing date.

  The portfolio (ending managed assets) declined to $9.88 billion at March 31,
2001 from $10.54 billion at March 31, 2000. The reduction was primarily due to
lower new business ($277.4 million in 2001 compared to $914.0 million in the
first quarter of 2000) and to portfolio runoff. The new business in the first
quarter of 2001

                                      17
<PAGE>

included the funding of approximately $176 million from available lines of
credit, $150 million of which was in the Resort Finance line of business. As
the Company indicated in the 2000 Form 10-K/A, it has effectively eliminated
new business development activities and for the foreseeable future, intends to
focus on managing and maximizing the value of its existing portfolio. Those
efforts will include the continued collection of its portfolio pursuant to
contractual terms and may include efforts to retain certain customer
relationships, restructure or terminate other relationships or sell certain
assets if buyers can be found at attractive prices. The Company will continue
to fund its backlog of commitments, which declined to $1.85 billion at March
31, 2001 from $1.97 billion at March 31, 2000. Historically, the amount
reported as committed backlog was FINOVA's estimate of expected draw downs of
the total commitments outstanding, especially the available lines of credit.
Assuming full utilization, the total amount of available lines of credit at
March 31, 2001 was $2.98 million, including discontinued operations. The
available backlog increased from the $2.7 billion at December 31, 2000,
primarily due to pay downs on lines of credit, resulting in increased
availability.

  Provision for credit losses. The provision for credit losses on continuing
operations was higher by $40.9 million in the first quarter of 2001 compared
to the first quarter of 2000 ($61.8 million vs. $20.9 million) due to
increases in problem accounts and higher net write-offs during the period
($22.4 million in the first quarter of 2001 vs. $13.8 million in the first
quarter of 2000). The businesses with the highest level of net write-offs
during the 2001 quarter were Mezzanine Capital ($10.7 million), Rediscount
Finance ($7.4 million) and Healthcare Finance ($3.1 million). Net write-offs
as a percent of managed assets in the 2001 first quarter were 0.87% annualized
compared to 0.53% for the first quarter of 2000. A discussion of the increase
in problem accounts is included under "Financial Condition, Liquidity and
Capital Resources."

  FINOVA monitors developments affecting loans and leases in portfolio, taking
into account each borrower's financial developments and prospects, the
estimated value of collateral, legal developments and other available
information. Based upon that information, FINOVA adjusts its loan loss
reserves and when considered appropriate, writes down the values of the loans.
Depending on developments, there is the possibility that the loan loss
reserves and/or write-downs will increase in the future.

  Gains on investments and disposal of assets. Gains for the first quarter of
2001 were $6.7 million compared to $21.0 million for the 2000 first quarter.
Gains in the 2001 quarter were generated by Commercial Equipment Finance
($15.2 million), Mezzanine Capital ($4.7 million) and Communications Finance
($3.2 million). The largest gain was from the sale of stock of Corvis Corp.,
which generated a gain of $15.6 million. These gains were partially offset by
losses related to the reduction of investment in a sports franchise ($7.0
million), losses on residuals in Transportation Finance ($5.1 million) and
further write- down of Realty Capital's assets held for sale to fair value
($5.1 million).

  Operating expenses. For the first quarter of 2001, operating expenses
declined slightly to $55.0 million from $56.8 million in the comparable 2000
quarter. The decrease was primarily due to the cost savings resulting from a
reduction in employees (768 at March 31, 2001, compared to 1,508 at March 31,
2000) and lower goodwill amortization ($394 thousand vs. $4.2 million),
partially offset by accruals and payments made in connection with employee
retention plans and higher professional fees relating to events since March
2000. The higher professional services included increased accounting, legal
fees and investment banking fees.

  Reorganization items. Reorganization items reflect income and expense items
that are directly associated with the reorganization, as compared to those
from the ongoing operations of the business, as required by generally accepted
accounting principles for entities in reorganization under the Bankruptcy
Code. For the first quarter of 2001, reorganization items included the charge-
off of debt origination costs ($15.1 million), professional services fees
($9.6 million), the full amortization of debt discounts ($7.9 million)
partially offset by gains from cash settled interest rate swap terminations
($22.2 million) and interest earned ($0.8 million) on the cash retained and
invested as a result of the moratorium on payment of interest and principal
applicable to FINOVA's outstanding debt.

  Income taxes. Income taxes were provided during the first quarter of 2001 in
spite of losses before income taxes for the period, due to taxable income
being generated by foreign operations (primarily in the

                                      18
<PAGE>

United Kingdom and Canada). Income tax benefits were offset by an increase in
the valuation allowance during the 2001 quarter because of the uncertainty of
being able to utilize either state or federal net operating loss
carryforwards. This also applies to discontinued operations, which provided
income taxes on income from foreign operations while recording net pre-tax
losses for the period. The effective income tax rates in the first quarter of
2000 were 39.4% for continuing operations and 40.0% for discontinued
operations.

  Preferred dividends. Dividends, net of tax paid on $115 million of
outstanding Company-obligated mandatory redeemable convertible preferred
securities ("TOPrS"), were $946 thousand in both the first quarter of 2001 and
2000. Dividends were accrued but not paid in 2001 since during the first
quarter of 2001, in conjunction with the reorganization proceedings, the
Company suspended paying dividends on the TOPrs and interest on the underlying
convertible debentures.

Discontinued Operations

  During the third quarter of 2000, FINOVA's Board of Directors approved the
sale or liquidation of some of its more broad based businesses so the Company
could focus more on its niche-based businesses. The businesses included in
discontinued operations consist of Commercial Services (substantially sold
during the third quarter of 2000), Corporate Finance (which includes Business
Credit and Growth Finance) and Distribution & Channel Finance. During the
first quarter of 2001, $309 million of Corporate Finance assets were sold.
Sales of additional assets could occur for all or portions of the discontinued
business assets. To the extent assets are not sold, the Company intends to
liquidate the remaining assets in an orderly manner.

  Losses from discontinued operations in 2001 were $18.7 million (after-tax)
and primarily consisted of $12.8 million of charges to value the assets to be
sold or liquidated at estimated net realizable amounts, the effects of higher
nonaccruing assets and operating losses. Nonaccruing assets in discontinued
operations were $433.2 million at March 31, 2001, down $53 million from $486.2
million at December 31, 2000 and up by $293.6 million from $139.6 million at
March 31, 2000. Losses in the first quarter of 2000 were principally due to a
pre-tax charge to earnings to replenish loss reserves after a write-off of a
loan to a single customer in the Distribution & Channel Finance line of
business.

Financial Condition, Liquidity and Capital Resources

  The following primarily relates to continuing operations, except as noted.

  Managed assets were $9.88 billion at March 31, 2001 compared to $10.54
billion at December 31, 2000. Included in managed assets at March 31, 2001
were $9.56 billion in funds employed and $321.6 million of securitized assets.
The decrease in managed assets was due to prepayments and asset sales
accompanied by normal portfolio amortization, partially offset by funded new
business of $277.4 million for the three months ended March 31, 2001.

  The reserve for credit losses as it pertains to continuing operations
increased to $618 million at March 31, 2001 from $578.8 million at December
31, 2000. At March 31, 2001 and December 31, 2000, the reserve for credit
losses was 6.5% and 5.7% of ending managed assets, respectively. The reserve
for credit losses as a percent of nonaccruing assets declined to 53% at March
31, 2001, from 62.8% at December 31, 2000, due to the increase in nonaccruing
assets. Nonaccruing assets increased to $1.17 billion or 11.8% of ending
managed assets at March 31, 2001 from $921.4 million or 8.7% at the end of
2000. The largest increases to nonaccruing assets during the three months of
2001 occurred in Transportation Finance ($85.1 million), Commercial Equipment
Finance ($53.8 million), Mezzanine Capital ($50.4 million), Communications
Finance ($45.1 million) and Realty Capital ($10.6 million).

  The $85.1 million increase in nonaccruing assets in Transportation Finance
involved eight aircraft-secured transactions and one engine-secured
transaction. The single largest transaction ($28.2 million) moving to
nonaccrual in the first quarter was a 1988 B757 on lease to a scheduled
carrier. The other moves to nonaccrual involved two MD-82 aircraft ($21.0
million) on lease to a carrier in bankruptcy at March 31, and subsequent to
March 31, leased to the acquirer of that carrier; three 727-200 aircraft
($18.8 million) on operating leases to a

                                      19
<PAGE>

scheduled carrier; another MD-82 aircraft ($12.0 million) formerly on lease to
a carrier in bankruptcy and sold subsequent to March 31; three DC-9-30
aircraft ($10.6 million) in process of being returned; two 727-200 aircraft
($9.6 million) out on operating leases. FINOVA wrote-off $550 thousand in the
first quarter and established $1.45 million of specific reserves on these new
nonaccruals.

  The $53.8 million increase in nonaccruing assets in Commercial Equipment
Finance was principally due to the addition of a $41.9 million loan to a
corporate aircraft charter operator who is experiencing cash flow problems.
The balance of the increase was due to the addition of five other accounts
affected by the slowing economy. Specific reserves of $2.0 million have been
assigned against the total new nonaccruing assets.

  The Mezzanine Capital portfolio has been negatively affected by the
weakening economy resulting in more restrictive policies by senior lenders
regarding subordinated debt. In addition, the lack of equity support from the
traditional equity sponsors of many mezzanine transactions has resulted in a
liquidity crisis for a number of our borrowers. The increase in nonaccruing
accounts at quarter-end can be largely attributed to the following: violations
of senior debt covenants on four transactions totaling $7.1 million leading to
payment blockage; three transactions totaling $13.7 million for which the
equity sponsors have indicated an unwillingness to provide additional support
resulting in a liquidity crisis for those borrowers; one transaction for $10.8
million on which the senior lenders are in disagreement over the borrowing
base components; and the weakening economy has severely impacted the business
plans of six borrowers totaling $23.8 million, resulting in short to long-term
liquidity issues. Specific reserves of $30.4 million have been allocated to
the $58.1 million of new nonaccruing assets.

  The $45.1 million increase in the Communications Finance nonaccruing assets
is represented by five accounts in six different market niches. The largest
increase comes from the internet sector, as two accounts totaling $19.8
million moved into nonaccrual status. Also moving to nonaccruing was a $14.2
million loan to a radio and TV station operator serving numerous markets. An
$8.6 million loan to a paging operator was moved into the nonaccrual category
in the first quarter. Although interest payments were being made, the move was
appropriate in light of the significant softening in the paging industry and
the likelihood of a bankruptcy filing. One customer in the cable and security
monitoring industry went over 90 days delinquent in payments at the end of
March 2001. For these new nonaccrual accounts, specific reserves of $13.8
million have been established as of March 31, 2001.

  The increase in nonaccruing assets in Realty Capital of $10.6 million was
primarily attributable to one account for $7.8 million secured by five low-
rise office buildings in Orlando, Florida. The properties are experiencing
significant occupancy shortages and the transaction matures in the second
quarter. The Company designated the Realty Capital unit as being held for sale
in the fourth quarter of 2000 and took a charge to write-down its assets to
estimated fair value. A revaluation increased the markdown by $5.1 million in
the first quarter of 2001.

  Earning impaired assets increased during the three months ended March 31,
2001 to $308.1 million, or 3.1% of ending managed assets, from $235.8 million,
or 2.2% of ending managed assets at December 31, 2000. The largest additions
to earning impaired assets were in Rediscount Finance ($32.1 million),
Healthcare Finance ($28.7 million), Resort Finance ($17.0 million), Realty
Capital ($22.5 million) and Mezzanine Capital ($13.1 million). The increase in
Rediscount Finance represents one account which operates as a consumer sales
finance company based in Florida. The account is considered impaired due to an
out of formula condition with the underlying collateral of automobile finance
contracts. The increase in Healthcare Finance is attributable to two accounts.
One is a participation in a bank facility to finance an operator of skilled
nursing and assisted living facilities in California, Texas, and Arizona. The
facility is secured by all the assets of the company. The other Healthcare
transaction is also a participation for an operator of assisted living
facilities. The transaction matured at the end of March with no established
plan for refinancing. The increase in Realty Capital is primarily attributable
to one account secured by a two-story R&D/Office complex in California. The
account was moved to earning impaired status as a result of losing one of its
major tenants. The increase in Resort Finance represents one golf-oriented
resort in Florida. Sales of timeshare intervals have lagged expectations which
in turn has

                                      20
<PAGE>

slowed the repayment of FINOVA's acquisition facility. The increase in
Mezzanine Capital was primarily attributable to one account ($9.3 million)
involved with the paging industry. Although the account continues to pay in a
timely manner, the significant softening in the paging industry, along with
the uncertainty about the future direction of paging, warranted this
classification.

  There can be no assurance that any of the potential transactions noted above
will be consummated on anticipated terms.

  The carrying amount of FINOVA's accounts that were 31-90 days delinquent in
payment at March 31, 2001 increased to 1.6% of managed assets, from 1.2% of
managed assets at the end of 2000. The increases in 31-90 day delinquent
accounts were in Transportation Finance ($46.8 million), Resort Finance ($22.6
million) and Franchise Finance ($9.9 million).

  FINOVA's internally generated funds and asset sales financed liquidity
during the three months ended March 31, 2001. On February 27, 2001, FINOVA
announced a moratorium on repayments of principal on its outstanding bank and
bond debt. On March 7, 2001, FINOVA filed for protection from its creditors as
noted above to enable it to restructure the timing of its debt repayments. The
Reorganization Proceedings seek to enable FINOVA to restructure the debt
maturities, among other items. No principal or interest payments will be made
on the debt until the Plan defining repayment terms has been approved by the
court.

  In 2001, substantially all of FINOVA's interest rate swaps were terminated
as a result of the Reorganization Proceedings. Historically, FINOVA entered
into derivative transactions as part of its interest rate risk management
policy of match funding its assets and liabilities. Therefore, FINOVA's asset
and liabilities are not match funded going forward. At termination, the
interest rate swaps had an estimated value of approximately $70 million, of
which $18.2 were cash settled amortized into income and included as a
reorganization item in first quarter's results. Pursuant to the Company's
various agreements, the institutions exercised their right to offset the
amounts due to the Company, relative to approximately $50 million of the cash
termination value of the swaps, against the amount due by the Company on the
debt outstanding. No swap termination gains have been recognized on these
swaps since the amounts have not been approved by the bankruptcy court.

  At March 31, 2001, FINOVA had $11.1 billion of debt outstanding, including
$111.6 million of TOPrS, representing 19.1 times the Company's common equity
base of $580.9 million. As a result of its moratorium on debt payments, its
subsequent filing of Bankruptcy under Chapter 11 and defaults under various
financial covenants under its bank agreements, FINOVA Capital is in default
under its debt agreements.

New Accounting Standards

  In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes new accounting and
reporting standards for derivative instruments. In June 1999, the FASB issued
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities--
Deferral of the Effective Date of FASB Statement No. 133," and in June 2000,
the FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments
and Certain Hedging Activities--An Amendment of FASB Statement No. 133." SFAS
133, as amended, establishes accounting and reporting standards requiring that
derivative instruments, including certain derivative instruments embedded in
other contracts, be recorded in the statement of financial position as either
an asset or liability measured at its fair value. SFAS 133 requires that
changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met.

  FINOVA adopted the provisions of SFAS 133, as amended, on January 1, 2001,
which resulted in an immaterial impact on FINOVA's consolidated results of
operations and financial position.

Special Note Regarding Forward-Looking Statements

  Certain statements in this report are "forward-looking," in that they do not
discuss historical fact, but instead note future expectations, projections,
intentions or other items. These forward-looking statements include

                                      21
<PAGE>

matters in the sections of this report captioned "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Quantitative
and Qualitative Disclosure About Market Risk." They are also made in documents
incorporated in this report by reference, or in which this report may be
incorporated, such as a prospectus.

  Forward-looking statements are subject to known and unknown risks,
uncertainties and other factors that may cause FINOVA's actual results or
performance to differ materially from those contemplated by the
forward-looking statements. Many of those factors are noted in conjunction
with the forward- looking statements in the text. Other important factors that
could cause actual results to differ include:

  . The results of FINOVA's efforts to implement its business strategy,
    including successful completion of the Reorganization Proceedings.
    Failure to fully implement its business strategy might result in adverse
    effects, including materially adverse impacts on its financial position
    and results of operations. The current focus on maximizing portfolio
    values and liquidity while minimizing or eliminating new business
    generation will likely result in financial results that differ materially
    from prior periods.

  . The effect of economic conditions and the performance of FINOVA's
    borrowers. Economic conditions in general or in particular market
    segments could impact the ability of FINOVA's borrowers to operate or
    expand their businesses, which might result in decreased performance,
    impacting repayment of their obligations. The rate of borrower defaults
    or bankruptcies may increase. Economic conditions could adversely affect
    FINOVA's ability to realize gains from sales of assets and investments
    and estimated residual values. Those items could be particularly
    sensitive to changing market conditions. Certain changes in fair market
    values must be reflected in FINOVA's reported financial results.

  . The cost of FINOVA's capital. That cost has increased significantly as a
    result of the events of 2000 and will increase further if the Berkadia
    transaction is consummated. The impact of these developments will be a
    significant reduction in profit margins.

  . Loss of employees. FINOVA must retain a sufficient number of employees to
    continue to monitor and collect its portfolio. Failure to do so could
    result in additional losses.

  . Changes in air worthiness directives. These changes could have a
    significant impact on airplane values, especially FINOVA's portfolio of
    airplanes, which are of an older vintage.

  . Changes in government regulations, tax rates and similar matters. For
    example, government regulations could significantly increase the cost of
    doing business or could eliminate certain tax advantages of some of
    FINOVA's financing products. The current financial condition of FINOVA
    also makes it difficult to record potential tax benefits that may never
    be recognized.
  . Necessary technological changes, such as implementation of information
    management systems, may be more difficult, expensive or time consuming
    than anticipated.

  . Potential liabilities associated with dispositions of assets or lines of
    business.

  . Changes in interest rates could adversely affect financial results.

  . Other risks detailed in FINOVA'S other SEC reports or filings.

  FINOVA does not intend to update forward-looking information to reflect
actual results or changes in assumptions or other factors that could affect
those statements. FINOVA cannot predict the risk from reliance on forward-
looking statements in light of the many factors that could affect their
accuracy.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

  FINOVA's primary market risk has been exposure to the volatility of interest
rates. FINOVA sought to manage interest rate risk and preserve income through
a diversified borrowing base and a matched funding

                                      22
<PAGE>

policy. A diversified borrowing base consisted of short and long-term debt
with a fixed or variable rate. FINOVA's matched funding policy required that
floating-rate assets be financed with similar floating-rate liabilities and
fixed-rate assets be financed with similar fixed-rate liabilities. Under the
matched funding policy, the difference between floating-rate assets and
floating-rate liabilities was managed to not exceed 3% of total assets for any
extended period.

  As a result of the developments described in the Company's 2000 10-K/A, the
Company cannot determine the nature of its borrowing base or achieve a matched
funding policy. In addition, substantially all of the Company's interest rate
swap agreements were terminated as a result of the bankruptcy filing. During
the pendancy of the bankruptcy, the interest rate which will be applied to the
Company's debt obligations is also uncertain.

  Since approximately 50% of the Company's assets earn at a floating-rate, any
decline in market rates could adversely affect the Company since it would earn
less on its assets while the nature of its financing costs is uncertain.
Alternatively, any increase in market rates would increase its return on
floating-rate assets; however, if its financing costs also become floating any
potential increases in asset returns could be offset by rising costs of
capital. Until a plan of reorganization is approved and its financing costs
determined, the Company does not expect to be able to mitigate its exposure to
changes in interest rates.

  Under the terms of Berkadia's commitment, the New Senior Notes will be
fixed-rate obligations, at the weighted average rate of the existing debt
(excluding default interest or penalties, if any). If LIBOR is above 6%, the
Berkadia Loan will be a floating-rate loan; if LIBOR is below 6%, the Berkadia
Loan will be fixed at 9%. If this transaction is consummated, a successful
strategy to mitigate the Company's exposure to changes in market interest
rates could be developed; however, no assurance can be given that the Company
will be able to implement any such strategy at an acceptable cost or will seek
to do so. In addition, no assurance can be given that the transaction will be
consummated.

                                      23
<PAGE>

                           PART II OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

  See Part I, Item 1, Note H for a discussion of pending legal proceedings.

                                       24
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

  (a) The following exhibits are filed herewith:

<TABLE>
 <C>         <S>
 Exhibit No.                              Document
 -----------                              --------
             Computation of Ratio of (Losses) Income to Fixed Charges (interim
     12      period).

    4.0.1    Letter Agreement among Berkadia LLC, Berkshire Hathaway Inc.,
             Leucadia National Corporation, FINOVA and FINOVA Capital, dated
             May 2, 2001, including summaries of proposed terms and conditions
             for the $6 billion Senior Secured Credit Facility and the New
             Senior Notes.
</TABLE>

  (b) Report s on Form 8-K:

  A report on Form 8-K dated May 8, 2001 was filed by Registrant which
reported under Item 5 the filing by the Company and its subsidiaries in the
Bankruptcy Court of a proposed Joint Plan of Reorganization and Disclosure
Statement.

                                      25
<PAGE>

                             THE FINOVA GROUP INC.

                                   SIGNATURES

  Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          The Finova Group Inc.
                                          (Registrant)

                                                  /s/ Bruno A. Marszowski
                                          By: _________________________________
                                                    Bruno A Marszowski
                                               Senior Vice President, Chief
                                             Financial Officer and Controller
                                            Principal Financial and Accounting
                                                          Officer

Dated: May 15, 2001

                                       26
<PAGE>

                             THE FINOVA GROUP INC.

                         COMMISSION FILE NUMBER 1-11011

                                 EXHIBIT INDEX
                            MARCH 31, 2001 FORM 10-Q

<TABLE>
<CAPTION>
 Exhibit No.                              Document
 -----------                              --------
 <C>         <S>
             Computation of Ratio of (Losses) Income to Fixed Charges (interim
  12         period).

 4.0.1       Letter Agreement among Berkadia LLC, Berkshire Hathaway Inc.,
             Leucadia National Corporation, FINOVA and FINOVA Capital, dated
             May 2, 2001, including summaries of proposed terms and conditions
             for the $6 billion Senior Secured Credit Facility and the New
             Senior Notes.
</TABLE>

                                       27
<PAGE>

                                   EXHIBIT 12

                             THE FINOVA GROUP INC.

            COMPUTATION OF RATIO OF (LOSSES) INCOME TO FIXED CHARGES
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                           March 31,
                                                      --------------------
                                                        2001       2000
                                                      ---------  ---------
<S>                                                   <C>        <C>
(Loss) income from continuing operations before
 income taxes........................................ $ (53,711) $  80,086
Add fixed charges:
  Interest expense...................................   172,550    141,815
  One-third rentals..................................     1,123      1,270
                                                      ---------  ---------
    Total fixed charges..............................   173,673    143,085
                                                      ---------  ---------
(Loss) income from continuing operations as
 adjusted............................................ $ 119,962  $ 223,171
                                                      ---------  ---------
Ratio of (loss) income from continuing operations to
 fixed charges.......................................      0.69       1.56
                                                      =========  =========
Preferred stock dividends on a pre-tax basis......... $   1,581  $   1,581
Total fixed charges and preferred stock dividends.... $ 175,254  $ 144,666
                                                      ---------  ---------
Ratio of (loss) income from continuing operations to
 fixed charges and preferred stock dividends.........      0.68       1.54
                                                      =========  =========
</TABLE>

                                       28
<PAGE>

                                                                  Exhibit 4.0.1

                                 Berkadia LLC
                               1440 Kiewit Plaza
                             Omaha, Nebraska 68131

                                  May 2, 2001

The FINOVA Group Inc.
FINOVA Capital Corporation
4800 North Scottsdale Road
Scottsdale, Arizona 85251-7623

Ladies and Gentlemen:

  Pursuant to and as contemplated by the commitment letter (the "Commitment
Letter") dated as of February 26, 2001 by and among Berkadia LLC, Berkshire
Hathaway Inc., Leucadia National Corporation, The FINOVA Group Inc. ("FNV")
and FINOVA Capital Corporation ("Borrower"), we hereby confirm that the
attached Senior Secured Credit Facility term sheet and Summary of Terms of New
Senior Notes (the "Term Sheets") are acceptable to Berkshire and Leucadia to
be included as part of the plans of reorganization filed by FNV, Borrower and
their subsidiaries (together, the "Debtors") that have filed petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code with the
United States Bankruptcy Court for the District of Delaware (the "Court"). We
and you agree that:

    (i) the Term Sheets shall replace Annex I and Exhibit A to Annex I to the
  Commitment Letter, respectively, effective upon the earlier to occur of (a)
  the approval of the Commitment Letter and the Term Sheets by the Court, or
  (b) the effective date of plans of reorganization of the Debtors that
  satisfy and incorporate the terms and conditions set forth in the
  Commitment Letter and the Term Sheets, and

    (ii) this letter and the Term Sheets do not amend or modify the
  Commitment Letter in any respect unless and until the occurrence of either
  of the events described in clause (a) or (b) of paragraph (i).

                                          Very truly yours,

                                          Berkadia LLC

                                                    /s/ Marc D. Hamburg
                                          By: _________________________________
                                                      Marc D. Hamburg
                                                          Manager

                                      29
<PAGE>

                                          Berkshire Hathaway Inc.

                                                    /s/ Marc D. Hamburg
                                          By: _________________________________
                                                      Marc D. Hamburg
                                                      Vice President

                                          Leucadia National Corporation

                                                   /s/ Joseph A. Orlando
                                          By: _________________________________
                                                     Joseph A. Orlando
                                                      Vice President

Acknowledged and Agreed
this 2nd day of May, 2001

The Finova Group Inc.

      /s/ William J. Hallinan
By: _________________________________
          William J. Hallinan
            President & CEO

Finova Capital Corporation

        /s/ William J. Hallinan
By: _________________________________
          William J. Hallinan
            President & CEO

                                       30
<PAGE>

                 $6,000,000,000 SENIOR SECURED CREDIT FACILITY

                        Summary of Terms And Conditions

  This Summary of Terms and Conditions outlines certain terms of the Facility
referred to in the Commitment Letter dated February 26, 2001 among The FINOVA
Group Inc. ("FNV"), FINOVA Capital Corporation (the "Company" or the
"Borrower"), Lender, Berkshire and Leucadia (the "Commitment Letter"). This
Summary of Terms and Conditions is part of and subject to the Commitment
Letter. Certain capitalized terms used herein are defined in the Commitment
Letter.

Borrower:....................  The Company.

Guarantors:..................  FNV and all of FNV's direct and indirect
                               subsidiaries other than (i) the Company and
                               (ii) any special purpose subsidiary that is
                               contractually prohibited (as of February 26,
                               2001) from acting as a guarantor (the
                               "Guarantors").

Lender:......................  Berkadia LLC ("Lender").

The Facility:................  A five-year amortizing term loan made to the
                               Borrower in a single drawing on the Closing
                               Date in a principal amount of $6,000,000,000
                               (the "Term Loan"), mandatorily prepayable with
                               cash flows as set forth under "Prepayments."

                               The final maturity date for the Term Loan will
                               be five years from the Closing Date.

Closing Date:................  On or before August 31, 2001.

Purpose:.....................  Proceeds of the Term Loan will be used solely
                               to repay a portion of the pre-petition debt of
                               the Company and its subsidiaries in accordance
                               with the Plan.

Interest:....................  The Term Loan will bear interest at the greater
                               of the following rates:

                               (i) the current LIBO rate (for a period not to
                               exceed six months and to be determined prior to
                               execution of the loan documentation) as quoted
                               by Telerate Page 3750, adjusted for reserve
                               requirements, if any, applicable to Lender's
                               source of funds and subject to customary change
                               of circumstance provisions and reserve
                               requirements applicable to Lender and Lender's
                               provider of funds (the "LIBO Rate"), plus 3%
                               per annum; and

                               (ii) 9% per annum.

                               The interest rate shall be reset daily and
                               interest shall be calculated on the basis of
                               the actual number of days elapsed in a 360-day
                               year. Interest shall be payable quarterly.

Default Interest:............  During the continuance of an event of default
                               (as defined in the loan documentation), the
                               Term Loan (including unpaid interest and unpaid
                               default interest) will bear interest at an
                               additional 2% per annum.

                                      31
<PAGE>

Prepayments:.................
                               Following the (i) payment of or funding of a
                               reserve for accrued interest on the Term Loan,
                               (ii) payment of operating expenses and taxes of
                               FNV, the Company and their respective
                               subsidiaries, (iii) funding of reasonable
                               reserves for (a) revolving and unfunded
                               commitments existing at the Closing Date and
                               acceptable to Lender, (b) commitments otherwise
                               acceptable to Lender and (c) general corporate
                               purposes of FNV, the Company and their
                               respective subsidiaries, (iv) payment of
                               accrued interest on the Senior Notes, and (v)
                               provided no default has occurred, or would
                               result therefrom, payment of up to $75 million
                               in any three- month period to purchase Senior
                               Notes at a purchase price not to exceed par
                               plus accrued and unpaid interest thereon,
                               mandatory prepayments of the Term Loan without
                               premium thereon shall be required in an amount
                               equal to the aggregate net positive amount of
                               each of (x) 100% of the net sale proceeds from
                               asset sales, (y) 100% of excess cash flow (to
                               be defined in the loan documentation) and (z)
                               100% of net proceeds from insurance and
                               condemnation, in each case received by FNV, the
                               Company or any of its subsidiaries, except to
                               the extent any special purpose subsidiary is
                               subject (as of February 26, 2001) to a
                               contractual restriction on making distributions
                               to its parent entity. In no event shall the
                               Company or its subsidiaries make any prepayment
                               on the Term Loan out of any refinancing or
                               issuance of securities.

Security:....................  All amounts owing by and the obligations of the
                               Company under the Term Loan and the Guarantors
                               in respect thereof will be secured by (i) a
                               first priority perfected pledge of (x) all
                               notes owned by the Company and the Guarantors
                               and (y) all capital stock, securities,
                               partnership and LLC interests owned by the
                               Company and the Guarantors and (ii) a first
                               priority perfected security interest in all
                               other assets owned by the Company and the
                               Guarantors, including, without limitation,
                               accounts, inventory, equipment, investment
                               property, instruments, chattel paper, real
                               estate, leasehold interests, contracts,
                               patents, copyrights, trademarks and other
                               general intangibles, subject to customary
                               exceptions for transactions of this type.

Conditions Precedent to the    The loan documentation will contain conditions
Closing:.....................  to the closing of the Facility customarily
                               found in loan agreements for similar financings
                               and transactions of this type and other
                               conditions deemed by Lender to be appropriate
                               to the specific transaction and in any event
                               including without limitation:

                               . All documentation relating to the Facility
                                 shall be in form and substance satisfactory
                                 to the Company and its counsel and Lender and
                                 its counsel. Guarantees in form and substance
                                 satisfactory to the Lender and its counsel
                                 shall have been executed and delivered by the
                                 Guarantors, and shall be in full force and
                                 effect.

                               . FNV and the Company shall not be in default
                                 of any of their obligations under the
                                 Commitment Letter.

                               . The terms and conditions of, and
                                 documentation relating to the Senior Notes,
                                 the principal terms of which are outlined on

                                      32
<PAGE>

                               Exhibit A to this Annex I together with any
                               changes thereto as may be agreed to by Lender,
                               shall be satisfactory to Lender, including in
                               the case of such debt the extent of
                               subordination, security, absence of guarantees,
                               amortization, maturity, prepayments,
                               limitations on remedies and acceleration,
                               covenants, events of default, interest rate and
                               other intercreditor arrangements. All
                               conditions precedent to the issuance of the
                               Senior Notes shall have been satisfied or, with
                               the prior approval of Lender, waived and the
                               Senior Notes shall be issued concurrently with
                               the closing of the Facility.

                              . FNV, the Company and certain of their
                                subsidiaries (the "Debtors") shall have filed
                                voluntary petitions for relief under chapter
                                11 of the Bankruptcy Code (the "Chapter 11
                                Cases") in the Bankruptcy Court and (i) all
                                motions and other documents to be filed with
                                and submitted to the Bankruptcy Court in
                                connection with the Facility and the
                                Management Agreement, the fees and
                                transactions contemplated thereby and the
                                approval thereof and (ii) the plan of
                                reorganization of each of the Debtors shall be
                                in form and substance reasonably satisfactory
                                to Lender.

                              . An order of the Bankruptcy Court granting
                                approval and confirmation of the Plan of each
                                of the Debtors shall have been entered and
                                have become final and nonappealable (the
                                "Final Order"), which Final Order and plans
                                shall provide for, among other things, (i)
                                borrowing under the Facility, including first
                                priority liens on all collateral thereunder,
                                (ii) the use of proceeds of the Facility to
                                make the Existing Debt Repayment, (iii)
                                issuance of the Senior Notes , (iv) the
                                distribution on a pro-rata basis of $115
                                million principal amount of FNV's 5 1/2%
                                Convertible Subordinated Debentures due 2016
                                to the holders of FNV's outstanding Trust
                                Originated Preferred Securities ("TOPrS"), (v)
                                the adoption by each of FNV and the Company of
                                a Certificate of Incorporation and By-laws in
                                form and substance acceptable to Lender, (vi)
                                the designees of Lender constituting not less
                                than a majority of the Boards of Directors of
                                FNV and the Company, at least two (2) of the
                                remaining members of which shall be selected
                                from the current Board of Directors of FNV as
                                of the date hereof, (vii) the issuance by FNV
                                to Lender, and/or Berkshire and Leucadia (the
                                "Berkadia Parties") and/or their subsidiaries
                                for no additional consideration of shares of
                                common stock of FNV such that such parties
                                will own, in the aggregate, 51% (or a lesser
                                amount as agreed by the Berkadia Parties) of
                                the outstanding equity of FNV on a fully
                                diluted basis (and an allocation of
                                consideration for such issuance to the capital
                                of FNV in an amount equal to the aggregate par
                                value represented by such equity interests so
                                that such equity interests are fully paid and
                                non- assessable), (viii) the release, in form
                                and substance satisfactory to Lender, Leucadia
                                and Berkshire, of each Indemnified Party (as
                                defined in the Commitment Letter) from any and
                                all claims or liabilities that any creditor or
                                other party in interest has or could have had
                                in connection with or arising out of the
                                Chapter 11 Cases, the Commitment Letter, the
                                Management

                                      33
<PAGE>

                               Agreement and/or any action, authority, event
                               or transaction contemplated by any of the
                               foregoing, (ix) such other terms as shall be
                               acceptable to Lender in its reasonable
                               discretion, and (x) such other terms as are
                               requested by Lender following the initial date
                               of filing of the Plan and that do not adversely
                               affect the holders of claims against or
                               interests in any of the debtors in the Chapter
                               11 Cases.

                              . The amounts of the allowed general unsecured
                                claims, the allowed secured claims and the
                                amount of disputed claims against FNV, the
                                Company and their subsidiaries in the Chapter
                                11 Cases as of the effective date of the Plan
                                shall be satisfactory to Lender. Lender shall
                                be satisfied with the liabilities and
                                capitalization of the Company, FNV and their
                                subsidiaries after giving effect to the plans
                                of reorganization of the Debtors.

                              . All fees and expenses (including reasonable
                                fees and expenses of counsel) required to be
                                paid or reimbursed to Lender, Berkshire and
                                Leucadia on or before the Closing Date shall
                                have been paid.

                              . Lender shall be satisfied in its reasonable
                                judgment that (i) there shall not occur as a
                                result of the funding of the Facility, a
                                default (or any event which with the giving of
                                notice or lapse of time or both would be a
                                default) under any debt instruments and other
                                material agreements of FNV, the Company or any
                                of their respective subsidiaries that exist
                                following the effective date of the plans of
                                reorganization of the Debtors, and (ii) that
                                each of FNV and the Company are solvent after
                                giving effect to the funding of the Term Loan
                                and the issuance of the Senior Notes.

                              . Lender shall be satisfied that FNV, the
                                Company and their respective subsidiaries will
                                be able to meet their respective obligations
                                under all employee and retiree welfare plans
                                of such entities, that such employee benefit
                                plans are, in all material respects, funded in
                                accordance with the minimum statutory
                                requirements, that no material "reportable
                                event" (as defined in ERISA, but excluding
                                events for which reporting has been waived)
                                has occurred as to any such employee benefit
                                plan and that no termination of, or withdrawal
                                from, any such employee benefit plan has
                                occurred or is contemplated that could result
                                in a material liability. Lender shall have
                                reviewed and be satisfied with all employee
                                benefit plans of FNV, the Company and their
                                respective subsidiaries.

                              . Lender shall have received satisfactory
                                opinions of counsel to FNV and the Company,
                                addressing such matters as Lender shall
                                reasonably request, including, without
                                limitation, the enforceability of all loan
                                documentation, compliance with all laws and
                                regulations (including Regulations T, U and X
                                of the Board of Governors of the Federal
                                Reserve System), the perfection of all
                                security interests purported to be granted and
                                no conflicts with material agreements.

                              . There shall not have occurred any change,
                                occurrence or development that could, in
                                Lender's reasonable opinion, result in

                                      34
<PAGE>

                               a material adverse change in (i) the business,
                               condition (financial or otherwise), operations,
                               performance, properties, assets, liabilities
                               (actual or contingent) or prospects of FNV, the
                               Company and their respective subsidiaries taken
                               as a whole since December 31, 2000 (other than
                               the commencement and continuation of the
                               Chapter 11 Cases and the consequences that
                               would normally result therefrom), (ii) the
                               ability of the Company to perform its
                               obligations under the loan documentation, (iii)
                               the ability of the Guarantors (other than
                               Guarantors as to which Lender, in its
                               reasonable judgment, is satisfied that their
                               inability, individually or in the aggregate, to
                               perform their obligations is not material) to
                               perform their obligations under the loan
                               documentation or (iv) the ability of Lender to
                               enforce the loan documentation (any of the
                               foregoing being a "Material Adverse Change").

                              . There shall exist no action, suit,
                                investigation, litigation or proceeding
                                pending or threatened in any court or before
                                any arbitrator or governmental instrumentality
                                that (i) could reasonably be expected to
                                result in a Material Adverse Change or, if
                                adversely determined, could reasonably be
                                expected to result in a Material Adverse
                                Change or (ii) restrains, prevents or imposes
                                or can reasonably be expected to impose
                                materially adverse conditions upon the
                                Facility, the plans of reorganization of the
                                Debtors or the transactions contemplated
                                thereby. All necessary governmental and
                                material third party consents and approvals
                                necessary in connection with the Facility, the
                                plans of reorganization of the Debtor and the
                                transactions contemplated thereby shall have
                                been obtained (without the imposition of any
                                conditions that are not reasonably acceptable
                                to Lender) and shall remain in effect, and all
                                applicable governmental filings have been made
                                and all applicable waiting periods shall have
                                expired without in either case any action
                                being taken by any competent authority; and no
                                law or regulation shall be applicable in the
                                judgment of Lender that restrains, prevents or
                                imposes materially adverse conditions upon the
                                Facility or the transactions contemplated
                                thereby.

                              . No information shall have come to the
                                attention of Lender that leads Lender to
                                determine that, and Lender shall not have
                                become aware of any fact or condition not
                                disclosed to them prior to the date hereof
                                which leads Lender to determine that, the
                                Company's or any of its subsidiaries'
                                condition (financial or otherwise),
                                operations, performance, properties, assets,
                                liabilities (actual or contingent) or
                                prospects are different in any material
                                adverse respect from that known to Lender as
                                of this date.

                              . Lender shall have a valid and perfected first
                                priority lien on and security interest in the
                                collateral referred to above under "Security"
                                (other than collateral which Lender is
                                satisfied in its reasonable judgment is not
                                material, individually or in the aggregate);
                                all filings, recordations and searches
                                necessary or desirable in connection with such
                                liens and security interests shall

                                      35
<PAGE>

                               have been duly made; and all filing and
                               recording fees and taxes shall have been duly
                               paid.

                              . Lender shall be satisfied with the amount,
                                types and terms and conditions of all
                                insurance and bonding maintained by the
                                Company and its subsidiaries, and Lender shall
                                have received endorsements naming Lender as an
                                additional insured and loss payee under all
                                insurance policies to be maintained with
                                respect to the properties of the Company and
                                its subsidiaries forming part of Lender's
                                collateral.

                              . Lender shall be satisfied with all
                                environmental matters relating to the Company
                                or its business or assets, and shall have
                                received such environmental review reports as
                                Lender may request, in form and substance
                                satisfactory to it, as to any environmental
                                hazards or liabilities to which the Company
                                and its subsidiaries may be subject, and
                                Lender shall be satisfied with the amount and
                                nature of any such hazards or liabilities and
                                with the Company's plans with respect thereto.

                              . The Management Agreement shall be in full
                                force and effect, and there shall be no cause
                                for termination thereunder.

                              . There shall not exist or have occurred any
                                defaults, prepayment events or creation of
                                liens under debt instruments that exist
                                following the effective date of the Plan or
                                otherwise as a result of the Facility, the
                                plans of reorganization of the Debtors, or the
                                transactions contemplated thereby.

                              . FNV shall have granted registration rights to
                                the Berkadia Parties and/or their affiliates
                                relating to the shares of common stock of FNV
                                issued pursuant to the Plan in form and
                                substance reasonably satisfactory to the
                                Berkadia Parties.

Conditions Precedent to the   On the funding date of the Term Loan (if
Loan:.......................  different from the closing date of the Facility)
                              (i) there shall exist no default under the loan
                              documentation, (ii) the representations and
                              warranties of the Company and each Guarantor
                              therein shall be true and correct immediately
                              prior to, and after giving effect to, funding,
                              and (iii) the making of the Term Loan shall not
                              violate any requirement of law and shall not be
                              enjoined, temporarily, preliminarily or
                              permanently.

Representations and           The loan documentation will contain
Warranties:.................  representations and warranties customarily found
                              in loan documentation for similar financings and
                              transactions of this type and other
                              representations and warranties deemed by Lender
                              appropriate to the specific transaction (which
                              will be applicable to FNV, the Company and their
                              respective subsidiaries) including, without
                              limitation with respect to: valid existence,
                              requisite power, due authorization, no conflict
                              with agreements or applicable law,
                              enforceability of loan documentation, validity,
                              priority and perfection of security interests
                              and enforceability of liens, accuracy of
                              financial statements and all other information
                              provided, compliance with law, absence of
                              Material Adverse Change, no default under the
                              loan documentation, absence of material
                              litigation, ownership of properties and
                              necessary rights

                                      36
<PAGE>

                               to intellectual property, no burdensome
                               restrictions and inapplicability of Investment
                               Company Act or Public Utility Holding Company
                               Act.

Affirmative and Financial      The loan documentation will contain affirmative
Covenants:...................  and financial covenants customarily found in
                               loan documentation for similar financings and
                               transactions of this type and other covenants
                               deemed by Lender appropriate to the specific
                               transaction (which will be applicable to FNV,
                               the Company and their respective subsidiaries),
                               including, without limitation, the following:

                               . Comply in all material respects with laws
                                 (including, without limitation, ERISA and
                                 environmental laws), pay taxes, maintain all
                                 necessary licenses and permits and trade
                                 names, trademarks, patents and other
                                 intellectual property, preserve corporate
                                 existence, maintain accurate books and
                                 records, maintain properties, maintain
                                 appropriate and adequate insurance, permit
                                 inspection of properties, books and records,
                                 use loan proceeds as specified and provide
                                 further assurances as required.

                               . Perform obligations under leases, contracts
                                 and other agreements.

                               . Conduct all transactions with affiliates on
                                 terms reasonably equivalent to those
                                 obtainable in arm's length transactions,
                                 including, without limitation, restrictions
                                 on management fees to affiliates.

                               . Maintain with a bank satisfactory to Lender
                                 main cash concentration accounts and blocked
                                 accounts into which all cash flows of the
                                 Borrower and proceeds of collateral are paid
                                 and which are swept daily (and with respect
                                 to accounts at other banks, which will be
                                 limited, blocked account agreements in form
                                 and substance acceptable to Lender have been
                                 executed).

                               . Financial covenants, including, but not
                                 limited to, minimum EBITDA, minimum net
                                 worth, minimum fixed charge coverage, minimum
                                 interest coverage, maximum leverage (measured
                                 on a balance sheet debt to EBITDA basis) and
                                 maximum capital expenditures.

                               . Maintain a loan-to-collateral value ratio of
                                 no greater than 1:1.75. For purposes of this
                                 covenant, "collateral" (i) shall only include
                                 the value of the tangible assets of the
                                 Company and the Guarantors that have been
                                 specifically identified by the Company and
                                 that are subject to a perfected, first
                                 priority security interest in favor of the
                                 Lender (and shall exclude all assets of (a)
                                 any special purpose subsidiary of the Company
                                 that is subject to contractual or legal
                                 restrictions on making distributions to its
                                 parent entity and (b) any Guarantor for which
                                 the Company does not exercise sole voting
                                 control and/or for which all of the capital
                                 stock is not subject to a perfected, first
                                 priority pledge to Lender) and (ii) shall be
                                 net of all specific and general reserves.

Negative Covenants:..........
                               The loan documentation will contain negative
                               covenants customarily found in loan
                               documentation for similar financings and
                               transactions

                                      37
<PAGE>

                               of this type (which will be applicable to FNV,
                               the Company and their respective subsidiaries).
                               Each of FNV, the Company and their respective
                               subsidiaries shall agree that (i) except
                               pursuant to the Plan, or (ii) without the
                               consent of Lender, it will not:

                               . Incur or assume any debt (whether or not non-
                                 recourse) other than the Term Loan or the
                                 Senior Notes (as the case may be); give any
                                 guaranties; create any liens, charges or
                                 encumbrances; incur additional lease
                                 obligations; merge or consolidate with any
                                 other person, or change the nature of
                                 business or corporate structure or create any
                                 new subsidiaries or amend its charter or by-
                                 laws; sell, lease or otherwise dispose of
                                 assets (including, without limitation, in
                                 connection with a sale leaseback
                                 transaction), except for asset sales for cash
                                 where seller retains no residual interest in
                                 such assets and proceeds are applied as set
                                 forth under "Prepayments;" give a negative
                                 pledge on any assets in favor of any person
                                 other than Lender; permit to exist any
                                 consensual encumbrance on the ability of any
                                 subsidiary to pay dividends or other
                                 distributions to the Company; or permit to
                                 exist any restrictions on the ability of the
                                 Company to prepay the Term Loan.

                               . Prepay, redeem, purchase, defease, exchange,
                                 refinance or repurchase any debt including,
                                 without limitation, the Senior Notes, except
                                 to fund the commitment to spend up to $75
                                 million per three-month period to repurchase
                                 Senior Notes as contemplated under clause (v)
                                 of "Prepayments," or amend or modify any of
                                 the terms of any such debt or other similar
                                 agreements, or other material agreements,
                                 entered into or binding upon FNV, the Company
                                 or their respective subsidiaries.

                               . Make any loans or advances, capital
                                 contributions or acquisitions (except to fund
                                 existing commitments not discharged in the
                                 Chapter 11 Cases) or form any joint ventures
                                 or partnerships or make any other investments
                                 in subsidiaries or any other person.

                               . Make or commit to make any payments in
                                 respect of warrants, options, repurchase of
                                 stock, dividends or any other distributions
                                 to shareholders, except the commitment
                                 contemplated under the terms of the Senior
                                 Notes following the payment in full of the
                                 Term Loan.

                               . Permit any change in ownership or control of
                                 the Company or any of its respective
                                 subsidiaries or any change in accounting
                                 treatment or reporting practices, except as
                                 required by GAAP and as permitted by the loan
                                 documentation.

                               . Redeem or otherwise acquire any shares of its
                                 capital stock, or issue or sell any
                                 securities (other than the issuance of the
                                 Senior Notes, pursuant to the exercise of
                                 options or conversion of outstanding
                                 securities or otherwise pursuant to the Plan)
                                 or grant any option, warrant or right
                                 relating to its capital stock or split,
                                 combine or reclassify any of its capital
                                 stock, other than pursuant to a stock option
                                 plan adopted following the effective date of
                                 the Plan and reasonably acceptable to
                                 Berkadia.

                                      38
<PAGE>

                               . Make any material amendment to any existing
                                 or enter into any new employment, consulting,
                                 severance, change in control or similar
                                 agreement or establish any new compensation
                                 or benefit or commission plans or
                                 arrangements for directors or employees.

                               . Merge, amalgamate or consolidate with any
                                 other entity in any transaction, sell all or
                                 any substantial portion of its business or
                                 assets, or acquire all or substantially all
                                 of the business or assets of any other
                                 entity, other than acquisitions of businesses
                                 in connection with foreclosures in the
                                 ordinary course of business and mergers or
                                 consolidations wholly-owned subsidiaries of
                                 the Company.

                               . File any petition for voluntary
                                 reorganization or enter into any
                                 reorganization plan or recapitalization,
                                 dissolution or liquidation of the Company.

                               . Take any action that would have a material
                                 impact on the consolidated federal income tax
                                 return filed by FNV as the common parent,
                                 make or rescind any express or deemed
                                 material election relating to taxes, settle
                                 or compromise any material claim, action,
                                 suit, litigation, proceeding, arbitration,
                                 investigation, audit or controversy relating
                                 to taxes, enter into any material tax ruling,
                                 agreement, contract, arrangement or plan,
                                 file any amended tax return, or, except as
                                 required by applicable law or GAAP or in
                                 accordance with past practices, make any
                                 material change in any method of accounting
                                 for taxes or otherwise or any tax or
                                 accounting practice or policy.

                               . Enter into any contract, understanding or
                                 commitment that restrains, restricts, limits
                                 or impedes the ability of FNV or any of its
                                 subsidiaries to compete with or conduct any
                                 business or line of business in any
                                 geographic area.

                               . Permit FNV to engage in any business or
                                 activity, or hold any assets, other than
                                 holding the capital stock of the Company.

                               . Pay any management or similar fees, other
                                 than pursuant to the Management Agreement.

Financial Reporting            The Company shall provide: (i) monthly
Requirements:................  consolidated financial statements of FNV, the
                               Company and their respective subsidiaries,
                               including balance sheet, income statement and
                               cash flow statement within 30 days of month-
                               end, certified by the chief financial officer
                               of FNV or the Company, as appropriate; (ii)
                               quarterly consolidated and consolidating
                               financial statements of FNV, the Company and
                               its subsidiaries within 45 days of quarter-end,
                               certified by the chief financial officer of FNV
                               or the Company, as appropriate; (iii) annual
                               audited consolidated and consolidating
                               financial statements of FNV, the Company and
                               their subsidiaries within 90 days of year-end,
                               certified with respect to such consolidated
                               statements by independent certified public
                               accountants acceptable to Lender; (iv) copies
                               of all reports on Form 10-K, 10-Q or 8-K filed
                               by FNV or the Company with the Securities and
                               Exchange Commission; (v) projections for the
                               balance of the term of the Facility provided

                                      39
<PAGE>

                               annually and annual business and financial
                               plans provided in each case at least 30 days
                               prior to fiscal year-end, with the business and
                               financial plans being updated quarterly; (vi)
                               periodic compliance certificates; and (vii)
                               periodic certifications as to collateral value,
                               loan and asset classification and reserves.

Other Reporting                The loan documentation will contain other
Requirements:................  reporting requirements customarily found in
                               loan documentation for similar financings and
                               transactions of this type and other reporting
                               requirements deemed by Lender appropriate to
                               the specific transaction, including, without
                               limitation, with respect to litigation,
                               contingent liabilities, defaults, ERISA or
                               environmental events and potential defaults or
                               events of default relating to loans or assets
                               held by the Company and its subsidiaries at
                               such times and in form and substance as is
                               satisfactory to Lender.

Events of Default:...........  The loan documentation will contain events of
                               default customarily found in loan documentation
                               for similar financings and transactions of this
                               type and other events of default deemed by
                               Lender appropriate to the specific transaction
                               (which will be applicable to FNV, the Company
                               and their respective subsidiaries), including,
                               without limitation, failure to make payments
                               when due, defaults or accelerations under other
                               indebtedness, noncompliance with covenants,
                               breaches of representations and warranties,
                               bankruptcy and insolvency events, failure to
                               satisfy or stay execution of judgments in
                               excess of specified amounts, the existence of
                               certain materially adverse employee benefit or
                               environmental liabilities, impairment of loan
                               documentation or security, Material Adverse
                               Change, actual or asserted invalidity of the
                               guarantees, the security documents or the liens
                               of Lender, change of ownership or control, and
                               defaults under material contracts, including
                               the Management Agreement.

Indemnification:.............  The Company shall indemnify and hold harmless
                               Lender, Berkshire and Leucadia and each of
                               their respective affiliates, officers,
                               directors, employees, members, managers,
                               agents, advisors, attorneys and representatives
                               of each (each, an "Indemnified Party") from and
                               against any and all claims, damages, losses,
                               liabilities and expenses (including, without
                               limitation, reasonable fees and disbursements
                               of counsel), joint or several, that may be
                               incurred by or asserted or awarded against any
                               Indemnified Party (including, without
                               limitation, in connection with or relating to
                               any investigation, litigation or proceeding or
                               the preparation of any defense in connection
                               therewith), in each case arising out of or in
                               connection with or by reason of the Facility,
                               the loan documentation or any of the
                               transactions contemplated thereby, or any
                               actual or proposed use of the proceeds of the
                               Facility, except to the extent such claim,
                               damage, loss, liability or expense is found in
                               a final non- appealable judgment by a court of
                               competent jurisdiction (or admitted by an
                               Indemnified Party pursuant to a written
                               settlement agreement) to have resulted
                               primarily from such Indemnified Party's gross
                               negligence or willful misconduct. In the case
                               of an

                                      40
<PAGE>

                               investigation, litigation or other proceeding
                               to which the indemnity in this paragraph
                               applies, such indemnity shall be effective
                               whether or not such investigation, litigation
                               or proceeding is brought by FNV, the Company,
                               any of their respective directors,
                               securityholders or creditors, an Indemnified
                               Party or any other person, or an Indemnified
                               Party is otherwise a party thereto and whether
                               or not the transactions contemplated hereby are
                               consummated. The Company further agrees that no
                               Indemnified Party shall have any liability
                               (whether direct or indirect, in contract, tort
                               or otherwise) to the Company or any of its
                               securityholders or creditors for or in
                               connection with the transactions contemplated
                               hereby, except for direct damages (as opposed
                               to special, indirect, consequential or punitive
                               damages (including, without limitation, any
                               loss of profits, business or anticipated
                               savings)) determined in a final non-appealable
                               judgment by a court of competent jurisdiction
                               (or admitted by an Indemnified Party pursuant
                               to a written settlement agreement) to have
                               resulted primarily from such Indemnified
                               Party's gross negligence or willful misconduct
                               and any liability of any Indemnified Party
                               shall be limited to the amount of fees actually
                               received hereunder by such Indemnified Party.

Expenses:....................  FNV, the Company and each of their respective
                               subsidiaries shall jointly and severally pay
                               all (i) reasonable costs and expenses of
                               Lender, Berkshire and Leucadia (including all
                               reasonable fees, expenses and disbursements of
                               outside counsel) in connection with the
                               preparation, execution and delivery of the loan
                               documentation and the funding of all loans
                               under the Facility, and all search, filing and
                               recording fees, incurred or sustained by
                               Lender, Berkshire and Leucadia in connection
                               with the Facility, the loan documentation or
                               the transactions contemplated thereby, the
                               administration of the Facility and any
                               amendment or waiver of any provision of the
                               loan documentation and (ii) costs and expenses
                               of Lender, Berkshire and Leucadia (including
                               fees, expenses and disbursements of counsel) in
                               connection with the enforcement of any of their
                               rights and remedies under the loan
                               documentation.

Miscellaneous:...............  The loan documentation will include standard
                               yield protection provisions (including, without
                               limitation, provisions relating to compliance
                               with risk-based capital guidelines, increased
                               costs and payments free and clear of
                               withholding taxes) relating to Lender and
                               Lender's provider of funds.

Fees and Expenses:...........  Commitment Fee: A commitment fee of $60,000,000
                               shall be due and payable to Lender upon
                               execution of the Commitment Letter.

                               Funding Fee: A funding fee of $60,000,000 shall
                               be due and payable to Lender upon the closing
                               of and borrowing under the Facility.

                               Termination Fee: A termination fee of
                               $60,000,000 shall be due and payable to Lender
                               if the Company does not borrow under the
                               Facility for any reason (including the
                               termination of Lender's obligations under the
                               Commitment Letter, whether or not the Facility
                               agreements have been entered) unless the
                               Company's failure

                                      41
<PAGE>

                               to borrow is solely due to (x) the failure by
                               Lender to fund in violation of its obligations
                               under the Commitment Letter or, (y) following
                               confirmation of the Plan by the Bankruptcy
                               Court, a Material Adverse Change has occurred
                               or a due diligence condition relating to
                               environmental, insurance or employee matters
                               has not been satisfied.

                               Reimbursement Fees: All fees, if any, and
                               expenses incurred from time to time by Lender
                               and its affiliates relating to its financing
                               for the Facility shall be due and payable to
                               Lender or such affiliates when incurred by
                               Lender or such affiliates.

                               Facility Fee: An annual facility fee in an
                               amount equal to 25 basis points times the
                               outstanding principal amount of the Term Loan,
                               payable monthly, shall be due and payable to
                               Lender, commencing on the date of borrowing
                               under the Facility.

Governing Law and Submission
to Jurisdiction:.............  State of New York.

                                      42
<PAGE>

                     SUMMARY OF TERMS OF NEW SENIOR NOTES

Issuer.......................  The FINOVA Group Inc. ("FNV Group").

Aggregate Principal Amount...  Approximately $4.44 billion, representing 40%
                               of the aggregate amount of Allowed General
                               Unsecured Claims (as defined in the Joint Plan
                               of Reorganization (the "Plan") of FNV Group and
                               the debtors named therein) against FINOVA
                               Capital Corporation ("FNV Capital").

Term.........................  Ten (10) years, subject to prepayment as
                               described below.

Annual Interest Rate.........  The weighted average of the annual interest
                               rates on FNV Capital's bank debt and bond
                               indebtedness outstanding on the Petition Date
                               (as defined in the Plan) , will be determined
                               (as of a date within five days prior to the
                               Effective Date (as defined in the Plan) (the
                               "Measurement Date") as follows:

                               For each fixed rate obligation, the established
                               rate in effect at the Measurement Date, without
                               giving effect to any default rate, penalty or
                               facility or other fees or any change in rates
                               due to the failure to elect interest rates or
                               periods from and after the Petition Date, will
                               be multiplied by the total principal amount of
                               the obligation outstanding at the Petition
                               Date, reduced by any amounts that the Debtors
                               have the right to set-off against such
                               obligation;

                               For each floating rate obligation, (x) the
                               specified index in effect at the Measurement
                               Date (or, if more than one index is specified,
                               the selected index will be the one that will
                               result in the lowest rate) (the "Index Rate"),
                               plus the specified spread over the Index Rate,
                               in each case without giving effect to any
                               default rate, penalty or facility or other fees
                               or any change in rates due to the failure to
                               elect interest rates or periods from and after
                               the Petition Date and without regard to any
                               limitation on the selection of indices upon a
                               default or otherwise, will be multiplied by (y)
                               the total principal amount of the obligation
                               outstanding at the Petition Date, reduced by
                               any amounts that the Debtors have the right to
                               set-off against such obligation.

                               The sum of such amounts will be divided by the
                               aggregate principal amount of all bank and bond
                               indebtedness outstanding at the Petition Date,
                               reduced by any amounts that the Debtors have
                               the right to set- off against such obligations.
                               The quotient of such calculation shall be the
                               annual interest rate the New Senior Notes will
                               bear.

                               If the Measurement Date were April 26, 2001,
                               the annual interest rate would be 6.037%.

Payment......................  Interest will be paid on semi-annual interest
                               payment dates if and to the extent that (i) FNV
                               Group has available cash on such dates for that
                               purpose as described below under clause SECOND
                               of the "Use of Cash" covenant and (ii) no
                               default or event of default has occurred and is
                               continuing on such dates under the credit
                               agreement

                                      43
<PAGE>

                               pursuant to which Berkadia LLC ("Berkadia")
                               will make a $6 billion five-year amortizing
                               senior secured term loan (the "Berkadia Loan")
                               to FNV Capital (the "Berkadia Credit
                               Agreement").

                               Each $1,000 principal amount of the New Senior
                               Notes issued under the Plan (whether issued on
                               the Effective Date or later) will entitle the
                               holder thereof to receive such holder's pro
                               rata share of an aggregate of up to $100
                               million of additional interest ("Contingent
                               Interest") in respect of all New Senior Notes
                               issued under the Plan (whether issued on the
                               Effective Date or later). Contingent Interest
                               will be paid on semi-annual interest payment
                               dates if and to the extent that FNV Group has
                               available cash on such dates for that purpose
                               as described below under clause Eighth of the
                               "Use of Cash" covenant until the first to occur
                               of (i) the payment of an aggregate of $100
                               million in Contingent Interest (as such amount
                               may be reduced as described below under clause
                               Eighth of the "Use of Cash" covenant) or (ii)
                               15 years after the Effective Date of the Plan.
                               Principal will be paid on semi-annual principal
                               payment dates if and to the extent that FNV
                               Group has available cash on such dates for that
                               purpose as described below under clause Sixth
                               of the "Use of Cash" covenant.

Optional Prepayment..........  Subject to compliance with the "Use of Cash"
                               covenant, FNV Group will have the option to
                               prepay the principal of the New Senior Notes,
                               in whole or in part, at any time and from time
                               to time, without premium or penalty, by
                               delivering to the indenture trustee under the
                               New Senior Notes indenture (the "Indenture
                               Trustee") an amount equal to the principal to
                               be repaid, plus interest from the last interest
                               payment date on which interest was paid to the
                               prepayment date; provided that such prepayment
                               will not release FNV Group from its obligations
                               to pay Contingent Interest with respect to the
                               New Senior Notes so prepaid.

Priority and Collateral        FNV Group will grant to the Indenture Trustee
Security.....................  for the benefit of the holders of the New
                               Senior Notes (other than with respect to FNV
                               Group's obligation under the New Senior Notes
                               Indenture to pay Contingent Interest) a
                               security interest in all of the capital stock
                               of FNV Capital, which shall be junior to the
                               first priority perfected security interest
                               granted to Berkadia as described below and
                               which shall be released upon payment in full of
                               all interest (other than Contingent Interest)
                               on and principal of the New Senior Notes. Until
                               such time as all obligations under the Berkadia
                               Loan and related guarantees are paid in full or
                               otherwise satisfied, the security interest to
                               be granted to the Indenture Trustee will be
                               junior to the perfected, first priority
                               security interest in the capital stock of FNV
                               Capital granted to Berkadia to secure FNV
                               Group's guarantee of the Berkadia Loan. The
                               Indenture Trustee and the holders of the New
                               Senior Notes will have no right to take action
                               to enforce or otherwise realize on the security
                               interest held by the Indenture Trustee unless
                               and until all obligations under the Berkadia
                               Loan and related FNV Group guarantee have been
                               paid in full or otherwise satisfied or
                               released. Neither the indenture governing the
                               New

                                      44
<PAGE>

                               Senior Notes nor the pledge agreement effecting
                               the grant of the security interest (the "Pledge
                               Agreement") will restrict the sale of
                               collateral, other than as required by the Trust
                               Indenture Act of 1939, as amended.

                               The payment of Contingent Interest will not be
                               secured by the security interest or otherwise.
                               Contingent Interest shall constitute general
                               unsecured obligations of FNV Group.

Covenants....................  The indenture governing the New Senior Notes
                               will contain the following covenants:

                               Use of Cash

                               To the extent not prohibited by the Berkadia
                               Credit Agreement, FNV Group will, and will
                               cause its subsidiaries including FNV Capital
                               to, apply the aggregate net positive amount of
                               each of (x) 100% of the net sale proceeds from
                               asset sales, (y) 100% of excess cash flow (to
                               be defined in the indenture) and (z) 100% of
                               net proceeds from insurance and condemnation,
                               in each case received by FNV Group or any of
                               its subsidiaries, except to the extent any
                               special purpose subsidiary is subject to a
                               contractual restriction (which existed on
                               February 26, 2001) or legal restriction on
                               making distributions to its parent entity, to
                               the following purposes in the following order:

                               First:

                               For FNV Group or any of its subsidiaries (a) to
                               pay or to fund its operating expenses, taxes,
                               reasonable reserves for revolving commitments,
                               unfunded commitments and general corporate
                               purposes (which reserve amounts shall be
                               determined in good faith by the entity setting
                               such reserves), (b) to pay when due interest on
                               and principal of Permitted Indebtedness (as
                               defined below) of such entity (other than, in
                               the case of FNV Capital, the Berkadia Loan or,
                               in the case of FNV Group, the New Senior Notes
                               and the 5 1/2% Convertible Subordinated
                               Debentures due 2016 of FNV Group (the "Group
                               Subordinated Debentures")), the payment of each
                               of which is provided for specifically below),
                               (c) to pay when due interest on and principal
                               of any Refinancing Indebtedness (as defined
                               below) incurred to refinance the Permitted
                               Indebtedness described in clause (b), (d) to
                               pay or to fund a reserve to pay interest when
                               due on the Berkadia Loan, and (e) to (i) make
                               payments excluded from the definition of
                               Restricted Payments (as defined below) under
                               the proviso contained in the definition of
                               Restricted Payments (provided that any payments
                               described in clause (v) of such proviso shall
                               not exceed $1 million per year) and (ii) fund
                               reasonable reserves, if any, for interest and
                               Compounded Interest (as defined in the
                               indenture governing the Group Subordinated
                               Debentures) on the Group Subordinated
                               Debentures solely to permit the payment of
                               interest and Compounded Interest thereon at the
                               end of an Extension Period (as defined in the
                               indenture governing the Group Subordinated
                               Debentures) and to pay accrued and unpaid
                               interest and

                                      45
<PAGE>

                               Compounded Interest on the Group Subordinated
                               Debentures on the expiration of any Extension
                               Period that has lasted for 20 consecutive
                               quarters; provided that FNV Capital and its
                               subsidiaries may make distributions to any
                               parent entity, including FNV Group, which
                               entity shall use such distributions, plus any
                               other cash it has available for this purpose,
                               to satisfy its obligations under this clause
                               First (it being understood that the listing of
                               subclauses (a) through (e) herein shall be for
                               ease of reference only and shall not imply any
                               priority of allocation or payment within this
                               clause First);

                               Second:

                               to make distributions to FNV Group, which shall
                               use such distributions plus any other cash it
                               has available for this purpose, to pay accrued
                               and unpaid interest on the New Senior Notes
                               when due;

                               Third:

                               commencing with the first calendar quarter
                               following the Effective Date, and continuing
                               for each subsequent calendar quarter until the
                               earlier of (i) payment in full of the Berkadia
                               Loan and (ii) the fifth anniversary of the
                               Effective Date, to make distributions to FNV
                               Group, which shall use such distributions plus
                               any other cash it has available for this
                               purpose, to spend $75 million per quarter (or
                               such greater amount as may be consented to by
                               Berkadia) to purchase New Senior Notes
                               (including the Contingent Interest in respect
                               of such New Senior Notes) at a purchase price
                               not to exceed par plus accrued and unpaid
                               interest thereon (the "Maximum Price") through
                               (a) tender offers announced during a quarter,
                               (b) open market purchases and/or (c) privately
                               negotiated transactions, in all cases at FNV
                               Group's discretion; provided that additional
                               such purchases may be made at FNV Group's
                               discretion during any quarter to satisfy FNV
                               Group's obligation hereunder for future
                               quarters and, if and to the extent that such
                               purchases cannot be effected at or below the
                               Maximum Price during any such quarter, such
                               purchases shall not be required for such
                               quarter and FNV Group shall not carry over into
                               any following quarter any obligation to make
                               purchases hereunder in excess of $75 million
                               per quarter; and provided further, that no
                               purchase of New Senior Notes shall be made
                               under this clause Third if a default or an
                               event of default under the Berkadia Credit
                               Agreement has occurred, is continuing or would
                               result therefrom;

                               Fourth:

                               to make distributions to FNV Capital, or in the
                               case of FNV Group to make contributions to FNV
                               Capital, which shall use such distributions or
                               contributions, plus any other cash it has
                               available for this purpose, to repay principal
                               of the Berkadia Loan as required under the
                               Berkadia Credit Agreement;

                               Fifth:

                               to the extent not already funded or paid
                               pursuant to clause First above, to make
                               distributions to FNV Group, which shall use
                               such

                                      46
<PAGE>

                               distributions plus any other cash it has
                               available for this purpose, to pay or to fund a
                               reserve to pay accrued and unpaid interest on
                               the then-outstanding Group Subordinated
                               Debentures;

                               Sixth:

                               until the New Senior Notes are paid in full, to
                               make distributions to FNV Group, (A) 95% of
                               which FNV Group will use to repay principal of
                               the New Senior Notes until the principal of the
                               New Senior Notes has been paid in full and/or,
                               at FNV Group's option, to prepay all or part of
                               the New Senior Notes as described under
                               "Optional Prepayment," and/or to purchase by
                               tender offer, market purchases or privately
                               negotiated transactions or otherwise all or
                               part of the New Senior Notes (including the
                               Contingent Interest in respect of such New
                               Senior Notes), and (B) 5% of which FNV Group
                               will use to make Restricted Payments (unless
                               the making of any such Restricted Payments
                               would be an "Impermissible Restricted Payment"
                               (as defined below), in which event FNV Group
                               shall retain such amounts and any retained
                               amounts shall accumulate and shall be used to
                               make Restricted Payments at such time or from
                               time to time, as such Restricted Payments are
                               not Impermissible Restricted Payments);

                               Seventh:

                               until an amount equal to 5.263% of the
                               aggregate principal amount of the New Senior
                               Notes issued under the Plan (whether on the
                               Effective Date or later) has been used to make
                               Restricted Payments to FNV Group's common
                               stockholders under clause Sixth or, after
                               repayment of the New Senior Notes, has been
                               used to make "Deemed Restricted Payments" (as
                               defined below), to make Deemed Restricted
                               Payments (unless the making of such Deemed
                               Restricted Payments would be an "Impermissible
                               Deemed Restricted Payment," (as defined below)
                               in which event FNV Group shall retain such
                               amounts and any retained amounts shall
                               accumulate and shall be used to make Deemed
                               Restricted Payments at such time or from time
                               to time, as such Deemed Restricted Payments are
                               not Impermissible Deemed Restricted Payments);
                               and

                               Eighth:

                               until an aggregate of up to $100 million (as
                               such amount may be reduced to reflect a
                               decrease in the principal amount of New Senior
                               Notes outstanding as a result of purchases (but
                               not prepayments or repayments) by FNV Group
                               under clause Third and clause Sixth above) has
                               been paid as Contingent Interest, to make
                               distributions to FNV Group (i) 95% of which
                               will be used to pay Contingent Interest and
                               (ii) 5% of which will be used by FNV Group to
                               make Deemed Restricted Payments) (unless the
                               making of such Deemed Restricted Payments would
                               be an Impermissible Deemed Restricted Payment,
                               in which event FNV Group shall retain such
                               amounts and any retained amounts shall
                               accumulate and shall be used to make Deemed
                               Restricted Payments at such time or from time
                               to time, as such Deemed Restricted Payments are
                               not Impermissible Deemed Restricted Payments);.

                                      47
<PAGE>

                               provided that, notwithstanding the foregoing,
                               it shall not be a default of this "Use of Cash"
                               covenant if a subsidiary does not make
                               distributions to its parent entity as set forth
                               in First through Eighth above if such dividends
                               or distributions would be Impermissible
                               Restricted Payments or Impermissible Deemed
                               Restricted Payments.

                               Funding and payments in respect of any
                               Refinancing Indebtedness (as defined below)
                               will have the same priority in this "Use of
                               Cash" covenant as corresponds to the
                               Indebtedness so refinanced.

                               "Deemed Restricted Payments" means any payments
                               to FNV Group's stockholders that would have
                               been Restricted Payments prior to repayment of
                               the New Senior Notes.

                               "Impermissible Deemed Restricted Payments"
                               means a Deemed Restricted Payment that, if made
                               by FNV Group or any of its subsidiaries, would
                               render such entity insolvent, would be a
                               fraudulent conveyance by such entity or would
                               not be permitted to be made by such entity
                               under applicable law.

                               "Impermissible Restricted Payments" means a
                               Restricted Payment that, if made by FNV Group
                               or any of its subsidiaries, would render such
                               entity insolvent, would be a fraudulent
                               conveyance by such entity or would not be
                               permitted to be made by such entity under
                               applicable law.

                               Limitation on Restricted Payments

                               FNV Group will not, directly or indirectly,
                               make any Restricted Payments, other than
                               Restricted Payments permitted under the "Use of
                               Cash" covenant described above.

                               "Restricted Payment" means (i) the declaration
                               or payment of any dividend or the making of any
                               distribution on account of FNV Group's equity
                               interests (other than dividends or
                               distributions payable in equity interests of
                               FNV Group) and (ii) the purchase, redemption or
                               other acquisition or retirement for value of
                               any equity interests of FNV Group, other than
                               redemptions, acquisitions or retirements in
                               exchange for equity interests of FNV Group;
                               provided, however, that Restricted Payments
                               shall not include (i) repurchase of shares to
                               eliminate fractional shares or odd-lots,
                               whether pursuant to a reverse stock-split, odd-
                               lot tender offer or otherwise; (ii) cash
                               payments in lieu of issuance of fractional
                               shares in connection with the exercise of any
                               warrants, rights, options or other securities
                               convertible into or exchangeable for FNV Group
                               equity interests, (iii) the deemed repurchase
                               of FNV Group's equity interests by FNV Group on
                               the cashless exercise of stock options; (iv)
                               payments or distributions to dissenting
                               shareholders pursuant to applicable law,
                               pursuant to or in connection with a
                               consolidation, merger or transfer of assets; or
                               (v) repurchases, redemptions, acquisitions or
                               retirements of equity interests of FNV Group
                               from employees, directors or officers of FNV
                               Group and its subsidiaries.

                                      48
<PAGE>

                               Limitation on Incurrence of Indebtedness

                               FNV Group will not, and will not permit any of
                               its subsidiaries to, directly or indirectly,
                               create, incur, issue, assume, guarantee or
                               otherwise become directly or indirectly liable,
                               contingently or otherwise, for or with respect
                               to (collectively, "incur") any Indebtedness
                               other than Permitted Indebtedness or Permitted
                               Nonrecourse Indebtedness.

                               "Indebtedness" means any indebtedness in
                               respect of borrowed money.

                               "Permitted Indebtedness" means (A) Indebtedness
                               outstanding (or deemed outstanding under the
                               Plan) on the Effective Date of the Plan,
                               including the Berkadia Loan and the New Senior
                               Notes; (B) Refinancing Indebtedness; (C)
                               Indebtedness at any time outstanding of up to
                               $25 million, excluding Indebtedness outstanding
                               under clause (A) or (B); (D) Foreclosure
                               Indebtedness and (E) intercompany Indebtedness
                               between or among FNV Group and/or any of its
                               subsidiaries.

                               "Foreclosure Indebtedness" means Indebtedness
                               of any person either (i) existing at the time
                               that such person becomes a subsidiary of FNV
                               Group or any of its subsidiaries provided that
                               such person becomes a subsidiary of FNV Group
                               as a result of a pre-existing bona fide
                               obligation to FNV Group or any of its
                               subsidiaries, (ii) assumed in connection with
                               the acquisition of assets from any such person
                               provided that such person had a pre-existing
                               bona fide obligation to FNV Group or any of its
                               subsidiaries or (iii) incurred to refinance (as
                               defined below) any Indebtedness described in
                               (i) or (ii) above, subject to the same
                               limitations contained in the proviso to the
                               definition of Refinancing Indebtedness below.

                               "Refinancing Indebtedness" means Indebtedness
                               of FNV Group or any of its subsidiaries that is
                               incurred to refund, refinance, replace, renew,
                               repay or extend (including pursuant to any
                               defeasance or discharge mechanism)
                               (collectively, "refinance") any Indebtedness
                               issued under the Plan and/or outstanding or
                               deemed to be outstanding on the Effective Date
                               of the Plan or incurred in compliance with the
                               New Senior Notes Indenture (including
                               Indebtedness of FNV Group that refinances
                               Indebtedness of any subsidiary and Indebtedness
                               of any subsidiary that refinances Indebtedness
                               of another subsidiary) including Indebtedness
                               that refinances Refinancing Indebtedness;
                               provided, however, that (a) such Refinancing
                               Indebtedness is incurred in an aggregate
                               principal amount (or if issued with original
                               issue discount, an aggregate accreted value)
                               not exceeding the then outstanding amount of
                               the Indebtedness being refinanced, plus a
                               reasonable premium and reasonable costs and
                               expenses paid or incurred in connection with
                               such refinancing (b) except with respect to
                               Refinancing Indebtedness incurred to refinance
                               (i) the New Senior Notes, (ii) Foreclosure
                               Indebtedness or (iii) Permitted Indebtedness
                               not issued under the Plan, such Refinancing
                               Indebtedness shall not

                                      49
<PAGE>

                               have a weighted average life to maturity or
                               maturity date that is earlier than the
                               Indebtedness being refinanced and (c) if the
                               Indebtedness being refinanced is subordinate to
                               the New Senior Notes, then such Refinancing
                               Indebtedness shall be subordinate to the New
                               Senior Notes at least to the same extent. The
                               accretion of interest with respect to
                               Indebtedness issued with original issue
                               discount shall not constitute an incurrence of
                               additional Indebtedness.

                               "Permitted Nonrecourse Indebtedness" means
                               Indebtedness incurred in connection with the
                               acquisition or lease (as lessor) of equipment
                               or real estate (a) that is secured solely by
                               the equipment or real estate acquired or
                               leased, (b) with respect to which the holder of
                               such Indebtedness has recourse only to such
                               equipment or real estate, and (c) which is
                               otherwise nonrecourse to FNV Group or any
                               subsidiary thereof, provided that all proceeds
                               of such Indebtedness, less reasonable expenses
                               incurred in connection with such acquisition or
                               lease, are used as provided in the "Use of
                               Cash" covenant.

                               Limitation on Issuance of Capital Stock of
                               Subsidiaries.

                               FNV Group will not permit FNV Capital to issue
                               any additional equity interests to any person
                               other than to FNV Group and will not permit any
                               other subsidiary of FNV Group to issue any
                               preferred equity interests to any person other
                               than to FNV Group or a subsidiary thereof,
                               except that preferred equity interests may be
                               issued such that the liquidation preference of
                               such preferred equity interests is equal to the
                               amount of Indebtedness that would be permitted
                               to be incurred under the "Limitation on
                               Incurrence of Indebtedness" covenant.

                               Mergers and Consolidations

                               FNV Group will not, directly or indirectly,
                               consolidate or merge with or into another
                               person (whether or not FNV Group is the
                               surviving person) unless the person formed by
                               or surviving any such consolidation or merger
                               (if other than FNV Group) assumes all of the
                               obligations under the New Senior Notes and the
                               indenture and immediately after such
                               consolidation or merger there is no default or
                               event that, with the passage of time or notice
                               or both, would be a default under the
                               indenture.

                               No Payment Restrictions Affecting Subsidiaries

                               FNV Group and its subsidiaries will not permit
                               their respective subsidiaries to create any
                               restriction on the ability of any subsidiary to
                               make Restricted Payments, to make loans or
                               advances to its parent entity or to transfer
                               any property or assets to its parent entity,
                               except for restrictions pursuant to (i) the New
                               Senior Notes, (ii) the Berkadia Loan, (iii)
                               contracts as of February 26, 2001 restricting
                               special purpose subsidiaries, (iv) applicable
                               law, (v) Refinancing

                                      50
<PAGE>

                               Indebtedness containing restrictions no more
                               restrictive, taken as a whole, than those
                               contained in the Indebtedness so refinanced,
                               (vi) Permitted Indebtedness described in clause
                               C or D of the definition of Permitted
                               Indebtedness, provided restrictions contained
                               therein are no more restrictive, taken as a
                               whole, than restrictions contained in any
                               Permitted Indebtedness, or (vii) Permitted
                               Nonrecourse Indebtedness incurred by any
                               special purpose subsidiary.

                                      51
<PAGE>

                                                                      EXHIBIT L

                           THE FINOVA GROUP INC(/1/)

                                 BALANCE SHEET

<TABLE>
<CAPTION>
                                                March 7, 2001   March 31, 2001
                                                --------------  --------------
<S>                                             <C>             <C>
                    ASSETS
Cash & Cash Equivalents........................ $     (217,702) $    1,623,331
Investment in Financing Transactions:
  Loans and Other Financing Contracts, Less
   Unearned Income.............................            --              --
  Investment in Leasing Transactions...........            --              --
  Operating Leases.............................            --              --
  Investment in Leveraged Leases...............            --              --
                                                --------------  --------------
                                                           --              --
  Less Reserve for Possible Credit Losses......            --              --
                                                --------------  --------------
                                                           --              --
  Other Assets and Deferred Charges............     74,944,657      67,206,415
  Investment in Subsidiaries...................  1,186,543,485   1,186,543,485
  Due from Subsidiaries........................            --              --
                                                --------------  --------------
                                                $1,261,270,440  $1,255,373,231
                                                ==============  ==============
  LIABILITIES, DEFERRED ITEMS & STOCKHOLDERS
                     EQUITY
Liabilities:
  Accounts Payable and Accrued Expenses........ $          --   $    8,557,828
  Pre Petition Obligations.....................     38,763,441      27,841,774
  Due to Intercompany..........................    123,227,114     127,203,287
  Senior Debt..................................    115,000,000     115,000,000
  Deferred Income Taxes, net...................    (11,165,422)    (11,165,422)
                                                --------------  --------------
                                                   265,825,133     267,437,466
  Convertible Preferred Stock
Stockholder's Equity:
  Common Stock.................................        648,059         648,059
  Additional Capital...........................  1,107,731,434   1,110,463,466
  Retained Income..............................     57,884,336      57,884,336
  Net Income, Year-to-Date.....................     (1,054,167)     (8,563,709)
  Common Stock in Treasury.....................   (169,764,354)   (172,496,387)
                                                --------------  --------------
                                                   995,445,308     987,935,765
                                                --------------  --------------
                                                $1,261,270,440  $1,255,373,231
                                                ==============  ==============
</TABLE>

* This monthly operating report is unaudited and has not been subjected to all
 procedures and reviews performed on the Company's quarterly unaudited
 financial statements filed with the U.S. Securities and Exchange Commission.
 You should not rely on the accuracy or completeness of this report.

(/1/) There is no separate balance sheet for FINOVA Technology Finance, Inc.
Financial information is recorded and reported, generally, on a consolidated
basis and is included in the quarterly annual and other reports made available
to the public and in financial statements and reports provided to bank lenders
and other parties in the ordinary course by The FINOVA Group Inc. and FINOVA
Capital Corporation.

                                       1
<PAGE>

                        FINOVA CAPITAL CORPORATION(/1/)

                                 BALANCE SHEET

<TABLE>
<CAPTION>
                                              March 7, 2001    March 31, 2001
                                             ----------------  ---------------
<S>                                          <C>               <C>
                   ASSETS
Cash & Cash Equivalents..................... $  1,220,444,724  $ 1,504,964,663
Investment in Financing Transactions:
  Loans and Other Financing Contracts, Less
   Unearned Income..........................    7,071,629,871    6,814,905,576
  Investment in Leasing Transactions........      333,689,512      353,384,401
  Operating Leases..........................      395,727,302      389,652,635
  Investment in Leveraged Leases............      692,008,708      659,630,680
  Financing contracts held for sale.........              --               --
                                             ----------------  ---------------
                                                8,493,055,393    8,217,573,293
  Less Reserve for Possible Credit Losses...     (592,668,000)    (618,004,929)
                                             ----------------  ---------------
                                                7,900,387,393    7,599,568,364
  Other Assets and Deferred Charges.........      490,885,946      581,614,965
  Intercompany Loans........................      420,158,216      421,507,682
  Investment in Discontinued Operations.....      717,466,180      689,739,229
  Investment in Subsidiaries................      599,520,331      599,520,331
  Due from Subsidiaries.....................      309,037,080      297,353,206
                                             ----------------  ---------------
                                             $ 11,657,899,871  $11,694,268,440
                                             ================  ===============
 LIABILITIES, DEFERRED ITEMS & STOCKHOLDERS
                   EQUITY
  Accounts Payable and Accrued Expenses..... $            --   $     7,696,306
  Pre Petition Obligations..................      198,358,696      249,401,681
  Interest Payable..........................              --        41,604,106
  Senior Debt...............................   10,805,558,826   10,811,016,809
  Deferred Income Taxes.....................      100,575,224       99,672,882
                                             ----------------  ---------------
                                               11,104,492,746   11,209,391,784
Stockholder's Equity:
  Common Stock..............................           25,000           25,000
  Additional Capital........................    1,114,548,751    1,114,548,751
  Retained Income...........................     (426,454,264)    (426,454,264)
  Net Income, Year-to-Date..................       (9,057,739)     (72,571,704)
  Accumulative Other Comprehensive Income...       (3,588,777)      (5,156,192)
  Related party transactions................     (122,065,846)    (125,514,935)
                                             ----------------  ---------------
                                                  553,407,125      484,876,656
                                             ----------------  ---------------
                                             $ 11,657,899,871  $11,694,268,440
                                             ================  ===============
</TABLE>

* This monthly operating report is unaudited and has not been subjected to all
 procedures and reviews performed on the Company's quarterly unaudited
 financial statements filed with the U.S. Securities and Exchange Commission.
 You should not rely on the accuracy or completeness of this report.

(/1/) There is no separate balance sheet for FINOVA Technology Finance, Inc.
Financial information is recorded and reported, generally, on a consolidated
basis and is included in the quarterly annual and other reports made available
to the public and in financial statements and reports provided to bank lenders
and other parties in the ordinary course by The FINOVA Group Inc. and FINOVA
Capital Corporation.

                                       2
<PAGE>

                              FINOVA FINANCE TRUST

                                 BALANCE SHEET

<TABLE>
<CAPTION>
                                                      March 7,     March 31,
                                                        2001          2001
                                                    ------------  ------------
<S>                                                 <C>           <C>
                      ASSETS
Cash & Cash Equivalents............................ $        --   $        --
Investment in Financing Transactions:
  Loans and Other Financing Contracts, Less
   Unearned Income.................................          --            --
  Investment in Leasing Transactions...............          --            --
  Operating Leases.................................          --            --
  Investment in Leveraged Leases...................          --            --
                                                    ------------  ------------
                                                             --            --
  Less Reserve for Possible Credit Losses..........          --            --
                                                    ------------  ------------
                                                             --            --
  Other Assets and Deferred Charges................  115,000,000   115,000,000
  Due from Subsidiaries............................    1,161,269     1,688,352
                                                    ------------  ------------
                                                    $116,161,269  $116,688,352
                                                    ============  ============
 LIABILITIES, DEFERRED ITEMS & STOCKHOLDERS EQUITY
Liabilities:
  Accounts Payable and Accrued Expenses............ $        --   $    527,083
  Pre Petition Obligations.........................    1,054,167     1,054,167
  Deferred Income Taxes, net.......................   (1,056,134)   (1,268,021)
                                                    ------------  ------------
                                                          (1,967)      313,229
  Convertible Preferred Stock......................  111,550,000   111,550,000
Stockholder's Equity:
  Common Stock.....................................    3,556,750     3,556,750
  Retained Income..................................      632,710       632,710
  Net Income, Year-to-Date.........................      423,775       635,663
                                                    ------------  ------------
                                                       4,613,235     4,825,123
                                                    ------------  ------------
                                                    $116,161,269  $116,688,352
                                                    ============  ============
</TABLE>
--------
* This monthly operating report is unaudited and has not been subjected to all
 procedures and reviews performed on the Company's quarterly unaudited
 financial statements filed with the U.S. Securities and Exchange Commission.
 You should not rely on the accuracy or completeness of this report.

                                       3
<PAGE>

                         FINOVA PORTFOLIO SERVICES, INC

                                 BALANCE SHEET

<TABLE>
<CAPTION>
                                                    March 7, 2001 March 31, 2001
                                                    ------------- --------------
<S>                                                 <C>           <C>
                      ASSETS
Cash & Cash Equivalents...........................   $ 8,862,325   $ 9,006,453
Investment in Financing Transactions:
  Loans and Other Financing Contracts, Less
   Unearned Income................................           --            --
  Investment in Leasing Transactions..............           --            --
  Operating Leases................................           --            --
  Investment in Leveraged Leases..................           --            --
  Factored Receivables--Net.......................           --            --
                                                     -----------   -----------
                                                             --            --
  Less Reserve for Possible Credit Losses.........           --            --
                                                     -----------   -----------
                                                            --            --
  Other Assets and Deferred Charges...............     1,374,604     1,539,090
  Due from Subsidiaries...........................     2,376,788     2,448,324
                                                     -----------   -----------
                                                    $12,613,718    $12,993,867
                                                     ===========   ===========
LIABILITIES, DEFERRED ITEMS & STOCKHOLDERS' EQUITY
  Accounts Payable and Accrued Expenses...........   $       --    $     8,119
  Pre Petition Obligations........................       540,146       553,369
  Deferred Income Taxes, net......................      (427,221)     (427,221)
                                                     -----------   -----------
                                                         112,925       134,267
  Convertible Preferred Stock
Stockholder's Equity:
  Common Stock....................................         1,000         1,000
  Additional Capital..............................        63,830        63,830
  Retained Income.................................    11,615,067    11,615,067
  Net Income, Year-to-Date........................       820,895     1,179,703
                                                     -----------   -----------
                                                      12,500,792    12,859,600
                                                     -----------   -----------
                                                    $12,613,718    $12,993,867
                                                     ===========   ===========
</TABLE>
--------
* This monthly operating report is unaudited and has not been subjected to all
 procedures and reviews performed on the Company's quarterly unaudited
 financial statements filed with the U.S. Securities and Exchange Commission.
 You should not rely on the accuracy or completeness of this report.

                                       4
<PAGE>

                               FINOVA CAPITAL plc

                                 BALANCE SHEET

<TABLE>
<CAPTION>
                                                    March 7, 2001 March 31, 2001
                                                    ------------- --------------
<S>                                                 <C>           <C>
                      ASSETS
Cash & Cash Equivalents...........................  $ 55,804,524   $ 67,562,258
Investment in Financing Transactions:
  Loans and Other Financing Contracts, Less
   Unearned Income................................   305,448,236    304,208,278
  Investment in Leasing Transactions..............   140,175,764    129,853,606
  Operating Leases................................   147,281,918    145,751,648
  Investment in Leveraged Leases..................           --             --
                                                    ------------   ------------
                                                     592,905,918    579,813,532
  Less Reserve for Possible Credit Losses.........            --             --

                                                    ------------   ------------
                                                     592,905,918    579,813,532
  Intercompany Receivable.........................       517,231        479,669
  Other Assets and Deferred Charges...............    25,657,305     25,841,249
                                                    ------------   ------------
                                                    $674,884,978   $673,696,708
                                                    ============   ============
LIABILITIES, DEFERRED ITEMS & STOCKHOLDERS' EQUITY
  Accounts Payable and Accrued Expenses...........  $        --    $     10,693
  Pre Petition Obligations........................    29,905,693     29,990,811
  Interest Payable................................           --         944,336
  Intercompany Interest Payable...................    24,656,567     26,507,683
  Intercompany Loan...............................   395,000,000    395,000,000
  Senior Debt.....................................    90,094,451     87,095,071
  Deferred Income Taxes...........................    11,902,112     12,151,184
                                                    ------------   ------------
                                                     551,558,823    551,699,778
  Convertible Preferred Stock
Stockholder's Equity:
  Additional Capital..............................    68,857,102     68,857,102
  Retained Income.................................    51,547,033     51,547,033
  Net Income, Year-to-Date........................     2,399,491      1,072,834
  Accumulative Other Comprehensive Income.........       522,529        519,961
                                                    ------------   ------------
                                                     123,326,155    121,996,930
                                                    ------------   ------------
                                                    $674,884,978   $673,696,708
                                                    ============   ============
</TABLE>

* This monthly operating report is unaudited and has not been subjected to all
 procedures and reviews performed on the Company's quarterly unaudited
 financial statements filed with the U.S. Securities and Exchange Commission.
 You should not rely on the accuracy or completeness of this report.

                                       5
<PAGE>

                         FINOVA MEZZANINE CAPITAL INC.

                                 BALANCE SHEET

<TABLE>
<CAPTION>
                                                                     March 31,
                                                     March 7, 2001      2001
                                                     -------------  ------------
 <S>                                                 <C>            <C>
                       ASSETS
 Cash & Cash Equivalents...........................  $   2,075,206  $     72,676
 Investment in Financing Transactions:
   Loans and Other Financing Contracts, Less
    Unearned Income................................    303,778,113   291,030,997
   Investment in Leasing Transactions..............            --            --
   Operating Leases................................            --            --
   Investment in Leveraged Leases..................            --            --
                                                     -------------  ------------
                                                       303,778,113   291,030,997
   Less Reserve for Possible Credit Losses.........            --            --
                                                     -------------  ------------
                                                       303,778,113   291,030,997
   Other Assets and Deferred Charges...............     42,003,721    38,125,895
                                                     -------------  ------------
                                                     $ 347,857,039  $329,229,568
                                                     =============  ============
 LIABILITIES, DEFERRED ITEMS & STOCKHOLDERS EQUITY
   Accounts Payable and Accrued Expenses...........  $         --   $        --
   Pre Petition Obligations........................        357,914       306,140
   Due to Intercompany.............................     50,407,790    41,607,359
   Deferred Income Taxes...........................     (8,861,159)   (9,249,286)
                                                     -------------  ------------
                                                        41,904,546    32,664,213
   Convertible Preferred Stock
 Stockholder's Equity:
   Common Stock....................................    380,945,286   380,945,286
   Additional Capital..............................      5,132,140     5,132,140
   Retained Income.................................    (96,230,220)  (96,230,220)
   Net Income, Year-to-Date........................     12,449,315     3,771,471
   Accumulative Other Comprehensive Income.........      3,655,972     2,946,679
                                                     -------------  ------------
                                                       305,952,493   296,565,355
                                                     -------------  ------------
                                                     $ 347,857,039  $329,229,568
                                                     =============  ============
</TABLE>

* This monthly operating report is unaudited and has not been subjected to all
 procedures and reviews performed on the Company's quarterly unaudited
 financial statements filed with the U.S. Securities and Exchange Commission.
 You should not rely on the accuracy or completeness of this report.

                                       6
<PAGE>

                        FINOVA LOAN ADMINISTRATION INC.

                                 BALANCE SHEET

<TABLE>
<CAPTION>
                                                     March 7, 2001 March 31, 2001
                                                     ------------- --------------
 <S>                                                 <C>           <C>
                       ASSETS
 Cash & Cash Equivalents...........................   $ 1,797,899   $ 2,523,020
 Investment in Financing Transactions:
   Loans and Other Financing Contracts, Less
    Unearned Income................................           --            --
   Investment in Leasing Transactions..............           --            --
   Operating Leases................................           --            --
   Investment in Leveraged Leases..................           --            --
                                                      -----------   -----------
                                                              --            --
   Less Reserve for Possible Credit Losses.........           --            --
                                                      -----------   -----------
                                                              --            --
   Other Assets and Deferred Charges...............     5,861,548     5,741,260
                                                      -----------   -----------
                                                      $ 7,659,447   $ 8,264,280
                                                      ===========   ===========
 LIABILITIES, DEFERRED ITEMS & STOCKHOLDERS EQUITY
   Accounts Payable and Accrued Expenses...........   $       --    $       --
   Pre Petition Obligations........................       138,274        71,444
   Due to Intercompany.............................     9,083,847     9,642,999
   Deferred Income Taxes...........................      (402,282)     (402,282)
                                                      -----------   -----------
                                                        8,819,840     9,312,161
   Convertible Preferred Stock.....................
 Stockholder's Equity:
   Common Stock....................................         1,000         1,000
   Retained Income.................................      (888,168)     (888,168)
   Net Loss, Year-to-Date..........................      (273,226)     (160,714)
                                                      -----------   -----------
                                                       (1,160,394)   (1,047,881)
                                                      -----------   -----------
                                                      $ 7,659,447   $ 8,264,280
                                                      ===========   ===========
</TABLE>

* This monthly operating report is unaudited and has not been subjected to all
 procedures and reviews performed on the Company's quarterly unaudited
 financial statements filed with the U.S. Securities and Exchange Commission.
 You should not rely on the accuracy or completeness of this report.

                                       7
<PAGE>

                      FINOVA (CANADA) CAPITAL CORPORATION

                                 BALANCE SHEET

<TABLE>
<CAPTION>
                                                        March 7,    March 31,
                                                          2001         2001
                                                      ------------ ------------
<S>                                                   <C>          <C>
                       ASSETS
Cash & Cash Equivalents.............................. $ 26,295,442 $ 23,388,580
Investment in Financing Transactions:
  Loans and Other Financing Contracts, Less Unearned
   Income............................................   94,442,768   96,343,623
  Investment in Leasing Transactions.................          --           --
  Operating Leases...................................          --           --
  Investment in Leveraged Leases.....................          --           --
  Factored Receivables--Net..........................          --           --
                                                      ------------ ------------
                                                        94,442,768   96,343,623
  Less Reserve for Possible Credit Losses............          --           --
                                                      ------------ ------------
                                                        94,442,768   96,343,623
  Other Assets and Deferred Charges..................    2,102,702    1,428,178
  Due from subsidiary................................    3,958,476    3,896,044
  Investment in Discontinued Operations..............   49,036,660   51,234,117
                                                      ------------ ------------
                                                      $175,836,046 $176,290,543
                                                      ============ ============
  LIABILITIES, DEFERRED ITEMS & STOCKHOLDERS EQUITY
  Accounts Payable and Accrued Expenses.............. $        --  $        --
  Pre Petition Obligations...........................       14,323       13,864
  Interest Payable...................................          --       343,333
  Senior Debt........................................   94,607,495   95,028,004
  Deferred Income Taxes..............................    1,738,774    1,610,112
                                                      ------------ ------------
                                                        96,360,591   96,995,314
  Convertible Preferred Stock
Stockholder's Equity:
  Common Stock.......................................        1,000        1,000
  Additional Capital.................................   72,617,355   72,617,355
  Retained Income....................................    5,318,314    5,318,314
  Net Income, Year-to-Date...........................      997,163      698,599
  Accumulative Other Comprehensive Income............      541,623      659,961
                                                      ------------ ------------
                                                        79,475,455   79,295,229
                                                      ------------ ------------
                                                      $175,836,046 $176,290,543
                                                      ============ ============
</TABLE>
--------
* This monthly operating report is unaudited and has not been subjected to all
 procedures and reviews performed on the Company's quarterly unaudited
 financial statements filed with the U.S. Securities and Exchange Commission.
 You should not rely on the accuracy or completeness of this report.

                                       8<PAGE>

                                                                    Exhibit 4.24

                                    FORM OF

                          DANKA BUSINESS SYSTEMS PLC

                Zero Coupon Senior Subordinated Notes due 2004

                                   INDENTURE
                         Dated as of __________, 2001

                                 HSBC BANK USA
                                  as Trustee

                         DANKA OFFICE IMAGING COMPANY
                                 as Guarantor

                             DANKA HOLDING COMPANY
                                 as Guarantor
<PAGE>

                              CROSS-REFERENCE TABLE

                                                                       Indenture
                                                                       ---------
TIA Section                                                             Section
-----------                                                            ---------

SECTION 310  (a)(1)...................................................    7.10
             (a)(2)...................................................    7.10
             (a)(3)...................................................    N.A.
             (a)(4)...................................................    N.A.
             (a)(5)...................................................    7.10
             (b)......................................................     7.8
             .........................................................    7.10
             .........................................................    13.2
             (c)......................................................    N.A.

SECTION 311  (a)......................................................    7.11
             (b)......................................................    7.11
             (c)......................................................    N.A.

SECTION 312  (a)......................................................     2.6
             (b)......................................................    13.3
             (c)......................................................    13.3

SECTION 313  (a)......................................................     7.6
             (b)(1)...................................................     7.6
             (b)(2)...................................................     7.6
             (c)......................................................     7.6
                                                                          13.2
             (d)......................................................     7.6

SECTION 314  (a)......................................................     4.4
             .........................................................     4.7
             .........................................................    13.2
             (b)......................................................    N.A.
             (c)(1)...................................................    13.4
             (c)(2)...................................................    13.4
             (c)(3)...................................................    N.A.
             (d)......................................................    N.A.
             (e)......................................................    13.5
             (f)......................................................    N.A.

SECTION 315  (a)......................................................  7.1(b)
             (b)......................................................     7.5
             .........................................................    13.2
             (c)......................................................  7.1(a)
             (d)......................................................  7.1(c)
             (e)......................................................    6.11

SECTION 316  (a)(last sentence).......................................    2.12
             (a)(1)(A)................................................     6.5
             .........................................................     6.6
             (a)(1)(B)................................................     6.4
             (a)(2)...................................................    N.A.
             (b)......................................................     6.7

                                       i
<PAGE>

             (c)......................................................    9.4

SECTION 317  (a)(1)...................................................    6.2
             .........................................................    6.3
             (a)(2)...................................................    6.2
             .........................................................    6.9
             (b)......................................................    2.5

SECTION 318  (a)......................................................   13.1

SECTION 318  (c)......................................................   13.1

------------------------
N.A. means not applicable.
NOTE: This Cross-Reference Table is not part of the Indenture.

                                       ii
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                            <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.......................................................      1

      Section 1.1.   Definitions............................................................................     1
      Section 1.2.   Other Definitions......................................................................    13
      Section 1.3.   Incorporation by Reference of Trust Indenture Act......................................    14
      Section 1.4.   Rules of Construction..................................................................    14
      Section 1.5.   Acts of Holders........................................................................    14

ARTICLE 2 THE NOTES........................................................................................     15

      Section 2.1.   Form and Dating........................................................................    15
      Section 2.2.   Denominations..........................................................................    16
      Section 2.3.   Execution and Authentication...........................................................    16
      Section 2.4.   Registrar and Paying Agent.............................................................    16
      Section 2.5.   Paying Agent to Hold Money in Trust....................................................    16
      Section 2.6.   Noteholder Lists.......................................................................    17
      Section 2.7.   Transfer and Exchange..................................................................    17
      Section 2.8.   Book-Entry Provisions for Global Notes.................................................    17
      Section 2.9.   Deposit of Monies......................................................................    18
      Section 2.10.  Replacement Notes......................................................................    18
      Section 2.11.  Outstanding Notes......................................................................    19
      Section 2.12.  Treasury Notes.........................................................................    19
      Section 2.13.  Temporary Notes........................................................................    19
      Section 2.14.  Cancellation...........................................................................    19
      Section 2.15.  [Intentionally Omitted]................................................................    20
      Section 2.16.  Persons Deemed Owners..................................................................    20
      Section 2.17.  CUSIP, CINS and ISIN Numbers...........................................................    20
      Section 2.18.  Issuance of Additional Notes...........................................................    20

ARTICLE 3 REDEMPTION.......................................................................................     20

      Section 3.1.   Notices to Trustee.....................................................................    20
      Section 3.2.   Selection of Notes to Be Redeemed......................................................    21
      Section 3.3.   Notice of Redemption...................................................................    21
      Section 3.4.   Effect of Notice of Redemption.........................................................    22
      Section 3.5.   Deposit of Redemption Price............................................................    22
      Section 3.6.   Notes Redeemed in Part.................................................................    22
      Section 3.7.   Optional Redemption....................................................................    22

ARTICLE 4 COVENANTS........................................................................................     22

      Section 4.1.   Payment of Principal...................................................................    22
      Section 4.2.   Maintenance of Office or Agency for Notices and Demands................................    23
      Section 4.3.   Property and Insurance Matters.........................................................    23
      Section 4.4.   Compliance Certificate and Opinion of Counsel; Notice of Default.......................    23
      Section 4.5.   Corporate Existence....................................................................    23
      Section 4.6.   Payment of Taxes and Other Claims......................................................    23
      Section 4.7.   Reports................................................................................    24
      Section 4.8.   Waiver of Stay, Extension or Usury Laws................................................    24
      Section 4.9.   Limitation on Incurrence of Additional Debt............................................    24
      Section 4.10.  Limitation on Other Subordinated Debt..................................................    24
      Section 4.11.  Limitation on Restricted Payments......................................................    25
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                                             <C>
      Section 4.12.  Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries..........    25
      Section 4.13.  Limitation on liens....................................................................    26
      Section 4.14.  Limitation on Transactions with Affiliates and Related Persons.........................    26
      Section 4.15.  Limitation on Certain Asset Sales......................................................    26
      Section 4.16.  Limitation on Issuances and Sales of Capital Stock of Restricted Subsidiaries..........    28
      Section 4.17.  Change of Control......................................................................    28
      Section 4.18.  Limitations on Payments for Consent....................................................    29
      Section 4.19.  Limitation on Business Activities......................................................    29
      Section 4.20.  Limitation on Restricted and Unrestricted Subsidiaries.................................    29
      Section 4.21.  Subsidiary Guarantee...................................................................    29
      Section 4.22.  Maintenance of All Registration, Regulations and Licenses..............................    33
      Section 4.23.  Payment of Additional Amounts..........................................................    33
      Section 4.24.  Internal Revenue Service Filing........................................................    34

ARTICLE 5 SUCCESSORS.......................................................................................     34

      Section 5.1.   Limitation on Mergers, Consolidations and Sales of All Assets in respect to the
                     Company................................................................................    34
      Section 5.2.   Successor Corporation Substituted......................................................    34
      Section 5.3.   Limitations on Mergers, Consolidations and Sales of All Assets in respect to
                     Guarantors.............................................................................    35

ARTICLE 6 DEFAULTS AND REMEDIES............................................................................     35

      Section 6.1.   Events of Default......................................................................    35
      Section 6.2.   Acceleration...........................................................................    37
      Section 6.3.   Other Remedies.........................................................................    37
      Section 6.4.   Waiver of Past Defaults................................................................    37
      Section 6.5.   Control by Majority....................................................................    37
      Section 6.6.   Limitation on Suits....................................................................    38
      Section 6.7.   Rights of Holders to Receive Payment...................................................    38
      Section 6.8.   Collection Suit by Trustee.............................................................    38
      Section 6.9.   Trustee May File Proofs of Claim.......................................................    38
      Section 6.10.  Priorities.............................................................................    39
      Section 6.11.  Undertaking for Costs..................................................................    39
      Section 6.12.  Reports to the Trustee.................................................................    39

ARTICLE 7 TRUSTEE..........................................................................................     40

      Section 7.1.   Duties of Trustee......................................................................    40
      Section 7.2.   Rights of Trustee......................................................................    40
      Section 7.3.   Individual Rights of Trustee...........................................................    41
      Section 7.4.   Trustee's Disclaimer...................................................................    41
      Section 7.5.   Notice of Defaults.....................................................................    41
      Section 7.6.   Reports by Trustee to Holders..........................................................    41
      Section 7.7.   Compensation and Indemnity.............................................................    41
      Section 7.8.   Replacement of Trustee.................................................................    42
      Section 7.9.   Successor Trustee by Merger, Etc.......................................................    43
      Section 7.10.  Eligibility; Disqualification..........................................................    43
      Section 7.11.  Preferential Collection of Claims Against Company......................................    43
      Section 7.12.  Permitted Transactions.................................................................    43

ARTICLE 8 DISCHARGE OF INDENTURE...........................................................................     44

      Section 8.1.   Legal Defeasance and Covenant Defeasance of the Notes..................................    44
      Section 8.2.   Termination of Obligations Upon Cancellation of the Notes..............................    45
      Section 8.3.   Survival of Certain Obligations........................................................    46
      Section 8.4.   Acknowledgment of Discharge by Trustee.................................................    46
</TABLE>

                                      ii
<PAGE>

<TABLE>
<S>                                                                                                             <C>
      Section 8.5.   Application of Trust Assets............................................................    46
      Section 8.6.   Repayment to the Company; Unclaimed Money..............................................    46
      Section 8.7.   Reinstatement..........................................................................    46

ARTICLE 9 AMENDMENTS.......................................................................................     47

      Section 9.1.   Without Consent of Holders.............................................................    47
      Section 9.2.   With Consent of Holders................................................................    47
      Section 9.3.   Compliance with Trust Indenture Act....................................................    48
      Section 9.4.   Revocation and Effect of Consents......................................................    48
      Section 9.5.   Notation on or Exchange of Notes.......................................................    49
      Section 9.6.   Trustee to Sign Amendments.............................................................    49

ARTICLE 10 CONVERSION RIGHTS...............................................................................     49

      Section 10.1.  Conversion Rights......................................................................    49
      Section 10.2.  Conversion Price.......................................................................    50
      Section 10.3.  Conversion Notice......................................................................    50
      Section 10.4.  Approvals and Notices..................................................................    50
      Section 10.5.  Payments by the Holder.................................................................    51
      Section 10.6.  Cancellation of Note...................................................................    51
      Section 10.7.  Conversion Right Not Exercisable.......................................................    51
      Section 10.8.  Responsibility of Trustee for Conversion Provisions....................................    51

ARTICLE 11 SUBORDINATION...................................................................................     51

      Section 11.1.  Ranking................................................................................    51
      Section 11.2.  Priority and Payment Over of Proceeds in Certain Events................................    52
      Section 11.3.  Payments May Be Made Prior to Notice...................................................    54
      Section 11.4.  Rights of Holders of Senior Debt Not to Be Impaired....................................    54
      Section 11.5.  Authorization to Trustee to Take Action to Effectuate Subordination....................    54
      Section 11.6.  Subrogation............................................................................    54
      Section 11.7.  Obligations of Company Unconditional...................................................    55
      Section 11.8.  The Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice............    55
      Section 11.9.  Right of Trustee to Hold Senior Debt...................................................    55
      Section 11.10. No Implied Covenants by or Obligations of the Trustee..................................    55

ARTICLE 12 MEETINGS OF HOLDERS OF THE NOTES................................................................     56

      Section 12.1.  Purposes of the Meetings...............................................................    56
      Section 12.2.  Place of Meetings; Expenses............................................................    56
      Section 12.3.  Call and Notice of Meetings............................................................    56
      Section 12.4.  Voting at Meetings.....................................................................    56
      Section 12.5.  Voting Rights, Conduct and Adjournment.................................................    56
      Section 12.6.  Revocation of Consent by Holders.......................................................    57

ARTICLE 13 MISCELLANEOUS...................................................................................     57

      Section 13.1.  Trust Indenture Act Controls...........................................................    57
      Section 13.2.  Notices................................................................................    57
      Section 13.3.  Communication by Holders with Other Holders............................................    58
      Section 13.4.  Certificate and Opinion as to Conditions Precedent.....................................    59
      Section 13.5.  Statements Required in Certificate or Opinion..........................................    59
      Section 13.6.  Rules by Trustee and Agents............................................................    59
      Section 13.7.  Legal Holidays.........................................................................    59
      Section 13.8.  No Recourse Against Others.............................................................    59
      Section 13.9.  Governing Law..........................................................................    59
      Section 13.10. No Adverse Interpretation of Other Agreements..........................................    59
      Section 13.11. Successors.............................................................................    60
</TABLE>

                                      iii
<PAGE>

<TABLE>
      <S>                                                                                                       <C>
      Section 13.12. Severability...........................................................................    60
      Section 13.13. Counterpart Originals..................................................................    60
      Section 13.14. Variable Provisions....................................................................    60
      Section 13.15. Qualification of Indenture.............................................................    60
      Section 13.16. Table of Contents, Headings, Etc.......................................................    60
      Section 13.17. Indenture Controls over Form of Note...................................................    60
</TABLE>

       EXHIBIT A.   Form of Note

       EXHIBIT B.   Form of Notation of Subsidiary Guarantee

       EXHIBIT C.   Form of Supplemental Indenture

       EXHIBIT D.   Form of Conversion Notice

                                      iv
<PAGE>

     INDENTURE dated as of ____________, 2001 between Danka Business Systems
PLC, a public limited company organized under the laws of England and Wales (the
"Company"), HSBC Bank USA, a banking corporation and trust company organized and
existing under the laws of the State of New York, as trustee (the "Trustee") and
Danka Office Imaging Company, a corporation organized under the laws of the
State of Delaware and Danka Holding Company, organized under the laws of
Delaware, as guarantors (collectively, the "Guarantors").

     Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders (as defined below) of the Company's
Zero Coupon Senior Subordinated Notes due April 1, 2004 (the "Notes").

                                  ARTICLE 1

                  DEFINITIONS AND INCORPORATION BY REFERENCE

     SECTION 1.1.   Definitions.

     The term "ACQUIRED DEBT" shall mean, with respect to any Person, (a) Debt
of such Person existing at the time such Person becomes a Subsidiary of the
Company (or such Person is merged into or consolidated with the Company) or (b)
Debt assumed in connection with the acquisition of assets from such Person, in
each case not incurred by such Person in connection with or in contemplation of
such Person becoming a Subsidiary of the Company or such merger, consolidation,
or acquisition, as the case may be.

     The term "AFFILIATE" shall mean with respect to any specified Person, any
other Person who directly or indirectly through one or more intermediaries
controls, is controlled by, or is under common control with, such specified
Person.  For the purposes of this definition, "control" when used with respect
to any Person means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
provided, that beneficial ownership of 10% or more of the Voting Stock of a
Person will be deemed to be control.  The terms "controlling" and "controlled"
have meaning correlative to the foregoing.

     The term "AGENT" shall mean any registrar or paying agent, custodian for
the Notes, or authenticating agent or co-registrar.

     The term "ASSET ACQUISITION" shall mean:  (a) an Investment by the Company
or any Restricted Subsidiary of the Company in any other Person pursuant to
which such Person:  (i) becomes a Restricted Subsidiary of the Company; (ii) is
merged with or into the Company or any Restricted Subsidiary of the Company; or
(b) the acquisition by the Company or any Restricted Subsidiary of the Company
of the assets of any Person (other than a Subsidiary of the Company), which
constitute all or substantially all of the assets of such Person or comprises
any division or line of business of such Person or any other properties or
assets of such Person other than in the ordinary course of business.

     The term "ASSET SALE" shall mean any direct or indirect sale, issuance,
conveyance, transfer, lease, assignment or other disposition for value by the
Company or any of its Restricted Subsidiaries, including a sale and leaseback
transaction to any Person other than the Company or a Restricted Subsidiary of
the Company of:  (a) any Capital Stock of any Subsidiary of the Company; or (b)
any other property or assets of the Company or any Restricted Subsidiary of the
Company.  The term "Asset Sale" does not include:  (a) a transaction or series
of related transactions for which the Company or its Subsidiaries receive
aggregate consideration of less than $1 million; (b) the sale, lease,
conveyance, transfer or other disposition of all or substantially all of the
assets of the Company as permitted under Sections 4.15 and Article 5 hereof; (c)
any sale, lease, conveyance, transfer or other disposition in
<PAGE>

the ordinary course of business; (d) any operating lease in the ordinary course
of business; or (e) any sale or other disposition of obsolete or unusable
inventory or other assets.

     The term "ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction
shall mean, at the time of determination, the present value (discounted at the
interest rate implicit in such transaction, determined in accordance with GAAP)
of the obligation of the lessee for rental payments during the remaining term of
the lease included in such sale and leaseback transaction, including any period
for which such lease has been extended or may, at the option of the lessor, be
extended.

     The term "BANKRUPTCY LAW" shall mean the United Kingdom Insolvency Act
1986, as supplemented or amended, together with all rules, regulations and
instruments made thereunder and applicable United Kingdom law related to
bankruptcy, insolvency, winding up, administration, receivership and other
similar matters, the United States Bankruptcy Code or any similar federal, state
or foreign law for the relief of creditors.

     The term "BOARD OF DIRECTORS," when used with reference to a Person, shall
mean the board of directors or equivalent governing body of the Person or any
duly authorized committee of the board of directors or equivalent governing body
of the Person.

     The term "BOARD RESOLUTION" shall mean a duly adopted resolution of a Board
of Directors of a Person in full force and effect on the date of certification
certified by any Director, Secretary or Assistant Secretary of such Person.

     The term "BOOK-ENTRY DEPOSITARY" shall mean the book-entry depositary or
its nominee or the custodian of either, designated by the Company in the
Depositary Agreement until a successor depositary shall have become such
pursuant to the applicable provisions of the Depositary Agreement, and
thereafter  "Book-Entry Depositary" shall mean such successor book-entry
depositary or its nominee or the custodian of either.

     The term "BUSINESS DAY" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in New
York, New York are authorized or obligated by law or executive order to close.

     The term "CAPITAL STOCK" shall mean, with respect to any Person, any and
all shares, interests, participations, rights in or other equivalents (however
designated) of corporate stock of such Person and all other equity interests in
such Person.

     The term "CAPITALIZED LEASE OBLIGATION" shall mean as to any Person, the
obligations of such Person under a lease of real or personal property of such
Person that are required to be classified and accounted for as a capital lease
or a liability on the face of a balance sheet of such Person in accordance with
GAAP.  The stated maturity of such obligation shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.

     The term "CHANGE OF CONTROL" shall mean the occurrence of one or more of
the following events:

     (a)  any sale, assignment, transfer, lease, conveyance or other disposition
of all or substantially all the assets of the Company and its Subsidiaries taken
as a whole to any Person or group of Persons (as those terms are used in Section
13(d) of the Exchange Act) (other than Permitted Holders), except to effect a
Change of Domicile;

     (b)  the approval by the holders of Capital Stock of the Company of a plan
or proposal for the liquidation or dissolution of the Company, other than to
effect a Change of Domicile;

     (c)  a Person or group of Persons (as those terms are used in Section 13(d)
of the Securities Exchange Act of 1934, as amended) (other than Permitted
Holders) is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5
under the Exchange Act) of a majority of the securities of the Company
ordinarily having the right to vote in the election of directors of the Company;

     (d)  the replacement of a majority of the Board of Directors over a two-
year period from the directors who constituted the Board of Directors of the
Company at the beginning of such period, by persons who were not

                                       2
<PAGE>

approved by a majority vote of the directors then still in office who were
either directors at the beginning of such period or whose election as a director
was previously so approved; or

     (e)  the merger or consolidation of the Company with or into another
corporation or the merger of another corporation into the Company with the
effect that immediately after such transaction any Person or group of Persons
(other than Permitted Holders) becomes the beneficial owner of securities of the
surviving corporation of such merger or consolidation representing a majority of
the combined voting power of the outstanding securities of the surviving
corporation ordinarily having the right to vote in the election of directors.

     The term "CHANGE OF DOMICILE" shall mean a transaction or a series of
related transactions, including without limitation (i) a consolidation,
amalgamation, or merger of the Company with or into any other Person; (ii)
acquisition of all of the Capital Stock of the Company; or (iii) sale,
assignment, transfer, lease, conveyance or otherwise disposition of all or
substantially all of the Company's assets (determined on a consolidated basis
for the Company and its Subsidiaries) to another Person, of which the sole
purpose is to reincorporate the Company in a jurisdiction other than England and
Wales or incorporate or organize a Successor Entity to the Company in a
jurisdiction other than England and Wales. For the purposes of this definition
of Change of Domicile, a "Successor Entity" shall mean an entity whose Voting
Stock following the Change of Domicile is owned or beneficially owned by the
same Persons in the same proportions as owned or beneficially owned the Voting
Stock of the Company immediately prior to the Change of Domicile.

     The term "CLEARSTREAM" shall mean Clearstream International.

     The term "CLOSING DATE" shall mean the date on which the Notes are
originally issued under this Indenture.

     The term "COMMISSION" shall mean the Securities and Exchange Commission.

     The term "COMPANY" shall mean Danka Business Systems, PLC and, subject to
the provisions of Article 5 hereof, shall also include its successors and
assigns.

     The term "CONSOLIDATED EBITDA" shall mean, with respect to any Person, for
any period, the sum (without duplication) of:  (a) Consolidated Net Income of
such Person for such period; plus (b) to the extent Consolidated Net Income has
been reduced or increased by the following:  (i) all income taxes of such Person
and its Subsidiaries paid or accrued in accordance with GAAP for such period
(other than income taxes attributable to transactions the effect of which has
been excluded from Consolidated Net Income); (ii) Consolidated Interest Expense;
and (iii) Consolidated Non-cash Charges less any non-cash items increasing
Consolidated Net Income for such period, all as determined on a consolidated
basis for such Person and its Subsidiaries in accordance with GAAP.

     The term "CONSOLIDATED FIXED CHARGE COVERAGE RATIO" shall mean, with
respect to any Person, the ratio of Consolidated EBITDA to Consolidated Fixed
Charges, as measured for the four full fiscal quarters (the "Four Quarter
Period") ending on or before the date of the transaction to which the
Consolidated Fixed Charge Coverage Ratio applies and for which financial
statements are available (the "Transaction Date").  For purposes of this
definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" are
calculated after giving effect on a pro forma basis for the period of the
calculation to:  (a) the incurrence or repayment of Debt of such Person or any
of its Subsidiaries (and the application of the proceeds) giving rise to the
calculation and any incurrence or repayment of other Debt (and the application
of the proceeds), other than the incurrence or repayment of Debt in the ordinary
course of business for working capital purposes occurring during the Four
Quarter Period or at any time after the last day of the Four Quarter Period and
on or before the Transaction Date, as if the incurrence or repayment (and the
application of proceeds) had occurred on the first day of the Four Quarter
Period; and (b) any Asset Sales or Asset Acquisition (including any Asset
Acquisition giving rise to the calculation as a result of such Person or one of
its Subsidiaries (including a Person who becomes a Subsidiary as a result of the
Asset Acquisition) incurring, assuming or otherwise becoming liable for Acquired
Debt and also including any Consolidated EBITDA, but only to the extent
includable pursuant to the definition of "Consolidated Net Income," attributable
to the assets that are the subject of the Asset Acquisition or Asset Sale during
the Four Quarter Period) occurring during the Four Quarter Period or at any time
after the last day of the Four Quarter Period and on or before the Transaction
Date, as if such Asset Sale or Asset Acquisition (including the incurrence,
assumption or liability for any such Acquired Debt) had occurred on the first
day of the Four Quarter Period.  If such Person or its Subsidiary guarantees the
Debt of a third Person, the preceding sentence will give effect to the
incurrence of the guaranteed Debt as if such Person or its Subsidiary had
directly incurred or otherwise assumed such guaranteed Debt.  For purposes of
this definition, in calculating "Consolidated Fixed Charges" for determining the
denominator (but not the numerator) of the "Consolidated Fixed Charge Coverage
Ratio":  (a) interest on outstanding Debt determined on a fluctuating basis as
of and after the Transaction Date will be deemed to have accrued at a fixed rate
per year equal to the rate of interest on such Debt in effect on the Transaction
Date, except that if the interest on such Debt is covered by interest swap
obligation agreements, the interest will be deemed to have accrued at the rate
per year after giving effect to those agreements; and (b) if any interest on any
Debt actually incurred on the Transaction Date may optionally be determined at
an interest rate based on a factor of a prime or similar rate, a eurocurrency
interbank rate or other

                                       3
<PAGE>

rates, then the interest rate in effect on the Transaction Date will be deemed
to have been in effect during the Four Quarter Period.

     The term "CONSOLIDATED FIXED CHARGES" shall mean, with respect to any
Person, for any period, the sum (without duplication) of:  (a) Consolidated
Interest Expense of such Person, plus (b) the product of:  (i) the amount of all
dividend payments on any series of Preferred Stock of such Person and its
Restricted Subsidiaries (other than dividends paid in Qualified Capital Stock or
dividends to the extent payable to the Company or its Restricted Subsidiaries)
paid, accrued or scheduled to be paid or accrued during such period (other than
Preferred Stock of such Person and its Restricted Subsidiaries for which the
dividends are deductible for federal income tax purposes, which will be included
in Consolidated Fixed Charges without being multiplied by the fraction below);
and (ii) a fraction, the numerator of which is one and the denominator of which
is one minus the then current effective consolidated federal, state and local
tax rate of such Person, expressed as a decimal.

     The term "CONSOLIDATED INTEREST EXPENSE" shall mean, with respect to any
Person, for any period, the sum (without duplication) of:  (a) the aggregate of
the interest expense of such Person and its Restricted Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP, whether paid
or accrued, including:  (i) any amortization of Debt discount and amortization
or write-off of deferred financing costs; (ii) net costs under interest swap
obligations; (iii) all capitalized interest; and (iv) the interest portion of
any deferred payment obligation, including with respect to Attributable Debt;
(b) the aggregate dividend payments of such Person and its Restricted
Subsidiaries for such period with respect to Disqualified Capital Stock; and (c)
the interest component of Capitalized Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by such Person and its Restricted Subsidiaries
during such period as determined on a consolidated basis in accordance with
GAAP.

     The term "CONSOLIDATED NET INCOME" shall mean with respect to any Person,
for any period, the aggregate net income (or loss) of such Person and its
Subsidiaries for such period on a consolidated basis (before Preferred Stock
(other than Disqualified Capital Stock) dividend requirements), determined in
accordance with GAAP, excluding:  (a) after-tax gains from Asset Sales or
abandonments of reserves relating to Asset Sales; (b) after-tax items classified
as extraordinary or nonrecurring gains or losses; (c) the net income of any
Person acquired in a "pooling of interests" transaction accrued before the date
it becomes a Subsidiary of the referent Person or is merged or consolidated with
the referent Person or any Subsidiary of the referent Person; (d) the net income
(but not loss) of any Restricted Subsidiary of the referent Person to the extent
that the declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is restricted (or subject to tax) by a contract,
operation of law or otherwise; (e) the net income of any Person other than the
referent Person or a Restricted Subsidiary of the referent Person, except to the
extent of cash dividends or distributions paid to the referent Person or to a
Restricted Subsidiary of the referent Person by such Person (subject to the
limitation in (d)); (f) any restoration to income of any contingency reserve,
except to the extent that provision of such reserve reduced Consolidated Net
Income accrued at any time following the Issue Date; (g) income or loss
attributable to discontinued operations, whether or not such operations were
classified as discontinued; (h) in case of a successor to the referent Person by
consolidation or merger or as a transferee of the referent Person's assets, any
earnings of the successor corporation before such consolidation, merger or
transfer or assets; (i) any gain realized in connection with the disposition of
any marketable securities other than cash equivalents by such Person or any of
its Restricted Subsidiaries or the extinguishments of Debt of such Person or any
of its Restricted Subsidiaries; and (j) all gains or losses from the cumulative
effect of any change in accounting principles.

     The term "CONSOLIDATED NON-CASH CHARGES" shall mean, with respect to any
Person, for any period, the aggregate depreciation, amortization and other non-
cash expenses of such Person and its Subsidiaries reducing Consolidated Net
Income of such Person for such period, determined on a consolidated basis in
accordance with GAAP.

     The term "CONVERSION AGENT" shall mean, with respect to any person, that
person designated by the Company who assists and represents the Company with
respect to any conversion pursuant to Article 10 of this Indenture. The Company
may serve as Conversion Agent and will serve as Conversion Agent in the absence
of designation of any other person.

     The term "CORPORATE TRUST OFFICE" shall mean the principal corporate trust
office of the Trustee at which, at any particular time, its corporate trust
business shall be administered, which office at the date of execution of this
Indenture is located at c/o Issuer Services, 452 Fifth Avenue, New York, New
York 10018.

                                       4
<PAGE>

     The term "CREDIT FACILITY" shall mean the Credit Agreement dated December
5, 1996, by and among Danka Business Systems PLC, Dankalux Sarl & Co. SCA, Danka
Holding Company, the several financial institutions from time to time a party
and Bank of America NT&SA, as agent, as amended effective as of June 7, 2001,
and as the same may be amended, modified, supplemented, extended, renewed,
restated, refunded, refinanced, restructured or replaced from time to time, and
including the new credit facility proposed to be entered into among the Company
and the other parties to the Credit Facility.

     The term "CUSTODIAN" shall mean any receiver, trustee, assignee,
liquidator, custodian, or similar official under any Bankruptcy Law.

     The term "DEBT" shall mean, with respect to any Person (without
duplication):  (a) indebtedness of such Person, whether or not contingent, for
borrowed money; (b) indebtedness of such Person evidenced by bonds, debentures,
notes or other similar instruments; (c) all Capitalized Lease Obligations of
such Person; (d) all indebtedness or other obligations of such Person issued or
assumed as the deferred purchase price of property, all conditional sale
obligations and all obligations under any title retention agreement (but
excluding trade accounts payable and other accrued liabilities arising in the
ordinary course of business that are not in default or overdue by 90 days or
more or are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted); (e) all indebtedness for the reimbursement
of any obligation on any letter of credit, banker's acceptance or similar credit
transaction; (f) guarantees and other contingent obligations in respect of
indebtedness referred to in (a) through (e) above and (h) and (i)  below; (g)
all indebtedness of any other Person of the type referred to in (a) through (f)
that are secured by any Lien on any property or asset of the referent Person,
the amount of such obligation being deemed to be the lesser of the fair market
value of such property or asset or the amount of the obligation so secured; (h)
all indebtedness under currency agreements and interest swap agreements of such
Person; (i) all obligations under the TROL; and (j) all Disqualified Capital
Stock issued by such Person with the amount of indebtedness represented by such
Disqualified Capital Stock being equal to the greater of its voluntary or
involuntary liquidation preference and its maximum fixed repurchase price, but
excluding accrued dividends, if any.  "Maximum fixed repurchase price'' of any
Disqualified Capital Stock that does not have a fixed repurchase price is
calculated in accordance with the terms of such Disqualified Capital Stock as if
such Disqualified Capital Stock were purchased on any date on which the
indebtedness is required to be determined pursuant to this Indenture, and if
such price is based upon or measured by the fair market value of such
Disqualified Capital Stock, such fair market value will be determined reasonably
and in good faith by the Board of Directors of the issuer of the Disqualified
Capital Stock.  The amount of any indebtedness (other than Disqualified Capital
Stock) outstanding as of any date is: (a) the accreted value to the extent the
indebtedness does not require current payments of interest; (b) the principal
amount together with any interest that is more than 30 days past due in the case
of any other indebtedness; (c) in the case of currency agreements and interest
swap agreements, the amount that would appear on the consolidated balance sheet
of the Person in accordance with GAAP; and (d) in the case of any guarantee or
other contingent obligation in respect of indebtedness of any other Person, the
maximum amount of such indebtedness, unless the liability is limited by the
terms of the guarantee or contingent obligation, in which case the amount of
such guarantee or other contingent obligation is deemed to equal the maximum
amount of such liability.

     The term "DEFAULT" shall mean any event or condition the occurrence of
which is, or with the lapse of time or the giving of notice (as provided in this
Indenture), or both, would be, an Event of Default.

     The term "DEPOSITARY" shall mean The Depository Trust Company, its
nominees, and their respective successors, until a successor Depositary shall
have become such pursuant to the applicable provisions of this Indenture, and
thereafter "Depositary" shall mean or include each Person who is then a
Depositary hereunder.

     The term "DEPOSITARY AGREEMENT" shall mean the Note Depositary Agreement
dated as of the date of this Indenture between the Company and the Book-Entry
Depositary.

     The term "DESIGNATED SENIOR DEBT" shall mean (a) Debt under or in respect
of the Credit Facility, and (b) any other Debt constituting Senior Debt, which
at the time of determination has an aggregate principal amount of at least $50
million and is specifically designated in the instrument evidencing such Senior
Debt as "Designated Senior Debt" by the Company.

     The term "DISQUALIFIED CAPITAL STOCK" shall mean, with respect to any
Person, any Capital Stock that, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable) or upon

                                       5
<PAGE>

the happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is exchangeable for Debt, or is
redeemable at the option of the holder thereof, in whole or in part, on or prior
to the date that is 91 days after the date on which the Notes mature, excluding
the Senior Convertible Participating Shares.

     The term "DTC" shall mean the Depository Trust Company, a New York
corporation.

     The term "EUROCLEAR" shall mean the Morgan Guaranty Trust Company of New
York, Brussels office, as operator of the Euroclear system.

     The term "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.

     The term "GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, as in effect on the date on
which the Notes are first authenticated and delivered under this Indenture and
from time to time thereafter in force.

     The term "GUARANTOR" shall mean Danka Office Imaging Company, Danka Holding
Company and any other Subsidiary of the Company that guarantees the Notes in the
future.

     The term "GUARANTOR SENIOR DEBT" shall mean (a) the principal of, interest
on and all other obligations of any Guarantor relating to the Credit Facility,
including all loans, letters of credit and other extensions of credit under the
Credit Facility, and all expenses, fees, reimbursements, indemnities and other
amounts owing pursuant to the Credit Facility, (b) amounts payable in regard to
any interest swap obligations and currency agreements, (c) amounts payable in
respect of the up to $40 million of Indebtedness to purchase high-volume digital
copiers permitted under the Credit Facility and the Miscellaneous Notes Payable,
and (d) except as provided in the succeeding sentence all other Debt of any
Guarantor.  The term "Guarantor Senior Debt" shall not include:  (a) any Debt of
any Guarantor to the Company or to a Restricted Subsidiary of the Company, (b)
Debt to or guaranteed on behalf of any shareholders, directors, officers or
employees of any Guarantor or any Restricted Subsidiary of the Company,
including amounts owed for compensation, (c) Debt to trade creditors and other
amounts incurred in connection with obtaining goods, material or services, (d)
Debt represented by Disqualified Capital Stock, (e) any liability for federal,
state, local or other taxes owed by any Guarantor; (f) Debt incurred in
violation of Section 4.9, herein, (vii) Debt that is without recourse to any
Guarantor, (g) the 10% Notes, (h) the 6.75% Notes, and (i) any other Debt that
by its express terms ranks in right of payment equal to or junior to the Notes.

     The term "GUARANTY" by any Person shall mean any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Debt of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, and including, without limitation, any
obligation of such Person (a) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Debt or to purchase (or to advance or supply
funds for the purchase of) any security for the payment of such Debt, (b) to
purchase property, securities or services for the purpose of assuring the holder
of such Debt of the payment of such Debt, or (c) to maintain working capital,
equity capital or other financial condition or liquidity of the primary obligor
so as to enable the primary obligor to pay such Debt (and "Guarantee,"
"Guaranteeing" and "Guarantor" shall have meanings correlative to the
foregoing); provided, however, that the Guaranty by any Person shall not include
endorsements by such Person for collection or deposit, in either case, in the
ordinary course of business.

     The term "HOLDER," "HOLDER OF NOTES" or other similar terms, shall mean (a)
for so long as the Notes are represented by Global Notes, the bearer thereof,
which initially shall be the Book-Entry Depositary and (b) in the event Physical
Notes are issued, the person in whose name a particular Note shall be registered
on the books of the Company kept for that purpose in accordance with the terms
hereof, and the word "majority," used in connection with the terms "Holder,"
"Holder of Notes," or other similar terms, shall mean the "majority in principal
amount of Notes outstanding" whether or not so expressed.

     The term "INCUR" shall mean, with respect to any Debt or other obligation
of any Person, to directly or indirectly, create, incur (by conversion, exchange
or otherwise), assume, guarantee or otherwise become liable

                                       6
<PAGE>

contingently or otherwise in respect of such Debt or other payment obligation,
or otherwise become responsible for, (and "Incurrence," "Incurred," "Incurable"
and "Incurring" have meanings, correlative to the foregoing).

     The term "INDENTURE" shall mean this instrument as originally executed or,
if amended or supplemented as herein provided, as so amended or supplemented.

     The term "INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of
1986, as amended from time to time hereafter, or any successor federal income
tax laws.

     The term "INVESTMENT" shall mean, with respect to any Person, any direct or
indirect loan or other extension of credit (including, without limitation, a
guarantee) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition by such Person of any Capital
Stock, bonds, Notes, debentures or other securities or evidence of Indebtedness
issued by, any other Person (including a Subsidiary of the referent Person).
The term "Investment" excludes extensions of trade credit by a Person or its
Subsidiary on commercially reasonable terms in accordance with normal trade
practices of that Person or such subsidiary.  For the purposes of Section 4.11
of this Indenture, the amount of any Investment will be the original cost of
such Investment plus the cost of all additional Investments by the Company, or
any of its Subsidiaries, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment,
reduced by the payment of dividends or distributions in connection with such
Investment or any other amounts received in respect of such Investment; provided
that no such payment of dividends or distributions or receipt of any such other
amounts will reduce the amount of any Investment if such payment of dividends or
distributions or receipt of any such amounts would be included in Consolidated
Net Income.

     The term "ISSUE DATE" shall mean _______________________, 2001.

     The term "LIEN" shall mean any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind, including any conditional
sale or other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest.

     The term "MATURITY" when used with respect to any Note, shall mean the date
on which the principal of such Note or an installment of principal becomes due
and payable as therein or herein provided, whether at Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.

     The term "MISCELLANEOUS NOTES PAYABLE" shall mean the miscellaneous notes
payable of the Company totaling in the aggregate $2.6 million outstanding at
March 31, 2001, which were comprised of the following: (a) $1.5 million of
various bank overdraft accounts, (b) $0.9 million of outstanding notes payable
related to two acquisitions completed in prior years, and (c) $0.2 million of
outstanding capital leases.

     The term "NET CASH PROCEEDS" shall mean with respect to any Asset Sale,
the proceeds in the form of cash or cash equivalents including payments in
respect of deferred payment obligations when received in the form of cash or
cash equivalents (other than the portion of any such deferred payment
constituting interest) that the Company or any of its Restricted Subsidiaries
receive from such Asset Sale net of the following:  (a) reasonable out-of-pocket
expenses and fees relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees and sales commissions); (b) income
taxes paid or payable after taking into account any reduction in consolidated
income tax liability due to available tax credits or deductions and any tax
sharing arrangements; (c) repayment of Debt that is required to be repaid in
connection with such Asset Sale; (d) appropriate amounts to be provided by the
Company or any Restricted Subsidiary, as the case may be, as a reserve, in
accordance with GAAP, against any liabilities associated with such Asset Sale
and retained by the Company, or any Restricted Subsidiary, as the case may be,
after such Asset Sale, including, without limitation, pension and other post-
employment benefit liabilities, liabilities related to environmental matters and
liabilities under any warranty or indemnification obligations associated with
such Asset Sale; (e) proceeds required to be placed in escrow, provided that
upon the release of any such proceeds from such escrow to the Company or a
Subsidiary of the Company such released proceeds will constitute "Net Cash
Proceeds"; and (f) in the case of a sale by a Restricted Subsidiary that is not
a wholly owned Restricted Subsidiary, the minority interest's proportionate
share of such Net Cash Proceeds.

                                       7
<PAGE>

     The term "NOTES" shall mean the Zero Coupon Senior Subordinated Notes due
April 1, 2004 that are issued under this Indenture.

     The term "NOTEHOLDER" shall mean a Holder of one or more Notes.

     The term "OFFICER" shall mean any of the Chairman of the Board of Directors
of the Company, the Chief Executive Officer, the President, any Vice President,
the Chief Financial Officer, the Treasurer or the Secretary of the Company.

     The term "OFFICERS' CERTIFICATE" shall mean a certificate signed by two
Officers of the Company complying with the applicable provisions of Sections
13.4 and 13.5 hereof.

     The term "OPINION OF COUNSEL" shall mean, with respect to any Person, an
opinion in writing signed by legal counsel (who may be an employee of or counsel
to such Person) who is reasonably acceptable to the Trustee and complying with
the applicable provisions of Sections 13.4 and 13.5 hereof.

     The term "PERMITTED BUSINESS" shall mean the business of the Company and
its Subsidiaries existing on the Issue Date or such other businesses as the
Board of Directors of the Company determines are businesses reasonably related
thereto as evidenced by a Board Resolution.

     The term "PERMITTED DEBT" shall mean:  (a) indebtedness under the Notes and
this Indenture; (b) indebtedness under the 10% Notes and the 10% Indenture; (c)
indebtedness in an aggregate principal amount at any time outstanding not to
exceed the greater of:  (i) $150 million and (ii) the available borrowing base
of the accounts receivable, inventory and other assets as determined under the
Credit Facility; (d) indebtedness in an aggregate principal amount at any time
outstanding not to exceed $350 million, less the smaller of the amounts in
clauses (c)(i) and (c)(ii) above; (e) other indebtedness (other than the Credit
Facility) of the Company and its Subsidiaries outstanding on the Issue Date,
including the 6.75% Notes; (f) interest swap obligations of the Company covering
indebtedness of the Company or any of its Subsidiaries and interest swap
obligations of any Subsidiary of the Company covering indebtedness of such
Subsidiary; provided, however, that (i) such interest swap obligations are used
for bona fide hedging, and not speculative, purposes and (ii) the notional
principal amount of such interest swap obligations does not exceed the principal
amount of the indebtedness to which such interest swap obligation relates; (g)
indebtedness under currency agreements that (i) are used for bona fide hedging,
and not speculative, purposes, and (ii) in the case of currency agreements
related to indebtedness, do not increase the indebtedness of the Company and its
Subsidiaries outstanding, other than as a result of fluctuations in foreign
currency exchange rates or by reason of fees, indemnities and compensation
payable thereunder; (h) indebtedness of a Restricted Subsidiary of the Company
to the Company or to a Restricted Subsidiary of the Company as long as such
indebtedness is held by the Company or a Restricted Subsidiary of the Company
subject to no Lien held by a Person other than the Company or a Restricted
Subsidiary of the Company; provided that if as of any date any Person other than
the Company or a Restricted Subsidiary of the Company owns or holds any such
indebtedness or holds a Lien in respect of such indebtedness, the incurrence of
indebtedness not constituting Permitted Debt by the issuer of such indebtedness
shall be deemed to have occurred on such date; (i) indebtedness of the Company
to a Restricted Subsidiary of the Company for as long as such indebtedness is
held subject to no Lien; provided, if as of any date any Person other than a
Restricted Subsidiary of the Company owns or holds any such indebtedness or any
Person holds a Lien in respect of such indebtedness, the incurrence of
indebtedness not constituting Permitted Debt by the Company shall be deemed to
have occurred on such date; (j) indebtedness arising from the honoring by a bank
or other financial institution of a check, draft, or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; provided, however, that
such indebtedness is extinguished within two business days of incurrence; (k)
indebtedness of the Company or any of its Subsidiaries represented by letters of
credit for the account of the Company or such Subsidiary, as the case may be, in
order to provide security for workers' compensation claims, payment obligations
in connection with self-insurance or similar requirements in the ordinary course
of business; (l) Refinancing Debt; (m) indebtedness incurred by the Company or
any Restricted Subsidiary of the Company in connection with the purchase or
improvement of property (real or personal) or equipment or other capital
expenditures in the ordinary course of business or consisting of Capitalized
Lease Obligations; provided that at the time of the incurrence thereof, such
indebtedness that is then outstanding does not exceed $40 million; (n) the TROL
and any refinancing of the TROL; (o) indebtedness arising from agreements of the
Company or a Restricted Subsidiary, for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred in connection with the
disposition of any

                                       8
<PAGE>

business, assets or Restricted Subsidiary, other than guarantees of indebtedness
incurred by any Person acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such acquisition; provided
that the maximum aggregate liability in respect to all such indebtedness will at
no time exceed the gross proceeds actually received by the Company and the
Restricted Subsidiary in connection with such disposition; (p) obligations in
respect of performance bonds and completion guarantees provided by the Company
or any Restricted Subsidiary of the Company in the ordinary course of business;
(q) guarantees by the Company or a Restricted Subsidiary of the Company of
indebtedness incurred by the Company or a Restricted Subsidiary of the Company
so long as the incurrence of such indebtedness by the Company or any such
Restricted Subsidiary of the Company is otherwise permitted by the terms of this
Indenture; and (r) additional indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $50 million at any
one time outstanding.

     The term "PERMITTED HOLDER" shall mean Cypress Associates II LLC and its
Affiliates.

     The term "PERMITTED INVESTMENTS" shall mean:  (a) Investments existing as
of the Issue Date; (b) Investments in the Company; (c) Investments by the
Company or any Subsidiary of the Company in any Person engaged in a Permitted
Business that is or will become immediately after such Investment a Restricted
Subsidiary of the Company or that will merge or consolidate into the Company or
a Restricted Subsidiary of the Company; (d) Investments in cash and cash
equivalents; (e) loans and advances to employees and Officers of the Company and
its Subsidiaries in the ordinary course of business for bona fide business
purposes not in excess of $2.5 million at any one time outstanding; (f) currency
agreements and interest swap obligations entered into in the ordinary course of
the Company's or its Subsidiaries' businesses and otherwise in compliance with
this Indenture; (g) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers; (h) Investments
made by the Company or any of its Subsidiaries as a result of consideration
received in connection with an Asset Sale made in compliance with Section 4.15
in the Indenture; and (i) other Investments in any Person having an aggregate
fair market value (measured on the date such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (i) that are at the time
outstanding, not to exceed $25 million, so long as that after giving effect to
any such Investment, no Default or Event of Default will have occurred.

     The term "PERMITTED LIENS" shall mean:  (a) Liens for taxes, assessments or
governmental charges or claims that are either (i) not delinquent or (ii) being
contested in good faith by appropriate proceedings and as to which the Company
or its Restricted Subsidiaries, as the case may be, has set aside on its books
such reserves as may be required pursuant to GAAP; (b) statutory Liens of
landlords and Liens of carriers, warehousemen, mechanics, suppliers, material
men, repairmen and other Liens imposed by law incurred in the ordinary course of
business for sums that are either (i) not yet delinquent or (ii) being contested
in good faith, and as to which the Company or its Restricted Subsidiary, as the
case may be, has set aside on its books such reserves as may be required by
GAAP; (c) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security; (d) Liens securing letters of credit issued in the ordinary
course of business consistent with past practice in connection with the items
referred to in clause (c) above or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money); (e) judgment Liens
not giving rise to an Event of Default so long as such Lien is adequately bonded
and any appropriate legal proceedings which may have been duly initiated for the
review of such judgment shall not have been finally terminated or the period
within which such proceedings may be initiated has not expired; (f) easements,
right-of-way, zoning restrictions and other similar charges or encumbrances in
respect of real property not interfering in any material respect with the
ordinary conduct of the business of the Company or any of its Restricted
Subsidiaries; (g) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods; (h) Liens
securing reimbursement obligations with respect to commercial letters of credit
which encumber documents and other property relating to such letters of credit
and products and proceeds; (i) Liens encumbering deposits made to secure
obligations arising from statutory, regulatory, contractual, or warranty
requirements of the Company or any of its Restricted Subsidiaries, including
rights of offset and set-off; (j) Liens securing interest swap obligations
related to Debt that is otherwise permitted under this Indenture; (k) Liens
securing Debt under currency agreements; (l) Liens securing Acquired Debt
incurred in accordance with Section 4.9 of this Indenture; provided that (i)
such

                                       9
<PAGE>

Liens secured such Acquired Debt at the time of and prior to the incurrence of
such Acquired Debt by the Company or a Restricted Subsidiary of the Company, and
were not granted in connection with the incurrence of such Acquired Debt by the
Company or a Subsidiary of the Company, and (ii) such Liens do not extend to or
cover any property or assets other than the property and assets that secured the
Acquired Debt prior to the time such Debt became Acquired Debt of the Company or
a Restricted Subsidiary of the Company, and are no more favorable to the lien
holders than those securing the Acquired Debt before the incurrence of such
Acquired Debt by the Company or a Subsidiary of the Company; (m) leases or
subleases granted to others not interfering in any material respect with the
business of the Company or any of its Restricted Subsidiaries; (n) any interest
or title of a lessor in the property subject to any lease, whether characterized
as capitalized or operating, other than any such interest or title resulting
from or arising out of a default by the Company or any of its Restricted
Subsidiaries of its obligations under such lease; (o) Liens arising from filing
UCC financing statements for precautionary purposes in connection with true
leases of personal property that are otherwise permitted under this Indenture
and under which the Company or any of its Restricted Subsidiaries is lessee, and
personal property held on assignment by the Company or any of its Restricted
Subsidiaries; (p) Liens arising by virtue of any statutory or common law
provisions relating to banker's Liens, rights of setoff or similar rights as to
deposit accounts or other funds maintained with a creditor depositary
institution; and (q) Liens in favor of the Trustee and any substantially
equivalent Lien granted to any trustee or similar institution under any
indenture governing Indebtedness permitted to be incurred or outstanding under
this Indenture.

     The term "PERSON" shall mean an individual, partnership, corporation,
limited liability company, trust or unincorporated organization, trust or joint
venture, a governmental agency or political subdivision thereof or any other
entity.

     The term "PHYSICAL NOTES" shall mean any Notes transferred or issued
pursuant to Section 2.8 in exchange for interests in the Global Notes.  The
Physical Notes shall be issued in the form of permanent certificated Notes in
fully registered form without interest coupons in substantially the form set
forth in Exhibit A.
         ---------

     The term "PREFERRED STOCK," as applied to the Capital Stock of any Person,
shall mean Capital Stock of such Person of any class or classes (however
designated) that ranks ahead, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of Capital Stock of any
other class of such Person.

     The term "QUALIFIED CAPITAL STOCK"  shall mean any Capital Stock that is
not Disqualified Capital Stock.

     The term "REDEMPTION DATE", when used with respect to any Note to be
redeemed, shall mean the date fixed for such redemption or repurchase by or
pursuant to this Indenture.

     The term "REDEMPTION PRICE" shall mean the amount payable for the
redemption of any Note pursuant to this Indenture.

     The term "REFINANCE" shall mean, in respect to any security or Debt, to
refinance, extend, renew, refund, repay, redeem, defease or retire, or to issue
a security or Debt in exchange or replacement for, such security or Debt in
whole or in part.  The terms "Refinanced" and "Refinancing" have correlative
meanings.

     The term "REFINANCING DEBT" shall mean any Refinancing by a Person of Debt
incurred in accordance with Section 4.9 of this Indenture (other than pursuant
to clauses (a), (b), (e) or (l) of the definition of "Permitted Debt"), in each
case that does not: (a) result in an increase in the aggregate principal amount
of Debt of such Person as of the date of such proposed Refinancing (plus the
amount of any premium or penalty required to be paid under the terms of the
instrument governing such Debt and plus the amount of reasonable expenses
incurred by the Company in connection with such Refinancing); or (b) create Debt
with (i) a Weighted Average Life to Maturity that is less than the Weighted
Average Life to Maturity of the Debt being Refinanced or (ii) a final maturity
earlier than the final maturity of the Debt being Refinanced; provided that (x)
if such Debt being Refinanced is solely Debt of the Company, then such
Refinancing Debt will be solely of the Company and (y) if such Debt being
Refinanced is subordinate or junior to the Notes or any Subsidiary Guarantee,
then such Refinancing Debt will require no prior principal payment prior to 91
days after the final maturity date of the Notes or will be subordinate to the
Notes at least to the same extent and in the same manner as the Debt being
Refinanced.

                                       10
<PAGE>

     The term "REGISTRAR" shall mean any Person, which may be the Company,
authorized by the Company to exchange or register the transfer of Notes.

     The term "RESPONSIBLE OFFICER" shall mean any officer within the Issuer
Services office of the Trustee (or any successor group of the Trustee) or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his or her knowledge of and familiarity with the particular
subject, or any officer of the Trustee with direct responsibility for the
administration of this Indenture.

     The term "RESTRICTED PAYMENTS" shall mean those payments that the Company
or any of its Subsidiaries or Restricted Subsidiaries make in connection with
the following: (a) the declaration or payment of any dividend or any
distribution (other than dividends or distributions payable in the form of
Qualified Capital Stock of the Company) on or in respect of shares of the
Company's Capital Stock or any Restricted Subsidiary or Subsidiary's Capital
Stock; (b) the purchase, redemption or other acquisition or retirement for value
of any Capital Stock of the Company or any Restricted Subsidiary or Subsidiary
of the Company or any warrants, rights or options to purchase or acquire shares
of any class of such Capital Stock; (c) any Investment (other than Permitted
Investments); or (d) any payment on or with respect to, or purchase, redemption,
defeasement or other acquisition or retirement for value of any of the Debt that
ranks below the Notes in right of payment, except a payment of interest or
principal at stated maturity and except an offer to purchase the 10% Notes made
in accordance with their terms upon a change of control, provided such offer is
consummated after the corresponding offer on the Notes has been consummated and
the purchase price for any tendered Notes has been paid in full.

     The term "RESTRICTED SUBSIDIARY" of a Person shall mean any Subsidiary of
the referent Person that is not an Unrestricted Subsidiary.

     The term "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.

     The term "SENIOR CONVERTIBLE PARTICIPATING SHARES" shall mean the 6.50%
senior convertible participating shares of the Company with par value $1.00
each.

     The term "SENIOR DEBT" shall mean:  (a) the principal of, interest on and
all other obligations relating to the Credit Facility, including all loans,
letters of credit and other extensions of credit under the Credit Facility, and
all expenses, fees, reimbursements, indemnities and other amounts owing pursuant
to the Credit Facility; (b) amounts payable in respect of any interest swap
obligations and currency agreements; (c) amounts payable in respect of up to the
$40 million of Indebtedness to purchase high-volume digital copiers permitted
under the Credit Facility and Miscellaneous Notes Payable; and (d) all other
Debt, except for any Debt which by its terms ranks equal to or behind the Notes
in right of payment and except as otherwise provided below.  Notwithstanding the
foregoing, the term ''Senior Debt" does not include:  (a) any Debt of the
Company to any Subsidiary of the Company; (b) Debt to or guaranteed on behalf of
any shareholder, director, officer or employee of the Company or any Subsidiary
of the Company, including amounts owed for compensation; (c) Debt to trade
creditors and other amounts incurred in connection with obtaining goods,
materials or services; (d) Debt represented by Disqualified Capital Stock; (e)
any liability for federal, state, local or other taxes owed by the Company; (f)
Debt incurred in violation of Section 4.9 of this Indenture; (g) Debt that is
without recourse to the Company; (h) the 10% Notes; (i) the 6.75% Notes; and (j)
any other Debt that by its express terms ranks in right of payment equal to or
behind the Notes.

     The term "SENIOR REPRESENTATIVE" shall mean any trustee, agent or
representative, if any, for the holders of any Designated Senior Debt.

     The term "SIGNIFICANT SUBSIDIARY" shall have the meaning given to it by
Article 1.02(w) of Regulation S-X under the Securities Exchange Act of 1934, as
amended.

     The term "6.75% NOTES" shall mean the Company's 6.75% Convertible
Subordinated Notes due April 1, 2002.

                                       11
<PAGE>

     The term "STATED MATURITY" when used with respect to any security or Debt,
or any installment of interest thereon, shall mean the date specified in such
security or the instrument relating to such Debt as the fixed date on which the
principal of such security or Debt or such installment of interest is due and
payable.

     The term "SUBSIDIARY" of any Person shall mean: (a) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances is
owned, directly or indirectly, by such Person; or (b) any other Person of which
at least a majority of the voting interest under ordinary circumstances is
owned, directly or indirectly, by such Person.  The term "Subsidiary" does not
include an Unrestricted Subsidiary for purposes of this Indenture.

     The term "SUBSIDIARY GUARANTEE" shall mean any Guarantee by a Guarantor, as
defined further in Section 4.21 hereof.

     The term "10% INDENTURE" shall mean the indenture for the 10% Notes
executed on the Issue Date.

     The term "10% NOTES" shall mean the Company's 10% Subordinated Notes due
April 1, 2008.

     The term "TROL" shall mean the tax retention operating lease arrangements
of the Company in effect on February 19, 2001.

     The term "TRUSTEE" shall mean HSBC Bank USA or any successor thereto.

     The term "UNRESTRICTED SUBSIDIARY" shall mean any Subsidiary that is
designated by the Board of Directors of the Company as an Unrestricted
Subsidiary pursuant to a Board Resolution, but only to the extent such
Subsidiary:  (a) has no Debt other than non-recourse Debt;  (b) on the date of
designation, is not a party to any agreement with the Company or a Restricted
Subsidiary of the Company unless the terms of any such agreement are no less
favorable to the Company or the Restricted Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates or the Company or the
Restricted Subsidiary;  (c) is a Person with respect to which neither the
Company or any of its Restricted Subsidiaries has any direct or indirect
obligation (i) to subscribe for additional Capital Stock or (ii) to maintain or
preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; and (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Debt of the
Company or any of its Restricted Subsidiaries.

     The term "U.S. GOVERNMENT OBLIGATIONS" shall mean securities which are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by, and acting as an agency or instrumentality, of the United States
of America the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either case,
are not callable or redeemable at the option of the issuer thereof, and shall
also include a depository receipt issued by a bank or trust company as custodian
with respect to any such U.S. Government Obligations or a specific payment of
interest on or principal of any such U.S. Government Obligations held by such
custodian for the account of the holder of a depository receipt, provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Obligations or the specific payment of interest on or principal of the U.S.
Government Obligations evidenced by such depository receipt.

     The term "VOTING STOCK" of any Person shall mean Capital Stock of such
Person which ordinarily has voting power for the election of directors (or
persons performing similar functions) of such Person, whether at all times or
only so long as no senior class of securities has such voting power by reason of
any contingency.

     The term "WEIGHTED AVERAGE LIFE TO MATURITY" shall mean, when applied to
any Debt at any date, the number of years obtained by dividing: (a) the sum of
the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Debt.

                                       12
<PAGE>

     SECTION 1.2.  Other Definitions.

     Term                                                Defined in Section
     ----                                                ------------------

"Acceleration Due to Blockage"                                  6.2

"Act"                                                        1.5(a)

"Additional Amounts"                                           4.23

"ADS Conversion Price"                                         10.2

"Agent Members"                                              2.8(b)

"Approvals and Notices"                                        10.4

"Blockage Period"                                              11.2

"Change of Control Offer"                                      4.17

"Conversion Notice"                                            10.3

"Conversion Price"                                             10.2

"Conversion Right"                                             10.1

"covenant defeasance"                                           8.1

"Default"                                                       6.1

"Event of Default"                                              6.1

"Excluded Holder"                                              4.23

"Global Notes"                                                  2.1

"legal defeasance"                                              8.1

"Ordinary Shares Conversion Price"                             10.2

"Net Proceeds Offer"                                        4.15(b)

"Net Proceeds Offer Amount"                                 4.15(b)

"Net Proceeds Offer Payment Date"                           4.15(b)

"Net Proceeds Offer Trigger Date"                           4.15(b)

"Paying Agent"                                                  2.4

"Registrar"                                                     2.4

"Repurchase Date"                                              4.17

"Required Filing Dates"                                         4.7

                                       13
<PAGE>

"Security Register"                                             2.7

"Senior Nonmonetary Default"                                   11.2

"Senior Payment Default"                                       11.2

"Shares"                                                       10.1

"Surviving Entity"                                              5.1

"Taxes"                                                     4.23(a)

"TIA"                                                           1.3

     SECTION 1.3.  Incorporation by Reference of Trust Indenture Act.

     Whenever this Indenture refers to a provision of the Trust Indenture Act of
1939 ("TIA"), the provision is incorporated by reference in and made a part of
this Indenture.

     The following TIA terms used in this Indenture have the following meanings:

     "INDENTURE SECURITIES" means the Notes;

     "INDENTURE SECURITYHOLDER" means a Noteholder;

     "INDENTURE TO BE QUALIFIED" means this Indenture; and

     "OBLIGOR" on the Notes means the Company, any other obligor upon the Notes
or any successor obligor upon the Notes.

     All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by Commission rule under the TIA
have the meanings so assigned to them.

     SECTION 1.4.  Rules of Construction.

     Unless the context otherwise requires: (a) a term has the meaning assigned
to it; (b) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP; (c) "or" is not exclusive; (d) "including" means
including without limitation; (e) words in the singular include the plural, and
words in the plural include the singular; (f) provisions apply to successive
events and transactions; and (g) references to sections of or rules under the
Securities Act and the Exchange Act shall be deemed to include substitute,
replacement or successor sections or rules adopted by the Commission from time
to time.

     SECTION 1.5.  Acts of Holders.

     (a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Written actions so taken
by the Holders or actions taken by the Holders at a meeting in accordance with
Article 12 hereof, are herein collectively referred to as the "Act" of Holders
of signing such instrument or instruments or taking such actions at a meeting of
the Holders. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 7.1 hereof) conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section 1.5.

     (b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of a notary public or other officer authorized by law

                                       14
<PAGE>

to take acknowledgments of deeds, certifying that the individual signing such
instrument or writing acknowledged to him or her the execution thereof. Where
such execution is by an officer of a corporation or a member of a partnership,
on behalf of such corporation or partnership, such certificate or affidavit
shall also constitute sufficient proof of his or her authority.

     (c) Pursuant to Article 2, if Global Notes are transferred into registered
Physical Notes, the ownership of those registered Notes shall be proved by the
register maintained by the Registrar.

     (d) Subject to the provisions of Section 9.4, any request, demand,
authorization, direction, notice, consent, waiver or other Act of the Holder of
any Note shall bind every future Holder of the same Note and the Holder of every
Note issued upon the registration of transfer therefor or in exchange therefor
or in lieu thereof in respect of anything done, omitted or suffered to be done
by the Trustee or the Company in reliance thereon, whether or not notation of
such action is made upon such Note.  However, any such Holder or subsequent
Holder may revoke the request, demand, authorization, direction, notice,
consent, waiver or other Act as to his or her Note or portion thereof if the
Trustee receives written notice of revocation before the date such Act becomes
effective.

     (e) The principal amount and serial numbers of Physical Notes held by any
Person, and the date of holding the same, shall be proved by the Security
Register.  The principal amount and serial numbers of Global Notes held by any
Person, and the date of holding the same, may be proved by the production of
such Global Notes or by a certificate executed, as depositary, by any trust
company, bank, banker or other depositary, wherever situated, if such
certificate shall be deemed by the Trustee to be satisfactory, showing that at
the date therein mentioned such Person had on deposit with such depositary, or
exhibited to it, the Global Notes therein described; or such facts may be proved
by the certificate or affidavit of the Person holding such Global Notes, if such
certificate or affidavit is deemed by the Trustee to be satisfactory.  The
Trustee and the Company may assume that such ownership of any Global Note
continues until (i) another certificate or affidavit bearing a later date issued
in respect of the same Global Note is produced, or (ii) such Global Note is
produced to the Trustee by some other Person, or (iii) such Global Note is
surrendered in exchange for a Physical Note, or (iv) such Global Note is no
longer outstanding.  The principal amount and serial numbers of Global Notes
held by any Person, and the date of holding the same, may also be proved in any
other manner which the Trustee deems sufficient.

                                   ARTICLE 2

                                   THE NOTES

     SECTION 2.1.  Form and Dating.

     (a) The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A.  The Notes may have notations, legends
or endorsements required by law, stock exchange rule or usage, in addition to
those set forth in Exhibit A.  The Company shall approve the form of the Notes
                   ---------
and any notation, legend or endorsement on the Notes.  Each Note shall be dated
the date of its authentication.  The Notes shall be issuable and initially
represented by one or more global notes in bearer form without interest coupons
in substantially the form set forth in Exhibit A (the "Global Notes").
                                       ---------

     (b) The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and, to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.

     (c) The aggregate principal amount of Global Notes may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depositary or its nominee, as hereinafter provided.

     (d) The Physical Notes shall be typed, printed, lithographed or engraved or
produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on

                                       15
<PAGE>

which the Notes may be listed, all as determined by the Officers executing such
Notes, as evidenced by their execution of such Notes. Physical Notes shall be
issued in registered form only and in no event shall Physical Notes be issued in
bearer form.

     SECTION 2.2.  Denominations.

     The Notes shall initially be issued in denominations of $1,000 and integral
multiples of $1,000; provided, however, the Company may issue Notes in
denominations of less than $1,000.

     SECTION 2.3.  Execution and Authentication.

     (a) Two Officers (each of whom shall have been duly authorized by all
requisite corporate actions) shall sign the Notes for the Company by manual or
facsimile signature.

     (b) If an Officer whose signature is on a Note no longer holds that office
at the time the Note is authenticated, the Note shall nevertheless be valid.

     (c) A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.

     (d) The Trustee shall authenticate Notes for original issue upon a written
order of the Company executed by two Officers.  The written order shall specify
the amount and type of Notes to be authenticated and the date on which the
original issue of Notes is to be authenticated and the legends, if any, to be
placed on the Notes.

     (e) The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent.

     SECTION 2.4.  Registrar and Paying Agent.

     (a) The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York where (i) Notes, if in registered form, may be
presented or surrendered for registration of transfer or for exchange
("Registrar"), (ii) Notes may be presented or surrendered for payment ("Paying
Agent") and (iii) notices and demands in respect of the Notes and this Indenture
may be served.  The Company or any Subsidiary or Affiliate of the Company may
serve as the Agent referred to in clause (i), (ii) or (iii) above, except the
Company, or such Subsidiary or Affiliate may not act as Paying Agent for
purposes of the repurchase under Sections 4.15 or 4.17.  The Registrar shall
keep a register of the Notes, in registered form, and of their transfer and
exchange.  The Company, upon written notice to and approval of the Trustee, may
appoint one or more co-registrars and one or more additional paying agents.  The
Company may change any Registrar or Paying Agent without notice to any
Noteholder.  The term "Paying Agent" includes any additional paying agent
reasonably acceptable to the Trustee.  The term "Registrar" includes any
appointed co-registrar.  The Company initially appoints the Trustee as Registrar
and Paying Agent and agent to receive notices and demands in respect of the
Notes until such time as the Trustee has resigned or a successor has been
appointed in accordance with the terms of this Indenture.  For so long as the
Notes are listed on the Luxembourg Stock Exchange, the Company shall maintain a
Paying Agent in Luxembourg.  The Company shall appoint Banque Internationale a
Luxembourg S.A. as its Paying Agent in Luxembourg until such time as Banque
Internationale a Luxembourg has resigned or a successor has been appointed.

     (b) The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall implement the
provisions of this Indenture that relate to such Agent.  The Company shall
notify the Trustee in writing, in advance, of the name and address of any such
Agent not a party to this Indenture.  If the Company fails to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee shall act as
such.

     SECTION 2.5.  Paying Agent to Hold Money in Trust.

     The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent shall hold in trust for the benefit of
Noteholders or the Trustee all money held by the Paying Agent for the payment of
principal of, and premium, if any, on, the Notes (whether such money has been
distributed to it by the

                                       16
<PAGE>

Company or any other obligor on the Notes), and shall notify the Trustee in
writing of any Default by the Company (or any other obligor upon the Notes) in
making any such payment. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate such money and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent. Upon any bankruptcy or
reorganization procedures relating to the Company, the Trustee shall serve as
Paying Agent for the Notes. While any such Default continues, the Trustee may
require a Paying Agent to pay all such money held by it to the Trustee. The
Company (or any other obligor upon the Notes) at any time may require a Paying
Agent to pay all such money held by it to the Trustee and account for any funds
disbursed. Upon such payment to the Trustee, the Paying Agent (if other than the
Company, a Subsidiary or any other obligor upon the Notes) shall have no further
liability for such money.

     SECTION 2.6.  Noteholder Lists.

     In the event that Physical Notes are issued, the Trustee shall preserve in
as current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Noteholders and shall otherwise comply with TIA
Section 312(a).  If the Trustee is not the Registrar, the Company (or any other
obligor upon the Notes) shall furnish to the Trustee at least seven (7) Business
Days before any payment date (and in all events at intervals of not more than
six months) and at such other times as the Trustee may request in writing a list
in such form and as of such date as the Trustee may reasonably require of the
names and addresses of Noteholders, and the Company shall otherwise comply with
TIA Section 312(a).

     SECTION 2.7.  Transfer and Exchange.

     (a) Physical Notes shall be transferable only upon the surrender of a
Physical Note for registration of transfer. The Company shall cause to be kept
at the Corporate Trust Office of the Trustee a register (the register maintained
in such office and in any other office or agency designated pursuant to Section
4.2 hereof being herein sometimes collectively referred to as the "Security
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Physical Notes and of
transfers of Physical Notes. Where Notes in registered form are presented to the
Registrar or a co-registrar with a request to register the transfer of such
Notes or exchange them for an equal principal amount of Notes of other
authorized denominations, the Registrar or co-registrar shall register the
transfer or make the exchange if its requirements for such transactions are met,
provided that any Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar or co-registrar and the Trustee,
duly executed by the Holder thereof or his or her attorney duly authorized in
writing. To permit registrations of transfer and exchanges, the Company shall
issue and the Trustee shall authenticate the Notes at the Registrar's or co-
registrar's request.

     (b) The Registrar or co-registrar shall not be required to register the
transfer of or exchange any Note in registered form (i) during a period
beginning at the opening of business on a Business Day fifteen (15) days before
the mailing of a notice of redemption of Notes and ending at the close of
business on the day of such mailing and (ii) selected for redemption in whole or
in part pursuant to Article 3 hereof, except the unredeemed portion of any Note
being redeemed in part.

     (c) No service charge shall be made for any registration of transfer or
exchange; provided however, that the Company, Registrar or Trustee, as
appropriate, may require payment of a sum sufficient to pay any taxes or similar
governmental charges that may be imposed in connection with the transfer or
exchange of Notes in registered form from the Noteholder requesting such
transfer or exchange (other than any such transfer taxes or similar governmental
charges arising under the laws of the United Kingdom or the United States or of
any State thereof payable upon transfers or exchanges pursuant to Sections 2.10,
2.13, 3.6, 4.15, 4.17 or 9.5 hereof).

     SECTION 2.8.  Book-Entry Provisions for Global Notes

     (a) The Global Notes initially shall (i) be registered in the name of the
Depositary for such Global Notes or the nominee of such Depositary and (ii) be
delivered to the Trustee as custodian for such Depositary.

     (b) Rights of members of, or participants in DTC or the Depositary ("Agent
Members") shall be limited with respect to any Global Note held on their behalf
by the Trustee in accordance with Section 2.16 hereof.

                                       17
<PAGE>

     (c) Transfers of a Global Note shall be limited to transfers of such Global
Note in whole, but not in part, to the Depositary, its successors or their
respective nominees.  Interests of beneficial owners in a Global Note may be
transferred in accordance with the rules and procedures of the Depositary or, if
applicable, those of Euroclear and Clearstream, and the provisions of this
Article 2.

     (d) Physical Notes shall be transferred to all beneficial owners, as
definitive registered Notes, in exchange for their beneficial interests in the
Global Notes, only if (i) the Depositary notifies the Company or the Trustee
that it is unwilling or unable to continue as Depositary for the Global Notes,
as the case may be, and a successor depositary is not appointed by the Company
within 90 days of such notice; (ii) at any time, the Company determines that the
Global Notes, in whole but not in part, should be exchanged for definitive
registered Notes, but only if, such exchange is required by any applicable law,
any event beyond the control, or payments on any Global Note, depositary
interest or book-entry interest, or would become, subject to any deduction or
withholding for taxes; (iii) the Trustee is at any time unwilling or unable to
continue as book-entry depositary and the Company does not appoint a successor
within 90 days;  or (iv) an Event of Default has occurred and is continuing and
the Trustee has received a request to the foregoing effect from the Holder.

     (e) In connection with any transfer of a portion of the beneficial
interests in a Global Note to beneficial owners pursuant to paragraph (d) of
this Section 2.8, the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of the Global Note in an amount equal to
the principal amount of the beneficial interest in such Global Note to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver to each beneficial owner identified by the Depositary or, if
applicable, by Euroclear or Clearstream, in exchange for its beneficial interest
in the Global Note an equal aggregate principal amount of Physical Notes of
authorized denominations.

     (f) In connection with the transfer of the entire Global Note to beneficial
owners pursuant to paragraph (b) of this Section, the Global Note shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depositary or, if applicable, by Euroclear or
Clearstream, in exchange for its beneficial interest in the Global Note an equal
aggregate principal amount of Physical Notes of authorized denominations.

     (g) The registered holder of a Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.

     (h) Beneficial owners of interests in a Global Note may receive Physical
Notes in accordance with the procedures of the Depositary. In connection with
the execution, authentication and delivery of such Physical Notes, the Registrar
shall reflect on its books and records a decrease in the principal amount of the
relevant Global Note, in registered form, equal to the principal amount of such
Physical Notes and the Company shall execute and the Trustee shall authenticate
and deliver one or more Physical Notes having an equal aggregate principal
amount.

     SECTION 2.9.  Deposit of Monies.

     Prior to 11:00 a.m. New York City time on (or, in the case of any money to
be used to make payments through the Luxembourg Paying Agent or any other Paying
Agent not located in the United States, one Business Day prior to the Maturity
Date) the Maturity Date, the Company or Guarantor shall have deposited with the
Paying Agent in immediately available funds money sufficient to make cash
payments, if any, due on the Maturity Date, as the case may be, in a timely
manner which permits the Paying Agent to remit payment to the Holders on the
Maturity Date, as the case may be.

     SECTION 2.10. Replacement Notes.

     If any mutilated Physical Note is surrendered to the Trustee or if any
mutilated Global Note is surrendered to the Company or if the Holder of a Note
claims that the Note has been lost, destroyed or wrongfully taken, and the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon the written order of the Company in the form of an Officers' Certificate,
shall authenticate a replacement Note if the Trustee's requirements are met.  If
required by the Trustee or the Company, an indemnity bond or other form of
indemnification must be supplied by the Holder that is sufficient in

                                       18
<PAGE>

the judgment of the Trustee and the Company to protect the Company, the Trustee,
or any Agent from any loss which any of them may suffer if a Note is replaced.
The Company may charge the Holder for its reasonable out-of-pocket expenses in
replacing a Note. The Company shall remain obligated under any replacement Note
to the same extent as the original Note surrendered.

     SECTION 2.11. Outstanding Notes.

     (a) The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled or those delivered to it for cancellation
and those described in this Section 2.11 as not outstanding.

     (b) If a Note is replaced pursuant to Section 2.10 hereof (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced Note is held by
a protected purchaser.  A mutilated Note ceases to be outstanding upon surrender
of such Note and replacement thereof pursuant to Section 2.10 hereof.

     (c) If an amount of money necessary to pay or redeem any Note shall be
deposited in trust with the Trustee (and in the case of a Note which is to be
redeemed prior to the Stated Maturity thereof, notice of such redemption shall
be duly given or provision satisfactory to the Trustee shall be made for giving
such notice), it ceases to be outstanding on and after the Redemption Date.

     (d) If a Note is cancelled by the Trustee or delivered to the Trustee for
cancellation, it ceases to be outstanding.

     (e) A Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note, except as otherwise provided in Section
2.12 hereof.

     SECTION 2.12. Treasury Notes.

     In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, any other obligor upon the Notes or an Affiliate of the Company or such
other obligor shall be considered as though not outstanding, except that, for
the purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Notes which the Trustee knows are so
owned shall be so disregarded.  Notes so owned that have been pledged in good
faith may be regarded as outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right to so act with respect to such
Notes and that the pledgee is not the Company or any Affiliate of the Company.

     SECTION 2.13. Temporary Notes.

     Until Physical Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Physical Notes upon receipt of a
written order of the Company in the form of an Officers' Certificate.  The
Officers' Certificate shall specify the amount of temporary Physical Notes to be
authenticated and the date on which the temporary Physical Notes are to be
authenticated.  Temporary Physical Notes shall be substantially in the form of
Physical Notes but may have variations that the Company considers appropriate
for temporary Physical Notes.  Without unreasonable delay, the Company shall
prepare and the Trustee, upon receipt of the written order of the Company
pursuant to Section 2.3(d) hereof, shall authenticate Physical Notes in exchange
for temporary Physical Notes.  Until such exchange, temporary Physical Notes
shall be entitled to the same rights, benefits and privileges as Physical Notes.

     SECTION 2.14. Cancellation.

     The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee for cancellation any
Physical Notes surrendered to them for registration of transfer, exchange,
payment, repayment or redemption. The Trustee, or at the direction of the
Trustee, the Registrar or the Paying Agent (other than the Company or a
Subsidiary of the Company), and no one else, shall promptly cancel all Notes (in
registered form) so delivered to the Trustee or surrendered for registration of
transfer, exchange, payment, repayment, redemption, replacement or cancellation
and shall destroy cancelled Notes in accordance with the usual destruction
procedures of the Trustee and a record of their destruction shall be maintained
by the Trustee.

                                       19
<PAGE>

If the Company shall acquire any of the Notes, such acquisition shall not
operate as a redemption or satisfaction of the Debt represented by such Notes
unless and until the same are surrendered to the Trustee for cancellation
pursuant to this Section 2.14.

     SECTION 2.15. [Intentionally Omitted]

     SECTION 2.16. Persons Deemed Owners.

     (a) Members of, or participants in, DTC shall have no rights under this
Indenture with respect to any Global Note held on their behalf by the Trustee,
and the Trustee may be treated by the Depositary, the Company and any agent of
the Company as the absolute owner of the Global Note for all purposes
whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee, the Depository or any agent of such, from giving effect to
any written certification, proxy or other authorization furnished by the Trustee
or the Depository regarding the operation of customary practices governing the
exercise of the rights of a Holder of any Note.

     (b) The Holder may grant proxies and otherwise authorize any Person,
including Agents and persons that may hold interests through Agents, to take any
action which a Holder is entitled to take under this Indenture or the Notes.

     SECTION 2.17. CUSIP, CINS and ISIN Numbers.

     The Company in issuing the Notes may use "CUSIP", "CINS", "ISIN" or other
identification numbers (if then generally in use), and, if so, the Trustee shall
use CUSIP numbers, CINS numbers, ISIN numbers or other identification numbers,
as the case may be, in notices of redemption or exchange as a convenience to
Holders, provided that any such notice shall state that no representation is
made as to the correctness of such numbers either as printed on the Notes or as
contained in any notice of redemption or exchange and that reliance may be
placed only to the other identification numbers printed on the Notes, provided
further that failure to use "CUSIP", "CINS", "ISIN" or other identification
numbers in any notice of redemption or exchange shall not effect the validity or
sufficiency of such notice.

     SECTION 2.18. Issuance of Additional Notes.

     The Company may not issue additional Notes under this Indenture.

                                   ARTICLE 3

                                  REDEMPTION

     SECTION 3.1.  Notices to Trustee.

     (a) If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, it shall furnish to the Trustee, at
least 30 days but not more than 60 days before a Redemption Date, an Officers'
Certificate setting forth the Section of this Indenture pursuant to which the
redemption shall occur, the Redemption Date, the principal amount of Notes to be
redeemed and the Redemption Price. If the Company elects to have the Trustee
furnish notice of redemption (as described above) of the Notes to the Holders,
the Company shall notify the Trustee in writing and provide all the information
and documentation required by this paragraph, at least 45 days but not more than
60 days before a Redemption Date.

     (b) If the Registrar is not the Trustee, the Company shall, concurrently
with each notice of redemption, cause the Registrar to deliver to the Trustee a
certificate (upon which the Trustee may rely) setting forth the principal
amounts of Notes held by each Holder.

                                       20
<PAGE>

     SECTION 3.2.  Selection of Notes to Be Redeemed.

     (a) If less than all of the Notes are to be redeemed, the Trustee shall
select the Notes to be redeemed in compliance with the requirements of the
principal national securities exchange, if any, on which the Notes are listed
or, if the Notes are not listed on a national securities exchange or if no such
requirements exist, on a pro rata basis, by lot or by such method as the Trustee
shall deem fair and appropriate; provided, however, that any Notes with a
principal amount of less than $1,000 shall not be redeemed in part.

     (b) The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed.  Notes and portions of
them selected shall be in amounts of $1,000 or integral multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes, held by such Holder, even if not a multiple of
$1,000, shall be redeemed.  Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.

     SECTION 3.3.  Notice of Redemption.

     (a) At least 30 days but not more than 60 days before a Redemption Date,
the Company shall (i) if the Notes are represented by a Global Note, publish in
a leading newspaper having a general circulation in New York (which is expected
to be the Wall Street Journal) and, so long as the Notes are listed on the
          -------------------
Luxembourg Stock Exchange and the rules of such Exchange so require, shall
publish in a daily newspaper in Luxembourg (which is expected to be the
Luxemburger Wort) or (ii) if the Notes are represented by Physical Notes, mail
----------------
or cause to be mailed by first class mail, a notice of redemption to each Holder
of the Notes to be redeemed, at the last address for that holder shown on the
registry books with a copy to the Trustee and for so long as the Notes are
listed on the Luxembourg Stock Exchange and the rules of such stock exchange so
require, publish in a newspaper having a general circulation in Luxembourg
(which is expected to be the Luxemburger Wort). If the Company redeems any Note
                             ----------------
in part only, the notice of redemption that relates to that Note will state the
portion of the principal amount to be redeemed, which portion will not be less
than $1,000. The Company will issue a new Note in principal amount equal to the
unredeemed portion in the name of the Holder upon cancellation of the original
Note (subject to DTC procedures).

     (b) The notice shall identify the Notes to be redeemed and shall state:

            (i)     the Redemption Date;

            (ii)    the Redemption Price;

            (iii)   if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed in integral multiples of $1,000,
and not less than $1,000 and that, after the Redemption Date, upon surrender of
such Note, a new note or notes in principal amount equal to the unredeemed
portion will be issued in the name of the holder upon cancellation of the
original note (subject to DTC procedures);

            (iv)    the name and address of the Paying Agent;

            (v)     that Notes called for redemption must be surrendered to the
Paying Agent at its address to collect the Redemption Price;

            (vi)    that, unless the Company defaults in making the redemption
payment, the only remaining right of the Holders of such Notes is to receive
payment of the Redemption Price upon surrender to the Paying Agent of such
Notes;

            (vii)   if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be redeemed, as
well as the aggregate principal amount of Notes to be redeemed and the aggregate
principal amount of Notes to be outstanding after such partial redemption;

            (viii)  the paragraph of this Indenture pursuant to which the Notes
called for redemption are being redeemed; and

                                       21
<PAGE>

          (ix)    the CUSIP, CINS or ISIN number of the Notes, as the case may
be.

     (c)  At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense, provided that the Company
shall deliver to the Trustee, at least 45 days prior to the Redemption Date, an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in Section 3.3(b).

     SECTION 3.4. Effect of Notice of Redemption.

     Once notice of redemption is mailed, Notes called for redemption become due
and payable on the Redemption Date at the Redemption Price.  Upon surrender to
any Paying Agent, such Notes shall be paid at the Redemption Price, on condition
that sufficient funds to pay the Redemption Price of such Notes have been
deposited with the Paying Agent.

     SECTION 3.5. Deposit of Redemption Price.

     At least one Business Day prior to the Redemption Date, the Company shall
irrevocably deposit with the Trustee or with the Paying Agent (or if the Company
is its own Paying Agent, shall, on or before the redemption date, segregate and
hold in trust) money sufficient to pay the Redemption Price of all Notes to be
redeemed on that date.  The Trustee or the Paying Agent shall return to the
Company any money not required for that purpose.

     SECTION 3.6. Notes Redeemed in Part.

     Upon surrender of a Note that is redeemed in part, the Company shall issue
and the Trustee shall authenticate for the Holder at the expense of the Company
a new Note equal in principal amount to the unredeemed portion of the Note
surrendered.

     SECTION 3.7. Optional Redemption.

     The Company may redeem all or any part of the Notes at any time, for a
Redemption Price equal to 100% of their principal amount. The Company must
provide at least 30 but no more than 60 days' notice to the Holders. Any
redemption pursuant to this Section 3.7 shall be made pursuant to the provisions
of Sections 3.1 through 3.6 hereof.

                                   ARTICLE 4

                                   COVENANTS

     Subject to the provisions of Section 8.1 hereof, so long as Notes are
outstanding hereunder, the Company covenants for the benefit of the Holders
that:

     SECTION 4.1. Payment of Principal.

     The Company shall duly and punctually pay the principal, and premium, if
any, on the Notes on the date and in the manner provided in the Notes and this
Indenture.  One Business Day prior to the date of any Stated Maturity, the
Company shall irrevocably deposit with the Trustee or with the Paying Agent
money in immediately available funds sufficient to pay such principal and
premium, if any. An installment of principal (or a payment of premium, if
applicable) shall be considered paid on the date due if the Trustee or the
Paying Agent (other than the Company, a Subsidiary of the Company or an
Affiliate of the Company) holds on that date money designated for and sufficient
to pay the installment in full.  If the Company or any Subsidiary of the Company
or any Affiliate of either the Company or any Subsidiary, acts as Paying Agent,
an installment of principal or premium, if any, shall be considered paid on the
due date if the entity acting as Paying Agent complies with Section 2.5.  The
Trustee or the Paying Agent shall return to the Company any money not required
for that purpose.

                                       22
<PAGE>

     SECTION 4.2. Maintenance of Office or Agency for Notices and Demands.

     The Company shall maintain in New York, New York, an office or agency
(which may be an office of the Trustee or an Affiliate of the Trustee, Registrar
or co-registrar) where the Notes may be presented for payment, registration of
transfer or exchange and an office or agency where notices and demands to or
upon the Company in respect of such Notes or of this Indenture may be served.
Until otherwise designated by the Company in a written notice to the Trustee,
such office or agency in The City of New York shall be the Corporate Trust
Office, which shall be, until further notice to the Company by the Trustee,  at
c/o Issuer Services, 452 Fifth Avenue, New York, New York  10018.  The Company
may designate multiple offices for purposes of notices and demands.  The Company
may designate multiple offices for purposes of notices and demands.

     SECTION 4.3. Property and Insurance Matters.

     The Company shall maintain all material property, including equipment, in
reasonable condition and order.  The Company shall provide or cause to be
provided for itself and each of its Subsidiaries insurance (including
appropriate self-insurance) against loss or damage arising from the conduct of
the business of the Company and its Subsidiaries with reputable insurers in such
amounts, with such deductibles, and by such methods as will be either (a)
consistent in all material respects with past practices of the Company or the
applicable Subsidiary, or (b) customary in the industry, unless the failure to
provide such insurance would not have a material adverse effect on the financial
condition or results of operations taken as a whole or be a violation of
applicable law or material agreement of the Company or its Subsidiaries.

     SECTION 4.4. Compliance Certificate and Opinion of Counsel; Notice of
Default.

     (a)  The Company shall deliver to the Trustee, within 90 days after the end
of the Company's fiscal year, an Officers' Certificate, if given by one of the
Company's Officers, or an Opinion of Counsel, if it is given by counsel, stating
that a review of its activities and the activities of its Subsidiaries during
the preceding fiscal year has been made under the supervision of the signing
Person with a view to determining whether it has kept, observed, performed and
fulfilled its obligations under this Indenture and further stating, as to each
such Officer signing such certificate or such counsel signing the opinion, that
to the best of his or her knowledge the Company during such preceding fiscal
year has kept, observed, performed and fulfilled each and every covenant
contained in this Indenture and no Default or Event of Default occurred during
such year or, if such signers do know of any Default or Event of Default, the
certificate shall describe such Default or Event of Default and its status with
reasonable particularity.

     (b)  The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, within five (5) Business Days after becoming aware of
any Default or Event of Default in the performance of any covenant, agreement or
condition contained in this Indenture, a notice identifying in reasonable detail
the circumstances relating to such Default or Event of Default and what action
the Company is taking or proposes to take with respect thereto.

     SECTION 4.5. Corporate Existence.

     Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, material rights (charter and statutory) and franchises; provided,
however, that the Company shall not be required to preserve any such material
right or franchise if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and that the loss thereof is not disadvantageous in any material
respect to the Holders of the Notes.

     SECTION 4.6. Payment of Taxes and Other Claims.

     The Company shall pay or discharge or cause to be paid or discharged,
before any material penalty accrues thereon the following:  (a) all material
taxes, assessments and governmental charges levied or imposed upon the Company
or any Subsidiary of the Company or upon the income, profits or property of the
Company or any Subsidiary of the Company, and (b) all material lawful claims for
labor, materials and supplies which, if unpaid, might by law become a Lien upon
the property of the Company or any Subsidiary of the Company; provided, however,
that the Company shall not be required to pay or discharge or cause to be paid
or discharged any such tax,

                                       23
<PAGE>

assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.

     SECTION 4.7. Reports.

     So long as any of the Notes are outstanding, whether or not the Company is
subject to Section 13(a) or 15(d) of the Exchange Act, the Company shall file
with the Commission the annual reports, quarterly reports and other documents
which the Company would have been required to file with the Commission pursuant
to such Sections 13(a) or 15(d) of the Exchange Act if the Company were so
subject, such documents to be filed with the Commission on or prior to the
respective dates (the "Required Filing Dates") by which the Company would have
been required to file such documents if the Company were so subject.  The
Company shall also in any event within 15 days after each Required Filing Date
mail to the Trustee, copies of the annual reports, quarterly reports and other
documents which the Company would have been required to file with the Commission
pursuant to Sections 13(a) or 15(d) of the Exchange Act if the Company were
subject so such Sections.  Upon qualification of this Indenture under the TIA,
the Company shall also comply with the other provisions of TIA Section 314(a).
Notwithstanding anything to the contrary herein, the Trustee shall have no duty
to review such documents for purposes of determining compliance with any
provisions of this Indenture.

     SECTION 4.8.  Waiver of Stay, Extension or Usury Laws.

     The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of, and premium, if any, on, the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.

     SECTION 4.9.  Limitation on Incurrence of Additional Debt.

     (a)  The Company shall not, and shall not permit any of its Restricted
Subsidiaries, including the Guarantors, to directly or indirectly, Incur any
Debt other than Permitted Debt, provided, however that (a) the Company and its
Restricted Subsidiaries, including the Guarantors, may Incur Debt (including
Acquired Debt) if there is no Default or Event of Default, at the time or as a
consequence of the incurrence of the Debt and on the date of incurrence of the
Debt, if after giving effect to the incurrence of the Debt, the Consolidated
Fixed Charge Coverage Ratio of the Company would be equal to or greater than 2.0
to 1.  The accretion of original issue discount and accrual of interest do not
constitute the Incurrence of Debt.

     (b)  For purposes of determining compliance with this Section 4.9, (i) in
the event that an item of Debt meets the criteria of more than one of the
categories of Debt set forth in Section 4.9(a) or in the definition of Permitted
Debt, the Company, in its sole discretion, shall classify such item of Debt and
shall only be required to include the amount and category of such Debt in one
such category set forth in Section 4.9(a) or in such definition and (ii) Debt
permitted by this Section 4.9 need not be permitted solely by reference to one
provision permitting such Debt but may be divided and classified in more than
one category of Permitted Debt set forth in the definition of Permitted Debt and
permitted in part by one provision and in part by one or more other provisions
of this Section 4.9 that would permit incurrence of such Debt.

     SECTION 4.10. Limitation on Other Subordinated Debt.

     So long as any of the Notes are outstanding, the Company shall not Incur
any Debt that is by its terms subordinated to Senior Debt, unless such Debt so
Incurred ranks pari passu in right of payment with the Notes, or is subordinated
in right of payment to the Notes.  For purposes of this Section 4.10, Debt which
is secured by a junior Lien is not deemed subordinate or junior merely by virtue
of such junior priority.

                                       24
<PAGE>

     SECTION 4.11. Limitation on Restricted Payments.

     (a)  The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, make, declare or pay any Restricted
Payment, unless if at the time of such Restricted Payment or immediately after
giving effect thereto:  (i) no Default or Event of Default has occurred or is
continuing; (ii) the Company can Incur at least $1.00 of additional Debt in
addition to Permitted Debt, pursuant to Section 4.9 hereof; and (iii) the
aggregate of all Restricted Payments (including the proposed Restricted Payment)
after the Issue Date do not exceed the sum of:  (A) 50% of the cumulative
Consolidated Net Income (or if a loss, minus 100% of such loss) of the Company
earned during the period after the Issue Date and on or before the date the
Restricted Payment occurs (excluding any partial fiscal quarter or quarters);
plus (B) 100% of the aggregate net cash proceeds received by the Company from
any Person other than a Subsidiary of the Company from the issuance and sale
after the Issue Date, and on or before the date the Restricted Payment occurs,
of Qualified Capital Stock; and (C) 100% of the net cash proceeds from the sale
of Investments by the Company (other than Permitted Investments) if such
Investment was made after the Issue Date.

     (b)  The foregoing provisions will not be violated by reason of:  (i) the
payment of any dividend within 60 days after the date of declaration of such
dividend if the dividend would have been permitted on the date of declaration;
(ii) if no Default or Event of Default has occurred or is continuing,
acquisition of any shares of Qualified Capital Stock of the Company or payment,
redemption, acquisition or defeasance of Debt that ranks below the Notes in
right of payment, either (A) solely in exchange for shares of Qualified Capital
Stock of the Company and in the case of payment, redemption, acquisition or
defeasance of Debt for Refinancing Debt, or (B) through the application of net
proceeds of a substantially concurrent sale for cash of shares of Qualified
Capital Stock of the Company; (iii) the defeasance, redemption, repurchase or
other acquisition of subordinated Debt with the net cash proceeds from
Refinancing Debt; (iv) the payment of a dividend or distribution by any of the
Company's Restricted Subsidiaries to the Company or any one of the Company's
wholly owned Restricted Subsidiaries; (v) if no Default or Event of Default has
occurred or is continuing, repurchases of Capital Stock deemed to occur upon the
exercise of stock options held by current or former employees or directors if
such Capital Stock represents a portion of the exercise price; and (vi) if no
Default or Event of Default has occurred or is continuing, dividends and
distributions by a Restricted Subsidiary or Subsidiary of the Company pro rata
to the holders of the Company's Capital Stock.

     SECTION 4.12. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries.

     (a)  The Company may not, and may not permit any Restricted Subsidiary of
the Company to create or otherwise cause or permit to exist or become effective
any encumbrance or restriction on the ability of any Restricted Subsidiary of
the Company: (i) to pay dividends or make any other distributions in respect of
its Capital Stock or pay any Debt or other obligation owed to the Company or any
other Restricted Subsidiary of the Company; (ii) to make loans or advances to
the Company or any Restricted Subsidiary of the Company; or (iii) to transfer
any of its property or assets to the Company or another of the Company's
Restricted Subsidiaries.

     (b)  Notwithstanding anything to the contrary in Section 4.12(a), the
Company may and may permit its Restricted Subsidiaries, to create, assume,
otherwise suffer to exist any such encumbrance or restriction on the ability of
any Restricted Subsidiary of the Company if and to the extent that such
encumbrance or restriction exist under or by reason of the following: (i)
applicable law; (ii) this Indenture; (iii) the 10% Indenture; (iv) customary
non-assignment provisions of any contract or any lease governing a leasehold
interest of any Subsidiary of the Company; (v) any instrument governing Acquired
Debt, which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person or the properties or
assets of the Person so acquired; (vi) agreements existing on the Issue Date to
the extent and in the manner such agreements are in effect on the Issue Date;
(vii) purchase money obligations for property acquired that impose restrictions
of the nature described in clause (v) above on the property so acquired; (viii)
any instrument or agreement governing Senior Debt; (ix) any instrument or
agreement governing any other Debt permitted to be incurred under this
Indenture, provided that the encumbrances or restrictions that exist in such
instrument or agreement are similar to those in this Indenture; or (x) any
restriction imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all of the Capital Stock or property of any
Restricted Subsidiary that apply pending the closing of such sale or
disposition.

                                       25
<PAGE>

     SECTION 4.13. Limitation on Liens.

     (a)  The Company shall not, and shall not permit any Restricted Subsidiary
of the Company to, directly or indirectly, create, incur, assume or suffer to
exist any Liens (other than Permitted Liens) upon or in respect of any of its
property or assets of the Company or any of its Restricted Subsidiaries, whether
owned on the Issue Date or acquired after the Issue Date, or any proceeds
therefore, or assign or otherwise convey any right to receive payment or profits
therefrom, in order to secure any Debt that ranks pari passu with or subordinate
in right of payment to the Notes, unless: (i) for Liens securing Debt that is
expressly subordinate or junior in right of payment to the Notes, the Notes are
secured by a Lien that is senior in priority to the Liens securing Debt which is
subordinated to the Notes; and (ii) in all other cases, the Notes are equally
and ratably secured.

     (b)  The restrictions of Section 4.13(a) shall not apply to:  (i) Liens
existing as of the Issue Date; (ii) Liens securing Senior Debt; (iii) Liens in
favor of the Company or a wholly owned Restricted Subsidiary of the Company on
assets of any Restricted Subsidiary of the Company; (iv) Liens securing
Refinancing Debt that is incurred to Refinance Debt that is secured by a Lien
permitted under this Indenture and that has been incurred in accordance with
this Indenture; provided, however that the effect of the Liens is no more
unfavorable to the Holders of the Notes than the Liens for the Debt being
Refinanced and do not extend to any property or assets not securing the Debt so
Refinanced; and (v) Permitted Liens.

     SECTION 4.14. Limitation on Transactions with Affiliates and Related
Persons.

     (a)  The Company may not, and may not permit any Restricted Subsidiary of
the Company to, directly or indirectly, enter into any transaction or series of
related transactions on or after the Issue Date with or for the benefit of any
Affiliate of the Company or its Restricted Subsidiaries, unless: (i) such
transactions or series of transactions are on terms that are no less favorable
to the Company or its Restricted Subsidiary than those that could be reasonably
obtained in a comparable arm's length transaction with a Person that is not an
Affiliate of the Company or its Restricted Subsidiary; and (ii) with respect to
any such transaction or series of transactions, the following terms shall have
been satisfied: (A) any transaction with Affiliates or a series of related
transactions with Affiliates that are similar or part of a common plan involving
aggregate payments or other property with a fair market value in excess of $5
million shall be approved by the Board of Directors of the Company or of its
Restricted Subsidiary, as the case may be, which approval shall be evidenced by
a Board Resolution stating that the Board of Directors, including a majority of
the disinterested directors has determined that the transaction complies with
the foregoing provisions, or (B) if the Company or any Restricted Subsidiary of
the Company enters into a transaction with an Affiliate, or a series of related
transactions with Affiliates that are similar or part of a common plan involving
aggregate payments or other property with a fair market value at more than $20
million, the Company or the relevant Restricted Subsidiary shall, before the
consummation of the transaction or transactions, have obtained a favorable
opinion as to the fairness of the transaction or series of related transactions
to the Company or the relevant Restricted Subsidiary, as the case may be, from a
financial point of view, from an independent financial advisor and file the same
with the Trustee.

     (b)  Section 4.14(a) shall not apply to: (i) reasonable fees and
compensation paid to, and indemnity provided on behalf of, officers, directors,
or employees of the Company or any Subsidiary of the Company as determined in
good faith by the Board of Directors; (ii) transactions between or among the
Company and any of its Restricted Subsidiaries or between or Restricted
Subsidiaries; (iii) any agreement in effect on the Issue Date and any modified
or replacement agreement of an agreement in effect on the Issue Date that is not
more disadvantageous to the Holders of the Notes in any material respect than
the original agreement as in effect on the Issue Date; and (d) Restricted
Payments and Permitted Investments permitted by this Indenture.

     SECTION 4.15. Limitation on Certain Asset Sales.

     (a)  The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:  (i) the Company or the
applicable Restricted Subsidiary (as the case may be) receives consideration at
the time of the Asset Sale at least equal to the fair market value of the assets
sold or otherwise disposed of (as determined in good faith by the Board of
Directors) and (ii) upon the consummation of the Asset Sale, the Company shall
apply, or cause such Restricted Subsidiary to apply, the Net Cash Proceeds of
the Asset Sale within 360 days of receipt to either (A) prepay Senior Debt; (B)
make an investment in properties and assets (other than cash, cash equivalents
or inventory) that replace the properties and assets that were the subject of
the

                                       26
<PAGE>

Asset Sale or in properties and assets that will be used in a Permitted
Business; or (C) a combination of prepayment and investment permitted by (A) and
(B) above.

     (b)  On the 360th day after an Asset Sale (the "Net Proceeds Offer Trigger
Date"), the portion of the aggregate amount of Net Cash Proceeds not applied on
or before the Net Proceeds Offer Trigger Date multiplied by a fraction the
numerator of which is equal to the principal amount of the Notes and the
denominator of which is equal to the sum of the principal amount of the Notes
and all Debt ranking equal to the Notes (each a "Net Proceeds Offer Amount")
will be applied by the Company or the Restricted Subsidiary to make an offer to
purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment
Date") at least 30 but not more than 60 days following the applicable Net
Proceeds Offer Trigger Date, from all Holders on a pro rata basis, that amount
of the Notes equal to the Net Proceeds Offer Amount at a price equal to 100% of
the principal amount of the Notes to be purchased.  If any non-cash
consideration received is converted into or sold or otherwise disposed of for
cash or cash equivalents (other than interest received with respect to any such
non-cash consideration), then the conversion or disposition will be deemed to be
an Asset Sale and the Net Cash Proceeds of which will be applied in accordance
with this Section 4.15.  The Company may defer the Net Proceeds Offer until
there is an aggregate unutilized Net Proceeds Offer Amount equal to or in excess
of $5 million resulting from one or more Asset Sales (at which time, the entire
unutilized Net Proceeds Offer Amount, and not just the amount in excess of $5
million, will be applied).

     (c)  Notice of each Net Proceeds Offer shall be given to each Holder in
accordance with Section 13.2,  within 30 days following the Net Proceeds Offer
Trigger Date, with a copy to the Trustee. Such notice shall state: (i) an Asset
Sale has occurred and that the Holder has the right to require the Company to
repurchase such Holder's Notes, in whole or in part, and if in part equal to
$1,000 or integral multiples of $1,000 at a repurchase price equal to 100% of
the principal amount thereof; (ii) the circumstances and relevant facts of the
Asset Sale; (iii) the Repurchase Date (which shall be not earlier than 30 days
or later than 60 days from the date such notice is mailed) (the "Repurchase
Date"); (iv)  that Holders electing to have a Note purchased pursuant to a Net
Proceeds Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, to
the Paying Agent (which may be the Company) at the address specified in the
notice prior to the close of business on the Repurchase Date; (v) that Holders
will be entitled to withdraw their election if the Paying Agent receives, not
later than the close of business on the third Business Day preceding the
Repurchase Date, a telegram, telex, facsimile transmission or other written
communication setting forth the name of the Holder, the principal amount of
Notes the Holder delivered for purchase, and a statement that such Holder is
withdrawing his or her election to have such Notes purchased; and (vi) that
Holders which elect to have their Notes purchased only in part will be issued
new Notes in a principal amount equal to the unpurchased portion of the Notes
surrendered.

     (d)  If the Company is required to repurchase Notes pursuant to the
provisions of this Section 4.15 hereof, it shall notify the Trustee in writing,
at least 30 days before a Redemption Date, of the Section of this Indenture
pursuant to which the repurchase shall occur, the Redemption Date, the principal
amount of Notes to be repurchased and the Redemption Price and shall furnish to
the Trustee an Officers' Certificate to the effect that the Company is required
to make or has made a Net Proceeds Offer. If the Company elects to have the
Trustee furnish notice of repurchase (as described above) of the Notes to the
Holders, the Company shall notify the Trustee in writing and provide all the
information and documentation required by this paragraph, at least 45 days but
not more than 60 days before a Redemption Date.

     (e)  Upon receiving notice of the Net Proceeds Offer, Holders may elect to
tender their Notes in whole or in part, and if in part, equal to $1,000 or in
integral multiples of $1,000, in exchange for cash.  To the extent holders
properly tender Notes in an amount exceeding the Net Proceeds Offer Amount,
tendered Notes will be purchased on a pro rata basis based on amounts tendered.

     (f)  A Net Proceeds Offer will remain open for a period of 20 Business Days
or such longer period as may be required by law. To the extent that the
aggregate amount of Notes tendered pursuant to a Net Proceeds Offer is less than
the Net Proceeds Offer Amount, the Company may use any remaining Net Proceeds
Offer Amount for

                                       27
<PAGE>

general corporate purposes subject to the provisions of this Indenture, and the
Net Proceeds Offer Amount will return to zero.

     (g)  The Company will comply with the requirements of Rule 14e-1 under the
Securities Exchange Act of 1934, as amended, and any other securities laws and
regulations thereunder to the extent they apply in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer.  To the extent that the
provisions of any securities laws or regulations conflict with this Section
4.15, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under this
Section 4.15.

     (h)  In the event the Company is required to make an offer to redeem Notes
pursuant to this Section 4.15 and the amount of the Net Cash Proceeds from the
Asset Sale are not evenly divisible by $1,000, upon written instructions from
the Company, the Trustee shall hold the remaining portion of such Net Available
Proceeds that are not so divisible until such amount, together with the Net Cash
Proceeds from any subsequent Asset Sale, may be applied to make an offer to
redeem Notes pursuant to this Section 4.15.

     SECTION 4.16.  Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries.

     The Company shall not, and shall not permit any Restricted Subsidiary of
the Company to, issue, transfer, convey, sell, lease or otherwise dispose of any
Capital Stock (other than directors' qualifying shares) of any Restricted
Subsidiary of the Company to any Person (other than the Company or another of
the Company's Restricted Subsidiaries), unless the disposition complies with
Section 4.15 of this Indenture.

     SECTION 4.17. Change of Control.

     (a) Upon the occurrence of a Change of Control, each Holder of the Notes
shall have the right to require that the Company repurchase such Holder's Notes,
in whole or in part, and if in part, equal to $1,000 or integral multiples of
$1,000, at a repurchase price in cash equal to 109% of the principal amount
thereof, pursuant to the offer described in clause (b) below (the "Change of
Control Offer").

  (b) Notice of each Change of Control Offer shall be given to each Holder in
accordance with Section 13.2, within 30 days following any Change of Control,
with a copy to the Trustee.  Such notice shall state:  (i) that a Change of
Control has occurred and that such Holder has the right to require the Company
to repurchase such Holder's Notes, in whole or in part, and if in part equal to
$1,000 or integral multiples of $1,000, at a repurchase price in cash equal to
109% of the principal amount thereof; (ii) the circumstances and relevant facts
regarding such Change of Control (including, to the extent known to the Company,
relevant information with respect to the transaction giving rise to such Change
of Control, and if applicable, information with respect to pro forma historical
income, cash flow and capitalization after giving effect to such Change of
Control); (iii) the repurchase date (which shall be not earlier than 30 days or
later than 60 days from the date such notice is mailed) (the "Repurchase Date");
(iv)  that Holders electing to have a Note purchased pursuant to a Change of
Control Offer will be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, to
the Paying Agent (which may be the Company) at the address specified in the
notice prior to the close of business on the Repurchase Date; (v) that Holders
will be entitled to withdraw their election if the Paying Agent receives, not
later than the close of business on the third Business Day preceding the
Repurchase Date, a telegram, telex, facsimile transmission or other written
communication setting forth the name of the Holder, the principal amount of
Notes the Holder delivered for purchase, and a statement that such Holder is
withdrawing his or her election to have such Notes purchased; and (vi) that
Holders which elect to have their Notes purchased only in part will be issued
new Notes in a principal amount equal to the unpurchased portion of the Notes
surrendered.

     (c)  If the Company is required to repurchase Notes pursuant to the
provisions of this Section 4.17, it shall notify the Trustee in writing, at
least 30 days before a Redemption Date, of the Section of this Indenture
pursuant to which the repurchase shall occur, the Redemption Date, the principal
amount of Notes to be repurchased and the Redemption Price and shall furnish to
the Trustee an Officers' Certificate to the effect that (a) the Company is
required to make or has made a Change of Control Offer and (b) the conditions
set forth in Section 5.1 hereof have been satisfied, as the case may be. If the
Company elects to have the Trustee furnish notice of repurchase (as described
above) of the Notes to the Holders, the Company shall notify the Trustee in
writing and provide all the information and documentation required by this
paragraph, at least 45 days but not more than 60 days before a Redemption Date.

                                       28
<PAGE>

     (d)  On the Repurchase Date, the Company shall (i) accept for payment Notes
or portions thereof tendered pursuant to the Change of Control Offer, (ii)
deposit with the Trustee or a Paying Agent (or segregate, if the Company is
acting as its own Paying Agent) money in immediately available funds sufficient
to pay the purchase price of all Notes or portions thereof so tendered and (iii)
deliver or cause to be delivered to the Trustee Notes so accepted, together with
an Officers' Certificate indicating the Notes or portions thereof which have
been tendered to the Company. The Trustee or a Paying Agent shall promptly mail
to the Holders of Notes so accepted payment in an amount equal to the purchase
price therefor and promptly authenticate and mail to such Holders a new Note in
a principal amount equal to any unpurchased portion of the Note surrendered. The
Company will publicly announce the results of the Change of Control Offer on or
as soon as practicable after the Repurchase Date.

     (e)  In the event a Change of Control occurs and any repurchase pursuant to
the foregoing constitutes a "tender offer" for purposes of Rule 14e-1 under the
Exchange Act, the Company will comply with the requirements of Rule 14e-1 as
then in effect, to the extent applicable, and any other applicable securities
laws or regulations with respect to such repurchase.

     SECTION 4.18. Limitations on Payments for Consent.

     Neither the Company nor any of its Restricted Subsidiaries shall, directly
or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Note for or as an inducement to
any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.

     SECTION 4.19. Limitation on Business Activities.

     The Company shall not and shall not permit any of its Restricted
Subsidiaries to engage in any business other than Permitted Businesses, except
to such extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole.

     SECTION 4.20. Limitation on Restricted and Unrestricted Subsidiaries.

     (a)  The Board of Directors may, if no Default or Event of Default shall
have occurred and be continuing or would arise therefrom, designate an
Unrestricted Subsidiary to be a Restricted Subsidiary, provided however, that:
(i) any such redesignation will be deemed to be an incurrence as of the date of
such redesignation by the Company and its Restricted Subsidiaries of the Debt
(if any) of such redesignated Subsidiary for purposes of Section 4.9 of this
Indenture; and (ii) unless such redesignated Subsidiary does not have any Debt
outstanding (other than Permitted Debt), no such designation will be permitted
if immediately after giving effect to such redesignation and the incurrence of
any such additional Debt (other than Permitted Debt) the Company could not incur
$1.00 of additional Debt (other than Permitted Debt) pursuant to Section 4.9 of
this Indenture.

     (b)  The Board of Directors of the Company may, if no Default or Event of
Default shall have occurred and be continuing or would arise therefrom,
designate any Restricted Subsidiary to be an Unrestricted Subsidiary if:  (i)
such designation is at that time permitted under Section 4.11 of this Indenture
(for purposes of this clause (i), the Company will be deemed to have made an
Investment (other than a Permitted Investment) in that amount of the fair market
value of the equity of such Subsidiary held directly or indirectly by the
Company); (ii) immediately after giving effect to such designation, the Company
could incur $1.00 of additional Debt (in addition to Permitted Debt) pursuant to
Section 4.9 of this Indenture; (iii) such Subsidiary meets the requirements of
the definition of the term Unrestricted Subsidiary; and (iv) any Subsidiary of
such designated Restricted Subsidiary is designated as, and meets the
requirements of, an Unrestricted Subsidiary.

     (c)  Any such designation by the Board of Directors shall be evidenced to
the Trustee by filing with the Trustee a certified copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the conditions of this Section 4.20 and was in
accordance with Section 4.11 of this Indenture.

     SECTION 4.21. Subsidiary Guarantee

                                       29
<PAGE>

     (a)  Guarantee.

          Each of the Guarantors fully and unconditionally and jointly and
severally, guarantee to each Holder the obligations of the Company under this
Indenture and the Notes in accordance with this Section 4.21(a).

               (i)     Subject to this Section 4.21, each of the Guarantors
hereby, fully and unconditionally and jointly and severally guarantees to each
Holder of a Note authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, irrespective of the validity and enforceability
of this Indenture, the Notes or the obligations of the Company hereunder or
thereunder, including, that: (a) the principal on the Notes will be promptly
paid in full when due, whether at maturity, by acceleration, redemption or
otherwise, and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
whether at Maturity, by acceleration, redemption or otherwise. Failing payment
when due of any amount so guaranteed or any performance so guaranteed for
whatever reason, each Guarantor shall be jointly and severally obligated to pay
the same immediately. Each Guarantor agrees that this is a guarantee of payment
and not a guarantee of collection.

               (ii)    The Guarantors hereby agree that their obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice and
all demands whatsoever, and covenants that this Subsidiary Guarantee shall not
be discharged except by complete performance of the obligations contained in the
Notes and this Indenture.

               (iii)   If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
the Guarantors, any amount paid by either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.

               (iv)    Each Guarantor agrees that it shall not be entitled to
any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Guarantor further agrees that, as between the
Guarantors, on the one hand, and the Holders and the Trustee, on the other hand,
(x) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Article 6 hereof for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such obligations as provided in
Article 6 hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of the
Subsidiary Guarantee. The Guarantors shall have the right to seek contribution
from any non-paying Guarantor so long as the exercise of such right does not
impair the rights of the Holders under the Subsidiary Guarantee.

     (b)  Subordination of Subsidiary Guarantee.

          The obligations of each Guarantor shall be general unsecured
obligations of each Guarantor. The Subsidiary Guarantees shall rank in priority
in accordance with this Section 4.21(b).

          (i) The obligations of each Guarantor under its Subsidiary Guarantee
pursuant to this Section 4.21 are general unsecured obligations of each
Guarantor. Payment on the Notes and under the guarantees thereof shall be
subordinated to payment in full in cash or cash equivalents of (A) all existing
and future Senior Debt and (B) existing and future Guarantor Senior Debt. The
Subsidiary Guarantees shall rank junior in right of payment to all guarantees by
each Guarantor of existing and future Senior Debt. The Subsidiary Guarantee
ranks pari passu or senior to any existing and future senior subordinated debt
of the Guarantor. The Subsidiary Guarantee shall rank senior in right of payment
to all other existing and future subordinated obligations of such Guarantor.

                                       30
<PAGE>

          (ii)   No Guarantor shall incur or permit to exist any debt that shall
be by its terms subordinated in right of payment to Guarantor Senior Debt but
shall rank senior in right of payment to such Guarantor's Subsidiary Guarantee
of the Notes.

          (iii)  Each Guarantor may incur additional indebtedness, including
Guarantor Senior Debt, as permitted under and in accordance with Section 4.9
hereof.

  (c)  [Intentionally Omitted]

  (d)  Execution and Delivery of Subsidiary Guarantee.

       Each Guarantor shall evidence its Subsidiary Guarantee in the form
included in Exhibit B of this Indenture and in accordance with this Section
            ---------
4.21(d).

          (i)    To evidence its Subsidiary Guarantee set forth in this Section
4.21, each Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit B shall be endorsed by an Officer
of such Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Guarantor by its
President or one of its Vice Presidents.

          (ii)   Each Guarantor hereby agrees that its Subsidiary Guarantee set
forth in this Section 4.21 shall remain in full force and effect notwithstanding
any failure to endorse on each Note a notation of such Subsidiary Guarantee.

          (iii)  If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.

          (iv)   The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of the Guarantors.

     (e)  Limitation on Consolidation or Merger or Sale of Assets.

          No Guarantor shall in a single transaction or a series of transactions
consolidate with, merge with or into, or sell, transfer, lease, convey or
otherwise dispose of all or substantially all its assets to any Person other
than the Company or any other Guarantor that is a Restricted Subsidiary except
in accordance with, and as permitted by, this Section 4.21(e), Section 4.15, and
Article 5 hereof.

          (i)    Subject to and except as provided in, and as permitted by, this
Section 4.21, 4.15 and Article 5, each Guarantor, other than any Guarantor whose
Subsidiary Guarantee is to be released in accordance with the terms of that
Subsidiary Guarantee and Section 4.21(g), shall not and the Company shall not
cause or permit any Guarantor, in a single transaction or a series of
transactions, to consolidate with or merge with or into or sell, transfer,
lease, convey or otherwise dispose of all or substantially all its assets to any
Person other than the Company or any other Guarantor that is a Restricted
Subsidiary unless:

                 (A)  the entity formed by or surviving any such consolidation
or merger if other than the Guarantor, is a corporation organized and existing
under the laws of England and Wales or the United States or any state thereof or
the District of Columbia;

                 (B)  such surviving entity, if other than the Guarantor fully
and unconditionally assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, this Indenture and the Subsidiary Guarantee on the
terms set forth herein or therein; and

                 (C)  immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing.

          (ii)   Any such consolidation, merger, sale or conveyance and upon the
assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the

                                       31
<PAGE>

Trustee, of the Subsidiary Guarantee endorsed upon the Notes and the due and
punctual performance of all of the covenants and conditions of this Indenture to
be performed by the Guarantor, such successor Person shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor Person thereupon may cause to be signed
any or all of the Subsidiary Guarantees to be endorsed upon all of the Notes
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee. All the Subsidiary Guarantees so issued shall in
all respects have the same legal rank and benefit under this Indenture as the
Subsidiary Guarantees theretofore and thereafter issued in accordance with the
terms of this Indenture as though all of such Subsidiary Guarantees had been
issued at the date of the execution hereof.

          (iii)  Any merger or consolidation of a Guarantor with or into the
Company, with the Company being the surviving entity, or with or into another
Guarantor that is a Restricted Subsidiary shall be permitted if the Guarantor
delivers to the Trustee an Officers' Certificate stating that such consolidation
or merger, and if a supplemental indenture is required in connection with such
transaction, such supplemental indenture, complies with the applicable
provisions of this Indenture and that all conditions precedent in this
Indenture, including without limitation, this Section 4.21 and Article 5 herein,
relating to such transaction shall be satisfied.

          (iv)   Except as set forth in Articles 4 and 5 hereof, and
notwithstanding anything to the contrary above, nothing contained in this
Indenture or in any of the Notes shall prevent any consolidation or merger, or
sale of assets of a Guarantor with or into the Company or another Guarantor that
is a Restricted Subsidiary, nor shall it prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.

     (f)  Contribution.

     Each Guarantor that makes a payment or distribution under a Subsidiary
Guarantee shall be entitled to a pro rata contribution from each other
Guarantor; such pro rata contributions shall be calculated on the basis of the
net assets of each other Guarantor.

     (g)  Release.

     Subject to the conditions set forth in this Section 4.21(g), each Guarantor
shall be automatically released from its respective Subsidiary Guarantee under
the following circumstances:

          (i)    Guarantor will be automatically released and relieved of any
obligations under its Subsidiary Guarantee under the following circumstances:
(A) a sale or other disposition of all or substantially all of the assets of any
Guarantor, by way of merger, consolidation or otherwise, or a sale or
disposition of all or substantially all of the assets or a sale or other
disposition of all the capital stock of any Guarantor, in each case to a Person
that is not (either before or after giving effect to such transactions) a
Restricted Subsidiary of the Company, in accordance with Section 4.21(e) and
Article 5 hereof, then such Guarantor (in the event of a sale or other
disposition, by way of merger, consolidation or otherwise, of all of the capital
stock of such Guarantor) or the corporation acquiring the property (in the event
of a sale or other disposition of all or substantially all of the assets of such
Guarantor); provided that the Net Proceeds of such sale or other disposition are
applied in accordance with Section 4.15 of this Indenture; (B) dissolution or
liquidation of the Guarantor in accordance with this Indenture; or (C)
designation by the Company of any such Guarantor as an Unrestricted Subsidiary
in accordance with this Indenture.

          (ii)   Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that any event set forth in
clause (i) above has occurred in accordance with the provisions of this
Indenture, the Trustee shall execute any documents reasonably required in order
to evidence the release of any Guarantor from its obligations under its
Subsidiary Guarantee.

          (iii)  Any Guarantor not released from its obligations in accordance
with clause (ii) above under its Subsidiary Guarantee shall remain liable for
the full amount of principal of the Notes and for the other obligations of any
Guarantor under this Indenture as provided in this Section 4.21.

     (h)  Subsidiary Guarantees for Other Subordinated Debt.

                                       32
<PAGE>

     The Company shall not permit any Restricted Subsidiary to guarantee other
indebtedness that is subordinate or junior to the Notes in right of payment or
that ranks equally with the Notes in right of payment unless the Restricted
Subsidiary guarantor shall fully and unconditionally guarantee jointly and
severally, to each Holder of the Notes and the Trustee, the payment of the
principal of, and premium, if any, on the Notes as follows:  If the other
subordinated debt that is being guaranteed is expressly subordinate or junior in
right of payment to the Notes, the Notes shall be guaranteed by a guarantee
which is senior in right of payment to the Restricted Subsidiary guarantees of
the other subordinated debts.  In other cases, the Notes shall be equally and
ratably guaranteed.  Any such guarantee shall be pursuant to a supplemental
indenture in form and substance satisfactory to the Trustee and pursuant to
which such Restricted Subsidiary shall execute and deliver, in accordance with
Section 4.21(d) hereof, a notation of such Subsidiary Guarantee substantially in
the form of Exhibit B attached hereto, and all other existing Guarantors shall
            ---------
execute and deliver a supplemental indenture substantially in the form of
Exhibit C attached hereto  for the purpose of  amending their respective
---------
notation of the Subsidiary Guarantee so as to have the effect of amending
Schedule I to the notation of such Guarantor to add such new Guarantor.

     SECTION 4.22. Maintenance of All Registration, Regulations and Licenses.

     The Company shall maintain registrations, licenses, permits, privileges and
franchises material to the conduct of its business and shall comply in all
material respects with all laws,  rules,  regulations and orders of any
government entity.

     SECTION 4.23. Payment of Additional Amounts.

     (a)  All payments made by or on behalf of the Company under or with respect
to the Notes shall be made free and clear of and without withholding or
deduction for or on account of any present or future tax, duty, levy, impost,
assessment or other governmental charge (including penalties, interest and other
liabilities related thereto) imposed or levied by or on behalf of the Government
of the United Kingdom or of any territory thereof, by any authority or agency
therein or thereof having power to tax (hereinafter "Taxes"), unless the Company
is required to withhold or deduct any amount for or on account of Taxes by law
or by the interpretation or administration thereof by the relevant government
authority or agency. If the Company is so required to withhold or deduct any
amount for or on account of Taxes from any payment made under or with respect to
the Notes, the Company shall pay such additional amounts ("Additional Amounts")
as may be necessary so that the net amount received by each Holder (including
Additional Amounts) after such withholding or deduction shall not be less than
the amount the Holder would have received if such Taxes had not been withheld or
deducted; provided, however, that no Additional Amounts shall be payable with
respect to payments made to a Holder (an "Excluded Holder") in respect of a
beneficial owner (i) which is subject to such Taxes by reason of its being
connected with the United Kingdom otherwise than by the mere holding of Notes or
the receipt of payments thereunder; (ii) with respect to any Taxes that would
not have been imposed, due or payable but for a failure by the Holder to comply
with a request by the Company to satisfy any certification, identification or
other reporting requirements, whether imposed by statute, regulation, treaty or
administrative practice concerning nationality, residence or connection with the
United Kingdom; (iii) with respect to any Taxes that would not have been
imposed, due or payable but for the Holder's presentation of a Note for payment
more than 30 days after the relevant payment is first made available to the
Holder (except to the extent that the Holder would have been entitled to
Additional Amounts had the Note been presented on any day (including the last
day) within such 30-day period); (iv) where such withholding or deduction is
imposed on a payment to an individual and is required to be made pursuant to any
European Union Directive on the taxation of savings implementing the conclusions
of the ECOFIN Council meeting of 26-27 November 2000, or any law implementing or
complying with, or introduced in order to conform to, such Directive. The
Company shall make any such withholding or deduction as required and remit the
full amount deducted or withheld to the relevant authority as and when required
in accordance with applicable law.

     (b)  The Company shall furnish to the Holder, within 30 days after the date
the payment of any Taxes referred to in (a) above is due pursuant to applicable
law, evidence of such payment by the Company.

                                      33
<PAGE>

     (c)  The foregoing obligations shall survive any termination, defeasance or
discharge of the Indenture.

     SECTION 4.24. Internal Revenue Service Filing.

     The Company shall file a United States Internal Revenue Service Form 8281,
Information Return for Publicly Offered Original Issue Discount Instruments,
with the United States Internal Revenue Service within the time and in the
manner required by law and shall mail a copy of such filing to the Trustee
within 15 days after such filing with the Internal Revenue Service.

                                  ARTICLE  5

                                  SUCCESSORS

     SECTION 5.1. Limitation on Mergers, Consolidations and Sales of All Assets
in respect to the Company.

     The Company shall not, in a single transaction or a series of related
transactions, (i) consolidate with, amalgamate, or merge with or into any other
Person or permit any other Person to consolidate with or merge into the Company
or any Subsidiary of the Company (in a transaction in which such Subsidiary
remains a Subsidiary of the Company); or (ii) sell, assign, transfer, lease,
convey or otherwise dispose of (or cause or permit any Subsidiary of the Company
to sell, assign, transfer, lease, convey or otherwise dispose of) all or
substantially all of the Company's assets (determined on a consolidated basis
for the Company and its Subsidiaries), unless, in either such case:  (A)
immediately before and immediately after giving effect to the transaction and
the assumption contemplated by clause (C)(2) below (including giving effect to
any Debt and Acquired Debt Incurred or anticipated to be Incurred and any Lien
granted in connection with or in respect of the transaction), no Default or
Event of Default has occurred or is continuing; (B) the Company is the surviving
or continuing corporation; or (C) the Person (if other than the Company) formed
by the consolidation or amalgamation or into which the Company is merged or the
Person that acquires the properties and assets of the Company and of the
Company's Subsidiaries substantially as an entirety (the "Surviving Entity") (1)
is a corporation organized and validly existing under the laws of England and
Wales or the United States or any State thereof or the District of Columbia and
(2) expressly assumes, by a supplemental indenture, the due and punctual payment
of the principal of, and premium, if any, on all of the Notes and the
performance of every covenant of the Notes and this Indenture on the part of the
Company or Subsidiary Guarantee on the part of Guarantor, to be performed or
observed; (D) immediately after giving effect to the transaction and the
assumption contemplated by clause (i)(C)(2) above (including giving effect to
any Debt and Acquired Debt incurred or anticipated to be incurred in connection
with or in respect of such transaction), the Company or Surviving Entity, as the
case may be  (x) can incur at least $1.00 of additional Debt (in addition to
Permitted Debt) pursuant to Section 4.9 of this Indenture, or, alternatively (y)
the Consolidated Fixed Charge Coverage Ratio is not reduced as a result of the
transaction; (E) the Company or the Surviving Entity agree to indemnify each
Holder of the Notes against any tax, levy, assignment or governmental change
payable by withholding or deduction which may be imposed on the Holder as a
result of such an amalgamation, merger or consolidation; and (F) the Company or
the Surviving Entity shall have delivered to the Trustee, prior to the
consummation of the proposed transaction, an Officers' Certificate, and an
Opinion of Counsel, each stating that such consolidation, merger, amalgamation,
sale, assignment, transfer, lease, conveyance or other disposition and, if a
supplemental indenture to this Indenture is required in connection with such
transaction, such supplemental indenture shall comply with the applicable
provision of this Indenture and all conditions precedent in this Indenture
relating to such transaction shall have been satisfied; provided that clause (A)
above shall not apply to a Change of Domicile.

     SECTION 5.2. Successor Corporation Substituted.

     Upon any consolidation, amalgamation, or merger, or any sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company, in accordance with Section 5.1 hereof, in which the Company is not the
continuing corporation or the successor Person formed or surviving any such
consolidation, amalgamation,

                                       34
<PAGE>

or merger, or to which a sale, lease, conveyance or other disposal of all or
substantially all of the Company's assets is made the Surviving Entity shall
succeed to and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such Surviving
Entity has been named as the Company herein, and, except in the case of a lease,
the predecessor corporation shall be relieved of all obligations and covenants
under this Indenture and the Notes.

     SECTION 5.3. Limitations on Mergers, Consolidations and Sales of All Assets
in respect to Guarantors.

     In accordance with Section 4.21 hereof, a Guarantor shall not, in a single
transaction or a series of related transactions consolidate with, amalgamate, or
merge with or into any other Person or permit any other Person to consolidate
with or merge into the Guarantor or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of the Guarantor's assets, except
as permitted under this Article 5 as if the Guarantor were deemed to be the
Company.

                                  ARTICLE  6

                             DEFAULTS AND REMEDIES

     SECTION 6.1. Events of Default.

     (a)  A "DEFAULT" or  "EVENT OF DEFAULT" shall occur if:

          (i)    the Company fails to pay principal of, or premium, if any, on
any of the Notes when the same becomes due;

          (ii)   the Company fails to pay principal of, or premium, if any, on
Notes required to be purchased pursuant to a Change of Control Offer as
described in Section 4.17 hereof or pursuant to Net Proceeds Offer as described
in Section 4.15 hereof, when due and payable;

          (iii)  the Company fails to perform any other covenant, warranty,
term, condition, provision or agreement (other than the provisions of Article 5
hereof) of the Company contained in the Notes or this Indenture and such failure
continues for 30 days after the notice specified below;

          (iv)   the Company fails to perform or comply with the provisions
described under Article 5 herein;

          (v)    the occurrence of a default under any Debt of the Company or
any Subsidiary of the Company if both (A) such default either results from
failure to pay any such Debt at its Stated Maturity or relates to an obligation
other than the obligation to pay such Debt at its Stated Maturity and results in
the holders of such Debt causing such Debt to become due before its stated
maturity and (B) the principal amount of such Debt, together with the principal
amount of any other such Debt is in default for failure to pay principal at the
Stated Maturity of the maturity of which has been accelerated, aggregated at
least $25 million or more at any one time outstanding;

          (vi)   the rendering of a final judgment or judgments (not subject to
appeal) by a court of competent jurisdiction against the Company or any of its
Restricted Subsidiaries in an aggregate amount at any one time in excess of $10
million and shall not have been vacated, discharged, satisfied or stayed within
60 consecutive days thereafter;

          (vii)  any Subsidiary Guarantee ceases to be in full force and effect
or any Subsidiary Guarantee is declared to be null and void and unenforceable or
any Subsidiary Guarantee shall be found to be invalid or any Guarantor shall
deny its liability under its Subsidiary Guarantee, other than by reason of
release of such Guarantor in accordance with Section 4.21 of this Indenture;

                                       35
<PAGE>

          (viii) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law;

                 (A) commences a voluntary case or proceeding;

                 (B) consents to the entry of an order for relief against it in
an involuntary case or proceeding or the commencement of any case against it;

                 (C) consents to the appointment of a Custodian of it or for any
substantial part of its property;

                 (D) makes a general assignment for the benefit of its
creditors;

                 (E) files a petition in bankruptcy or an answer or consent
seeking reorganization or relief; or

                 (F) consents to the filing of such petition in bankruptcy or
the appointment of or taking possession by a Custodian; and

          (ix)   a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:

                 (A) is for relief against the Company or any Restricted
Subsidiary in an involuntary case or proceeding;

                 (B) appoints a Custodian of the Company or any Restricted
Subsidiary or for any substantial part of its property; or

                 (C) orders the winding up or liquidation of the Company or any
Restricted Subsidiary;

and the order or decree remains unstayed and in effect for 60 days.

     The foregoing provisions in this Section 6.1(a) shall constitute Defaults
or Events of Default whatever the reason for any such Event of Default and
whether it is voluntary or involuntary or is effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body.

     (b)  Subject to the provisions of this Indenture relating to the duties of
the Trustee, set forth in Section 7 hereof, in case an Event of Default shall
occur and be continuing, the Trustee shall be under no obligation to exercise
any of its rights or powers under this Indenture at the request or direction of
any of the Holders, unless such Holders shall have offered to the Trustee
indemnity reasonably satisfactory to the Trustee, in accordance with Sections
6.6 and 7.1(5) hereof. Subject to Section 7.7 and in accordance with Section 6.5
hereof, the Holders of a majority in aggregate principal amount of the
outstanding Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee.

     (c)  A Default under Section 6.1(a)(ii) above is not an Event of Default
until the Trustee notifies the Company, or the Holders of at least 25% in
aggregate principal amount of the outstanding Notes notify the Company and the
Trustee, of the Default, and the Company or the applicable Subsidiary of the
Company does not cure the Default within 60 days after receipt of such notice.
The notice must specify the Default, demand that it be remedied and state that
the notice is a "Notice of Default" under this Section 6.1. Such notice shall be
given by the Trustee if so requested by the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding. When a Default is cured or
waived, it ceases.

     (d)  The Company shall notify the Trustee in writing within five (5)
Business Days of the occurrence of a Default or an Event of Default, in
accordance with Section 4.4(b) hereof.

     (e)  For purposes of Section 6.1(a)(viii) and Section 6.1(a)(ix), it shall
not be a Default or Event of Default if such proceedings are commenced or such
orders or decrees are issued solely for the purpose of giving effect to a Change
of Domicile transaction.

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<PAGE>

     SECTION 6.2. Acceleration.

     (a)  If an Event of Default (other than an Event of Default specified in
Section 6.1(a)(viii) or Section 6.1(a)(ix) hereof, with respect to the Company
or any Significant Subsidiary of the Company occurs and is continuing, either
(i) the Trustee may, by written notice to the Company or (ii) the Holders of at
least 25% in aggregate principal amount of the outstanding Notes may, by written
notice to the Company and the Trustee, and upon such request of such Holders the
Trustee shall (by notice as provided in clause (i) above), declare the aggregate
principal amount of the Notes outstanding to be due and payable and, upon any
such declaration the same shall become due and payable; provided however, that
after such acceleration, but before a judgment or decree based on acceleration,
the Holders of a majority in aggregate principal amount of the outstanding
Notes, may under certain circumstances, rescind and annul such acceleration if
all Events of Default, other than the non-payment of accelerated principal, have
been cured or waived as provided in this Indenture.  If an Event of Default
specified in Section 6.1(a)(viii)  or Section 6.1(a)(ix) hereof with respect to
the Company or any Significant Subsidiary of the Company occurs, the aggregate
principal amount of the Notes outstanding shall become immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder of the Notes.

     (b)  After a declaration of acceleration has been made, but before a
judgment or decree for payment of the money due has been obtained by the
Trustee, the Holders of at least a majority in aggregate principal amount of
Notes outstanding, by written notice to the Company and the Trustee, may annul
such declaration if (i) the Company has paid or deposited with the Trustee a sum
sufficient to pay (A) all sums paid or advanced by the Trustee, its agents and
counsel under this Indenture and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.7, (B) to the extent that payment of
such interest is lawful, interest upon overdue interest at the rate borne by the
Notes, and (C) principal due otherwise than by acceleration; and (ii) all Events
of Default, other than the nonpayment of principal of the Notes which have
become due solely by such declaration of acceleration, have been cured or
waived. Notwithstanding the foregoing, any acceleration of payment of the Notes
from the failure of the Company to make a payment on the Notes during a Blockage
Period (an "Acceleration Due to Blockage") automatically shall be rescinded if
and when the following conditions are satisfied within five Business Days
following the end of such Blockage Period: (A) the payment in respect of the
Notes, the failure of which gave rise to such Event of Default, is made; and (B)
no other Event of Default, other than an Event of Default which has occurred
solely as a result of the acceleration of other Debt of the Company or any
Subsidiary prior to its express maturity that was caused solely by an
Acceleration Due to Blockage, shall have occurred and be continuing.

     SECTION 6.3. Other Remedies.

     (a)  If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of, and premium, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.

     (b)  The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All available remedies are cumulative to the extent permitted by
law.

     SECTION 6.4. Waiver of Past Defaults.

     Subject to Sections 6.7 and 9.2, the Holders of a majority in aggregate
principal amount of the Notes outstanding may on behalf of the Holders of all
the Notes waive any past defaults under this Indenture and its consequences,
except a default in the payment of the principal of, and premium, if any, on any
Note, or in respect of a covenant or provision which under this Indenture cannot
be modified or amended without the consent of the Holder of each Note
outstanding.

     SECTION 6.5. Control by Majority.

     The Holders of a majority in aggregate principal amount of the outstanding
Notes may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or

                                       37
<PAGE>

power conferred on it including, without limitation, any remedies provided for
in Section 6.3. Subject to Section 7.1, however, the Trustee may refuse to
follow any direction that conflicts with any law or this Indenture, or that the
Trustee determines may be unduly prejudicial to the rights of another Holder, or
that may involve the Trustee in personal liability, provided that the Trustee
may take any other action deemed proper by the Trustee which is not inconsistent
with such direction.

     SECTION 6.6. Limitation on Suits.

     (a)  No Holder of any Note will have any right to institute any proceeding
with respect to this Indenture for any remedy thereunder, unless:

          (i)    such Holder previously has given to the Trustee written notice
of a continuing Event of Default;

          (ii)   the Holder or Holders of at least 25% in aggregate principal
amount of the outstanding Notes will have made written request to the Trustee to
institute such proceeding as trustee;

          (iii)  such Holders offer to the Trustee indemnity reasonably
satisfactory to the Trustee against any loss, liability or expense to be
incurred in compliance with such request;

          (iv)   the Trustee fails to institute such proceeding within 60 days
after receipt of such request and the offer of reasonable indemnity; and

          (v)    during such 60-day period the Trustee has not received from
Holders of a majority in aggregate principal amount of the outstanding Notes a
direction which, in the opinion of the Trustee, is inconsistent with the
request.

     (b)  A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.

     (c)  This Section 6.6 does not apply to a suit instituted by a Holder of a
Note for enforcement of payment of the principal of, and premiums, on such Note
or after the respective due dates expressed in such Note.

     SECTION 6.7. Rights of Holders to Receive Payment.

     Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of, and premium, if any, on, a Note, on
or after the respective due dates expressed in such Note, or to bring suit for
the enforcement of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of the Holder.

     SECTION 6.8. Collection Suit by Trustee.

     If an Event of Default in payment of principal, and premium, if any,
specified in clause (i) or (ii) of Section 6.1 occurs and is continuing, or if
any other Event of Default has occurred and the amounts due have been
accelerated, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company or any other obligor on the Notes for the
whole amount of principal, and premium, if any, as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.

     SECTION 6.9. Trustee May File Proofs of Claim.

     The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and the Holders allowed in
any judicial proceedings relating to the Company or any other obligor upon the
Notes, any of their respective creditors or any of their respective property and
shall be entitled and empowered to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same,
and any custodian in any such judicial proceedings is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the

                                       38
<PAGE>

Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agent and counsel, and
any other amounts due the Trustee under Section 7.7 hereof. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Noteholder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Holder thereof, or to authorize the Trustee to vote in respect of the claim of
any Noteholder in any such proceeding.

     SECTION 6.10.  Priorities.

     If the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:

          First:  to the Trustee, its agents and attorneys for amounts due under
     Section 7.7 hereof, including without limitation payment of all
     compensation, expense and liabilities incurred, and all advances made, by
     the Trustee and the costs and expenses of collection;

          Second:  to holders of Senior Debt to the extent required by Article
     11 hereof;

          Third:  to Holders for amounts due and unpaid on the Notes for
     principal, and premium, if any, without preference or priority of any kind,
     according to the amounts due and payable on the Notes for principal, and
     premium, if any, respectively;

          Fourth:  to holders of any other subordinated Debt of the Company for
     amounts due and unpaid on such subordinated Debt, including the 10% Notes
     for principal, and premium, if any, and interest, ratably, in accordance
     with the appropriate preferences and priorities of such subordinated Debt,
     according to the amounts due and payable on such subordinated debt for
     principal, premium, if any, and interest respectively; and

          Fifth:  to the Company.

     The Trustee, upon prior notice to the Company, may fix a record date and
payment date for any payment to Holders pursuant to this Section 6.10.

     SECTION 6.11.  Undertaking for Costs.

     In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
shall not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.7 hereof, or a suit by a Holder or Holders of more than 10% in aggregate
principal amount of the outstanding Notes.

     SECTION 6.12.  Reports to the Trustee.

     The Company shall furnish to the Trustee a statement annually of (a) the
Company's performance of certain obligations under this Indenture and (b) any
Default in such performance, including any Default identified in a notice made
pursuant to Section 4.4(b) hereof.  The Company shall provide written notice of
Default or Event of Default in accordance with Section 6.1(d) hereof.

                                       39
<PAGE>

                                  ARTICLE  7

                                    TRUSTEE

     SECTION 7.1. Duties of Trustee.

     (a)  If an Event of Default has occurred and is continuing, the Trustee,
subject to subparagraph (e) below, shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in its
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.

     (b)  Except during the continuance of an Event of Default:

          (i)    The duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against the
Trustee.

          (ii)   In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture.  However, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.

     (c)  The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:

          (i)    This paragraph does not limit the effect of paragraph (b) of
this Section 7.1.

          (ii)   The Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.

          (iii)  The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to the terms of this Indenture.

     (d)  Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), (c) and (e) of this Section 7.1.

     (e)  No provision of this Indenture shall require the Trustee to (i) expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder if it shall have reasonable grounds
for believing that repayment of such funds is not assured to it or it does not
receive indemnity reasonably satisfactory to the Trustee against such expense,
risk or liability or (ii) take or omit to take any action under this Indenture
or take any action at the request or direction of Holders if it does not receive
an indemnity against such risk, liability, loss, fee or expense which might be
incurred by it in compliance with such request or direction.

     (f)  The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.

     SECTION 7.2. Rights of Trustee.

     (a)  The Trustee may conclusively rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.

     (b)  Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.

                                       40
<PAGE>

     (c)  The Trustee may act through agents or attorneys and shall not be
responsible for the misconduct or negligence of any agent or attorney appointed
with due care.

     (d)  The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers conferred upon it by this Indenture.

     (e)  Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.

     (f)  The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.

     SECTION 7.3. Individual Rights of Trustee.

     The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company or an Affiliate of the
Company with the same rights it would have if it were not Trustee. Any Paying
Agent may do the same with like rights. However, the Trustee is subject to
Sections 7.10 and 7.11 hereof.

     SECTION 7.4. Trustee's Disclaimer.

     The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Notes, it shall not be accountable for the Company's use of the
proceeds from the Notes or any money paid to the Company or upon the Company's
direction under any provision hereof, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee and
it shall not be responsible for any statement or recital herein or any statement
in the Notes or any other document in connection with the sale of the Notes,
other than its certificate of authentication.

     SECTION 7.5. Notice of Defaults.

     If a Default or an Event of Default known to the Trustee occurs and is
continuing, the Trustee shall mail to each Noteholder a notice of the Default or
Event of Default within 90 days after it occurs. Except in the case of a Default
in payment on any Note (including the failure to make a mandatory redemption
pursuant hereto), the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of Holders. For purposes of Section 6.2, Section
7.1 and this Section 7.5, the Trustee shall not be deemed to have knowledge of a
Default or an Event of Default unless a Responsible Officer has actual knowledge
thereof or unless written notice of such Default or Event of Default is received
by the Trustee and such notice refers to the Notes or this Indenture.

     SECTION 7.6. Reports by Trustee to Holders.

     (a)  Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as the Notes remain outstanding, the
Trustee shall mail to all Holders a brief report dated as of such reporting date
that complies with TIA Section 313(a), if such a report is required pursuant to
TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b). The
Trustee shall also transmit by mail all reports as required by TIA Section
313(c).

     (b)  Commencing at the time this Indenture is qualified under the TIA, a
copy of each such report at the time of its mailing to Holders shall be filed
with the Commission and each stock exchange, if any, on which the Notes are
listed. The Company or any other obligor upon the Notes shall promptly notify
the Trustee if the Notes become listed on any stock exchange or of any delisting
thereof.

     SECTION 7.7. Compensation and Indemnity.

     (a)  The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation

                                       41
<PAGE>

of a trustee of an express trust. The Company shall reimburse the Trustee
promptly upon request for all reasonable disbursements, advances and expenses
incurred or made by it in addition to the compensation for its services. Such
expenses shall include reasonable compensation, disbursements and expenses of
the Trustee's agents and counsel, except as set forth in Section 7.7(d).

     (b)  The Company shall indemnify the Trustee and its officers, directors,
employees and agents against any loss, liability or expense incurred by the
Trustee or such person arising out of or in connection with the offer and sale
of the Notes or the acceptance or administration of its duties under this
Indenture (including but not limited to its services of Registrar and Paying
Agent), including the costs and expenses of enforcing this Indenture against the
Company (including this Section 7.7) and defending itself against any claim
(whether asserted by the Company or any Holder or any other person) or liability
in connection with the exercise or performance of any of its powers or duties
hereunder, except as set forth in Section 7.7(d). The Trustee shall notify the
Company promptly of any claim asserted against the Trustee for which it may seek
indemnity; provided, that failure to so notify the Company shall not affect the
Company's indemnity obligations hereunder.

     (c)  The obligations of the Company under this Section 7.7 to compensate
and indemnify the Trustee and its agents and to reimburse the Trustee for its
reasonable expenses shall survive the resignation or removal of the Trustee, the
termination of the Company's obligations hereunder and the satisfaction and
discharge of this Indenture.

     (d)  The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through negligence or willful
misconduct.

     (e)  The obligations of the Company under this Section shall not be
subordinated to the payment of Senior Debt pursuant to Article 11. To secure the
Company's payment obligations in this Section 7.7, the Trustee shall have a Lien
prior to the Notes on all money or property held or collected by the Trustee, in
its capacity as Trustee, except that held in trust to pay principal, and
premium, if any, on particular Notes. Such Lien shall survive the resignation or
removal of the Trustee and the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of Default
specified in Section 6.1(a)(viii) or Section 6.1(a)(ix) occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) shall be preferred over the status of the Holders in a proceeding
under any Bankruptcy Law and are intended to constitute expenses of
administration under any Bankruptcy Law.

     SECTION 7.8.   Replacement of Trustee.

     (a)  A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.

     (b)  The Trustee may resign in writing at any time, in accordance with the
requirements of the TIA, and be discharged from the trust hereby created by so
notifying the Company. The Holders of a majority in principal amount of the then
outstanding Notes may remove the Trustee by so notifying the Trustee and the
Company in writing at least 30 days prior to the date or proposed removal;
provided that at such date no Default or Event of Default shall have occurred
and be continuing. The Company may remove the Trustee if:

              (i)   the Trustee fails to comply with Section 7.10 hereof;

              (ii)  the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any Bankruptcy
Law;

              (iii) a custodian or public officer takes charge of the Trustee or
its property; or

              (iv)  the Trustee becomes incapable of acting.

     (c)  If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company and any other obligor upon the
Notes shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the then outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.

                                       42
<PAGE>

     (d)  If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least a majority in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.

     (e)  If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10 hereof, any
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.

     (f)  A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to each Noteholder. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums owing
to the Trustee hereunder have been paid and subject to the Lien provided for in
Section 7.7. Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's obligations under Section 7.7 hereof shall continue for the
benefit of the retiring Trustee.

     SECTION 7.9.   Successor Trustee by Merger, Etc.

     If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee, provided that such successor is eligible and qualified under this
Article 7.

     SECTION 7.10.  Eligibility; Disqualification.

     (a)  There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America or of any state thereof authorized under such laws to exercise corporate
trustee powers, shall be subject to supervision or examination by federal or
state authority and shall have a combined capital and surplus of at least $100
million as set forth in its most recent published annual report of condition.

     (b)  This Indenture shall always have a Trustee which satisfies the
requirements of TIA Sections 310(a)(1).  The Trustee is subject to TIA Section
310(a)(5) concerning inability of a trustee to be a direct or indirect obligor
of the Notes and is subject to TIA Section 310(b) regarding disqualification of
a trustee upon acquiring any conflicting interest. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Trustee shall resign immediately in the manner and with the effect specified
in this Article 7. Nothing contained herein shall prevent the Trustee from
filing the application in TIA Section 310(b) regarding resignation.

     SECTION 7.11.  Preferential Collection of Claims Against Company.

     The Trustee, in its capacity as Trustee hereunder, is subject to TIA
Section 311(a), subject to the creditor relationship provisions listed in TIA
Section 311(b). A Trustee who has resigned or been removed shall be subject to
TIA Section 311(a) to the extent indicated therein.

     SECTION 7.12.  Permitted Transactions.

     (a)  The Trustee shall be limited, should it become a creditor of the
Company, in its ability to obtain payment of claims or to realize on certain
property received by it in respect of any such claim as security or otherwise.

     (b)  The Trustee is permitted to engage in other transactions with the
Company or any of its Affiliates; provided, however, that if it acquires any
conflicting interest, as defined under the TIA, the Trustee must eliminate such
conflict or resign.

                                       43
<PAGE>

                                   ARTICLE 8

                            DISCHARGE OF INDENTURE

     SECTION 8.1.   Legal Defeasance and Covenant Defeasance of the Notes.

     (a)  The Company may, at its option by Board Resolution, at any time, with
respect to the Notes, elect to have either paragraph (b) or paragraph (c) below
be applied to the outstanding Notes upon compliance with the conditions set
forth in paragraph (d).

     (b)  Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (b), the Company shall be deemed to have been
released and discharged from its obligations with respect to the outstanding
Notes on the date the conditions set forth below are satisfied (hereinafter,
"legal defeasance"). For this purpose, such legal defeasance means that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of the Sections of and matters under this
Indenture referred to in (i) and (ii) below, and to have satisfied all its other
obligations under such Notes and this Indenture insofar as such Notes are
concerned, except for the following which shall survive until otherwise
terminated or discharged hereunder: (i) the rights of Holders of outstanding
Notes to receive solely from the trust fund described in paragraph (d) below and
as more fully set forth in such paragraph, payments in respect of the principal
of, and premium, if any, on such Notes when such payments are due and (ii)
obligations listed in Section 8.3.

     (c)  Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (c), the Company shall be released and discharged
from its obligations under any covenant contained in Section 5.1 hereof and in
Sections 4.2 through 4.24 hereof (subject to compliance with the Company's
obligations under the TIA), with respect to the outstanding Notes on and after
the date the conditions set forth below are satisfied (hereinafter, "covenant
defeasance"), and the Notes shall thereafter be deemed to be not "outstanding"
for the purpose of any direction, waiver, consent, declaration or act of Holders
(and the consequences of any thereof) in connection with such covenants, but
shall continue to be deemed "outstanding" for all other purposes hereunder. For
this purpose, such covenant defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section
6.1(a)(iii), nor shall any event referred to in Section 6.1(a)(viii) or Section
6.1(a)(ix) thereafter constitute a Default or an Event of Default thereunder
but, except as specified above, the remainder of this Indenture and such Notes
shall be unaffected thereby.

     (d)  The following shall be the conditions to application of either
paragraph (b) or paragraph (c) above to the outstanding Notes:

               (i)  The Company shall have irrevocably deposited in trust with
the Trustee, pursuant to an irrevocable trust and security agreement in form and
substance satisfactory to the Trustee, cash or U.S. Government Obligations
maturing as to principal and interest at such times, or a combination thereof,
in such amounts as are sufficient, without consideration of the reinvestment of
such interest and after payment of all federal, state and local taxes or other
charges or assessments in respect thereof payable by the Trustee, in the opinion
of a nationally recognized firm of independent certified public accountants
expressed in a written certification thereof (in form and substance reasonably
satisfactory to the Trustee) delivered to the Trustee, to pay the principal of,
and premium, if any, on the outstanding Notes on the dates on which any such
payments are due and payable in accordance with the terms of this Indenture and
of the Notes;

               (ii) (A) No Event of Default or Default shall have occurred and
be continuing on the date of such deposit, and (B) no Default or Event of
Default under Section 6.1(v) or 6.1(vi) shall occur on or before the 123rd day
after the date of such deposit;

                                       44
<PAGE>

               (iii)  Such deposit will not result in a Default under this
Indenture or a breach or violation of, or constitute a default under, any other
instrument or agreement to which the Company is a party or by which it or its
property is bound;

               (iv)   No default on any Senior Debt shall have occurred and be
continuing;

               (v)    In the case of a legal defeasance under paragraph (b)
above, the Company shall have delivered to the Trustee an Opinion of Counsel
stating that (A) the Company has received from, or there has been published by,
the Internal Revenue Service a ruling, or (B) since the date of this Indenture
there has been a change in the applicable federal income tax law, in either case
to the effect that, and based thereon such opinion shall confirm that, the
Holders of the Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such deposit, defeasance and discharge and will be
subject to federal income tax on the same amount, in the same manner and at the
same times as would have been the case if such deposit, defeasance and discharge
had not occurred; and, in the case of a covenant defeasance under paragraph (c)
above, the Company shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, in form and substance reasonably satisfactory to the
Trustee, to the effect that Holders of the Notes will not recognize income, gain
or loss for federal income tax purposes as a result of such deposit and
defeasance and will be subject to federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such deposit
and defeasance had not occurred;

               (vi)   The Holders shall have a perfected security interest under
applicable law in the cash or U.S. Government Obligations deposited pursuant to
Section 8.1(d)(i) above, or such cash or U.S. Government Obligations shall be
held in irrevocable trust for the benefit of all Holders;

               (vii)  The Company shall have delivered to the Trustee an Opinion
of Counsel, in form and substance reasonably satisfactory to the Trustee, to the
effect that (A) after the passage of 123 days following the deposit, the trust
funds will not be subject to any applicable bankruptcy, insolvency,
reorganization or similar law affecting creditors' rights generally, and (B)
neither the Company, the Trustee nor the trust is an investment company under
the Investment Company Act of 1940, or has been registered as an investment
company; and

               (viii) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating, to the defeasance contemplated by this
Section 8.1 have been complied with; provided however, that no deposit under
clause (i) above shall be effective to terminate the obligations of the Company
under the Notes or this Indenture prior to 123 days following any such deposit.

     In connection with the issuance of debt securities the proceeds of which
will be used to redeem all the Notes then outstanding, none of Section 4.9,
4.10, 4.11 or 4.12 hereof shall be violated by the issuance of such debt
securities to the extent the Company complies with all of the provisions of this
Section 8.1(d) other than Section 8.1(d)(ii)(B) hereof.  The Company shall use
its best efforts to ensure that the deposit referred to in Section 8.1(d)(i)
hereof does not result in the Company, the Trustee or the trust becoming or
being deemed an investment company under the Investment Company Act of 1940. In
the event that such deposit does result in the Company, the Trustee or the trust
becoming, or being deemed an investment company, the Company shall bear all
related expenses of registration and reporting under the Investment Company Act
of 1940 for the duration of the trust.

     SECTION 8.2.     Termination of Obligations Upon Cancellation of the Notes.

     In addition to the Company's rights under Section 8.1 hereof, the Company
may terminate all of its obligations under this Indenture and this Indenture
shall cease to be of further effect (subject to Sections 8.3 and 2.7 hereof)
when:

     (a)  either (i) all Notes theretofore authenticated and delivered (other
than Notes which have been destroyed, lost or stolen and which have been
replaced or paid and the Notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust) hereof have been delivered
to the Trustee for cancellation; or (ii) all Notes not theretofore delivered to
the Trustee for cancellation have become due and payable and the Company has
irrevocably deposited or caused to be deposited with the Trustee funds in an
amount sufficient to pay and discharge

                                       45
<PAGE>

the entire Indebtedness on the Notes not theretofore delivered to the Trustee
for cancellation for principal of and premium, if any, on the Notes to the date
of deposit together with irrevocable instructions from the Company directing the
Trustee to apply such funds to the payment thereof at maturity or redemption as
the case may be.

     (b)  the Company has paid or caused to be paid all other sums payable
hereunder and under the Notes by the Company; and

     (c)  the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, stating that all conditions precedent specified in this
Section 8 relating to the satisfaction and discharge of this Indenture have been
complied with.

     SECTION 8.3.   Survival of Certain Obligations.

     Notwithstanding the satisfaction and discharge of this Indenture and of the
Notes referred to in Sections 8.1 or 8.2 hereof, the respective obligations of
the Company and the Trustee, as applicable, under Sections 1.5, 2.3, 2.4, 2.5,
2.6, 2.7, 2.9, 2.10, 2.11, 2.14, 2.17, 4.1, 4.2, 4.23, 6.7, 7.7, 7.8, 8.5, 8.6,
8.7and Article 13 hereof shall survive until the Notes are no longer
outstanding, and thereafter the obligations of the Company under Sections 7.7,
8.5, 8.6 and 8.7 hereof shall survive. Nothing contained in this Article 8 shall
abrogate any of the obligations or duties of the Trustee as set forth in this
Indenture.

     SECTION 8.4.   Acknowledgment of Discharge by Trustee.

     Subject to Section 8.7 hereof, after (i) the conditions of Sections 8.1 or
8.2 hereof have been satisfied, (ii) the Company has paid or caused to be paid
all other sums payable hereunder by the Company and (iii) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent referred to in clause (i) above
relating to the satisfaction and discharge of this Indenture have been complied
with, the Trustee upon written request shall acknowledge in writing the
discharge of the Company's obligations under this Indenture except for those
surviving obligations specified in Section 8.3 hereof.

     SECTION 8.5.   Application of Trust Assets.

     The Trustee shall hold any cash or U.S. Government Obligations deposited
with it in the irrevocable trust established pursuant to Section 8.1 hereof. The
Trustee shall apply the deposited cash or the U.S. Government Obligations,
together with earnings thereon, through the Paying Agent, in accordance with
this Indenture and the terms of the irrevocable trust agreement established
pursuant to Section 8.1 hereof, to the payment of principal of, and premium, if
any, on the Notes. The cash or U.S. Government Obligations so held in trust and
deposited with the Trustee in compliance with Section 8.1 hereof, shall not be
part of the trust estate under this Indenture, but shall constitute a separate
trust fund for the benefit of all Holders entitled thereto.

     SECTION 8.6.   Repayment to the Company; Unclaimed Money.

     Upon termination of the trust established pursuant to Section 8.1, the
Trustee and the Paying Agent shall promptly pay to the Company upon request any
excess cash or U.S. Government Obligations held by them. Additionally, the
Trustee and the Paying Agent shall pay to the Company upon request, and, if
applicable, in accordance with the irrevocable trust established pursuant to
Section 8.1, any cash or U.S. Government Obligations held by them for the
payment of principal of, and premium, if any, on the Notes that remain unclaimed
for two years after the date on which such payment shall have become due unless
otherwise required by law. After payment to the Company, all liability of the
Trustee and such Paying Agent with respect to such cash or U.S. Government
Obligations shall cease and Holders entitled to such payment must look to the
Company for such payment as general creditors unless an applicable abandoned
property law expressly provides otherwise.

     SECTION 8.7.   Reinstatement.

     If the Trustee or Paying Agent is unable to apply any cash or U.S.
Government Obligations in accordance with Section 8.1 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to

                                       46
<PAGE>

Section 8.1 until such time as the Trustee or Paying Agent is permitted to apply
all such cash or U.S. Government Obligations in accordance with Section 8.1,
provided that if the Company makes any payment of principal of, and premium, if
any, on any Notes following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Notes to receive such
payment from the cash or U.S. Government Obligations, and proceeds thereof, held
by the Trustee or the Paying Agent.

                                   ARTICLE 9

                                  AMENDMENTS

     SECTION 9.1.   Without Consent of Holders.

     (a)  The Company, when authorized by a Board Resolution, the Trustee and
(as applicable) any Guarantor, together, may amend or supplement this Indenture
or the Notes without the consent of any Noteholder:

             (i)    to cure any ambiguity, omission, defect or inconsistency;

             (ii)   to comply with Article 5 hereof;

             (iii)  (A) to add guarantees with respect to the Notes, or (B) to
confirm and evidence the release, termination, or discharge of any Guarantee
with respect to the Notes when such release, termination or discharge is
permitted under and subject to the satisfaction of the conditions precedent set
forth in Section 4.21(g) hereof;

             (iv)   to comply with any requirements of the Commission in
connection with the qualification of this Indenture under the TIA as then in
effect;

             (v)    to make any change that does not adversely affect the legal
rights hereunder of any Noteholder under this Indenture or the Notes;

             (vi)   to evidence or to provide for a replacement Trustee under
Section 7.8 hereof; or

             (vii)  to add to the covenants and agreements of the Company for
the benefit of the Holders and to surrender any right or power herein reserved
to or conferred upon the Company, provided that, in such case except in the case
of clause (vi) above, where the Trustee has resigned, the Company has delivered
to the Trustee an Opinion of Counsel and an Officers' Certificate, each stating
that such amendment or supplement complies with the provisions of this Section
9.1.

     (b)  Upon the written request of the Company, accompanied by a Board
Resolution authorizing the execution of any amended or supplemental Indenture,
and upon receipt by the Trustee of the documents described in Section 9.6
hereof, the Trustee shall join with the Company in the execution of any amended
or supplemental Indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations which may be
therein contained, but the Trustee shall not be obligated to enter into such
amended or supplemental Indenture which affects its own rights, duties or
immunities under this Indenture or otherwise.

     SECTION 9.2.   With Consent of Holders.

     (a)  Subject to Section 9.2(e), the Company, when authorized by a Board
Resolution, and the Trustee, together, may amend this Indenture or the Notes
with the consent of the Holders of at least a majority in aggregate principal
amount of the then outstanding Notes (such consent to be evidenced by an Act of
such Holders in accordance with Section 1.5 hereof). The Holders of at least a
majority in aggregate principal amount of the Notes then outstanding (by an Act
of such Holders in accordance with Section 1.5 hereof), or the Trustee, with the
consent of the Holders of a majority in aggregate principal amount of the then
outstanding Notes (such consent to be evidenced by an Act of such Holders in
accordance with Section 1.5 hereof) may, waive compliance in a particular
instance by the Company, any past default under this Indenture or the Notes,
except for as provided in Section 9.2(e)(vii).

                                       47
<PAGE>

     (b)  Upon the written request of the Company, accompanied by a Board
Resolution authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders pursuant to Section 9.2(a), and upon
receipt by the Trustee of the documents described in Section 9.6 hereof, the
Trustee shall join with the Company in the execution of such amended or
supplemental Indenture but the Trustee shall not be obligated to enter into such
amended or supplemental Indenture which affects its own rights, duties or
immunities under this Indenture or otherwise.

     (c)  It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.

     (d)  After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to each Holder affected thereby a notice
briefly describing the amendment, supplement or waiver.  Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amended or supplemental Indenture
or waiver.

     (e)  Notwithstanding Section 9.2(a), without the consent of each Holder
affected, an amendment, supplement or waiver under this Section may not:

               (i)     reduce the percentage stated in Section 9.2(a) of
aggregate principal amount of outstanding Notes necessary to consent to an
amendment, supplement or waiver of this Indenture;

               (ii)    reduce the percentage of aggregate principal amount of
outstanding Notes necessary consent for waiver of certain defaults provided for
in this Indenture;

               (iii)   reduce the principal amount of (or the premium, if any,
of) on any Note or change the Stated Maturity of the principal of the Notes;

               (iv)    change place or currency of payment of principal of, and
premium, if any, on, any Note;

               (v)     change the stated maturity of the principal of any Note;

               (vi)    impair the right to institute suit for the enforcement of
any payment of principal of, and premium, if any, on, any Note;

               (vii)   waive a continuing past Default or Event of Default in
the payment of principal of, and premium, if any, on, the Notes;

               (viii)  modify or amend any of the provisions of this Indenture
relating to the subordination of the Notes in a manner adverse to Holders;

               (ix)    modify or amend any of the provisions of this Indenture
relating to the modification and amendment of this Indenture or the waiver of
past defaults or covenants; or

               (x)     following the mailing of an offer with respect to a
Change of Control Offer pursuant to Section 4.17 or Net Proceeds Offer pursuant
to Section 4.15, modify this Indenture with respect to such Change of Control
Offer or Net Proceeds Offer in a manner adverse to such Holders.

     SECTION 9.3.      Compliance with Trust Indenture Act.

     Every amendment to or supplement of this Indenture or the Notes shall
comply with the TIA as then in effect.

     SECTION 9.4.      Revocation and Effect of Consents.

     (a)  Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any

                                       48
<PAGE>

such Holder or subsequent Holder may revoke the consent as to his or her Note or
portion of a Note if the Trustee receives written notice of revocation before
the date the amendment, supplement or waiver becomes effective. Any amendment,
supplement or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.

     (b)  The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any Act of
Holders, including any amendment, supplement or waiver. If a record date is
fixed, then notwithstanding the last two sentences of Section 9.4(a), those
Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to consent to such Act of Holders,
including an amendment, supplement or waiver, or to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date. After an Act of Holders, including an amendment,
supplement or waiver becomes effective, it shall bind every Noteholder, unless
it is an amendment, supplement or waiver that makes a change described in
Section 9.2(e), in which case the amendment, supplement or waiver shall bind
only each Holder of a Note who has consented to it and every subsequent Holder
of a Note or portion of a Note that evidences the same debt as the consenting
Holder's Note, provided, that any such waiver shall not impair or affect the
right of any Holder to receive payment of principal of a Note, on or after the
respective due dates expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates without the
consent of such Holder.

     SECTION 9.5.   Notation on or Exchange of Notes.

     If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of the Note to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms. Failure to make
the appropriate notation or issue a new Note shall not affect the validity and
effect of such amendment, supplement or waiver.

     SECTION 9.6.   Trustee to Sign Amendments.

     The Trustee shall sign any amendment, waiver or supplemental indenture
authorized pursuant to this Article 9 if the amendment, waiver or supplement
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee.  If it does, the Trustee may, but need not, sign it.  In signing or
refusing to sign such amendment, waiver, or supplemental Indenture, the Trustee
shall be entitled to receive and, subject to Section 7.1, shall be fully
authorized and protected in relying upon, an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that such amendment, waiver or
supplemental Indenture is authorized or permitted by this Indenture, that it is
not inconsistent herewith, and that it will be valid and binding upon the
Company in accordance with its terms.  The Company may not sign any amendment or
supplemental Indenture until the Board of Directors approves it.

     SECTION 9.7.  Conformity with TIA.

     Every amendment or supplemental indenture executed pursuant to this Article
9 shall conform to the requirements of the TIA as then in effect.

                                  ARTICLE 10

                               CONVERSION RIGHTS

     SECTION 10.1.  Conversion Rights

     (a)  If the Company fails to repay the Notes at Maturity, then, subject to
and upon compliance with the provisions of this Section 10.1, Holders shall be
entitled at their option and in addition to all other rights and remedies, to
convert in whole or part of their Notes, at the principal amount thereof, into
the number of fully paid American depositary shares or ordinary shares of the
Company (the "Shares") (rounded down to the nearest Share if not an integral
number of Shares) obtained by dividing the aggregate principal amount of such
Note surrendered for conversion by the Conversion Price, determined pursuant to
the applicable clause of Section 10.2, in effect at the Maturity Date (the
"Conversion Right").

                                       49
<PAGE>

     (b)  The Conversion Right shall only be exercisable if: (i) at Maturity,
the Company fails to repay the Notes and the Guarantors fail to repay the Notes
pursuant to the Subsidiary Guarantee; (ii) the issuance of the requisite number
of Shares to satisfy the Conversion Right, in exchange for the Notes is approved
by the Company's shareholders and (iii) exercise of the Conversion Right and
issuance of the Shares complies with applicable laws and regulations, including,
without limitation, the securities laws and regulations of the United States and
the United Kingdom.

     SECTION 10.2.  Conversion Price

     (a)  The price at which the Notes shall be convertible into American
depositary shares (the "ADS Conversion Price") shall be equal to the average
closing market price for the Company's American depository shares on the Nasdaq
Small Cap Market, or if the American depository shares are listed on another
United States exchange, that other exchange, for the period of twenty trading
days ending on the Stated Maturity.

     (b)  The price at which the Notes shall be convertible into ordinary shares
(the "Ordinary Shares Conversion Price') shall be equal to the ADS Conversion
Price divided by the number of ordinary shares then represented by one American
depositary share.

     (c)  The ADS Conversion Price and the Ordinary Shares Conversion Price are
collectively referred to in this Article 10 as the "Conversion Price".

     (d)  Fractions of ordinary shares or American depositary shares shall not
be issued and no cash adjustments shall be made.

     (e)  The Conversion Price shall be determined by the Conversion Agent whose
determination shall be final and binding upon the Company and the Noteholders.

     (f)  In the event that the Ordinary Shares Conversion Price is less than
the stated value of the ordinary shares of the Company, the Conversion Price
shall equal the stated value of the ordinary shares of the Company (at the date
hereof, UK (Pounds) 0.0125).

     SECTION 10.3.  Conversion Notice.

     In order to cause the Conversion Right with respect to any Note to be
exercised, the Holder of such Note or any other Person acting on its behalf
shall within twenty (20) Business Days after Maturity deliver or cause to be
delivered to the Company and to any office or agency of the Trustee, maintained
for that purpose, a written notice requesting that such Note be converted in the
form of Exhibit D attached hereto (the "Conversion Notice"). The Conversion
        ---------
Notice must specify whether the Holder requires to be issued American depositary
shares or ordinary shares. A Conversion Notice shall be accompanied by (i)
surrender of the Note to the Trustee or, the if Note is in the form of a Global
Note, surrender of the beneficial interest in the Note to the Trustee (which may
be by book-entry delivery, if the Notes are held in book-entry form) and
surrender of the Note for annotation to the Company or its agent; (ii) if
required, appropriate endorsements and any transfer documents requested by the
Conversion Agent; (iii) if required, payment of any taxes and capital, stamp,
issue and registration duties arising on conversion and deemed disposition of a
Note in connection with such conversion; and (iv) subject to satisfying the
conditions of Section 10.1(b), designation of DTC account or address for
delivery of Shares upon conversion.  The Conversion Right must be exercised by
Holders and the Conversion Notice delivered to the Company and the Trustee in
accordance with this Section 10.3 within a period of twenty (20) Business Days
following Maturity.

     SECTION 10.4.  Approvals and Notices.

     Upon receipt of a Conversion Notice and subject to Section 10.7 hereof, the
Company shall take all steps (including any issuance or purchase of Shares and
obtaining or giving of any consent, approval, authorization, registration,
filing or notice from or to any governmental authority, shareholders or other
third parties (collectively the "Approvals and Notices")) necessary to ensure
that, upon every conversion of a Note, Shares will be available for issue, and
will be issued, upon such conversion promptly and to a DTC account or address
specified on the Conversion Notice.  The Company shall use its reasonable
efforts to obtain shareholder approval for the new share issuance, as set forth
below in this Section 10.4. and the Company shall take all steps necessary to
comply with

                                       50
<PAGE>

applicable securities laws in connection with the issuance as soon as reasonably
practicable after Maturity. The Company hereby represents that, upon conversion,
the Shares to be issued to the Holder shall be duly authorized, duly and validly
issued, fully paid and nonassessable, free and clear of any preemption rights or
Liens. Upon Maturity and if Company or Guarantors fail to repay the Notes, the
Company shall undertake to secure shareholder approval to maintain lawful access
to the maximum number of Shares that would be needed to meet its obligations
hereunder to issue the Shares on conversion of all outstanding Notes after
Maturity and the Company shall use its reasonable efforts to obtain all
Approvals and Notices necessary at Maturity for it, and to perform its
obligations under this Section 10.

     SECTION 10.5.  Payments by the Holder

     The Holder exercising a Conversion Right shall be required to pay any taxes
and capital, stamp, issue and registration duties arising on conversion and all,
if any, taxes arising by reference to any disposition or deemed disposition of a
Note (or a beneficial interest in a Note) in connection with such conversion.

     SECTION 10.6.  Cancellation of Note

     All Notes delivered for conversion shall be delivered to the Trustee to be
cancelled by or at the direction of the Trustee, which shall dispose of the same
as provided in Section 2.14 hereof.

     SECTION 10.7.  Conversion Right Not Exercisable

     (a)  The Conversion Right shall not be exercisable if, following Maturity,
but prior to the date on which the Company obtains shareholder approval for the
issuance of the Shares, the Company or a Guarantor repays the principal amount
of the Notes in full.

     (b)  The Conversion Right shall not be exercisable in the event that the
Company does not obtain shareholder approval for the issuance, or is unable
without undue expenditure or effort to comply with applicable laws and
regulations in connection with the issuance.

     (c)  In no event shall the Conversion Right be exercisable by any Holder
prior to the Maturity Date of the Notes.

     SECTION 10.8.  Responsibility of Trustee for Conversion Provisions

     The Trustee may be appointed as Conversion Agent but shall not be obligated
to accept such appointment.  In the event that the Trustee is not the Conversion
Agent, it shall not be responsible for determination of the Conversion Price.
Neither the Trustee nor the Conversion Agent shall be accountable with respect
to the validity or value (or the kind or amount) of any shares of Common Stock
or of any securities or property or cash which may at any time be issued or
delivered upon the conversion of any Note; and neither the Trustee nor any
Conversion Agent makes any representation with respect thereto.  Neither the
Trustee nor any Conversion Agent shall be responsible for any failure of the
Company to make any cash payment or to issue, transfer or deliver any shares of
Common Stock or stock certificates or other securities or property upon the
surrender of any Note for the purpose of conversion, or, subject to Section 7.1,
to comply with any of the covenants of the Company contained in this Article 10.

                                  ARTICLE 11

                                 SUBORDINATION

     SECTION 11.1.  Ranking.

     (a)  Notwithstanding the provisions of Sections 6.2 and 6.3, the Company
covenants and agrees, and the Trustee and each Holder of the Notes by his or her
acceptance thereof likewise covenants and agrees, that all

                                       51
<PAGE>

payments of the principal of, and premium, if any, on the Notes by the Company
shall be subordinated in accordance with the provisions of this Article 11 to
the prior payment in full of all amounts payable under existing and future
Senior Debt of the Company.

     (b)  The Company also covenants and agrees not to Incur any Debt that is
both (a) subordinate or junior in right of payment to any Senior Debt of the
Company and (b) senior in any respect in right of payment to the Notes. For
purposes of this restriction, Debt which is secured by a junior Lien does not
constitute subordinated Debt by virtue of such junior priority.

     (c)  The Notes shall rank in right of payment junior to all of the
Company's existing and future Senior Debt. The Notes rank or shall rank in right
of payment pari passu or senior to the Company's existing and future senior
subordinated Debt. The Notes will rank in right of payment senior to the 10%
Notes and any 6.75% Notes.

     (d)  The Notes are unsecured obligations of the Company.

     SECTION 11.2.  Priority and Payment Over of Proceeds in Certain Events.

     (a)  Subordination on Dissolution, Liquidation or Reorganization of the
Company.

              (i)   In the event of any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to the Company or to its
assets, or any liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary, or any assignment for the benefit of creditors
or other marshalling of assets or liabilities of the Company (except in
connection with the consolidation or merger of the Company or its liquidation or
dissolution following the conveyance, transfer or lease of its properties
substantially as an entirety, upon the terms and conditions described under
Article 5 hereof), all Senior Debt due and owing (including, in the case of
Designated Senior Debt and Senior Debt under the Credit Facility, interest
accruing after the commencement of any such case or proceeding at the rate
specified in the instrument evidencing such Senior Debt, whether or not a claim
therefor is allowed in such proceeding, to the date of payment of such Senior
Debt) must be paid in full before any payment or distribution of any assets of
the Company of any kind or character (excluding shares of Capital Stock of the
Company or securities of the Company provided for in a plan of reorganization or
readjustment which are subordinate in right of payment to all Senior Debt to
substantially the same extent as the Notes are so subordinated) is made on
account of principal of, and premium, if any, on, the Notes, including
repurchase, purchase, redemption or other acquisition of the Notes.

              (ii)  Before any payment may be made by the Company of the
principal of, and premium, if any, on the Notes, and upon any such dissolution
or winding up or liquidation or reorganization, any payment or distribution of
assets or securities of the Company of any kind or character, whether in cash,
property or securities, to which the Holders or the Trustee on their behalf
would be entitled, except for the provisions of this Article 11, shall be made
by the Company or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, directly to the
holders of the Senior Debt of the Company or any Senior Representative thereof
to the extent necessary to pay all such Senior Debt in full after giving effect
to any concurrent payment or distribution to the holders of such Senior Debt.

     (b)  Subordination on Default in Senior Debt.

              (i)   During the continuance of any default in the payment when
due of principal of, reimbursement obligation under, and premium, if any, on,
any Senior Debt, including without limitation any default in the payment when
due of any commitment or facility fees, letter of credit fees or agency fees
under the Credit Facility, or any default in payment when due of any
reimbursement obligation of the Company with respect to any letter of credit
issued under the Credit Facility (a "Senior Payment Default"), no direct or
indirect payment or distribution of any assets of the Company of any kind or
character may be made on account of the principal of, and premium, if any, on,
or other amounts payable in respect of, the Notes or on account of the purchase,
redemption or other acquisition of or in respect of the Notes unless and until
such Senior Payment Default has been cured, waived or has ceased to exist or
such Senior Debt shall have been discharged or paid in full or when the right
under this Indenture to prevent any such payment is waived by or on behalf of
the holders of such Senior Debt.

                                       52
<PAGE>

             (ii)   During the continuance of any default (other than a Senior
Payment Default) with respect to the Credit Facility or any Designated Senior
Debt, the occurrence of which entitles, or with the giving of notice or lapse of
time (or both) would entitle, one or more Persons to accelerate the maturity
thereof (a "Senior Nonmonetary Default") pursuant to which the Trustee and the
Company have received from the agent bank for the Credit Facility or from any
authorized person on behalf of any Designated Senior Debt a written notice of
such Senior Nonmonetary Default, no direct or indirect payment or distribution
of any assets of the Company of any kind or character may be made on account of
the principal of, and premium, if any, on, or other amounts payable in respect
of, the Notes or on account of the purchase, redemption or other acquisition of,
or in respect of, the Notes for the period specified below (the "Blockage
Period").

             (iii)  The Blockage Period shall commence upon the receipt of
notice of a Senior Nonmonetary Default by the Trustee and the Company and shall
end (subject to any blockage of payment that may be in effect in respect of a
Senior Payment Default or insolvency) on the earlier of (A) 179 days after the
receipt of such notice, provided such Senior Debt shall not theretofore have
been accelerated and no Senior Payment Default shall be in effect; or (B) the
date on which such Senior Nonmonetary Default is cured, waived or ceases to
exist or such Senior Debt is discharged or paid in full. In no event will a
Blockage Period extend beyond 179 days from the date of the receipt by the
Trustee and the Company of the notice initiating such Blockage Period. Any
number of notices of a Senior Nonmonetary Default may be given during a Blockage
Period, provided, that no such notice shall extend such Blockage Period, only
one Blockage Period may be commenced within any 360-day period and there shall
be a period of at least 181 consecutive days in each period of 360 consecutive
days when no Blockage Period is in effect. No Senior Nonmonetary Default with
respect to Senior Debt that existed or was continuing on the date of the
commencement of any Blockage Period and that was known to the holders of or the
Senior Representative for such Senior Debt will be, or can be, made the basis
for the commencement of a subsequent Blockage Period, whether or not within a
period of 360 consecutive days, unless such Senior Nonmonetary Default has been
cured or waived for a period of not less than 90 consecutive days. The Company
shall deliver an Officers' Certificate to the Trustee promptly after the date on
which any Senior Nonmonetary Default is cured or waived or ceases to exist or on
which the Senior Debt related thereto is discharged or paid in full.

     (c)  Rights and Obligations of Holders of Notes and Trustee.

             (i)    In the event that, notwithstanding the foregoing provisions
prohibiting such payment or distribution, the Trustee or any Holder shall have
received any payment on account of the principal of, and premium, if any, on the
Notes at a time when such payment is prohibited by this Section 11.2 and before
the principal of, premium, if any, and interest on Senior Debt is paid in full,
then and in such event (subject to the provisions of Section 11.8) such payment
or distribution shall be received and held in trust for the holders of Senior
Debt and shall be paid over or delivered (A) to the trustee in bankruptcy,
liquidating trustee, receiver, custodian, assignee, agent or other person making
any such payment or distribution of assets of the Company, or (B) in the event
that no such trustee or other person under clause (A) has been appointed, then
to the holders of the Senior Debt (or to their Senior Representatives in the
case of Designated Senior Debt) remaining unpaid promptly at the written
direction of such holders of Senior Debt or their designees to the extent
necessary for application to the payment in full of the principal of, premium,
if any, and interest on such Senior Debt in accordance with its terms after
giving effect to any concurrent payment or distribution to the holders of such
Senior Debt.

             (ii)   Nothing contained in this Article 11 will limit the right of
the Trustee or the Holders of Notes to take any action to accelerate the
maturity of the Notes pursuant to Section 6.2 hereof or to pursue any rights or
remedies hereunder against the Company, provided, that, to the extent provided
in this Article 11, all Senior Debt of the Company then or thereafter due or
declared to be due shall first be paid in full before the Holders or the Trustee
are entitled to receive any payment from the Company of principal of, and
premium, if any, on the Notes.

             (iii)  Upon any payment or distribution of assets or Notes referred
to in this Article 11, the Trustee and the Holders shall be entitled to rely
upon any order or decree of a court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are pending,
and upon any certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent or other person making any such payment or distribution delivered
to the Trustee, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Senior Debt and other Debt of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
11. In the absence of such order, decree or certificate, the Trustee and the
Holders shall be entitled to request and rely upon an

                                       53
<PAGE>

Officers' Certificate from the Company. The Company shall provide to the
Trustee, in the form of an Officers' Certificate, the names and addresses of the
holders of such Senior Debt, the amount of the Senior Debt outstanding to each
such holder of Senior Debt and any necessary information to calculate the daily
increase in indebtedness to such holders of Senior Debt. The Trustee shall be
entitled to rely conclusively on any such order, decree or certificate
(including any such Officers' Certificate) in making any disbursements to the
holders of Senior Debt, without making any independent verification of the
information contained therein.

     (d)  The subordination provisions of this Section 11.2 shall cease to apply
to the Notes upon any defeasance or covenant defeasance of the Notes pursuant to
Article 8 hereof.

     SECTION 11.3.  Payments May Be Made Prior to Notice.

     Nothing contained in this Article 11 or elsewhere in this Indenture shall
prevent (i) the Company, except under the conditions described in Section 11.2
hereof, from making payments at any time of principal of, and premium, if any,
on, the Notes, or from depositing with the Trustee any monies for such payments
or (ii) the application by the Trustee of any monies deposited with it for the
purpose of making such payments of principal of, and premium, if any, on, the
Notes, to the Holders entitled thereto, unless by noon Eastern time one Business
Day prior to the date upon which such payment would otherwise (except for the
prohibitions contained in Section 11.2 hereof) become due and payable, the
Trustee shall have received the written notice provided for in Section 11.2(b)
hereof (or there shall have been an acceleration of the Notes prior to such
application), subject to Section 11.8 hereof.

     SECTION 11.4.  Rights of Holders of Senior Debt Not to Be Impaired.

     (a)  No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act in good faith by any such holder, or by
any noncompliance by the Company with the terms and provisions and covenants
herein, regardless of any knowledge thereof any such holder may have or
otherwise be charged with.

     (b)  The provisions of this Article 11 are intended to be for the benefit
of, and shall be enforceable directly by, the holders of Senior Debt.

     SECTION 11.5.  Authorization to Trustee to Take Action to Effectuate
                    Subordination.

     Each Holder of Notes by his or her acceptance thereof authorizes and
directs the Trustee on his or her behalf to take such action as may be necessary
or appropriate to effectuate, as between the holders of Senior Debt and the
Holders, the subordination as provided in this Article 11 and appoints the
Trustee his or her attorney-in-fact for any and all such purposes.

     SECTION 11.6.  Subrogation.

     (a)  Subject to the payment in full of all amounts payable under or in
respect of Senior Debt, the Holders shall be subrogated to the rights of the
holders of such Senior Debt to receive payments or distributions of assets of
the Company made on such Senior Debt until the Notes shall be paid in full in
cash; and for the purposes of such subrogation, no payments or distributions to
holders of such Senior Debt of any cash, property or securities to which Holders
of the Notes would be entitled except for the provisions of this Article 11, and
no payment pursuant to the provisions of this Article 11 to holders of such
Senior Debt by the Holders, shall, as between the Company, its creditors other
than holders of such Senior Debt and the Holders, be deemed to be a payment by
the Company to or on account of such Senior Debt, it being understood that the
provisions of this Article 11 are solely for the purpose of defining the
relative rights of the holders of such Senior Debt, on the one hand, and the
Holders, on the other hand.

     (b)  If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article 11 shall have been
applied, pursuant to the provisions of this Article 11, to the payment of all
amounts payable under the Senior Debt, then and in such case, the Holders shall
be entitled to receive from the holders of such Senior Debt at the time
outstanding any payments or distributions received by such holders of Senior
Debt in excess of the amount sufficient to pay all amounts payable under or in
respect of such Senior Debt in full.

                                       54
<PAGE>

     SECTION 11.7.  Obligations of Company Unconditional.

     (a)  Nothing contained in this Article 11 or elsewhere in this Indenture or
in any Note is intended to or shall impair, as between the Company and the
Holders, the obligations of the Company, which are absolute and unconditional to
pay to the Holders the principal of, and premium, if any, on the Notes as and
when the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders and creditors of
the Company other than the holders of the Senior Debt, nor shall anything herein
or therein prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon Default under this Indenture, subject
to the rights, if any, under this Article 11 of the holders of such Senior Debt
in respect of cash, property or Notes of the Company received upon the exercise
of any such remedy.

     (b)  The failure to make a payment on account of principal of, and premium,
if any, on, the Notes by reason of any provision of this Article 11 shall not be
construed as preventing the occurrence of an Event of Default under Section 6.1.

     SECTION 11.8.  The Trustee Entitled to Assume Payments Not Prohibited in
                    Absence of Notice.

     The Trustee or Paying Agent shall not at any time be charged with the
knowledge of the existence of any facts which would prohibit the making of any
payment to or by the Trustee or Paying Agent, unless and until the Trustee or
Paying Agent shall have received written notice thereof from the Company or one
or more holders of Senior Debt or from any trustee or agent therefor, including
Senior Representatives; and, prior to the receipt of any such written notice,
the Trustee or Paying Agent shall be entitled to assume conclusively that no
such facts exist. Unless by noon Eastern time one Business Day prior to the date
on which by the terms of this Indenture any monies are to be deposited by the
Company with the Trustee or any Paying Agent (whether or not in trust) for any
purpose (including, without limitation, the payment of the principal of, and
premium, if any, on, any Note), the Trustee or Paying Agent shall have received
with respect to such monies the notice provided for in the preceding sentence,
the Trustee or Paying Agent shall have full power and authority to receive such
monies and to apply the same to the purpose for which they were received, and
shall not be affected by any notice to the contrary which may be received by it
on or after such date, except for an acceleration of the Notes prior to such
application. The foregoing shall not apply to the Paying Agent if the Company is
acting as Paying Agent. Nothing contained in this Section 11.8 shall limit the
right of the holders of Senior Debt to recover payments as contemplated by
Section 11.2 hereof. The Trustee shall be entitled to rely on the delivery to it
of a written notice by a person representing himself or itself to be a holder of
such Senior Debt (or a trustee on behalf of, or other representative of, such
holder, including Senior Representatives) to establish that such notice has been
given by a holder of such Senior Debt or a trustee on behalf of any such holder.
Nothing in this Article 11 shall apply to amounts due the Trustee pursuant to
Section 7.7 hereof.

     SECTION 11.9.  Right of Trustee to Hold Senior Debt.

     The Trustee and any agent (including Senior Representatives) for the
holders of Senior Debt shall be entitled to all of the rights set forth in this
Article 11 in respect of any Senior Debt at any time held by it to the same
extent as any other holder of such Senior Debt, and nothing in this Indenture
shall be construed to deprive the Trustee or any agent for the holders of Senior
Debt of any of its rights as such holder.

     SECTION 11.10. No Implied Covenants by or Obligations of the Trustee.

     With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article 11, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Article 11 against the Trustee.  The Trustee shall not be deemed to have any
fiduciary duty to the holders of the Senior Debt.

                                       55
<PAGE>

                                  ARTICLE  12

                       MEETINGS OF HOLDERS OF THE NOTES

     SECTION 12.1.  Purposes of the Meetings.

     A meeting of the Holders may be called at any time from time to time
pursuant to this Article 12 for any of the following purposes:  (a) to give any
notice to the Company, the Guarantors or to the Trustee, or to give any
directions to the Trustee, or to consent to the waiving of any Default hereunder
and its consequences, or to take any other action authorized to be taken by
Holders pursuant to Article 9 hereof; (b) to remove the Trustee and appoint a
successor trustee pursuant to Article 7 hereof; or (c) to consent to the
execution of an indenture supplemental hereto pursuant to Article 9 hereof.

     SECTION 12.2.  Place of Meetings; Expenses.

     Meetings of Holders may be held at such place or places in the Borough of
Manhattan, The City of New York, as the Trustee or, in case of its failure to
act, the Company or the Holders calling the meeting, in accordance with Section
12.3(b) hereof, shall from time to time determine.  Except for a meeting
requested by the Company pursuant to a Board Resolution or by the Trustee, all
expenses (other than the expenses of the Company and the Trustee) of any
meetings called or held pursuant to this Article 12 shall be borne by the
Holders who call such meeting and the Company and the Trustee shall be entitled
to indemnification from such Holders in respect of the costs thereof.

     SECTION 12.3.  Call and Notice of Meetings.

     (a)  The Trustee may at any time (upon not less than 20 days' notice) call
a meeting of Holders to be held at such time and at such place in the location
determined by the Trustee pursuant to Section 12.2 hereof. Notice of every
meeting of Holders, setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be given to
the Company and each Holder, in accordance with Section 13.2 hereof.

     (b)  In case at any time the Company pursuant to a Board Resolution, or the
Holders of at least 25% in aggregate principal amount of the Notes then
outstanding, shall have requested the Trustee to call a meeting of the Holders,
by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have made the first giving of
the notice of such meeting within 20 days after receipt of such request, then
the Company or the Holders in the amount above specified may determine the time
(not less than 20 days after notice is given) and the place in the location
determined by the Company or the Holders pursuant to Section  12.2 hereof for
such meeting and may call such meeting to take any action authorized in Section
12.1 hereof by giving notice thereof as provided in Section 12.3(a) hereof.

     SECTION 12.4.  Voting at Meetings.

     To be entitled to vote at any meeting of Holders, a Person shall be (i) a
Holder or (ii) a Person appointed by an instrument in writing as proxy for a
Holder or Holders by such Holder or Holders.  The only Persons who shall be
entitled to be present or to speak at any meeting of Holders shall be the
Persons so entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.

     SECTION 12.5.  Voting Rights, Conduct and Adjournment.

     (a)  Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Holders in regard to proof of the holding of Notes and of the appointment of
proxies and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the
right to vote, and such other matters concerning the conduct of the meeting as
it shall deem appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Notes shall be proved in the manner specified in
Section 1.5 hereof and the appointment

                                       56
<PAGE>

of any proxy shall be proved in such manner as is deemed appropriate by the
Trustee or by having the signature of the person executing the proxy witnessed
or guaranteed by any bank, banker or trust company customarily authorized to
certify to the holding of a security such as a Global Note.

     (b)  At any meeting of Holders, the presence of Persons holding or
representing Notes in an aggregate principal amount sufficient under the
appropriate provision of this Indenture to take action upon the business for the
transaction of which such meeting was called shall constitute a quorum. Any
meetings of Holders duly called pursuant to Section 12.3 hereof may be adjourned
from time to time by vote of the Holders (or proxies for the Holders) of a
majority of the Notes represented at the meeting and entitled to vote, whether
or not a quorum shall be present; and the meeting may be held as so adjourned
without further notice. No action at a meeting of Holders shall be effective
unless approved by Persons holding or representing Notes in the aggregate
principal amount required by the provision of this Indenture pursuant to which
such action is being taken.

     (c)  At any meeting of the Holders, each Holder or proxy shall be entitled
to one vote for each $1,000 principal amount at maturity of outstanding Notes
held or represented.

     (d)  Any resolution duly passed or decision or action duly taken at any
meeting of the Holders duly held in accordance with this Article 12 shall be
binding on all Holders whether or not present or represented at the meeting;
provided, however, that the requisite number of Holders necessary to approve
such resolution, decision or action required by Article 9 shall have voted in
favor of such resolution, decision or action at such meeting. The Company shall
furnish to the Trustee a written copy of any resolution passed or decision or
action taken at any meeting of the Holders.

     SECTION 12.6.  Revocation of Consent by Holders.

     Any revocation of consent by Holders shall be made pursuant to Section 9.4
of this Indenture.

                                  ARTICLE  13

                                 MISCELLANEOUS

     SECTION 13.1.  Trust Indenture Act Controls.

     If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required or deemed to be included in this Indenture
by the TIA, the provision so required or deemed shall control; and if any
provision of this Indenture limits, qualifies or conflicts with the duties
imposed by TIA Section 318(c), the imposed duties shall control.

     SECTION 13.2.  Notices.

     Any notice or communication by the Company, the Trustee or any Senior
Representative to the others is duly given if in writing and delivered in person
or mailed by first-class mail (registered or certified, return receipt
requested), telex, facsimile or overnight air courier guaranteeing next day
delivery, to the other's address:

If to the Company:  Danka Business Systems PLC
                    11201 Danka Circle North
                    St. Petersburg, Florida  33716
                    Telephone: (727) 579-2801
                    Facsimile: (727) 579-2880
                    Attn: Keith J. Nelsen, Esquire

With a copy to:     Altheimer & Gray
                    10 South Wacker Drive, Suite 4000
                    Chicago, Illinois  60606

                                       57
<PAGE>

                    Telephone: (312) 715-4000
                    Facsimile: (312) 715-4800
                    Attn:  Jonathan Baird, Esquire

If to a Guarantor:  To the address provided on Schedule I to the Notation of
                    Guarantee in the form attached hereto as Exhibit B
                                                             ---------

If to the Trustee:  HSBC Bank USA
                    Issuer Services
                    452 Fifth Avenue
                    New York, New York  10018
                    Attention:  Frank J. Godino

     If to any Senior Representative, to such address as such Senior
Representative may by notice to the others designate.

     The Company, any other obligor upon the Notes, or the Trustee or any Senior
Representative by notice to the others may designate additional or different
addresses for subsequent notices or communications.

     All notices and communications (other than those sent to Noteholders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.

     Any notice or communication to a Noteholder shall be made (i) if the Notes
are represented by a Global Note, by publishing such in a leading newspaper
having a general circulation in New York (which is expected to be the Wall
                                                                      ----
Street Journal) (and, so long as the Notes are listed on the Luxembourg Stock
--------------
Exchange and the rules of such Stock Exchange shall so require, a newspaper
having a general circulation in Luxembourg (which is expected to be the
Luxemburger Wort)), and (ii) if the Notes are represented by Physical Notes, by
----------------
mailing such notice or other communication by first-class mail to his or her
address shown on the register kept by the Registrar and, with respect to a
notice of redemption or repurchase under this Indenture, so long as the Notes
are listed on the Luxembourg Stock Exchange and the rules of such stock exchange
so require, publishing in a newspaper having a general circulation in Luxembourg
(which is expected to be the Luxemburger Wort).  Copies of any notice or
                             ----------------
communication by the Company, or any other obligor upon the Notes, shall also be
mailed to the Trustee and each Agent at the same time.  Failure to mail a notice
or communication to a Noteholder or any defect in it shall not affect its
sufficiency with respect to other Noteholders.

     Except for a notice to the Trustee, which is deemed given only when
received, and except as otherwise provided in this Indenture, if a notice or
communication is mailed and published in the manner provided in this Section
13.2, it is duly given, whether or not the addressee receives it.

     Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.

     In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.

     SECTION 13.3.  Communication by Holders with Other Holders.

     Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and other applicable Persons shall have the
protection of TIA Section 312(c).

                                       58
<PAGE>

     SECTION 13.4.   Certificate and Opinion as to Conditions Precedent.

     Upon any request or application by the Company (or any other obligor upon
the Notes) to the Trustee to take any action under this Indenture, the Company
(or such other obligor) shall furnish to the Trustee:

     (a)  an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 13.5)
stating that, in the opinion of the signers, all conditions precedent and
covenants, if any, provided for in this Indenture relating to the proposed
action have been complied with; and

     (b)  an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 13.5)
stating that, in the opinion of such counsel, all such conditions precedent and
covenants have been complied with.

     SECTION 13.5.   Statements Required in Certificate or Opinion.

     Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:

     (a)  a statement that the Person making such certificate or opinion has
read such covenant or condition;

     (b)  a brief statement as to the nature and scope of the examination or
investigation upon which the statements contained in such certificate or opinion
are based;

     (c)  a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and

     (d)  a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been complied with; provided, however, that with
respect to matters of fact, an Opinion of Counsel may rely on an Officers'
Certificate or certificates of public officials.

     SECTION 13.6.   Rules by Trustee and Agents.

     The Trustee may make reasonable rules for action by or at a meeting of
Noteholders. Any Agent may make reasonable rules and set reasonable requirements
for its functions.

     SECTION 13.7.   Legal Holidays.

     If any specified date for making payment is not a Business Day, subject to
Section 4.1 hereof, the action may be taken on the next succeeding Business Day
without penalty of any kind.

     SECTION 13.8.   No Recourse Against Others.

     A director, officer, employee or stockholder of the Company, as such, shall
not have any liability for any obligations of the Company under the Notes or
this Indenture, or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Noteholder, by accepting a Note, waives and
releases all such liability.

     SECTION 13.9.   Governing Law.

     The laws of the State of New York shall govern and be used to construe this
Indenture and the Notes.

     SECTION 13.10.  No Adverse Interpretation of Other Agreements.

     This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.

                                       59
<PAGE>

     SECTION 13.11.  Successors.

     All agreements of the Company in this Indenture and in the Notes shall bind
its successors. All agreements of the Trustee in this Indenture shall bind its
successors.

     SECTION 13.12.  Severability.

     In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

     SECTION 13.13.  Counterpart Originals.

     The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement. One signed copy is enough to prove this Indenture.

     SECTION 13.14.  Variable Provisions.

     The Company initially appoints the Trustee as Paying Agent and Registrar.

     SECTION 13.15.  Qualification of Indenture.

     The Company shall qualify this Indenture under the TIA and shall pay all
reasonable costs and expenses (including attorneys' fees for the Company and the
Trustee) incurred in connection therewith, including, but not limited to, costs
and expenses of qualification of the Indenture and the Notes and printing this
Indenture and the Notes. The Trustee shall be entitled to receive from the
Company any such Officers' Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA and the registration and exchange
of the Notes.

     SECTION 13.16.  Table of Contents, Headings, Etc.

     The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only and are not intended to describe, interpret, define, limit or modify any of
the terms or provisions of this Indenture.

     SECTION 13.17.  Indenture Controls over Form of Note.

     If any provision of a Note conflicts with the terms of this Indenture, the
terms of this Indenture shall control.

                           [SIGNATURE PAGES FOLLOW]

                                       60
<PAGE>

     IN WITNESS WHEREOF, the Company and the Trustee have caused this Indenture
to be duly executed and delivered as of the date first written above.

                                   DANKA BUSINESS SYSTEMS PLC

                                   By:    _____________________________________

                                   Name:  _____________________________________

                                   Title: _____________________________________

                                   HSBC Bank USA, as Trustee

                                   By:    _____________________________________

                                   Name:  _____________________________________

                                   Title: _____________________________________

            Signature Page One of Two to Danka Business Systems PLC
                Zero Coupon Senior Subordinated Notes Due 2004
<PAGE>

     IN WITNESS WHEREOF, the undersigned subsidiary Guarantors have caused this
Indenture to be duly executed and delivered as of the date first written above.

                                   DANKA OFFICE IMAGING COMPANY

                                   By:    _____________________________________

                                   Name:  _____________________________________

                                   Title: _____________________________________

                                   DANKA HOLDING COMPANY

                                   By:    _____________________________________

                                   Name:  _____________________________________

                                   Title: _____________________________________

            Signature Page Two of Two to Danka Business Systems PLC
                Zero Coupon Senior Subordinated Notes Due 2004
<PAGE>

                                                            EXHIBIT A

                                 FORM OF NOTE

                                 [FRONT SIDE]

                     ZERO COUPON SENIOR SUBORDINATED NOTES

                       [CUSIP NO.] [CINS NO.] [ISIN NO.]

                               DUE APRIL 1, 2004

     DANKA BUSINESS SYSTEMS PLC, a public limited company organized under the
laws of England and Wales (the "Company," which term includes any successor
corporation under the indenture hereinafter referred to), for value received
promises to pay to [If Physical Note: _______, or registered assigns], [If
Global Note: the bearer upon surrender hereof], the principal sum of _______
dollars ($ _____)  on April 1, 2004.

     Reference is made to the further provisions of this Note contained herein,
which will for all purposes have the same effect as if set forth at this place.

     IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers and a facsimile of its corporate
seal to be affixed hereto or imprinted herein.

Dated:

                                        DANKA BUSINESS SYSTEMS PLC

                                        By:    _________________________________
                                        Name:  _________________________________
                                        Title: _________________________________
Attest:  ___________________________

                         CERTIFICATE OF AUTHENTICATION

This is one of the Zero Coupon Senior Subordinated Notes due 2004 referred to in
the within mentioned Indenture.

                                        HSBC Bank USA, as Trustee

                                        By:    _________________________________
                                                      Authorized Officer

                                      A-1
<PAGE>

                                [REVERSE SIDE]

                     ZERO COUPON SENIOR SUBORDINATED NOTES
                                   DUE 2004

     1.   Principal.  The Company will pay the principal of this Note on April
1, 2004 ("Maturity").

     2.   Method of Payment.  Prior to Maturity, the Company shall irrevocably
deposit with the Trustee or the Paying Agent money in immediately available
funds sufficient to pay such principal, and premium, if any. The Holder must
surrender this Note to a Paying Agent to collect principal payments. The Company
will pay principal, and premium, if any, in money of the United States that at
the time of payment is legal tender for payment of public and private debts. [If
Global Note: Payments in respect of Notes represented by global notes (including
principal, premium, interest and defaulted interest, if any) will be made by
wire transfer of immediately available funds to the accounts specified by the
bearer hereof.] [If Physical Note: With respect to Physical Notes, the Company
will make all payments of principal, premium, interest and defaulted interest,
if any by wire transfer of immediately available funds to the U.S. dollar
accounts maintained by the Holders with banks in the United States, or, if no
such account is designated by any Holder to the Trustee or the Paying Agent at
least 30 days prior to the relevant due date for payment (or such other date as
the Trustee may accept in its discretion), by mailing a check to the registered
address of such Holder.] If a payment date is a date other than a Business Day
at a place of payment, payment may be made at that place on the next succeeding
day that is a Business Day and no interest shall accrue for the intervening
period. The Company, at its option, may pay principal, and premium, if any, by
check payable in such money mailed to a Holder's registered address or at the
office or agency of the Company maintained for such purpose in the City of New
York.

     3.   Paying Agent and Registrar.  Initially, HSBC Bank, USA, as Trustee
("Trustee," which term shall include any successor trustee under the Indenture
hereinafter referred to), will act as Paying Agent and Registrar. Banque
Internationale a Luxembourg S.A. will also be appointed as a Paying Agent in
Luxembourg. The Company may change any Paying Agent, Registrar or co-registrar
without notice to any Noteholder. The Company, any Subsidiary or any Affiliate
or any of them may act as Paying Agent, Registrar or co-Registrar, except for
purposes of redemption under Sections 4.15 and 4.17, neither the Company nor any
Affiliate of the Company may act as Paying Agent.

     4.   Indenture.  The Company issued the Notes under an Indenture dated as
of __________, 2001 (as it may be amended from time to time in accordance with
the terms thereof, the "Indenture") between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (Title
15, United States Code, Sections 77aaa-77bbbb). The Notes are subject to all
such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. The Notes are unsecured general obligations of the
Company. The Company may not issue additional Notes under the Indenture.

     5.   Optional Redemption.  (a) The Company may redeem all or any of the
Notes at any time in whole or part for 100% their principal amount, to the date
of redemption. The Company may redeem the Notes upon not less than 30 days nor
more than 60 days' prior notice in whole or in part, and if in part equal to
$1,000 or integral multiples thereof.

     6.   Mandatory Redemption.  Except for in the event of a Change of Control
Offer or a Net Proceeds Offer, the Company is not required to make any mandatory
redemption or sinking fund payments with respect to the Notes.

     7.   Notice of Redemption.  Notice of redemption will be given at least 30
days but not more than 60 days before the Redemption Date, (i) if the Notes are
represented by a Global Note, notice shall be made by publishing in a leading
newspaper having a general circulation in New York (which is expected to be the
Wall Street Journal) (and, so long as the Notes are listed on the Luxembourg
-------------------
Stock Exchange and the rules of such Stock Exchange shall so require, a
newspaper having a general circulation in Luxembourg (which is expected to be
the Luxemburger Wort), or (ii) if the Notes are represented by Physical Notes,
    ----------------
notice shall be made by mailing such notice by first-class mail to each Holder
of Notes to be redeemed at such Holder's last address as shown on the registry
books, with

                                      A-2
<PAGE>

a copy to the Trustee (and, so long as the Notes are listed on the Luxembourg
Stock Exchange and the rules of such Stock Exchange shall so require, published
in a newspaper having a general circulation in Luxembourg (which is expected to
be the Luxemburger Wort)). Notes in denominations larger than $1,000 may be
       ----------------
redeemed in whole or in part, and if in part, equal to $1,000 or integral
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed.

     8.   Redemption of Notes at the Option of the Holder.

     (a)  Subject to the terms and conditions of the Indenture, if any Change of
Control (as defined in the Indenture) occurs on or prior to maturity, the
Company will be required, subject to its prior compliance with certain covenants
in respect of Senior Debt, to offer to purchase each Holder's Notes as provided
in the Indenture for a purchase price equal to 109% of the principal amount
thereof.

     (b)  If the Company consummates any Asset Sale (as such term is defined in
the Indenture), the Company may under certain circumstances be required to
utilize a certain portion of the proceeds received from such Asset Sale to offer
to repurchase Notes at a price equal to 100% of the principal amount, as
provided in the Indenture.

     (c)  In accordance with Section 13.2 of the Indenture, a notice of a Change
of Control or an Asset Sale will be given within 30 days after any Change of
Control occurs: (i) if the Notes are represented by a Global Note, by publishing
in a leading newspaper having a general circulation in New York (which is
expected to be the Wall Street Journal) (and, so long as the Notes are listed on
                   -------------------
the Luxembourg Stock Exchange and the rules of such Stock Exchange shall so
require, a newspaper having a general circulation in Luxembourg (which is
expected to be the Luxemburger Wort), and (ii) if the Notes are represented by
                   ----------------
Physical Notes, by mailing notice by first-class mail to each Holder of Notes to
be redeemed at such Holder's registered address (and, so long as the Notes are
listed on the Luxembourg Stock Exchange and the rules of such stock exchange
shall so require, published in a newspaper having a general circulation in
Luxembourg (which is expected to be the Luxemburger Wort)).
                                        ----------------

     9.   Subordination.  The Notes are subordinated to Senior Debt (as defined
in the Indenture) which includes (with certain exceptions) the principal of, and
premium, if any, and interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization relating to the
Company whether or not such claim for post-petition interest is allowed in such
proceeding) on, any Debt of the Company, whether outstanding on the date of the
Indenture or thereafter created, incurred or assumed, unless, in the case of any
particular Debt, the instrument creating or evidencing, or the agreement
governing, such Debt or pursuant to which such Debt is outstanding expressly
provides that such Debt shall not be senior in right of payment to the Notes. To
the extent provided in the Indenture, such Debt must be paid before the Notes
may be paid. The Company agrees, and each Noteholder by accepting a Note agrees,
to the subordination and authorizes the Trustee to give it effect.

     10.  Denominations, Transfer, Exchange.  The Notes are in bearer form
without coupons which shall be issuable in registered form of Physical Notes
only in the limited circumstances set forth in the Indenture. [If Physical Note:
A Holder may register the transfer or exchange of Physical Notes in accordance
with the Indenture. The Registrar may require a Holder of a Physical Note, among
other things, to furnish appropriate endorsements and transfer documents and to
pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not register the transfer or exchange of any Physical Notes
selected for redemption. Also, it need not register the transfer or exchange of
any Notes for a period of 15 days before a selection of Notes to be redeemed is
made.] The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements, certificates, opinions
and transfer documents and to pay any taxes and fees required by law or
permitted by the Indenture. The Registrar need not exchange or register the
transfer of any Note or portion of a Note selected for redemption. Also, it need
not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed.

     11.  Persons Deemed Owners.  [If Physical Note: a Holder] [If Global Note:
the bearer of this Note:] shall be treated as the absolute owner of the Note for
all purposes.

     12.  Amendments and Waivers.  Subject to certain exceptions, the Indenture
or the Notes may be amended or supplemented, or compliance by the Company with
any provision of the Indenture or the Notes may be waived, with the Act of the
Holders, in accordance with Section 1.5 of the Indenture, of a majority in
aggregate principal amount of the Notes then outstanding; provided, however,
that without the consent of each Holder affected thereby,

                                      A-3
<PAGE>

the Company and any Guarantor may not (1) reduce the percentage stated in the
Indenture of aggregate principal amount of outstanding Notes necessary to
consent to an amendment, supplement or waiver of the Indenture; (2) reduce the
percentage of aggregate principal amount of outstanding Notes necessary consent
for waiver of certain defaults as defined in the Indenture; (3) reduce the
principal amount of (or the premium of, if any) any Note or change the stated
maturity of the principal of the Notes; (4) change place or currency of payment
of principal of, and premium, if any, on, any Note; (5) change the Stated
Maturity of the principal of any Note; (6) impair the right to institute suit
for the enforcement of any payment of principal of, and premium, if any, on, any
Note; (7) waive a continuing past Default or Event of Default in the payment of
principal of, and premium, if any, on, the Notes; (8) modify or amend any of the
provisions of the Indenture relating to the subordination of the Notes in a
manner adverse to the Holders; (9) modify or amend any of the provisions of the
Indenture relating to the modification and amendment of the Indenture or the
waiver of past defaults or covenants; or (10) following the mailing of an offer
with respect to a Change of Control Offer pursuant to Section 4.17 of the
Indenture or Net Proceeds Offer pursuant to Section 4.15 of the Indenture,
modify the Indenture with respect to such Change of Control Offer or Net
Proceeds Offer to purchase in a manner adverse to such Holders.

     Notwithstanding the foregoing, without the consent of any Holder of Notes
and subject to certain requirements set forth in Section 9.1 of the Indenture,
the Company and the Trustee may amend or supplement the Indenture or the Notes
to cure any ambiguity, omission, defect or inconsistency, to comply with Article
5 of the Indenture, to add guarantees with respect to the Notes or to confirm
and evidence the release, termination, or discharge of any Guarantee with
respect to the Notes when such release, termination or discharge is permitted
under and subject to the satisfaction of the conditions precedent set forth in
Section 4.21(g) of the Indenture,  to make any changes that do not adversely
affect the legal rights under the Indenture of any such Holder, to evidence or
to provide for a replacement Trustee, to comply with requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act as then in effect, or to add to the covenants and
agreements of the Company for the benefit of the Holders and to surrender any
right or power reserved in the Indenture to the Company.

     13.  Defaults and Remedies.  An Event of Default shall occur if: (1) the
Company fails to pay principal of, or premium, if any, on any of the Notes when
the same becomes due and payable, at maturity, upon acceleration, redemption or
otherwise; (2) or the Company fails to pay the principal of, or premium, if any,
on any Notes required to be purchased pursuant to a Change of Control Offer
pursuant to Section 4.17 of the Indenture or Net Proceeds Offer pursuant to
Section 4.15 of the Indenture, as provided in such Section; (3) the Company
fails to perform any other covenant, warranty, term, condition, provision or
agreement (other than the provisions of Article 5 of the Indenture) of the
Company contained in the Notes or the Indenture and such failure continues for
30 days after the notice specified below; (4) the Company fails to perform or
comply with the provisions described under Article 5 or Section 4.15 of the
Indenture; (5) the occurrence of a default under any Debt of the Company or any
Subsidiary of the Company if both (A) the default either results from failure to
pay any such Debt at its Stated Maturity and (B) the principal amount of such
Debt, together with the principal amount of any other such Debt is in default
for failure to pay principal at the Stated Maturity of the maturity of which has
been accelerated, aggregated at least $25 million or more at any one time
outstanding; (6) the rendering of a final judgment or judgments (not subject to
appeal) by a court of competent jurisdiction against the Company or any of its
Restricted Subsidiaries in an aggregate amount at any one time in excess of $10
million and shall not have been vacated, discharged, satisfied or stayed within
60 consecutive days thereafter; and (7) any Subsidiary Guarantee ceases to be in
full force and effect or any Subsidiary Guarantee is declared to be null and
void and unenforceable or any Subsidiary Guarantee shall be found to be invalid
or any Guarantor shall deny its liability under its Subsidiary Guarantees other
than by reason of release or such Guarantor in accordance with Section 4.21 of
the Indenture; and (8) certain events of bankruptcy, insolvency or
reorganization affecting the Company or any significant Subsidiary of the
Company as set forth in Section 6.1 of the Indenture. If an Event of Default
shall occur and be continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the then outstanding Notes may declare all the
Notes to be due and payable as provided in the Indenture, except that in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes become due and payable immediately without
further action or notice. The Trustee may require indemnity reasonably
satisfactory to the Trustee before it enforces the Indenture or the Notes.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Company must furnish an annual compliance certificate to the Trustee.
The Company must also furnish a notice of any Default (as provided in the
Indenture) to the Trustee within five business days after such occurrence.

                                      A-4
<PAGE>

     14.  Subsidiary Guarantees. Subject to Section 4.21 of the Indenture, each
of the Guarantors shall, jointly and severally, unconditionally guarantee to
each Holder of a Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Notes or the obligations of the Company
hereunder or thereunder, that: (a) the principal on the Notes will be promptly
paid in full when due, whether at maturity, by acceleration, redemption or
otherwise, and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
whether at Maturity, by acceleration, redemption or otherwise. The guarantees
are subject to release in certain circumstances set forth in the Indenture.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be fully and
unconditionally and jointly and severally obligated to pay the same immediately.
Each Guarantor agrees that the guarantee is a guarantee of payment and not a
guarantee of collection.

     15.  Trustee Dealings with Company. Subject to certain limitations, the
Trustee under the Indenture, in its individual or any other capacity, may make
loans to, accept deposits from, and perform services for the Company or its
Affiliates, and may otherwise deal with the Company or its Affiliates, as if it
were not Trustee.

     16.  No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.

     17.  Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.

     18.  Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

     19.  Unclaimed Money. If money for the payment of principal remains
unclaimed for two years, the Trustee or Paying Agent will pay the money over to
the Company, unless otherwise required by law. After that, Holders entitled to
money must look to the Company for payment, unless otherwise required by law.

     20.  Discharge Prior to Maturity. If the Company irrevocably deposits with
the Trustee or Paying Agent in trust cash or U.S. Government Obligations
sufficient to pay the principal of on the Notes to maturity and satisfies
certain conditions specified in the Indenture, the Company shall be discharged
from the Indenture except for certain Sections thereof.

     21.  Successor. When a successor to the Company assumes all the obligations
of its predecessor under the Notes and the Indenture, such predecessor shall be
released from those obligations.

     22.  Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York.

     23.  Conversion Rights. Subject to and upon compliance with the provisions
of the Indenture, the Holder of this Note shall have the right (the "Conversion
Right"), at its option, at any time on or after Maturity, if the Company
defaults in making a payment in respect of this Note to convert the Note into
American depositary shares or ordinary shares of the Company. This Conversion
Right may be exercised during the period of twenty Business Days following the
Maturity Date. The Note may be converted, in whole or in part, and if in part,
equal to $1,000 or integral multiples of $1,000. The price at which the Notes
shall be convertible into American depositary shares shall be equal to the
average closing market price for the Company's American depositary shares on the
Nasdaq SmallCap Market (or, if the American Depositary Shares are listed on
another United States exchange, that other exchange) for the period of twenty
trading days ending on the Stated Maturity. The price at which the Notes shall
be convertible into ordinary shares shall be equal to the American depositary
share conversion price divided by the number of ordinary shares then represented
by one American depositary share. In the event that the Ordinary Shares
Conversion Price is less than the stated value of the ordinary shares of the
Company, the Conversion Price shall equal the stated value of the ordinary
shares of the Company (at the date hereof, UK (Pounds)0.0125).

                                      A-5
<PAGE>

     Subject to the conditions set forth in the Indenture, conversion shall be
effected by giving written notice to the Trustee, indicating that the Holder
hereof elects to convert this Note, or if less than the entire principal amount
hereof is to be converted, the portion hereof to be converted.  Notwithstanding
any provision hereof, the Conversion Right shall not be exercisable nor will
securities be delivered on conversion of this Note or any portion hereof unless
the approvals and other requirements described in the Indenture are satisfied.

     24.  Information. The Company will furnish to any Holder upon written
request and without charge a copy of the Indenture. Request may be made to:

     Danka Business Systems, PLC
     Attention: Keith J. Nelsen, Esquire
     11201 Danka Circle North
     St. Petersburg, Florida  33716

                                      A-6
<PAGE>

                 [SCHEDULE A - TO BE ATTACHED TO GLOBAL NOTES]

               SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

               The initial principal amount at maturity of this
              Global Note is as shown by the latest entry made or
    on behalf of the Company in the fourth column below.  Reductions in the
    principal amount of this Global Note following exchange of this Global
       Note for registered notes or purchase and cancellation of Notes,
   and increases in the principal amount of this Global Note, are entered in
                      the second and third columns below.

<TABLE>
<CAPTION>
                                                                         Initial principal
                                                                             amount and
                             Reason for                                      outstanding
                             reduction/                                    principal amount
                           increase in the                                  of this Global
                             principal                                          Note
                           amount of this          Amount of such           following such          Notation made
                               Global                reduction/              reduction/            by or on behalf
         Date                 Security               increases               increases              of the Issuer
     --------                 --------               ---------               ---------              -------------

       , 2001              Not applicable          Not applicable           [         ]            Not applicable
     <S>                   <C>                     <C>                   <C>                       <C>
     __________              __________              __________              __________              __________
     __________              __________              __________              __________              __________
     __________              __________              __________              __________              __________
</TABLE>

*State (a) whether reduction following (i) exchange for Notes in a different
form; or (ii) conversion of Notes; or (iii) purchase and cancellation of Notes;
or (b) circumstances relating to increase.

                                      A-7
<PAGE>

              ASSIGNMENT FORM FOR PHYSICAL NOTES AND GLOBAL NOTES

 TO ASSIGN THIS NOTE, FILL IN THE FORM BELOW: (I) OR (WE) ASSIGN AND TRANSFER
                                 THIS NOTE TO

                 (Insert assignee's soc. sec. or tax I.D. no.)

             (Print or type assignee's name, address and zip code)

and irrevocably appoint agent to transfer this Note on the books of the Company.
The agent may substitute another to act for him or her.

Date:  _______________        Your Signature: __________________________________
                              NOTICE: The signature to this assignment must
                              correspond with the name as written upon the face
                              of the within mentioned instrument in every
                              particular, without alteration or any change
                              whatsoever.

                              Signature Guarantee: _____________________________
                              (Signature must be guaranteed by an eligible
                              guarantor institution (banks, stock brokers,
                              savings and loan associations and credit unions)
                              with membership in an approved guarantee medallion
                              program pursuant to Securities and Exchange
                              Commission Rule 17Ad-15)

Date: _______________         Your Signature: __________________________________

                              NOTICE: To be executed by an executive officer

                                      A-8
<PAGE>

                              Signature Guarantee:  ____________________
                              (Signature must be guaranteed by an eligible
                              guarantor institution (banks, stock brokers,
                              savings and loan associations and credit unions)
                              with membership in an approved guarantee medallion
                              program pursuant to Securities and Exchange
                              Commission Rule 17Ad-15)

                                      A-9
<PAGE>

Option of Holder to Elect Purchase:

(1)  If you wish to elect to have all or any portion of this Note purchased by
     the Company pursuant to Section 4.17 ("Change of Control Offer") of the
     Indenture, check the applicable boxes:

[ ] Change of Control Offer: in whole [ ] in part [ ] Amount to be purchased: $

     Date:  ____________           Your Signature:  ____________________________
                              (Sign exactly as your name appears on the other
                              side of this Note)

                              Signature Guarantee: _________________________
                              (Signature must be guaranteed by an eligible
                              guarantor institution (banks, stock brokers,
                              savings and loan with membership in an pursuant to
                              Securities associations and credit unions)
                              approved guarantee and Exchange Commission
                              medallion program Rule 17Ad-15)

     Social Security Number or Taxpayer Identification Number: ______________

(2)  If you wish to elect to have all or any portion of this Note purchased by
     the Company pursuant to Section 4.15 ("Net Proceeds Offer") of the
     Indenture, check the applicable boxes:

  [ ] Net Proceeds Offer: in whole [ ] in part [ ] Amount to be purchased: $

     Date:  ____________           Your Signature:  ____________________________
                              (Sign exactly as your name appears on the other
                              side of this Note)

                              Signature Guarantee: _________________________
                              (Signature must be guaranteed by an eligible
                              guarantor institution (banks, stock brokers,
                              savings and loan with membership in an pursuant to
                              Securities associations and credit unions)
                              approved guarantee and Exchange Commission
                              medallion program Rule 17Ad-15)

     Social Security Number or Taxpayer Identification Number: ______________

                                     A-10
<PAGE>

                                                           EXHIBIT B

                   FORM OF NOTATION OF SUBSIDIARY GUARANTEE

     For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of _________________, 2001 (the
"Indenture") among Danka Business Systems PLC (the "Company"), the Guarantors
listed on Schedule I thereto and HSBC Bank USA, as trustee (the "Trustee"), (a)
the due and punctual payment of the principal of and premium, if any, on the
Notes (as defined in the Indenture), whether at maturity, by acceleration,
redemption or otherwise, and to the extent permitted by law, the due and
punctual performance of all other obligations of the Company to the Holders or
the Trustee all in accordance with the terms of the Indenture and (b) in case of
any extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration or otherwise. The obligations of the Guarantors of the
Notes and to the Trustee pursuant to the Subsidiary Guarantee and the Indenture
are expressly set forth in Section 4.21 of the Indenture and reference is hereby
made to the Indenture for the precise terms of the Subsidiary Guarantee. Each
Holder of a Note, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee, on behalf of such
Holder, to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Subsidiary Guarantee shall cease to be so
subordinated and subject in right of payment upon any defeasance of this Note in
accordance with the provisions of the Indenture.

                        [SIGNATURES ON FOLLOWING PAGE]

                                      B-1
<PAGE>

     IN WITNESS WHEREOF, the undersigned subsidiary Guarantors have caused this
Subsidiary Guarantee to be duly executed and delivered as of the date first
written above.

                                        DANKA OFFICE IMAGING COMPANY

                                        By:     _______________________________

                                        Name:   _______________________________

                                        Title:  _______________________________

                                        DANKA HOLDING COMPANY

                                        By:     _______________________________

                                        Name:   _______________________________

                                        Title:  _______________________________
<PAGE>

                                                                      SCHEDULE I

                              LIST OF GUARANTORS

<TABLE>
<CAPTION>
                                                                           Primary
                                                 State of            Standard Industrial        IRS Employee
   Name and Contact Information of             Incorporation         Classification Code     Identification Code
   -------------------------------             -------------         -------------------     -------------------
             Guarantor
             ---------
<S>                                       <C>                        <C>                     <C>

Danka Office Imaging Company              United States--Delaware             5040                59-3407614
11201 Danka Circle North
St. Petersburg, Florida 33716
(727) 576-6003
Attn: Treasurer
(727) 578-4766 (phone)
(727) 577-4802 (fax)

Danka Holding Company                     United States--Delaware             5040                59-3498367
11201 Danka Circle North
St. Petersburg, Florida 33716
(727) 576-6003
Attn: Treasurer
(727) 578-4766 (phone)
(727) 577-4802 (fax)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                           Primary
                                                 State of            Standard Industrial        IRS Employee
   Name and Contact Information of             Incorporation         Classification Code     Identification Code
   -------------------------------             -------------         -------------------     -------------------
             Guarantor
             ---------
<S>                                            <C>                   <C>                     <C>
</TABLE>
<PAGE>

                                                                       EXHIBIT C

       FORM OF SUPPLEMENTAL INDENTURE IN RESPECT OF SUBSIDIARY GUARANTEE

          SUPPLEMENTAL INDENTURE, dated as of [______________] (this
"Supplemental Indenture"), among [name of [New Guarantor[s]/1/] (the "New
 ----------------------                    ----------------           ---
Guarantor[s]"), Danka Business Systems PLC (the "Company"), Danka Office Imaging
------------
Company, Danka Holding Company and any other guarantors of the Notes
(collectively, the "Guarantors" under the Indenture referred to below and the
"Existing Guarantor[s]" herein) and HSBC Bank USA, as Trustee (the "Trustee")
 ---------------------                                              -------
under the Indenture referred to below.

                             W I T N E S S E T H:

          WHEREAS, the Company, [the] [any] Existing Guarantor[s] and the
Trustee have heretofore become parties to an Indenture, dated as of ___________,
2001 (as amended, supplemented, waived or otherwise modified, the "Indenture"),
                                                                   ---------
providing for the issuance of Zero Coupon Senior Subordinated Notes due April 1,
2004 of the Company (the "Notes");
                          -----

          WHEREAS, Section 4.21(h) of the Indenture provides that the Company is
required to, or may cause the New Guarantor[s] to, execute and deliver to the
Trustee a supplemental indenture pursuant to which the New Guarantor[s] shall
guarantee the Notes pursuant to a Subsidiary Guarantee on the terms and
conditions set forth herein and in Section 4.21 of the Indenture;

          WHEREAS, [the] [each] New Guarantor desires to enter into this
Supplemental Indenture for good and valuable consideration, including
substantial economic benefit in that the financial performance and condition of
such New Guarantor is dependent on the financial performance and condition of
the Company; and

          WHEREAS, pursuant to Section 4.21(h) and Section 9.1 of the Indenture,
the parties hereto are authorized to execute and deliver this Supplemental
Indenture to amend the Indenture, without the consent of any Holder;

          NOW , THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor[s], the Company, [the Existing Guarantors[s]] and the Trustee mutually
covenant and agree for the benefit of the Holders of the Notes as follows:

1.   Defined Terms. As used in this Supplemental Indenture, terms defined in the
     -------------
     Indenture or in the preamble or recital hereto are used herein as therein
     defined. The words "herein," "hereof" and "hereby" and other words of
     similar import used in this Supplemental Indenture refer to this
     Supplemental Indenture as a whole and not to any particular section hereof.

2.   Agreement to Guarantee. [The] [Each] New Guarantor hereby agrees, jointly
     ----------------------
     and severally with [all] [any] other New Guarantor[s] and [all] [any]
     Existing Guarantor[s], fully and unconditionally, to guarantee the
     obligations of the Company under the Indenture and the Notes on the terms
     and subject to the conditions set forth in Section 4.21 of the Indenture
     and to be bound by (and shall be entitled to the benefits of) all other
     applicable provisions of the Indenture as a Guarantor. The Subsidiary
     Guarantee of each New Guarantor is subject to the subordination provisions
     of the Indenture.

3.   Termination, Release and Discharge. [The] [Each] New Guarantor's Subsidiary
     ----------------------------------
     Guarantee shall terminate and be of no further force or effect, and [the]
     [each] New Guarantor shall be released and discharged from all obligations
     in respect of such Subsidiary Guarantee, as and when provided in Section
     4.21(g) of the Indenture.

_________________________________
/1/   Insert as appropriate.
<PAGE>

4.   Parties. Nothing in this Supplemental Indenture is intended or shall be
     -------
     construed to give any Person, other than the Holders and the Trustee, any
     legal or equitable right, remedy or claim under or in respect of [the]
     [each] New Guarantor's Subsidiary Guarantee or any provision contained
     herein or in Section 4.21 of the Indenture.

5.   Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
     -------------
     CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
     GIVING EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE
     APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
     THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY
     THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE
     JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE
     BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING
     ARISING OUT OF OR RELATING TO THE INDENTURE OR THE NOTES.

6.   Ratification of Indenture; Supplemental Indentures Part of Indenture.
     --------------------------------------------------------------------
     Except as expressly amended hereby, the Indenture is in all respects
     ratified and confirmed and all the terms, conditions and provisions thereof
     shall remain in full force and effect. This Supplemental Indenture shall
     form a part of the Indenture for all purposes, and every Holder of Notes
     heretofore or hereafter authenticated and delivered shall be bound hereby.
     The Trustee makes no representation or warranty as to the validity or
     sufficiency of this Supplemental Indenture.

7.   Counterparts. The parties hereto may sign one or more copies of this
     ------------
     Supplemental Indenture in counterparts, all of which together shall
     constitute one and the same agreement.

8.   Headings. The section headings herein are for convenience of reference only
     --------
     and shall not be deemed to alter or affect the meaning or interpretation of
     any provisions hereof.

                           [SIGNATURE PAGES FOLLOW]
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.

                                     DANKA BUSINESS SYSTEMS PLC

                                     By: ________________________________
                                         Name:
                                         Title

                                     HSBC Bank USA,
                                     as Trustee

                                     By: ________________________________
                                         Name:
                                         Title

                                     Danka Office Imaging Company,
                                     as Existing Guarantor

                                     By: ________________________________
                                         Name:
                                         Title

                                     Danka Holding Company,
                                     as Existing Guarantor

                                     By: ________________________________
                                         Name:
                                         Title

                                     [NAME OF NEW GUARANTOR],/2/
                                     As New Guarantor

__________________________________
/2/   Add a signature block for each New Guarantor.
<PAGE>

                                     By: ________________________________
                                         Name:
                                         Title:
<PAGE>

                                                                       EXHIBIT D

                           FORM OF CONVERSION NOTICE

TO CONVERT THIS NOTE, FILL IN THE FORM BELOW: (I) OR (WE) ELECT TO TRANSFER THIS
     NOTE, PURSUANT TO THE TERMS AND CONDITIONS SET FORTH IN THE INDENTURE

                  (Insert Holder's soc. sec. or tax I.D. no.)

              (Print or type Holder's name, address and zip code)

Assignment and Transfer of Note as Requested by the Conversion Agent:

The Holder of the Note hereby irrevocably appoints                agent to
transfer this Note on the books of the Company. The agent may substitute another
to act for him or her.

<TABLE>
      <S>                        <C>
      Date:  ____________        Your Signature: ___________________________________________
                                 (Sign exactly as your name appears on the other side of this
                                 Note)

                                 Signature Guarantee: ________________________________________
                                 (Signature must be guaranteed by an eligible guarantor
                                 institution (banks, stock brokers, savings and loan associations
                                 and credit unions) with membership in an approved guarantee
                                 medallion program pursuant to Securities and Exchange
                                 Commission Rule 17Ad-15)
</TABLE>

      Social Security Number or Taxpayer Identification Number:  ______________

Option of Holder to Convert Notes into Ordinary Shares or American Depository
Shares:

(1)   If you wish to convert this Note into either ordinary shares or American
      depository shares of the Company pursuant to Article 10 ("Conversion") of
      the Indenture, check the applicable boxes:
<PAGE>

        [ ] Ordinary Shares: in whole [ ] in part[ ] Amount to be converted: $

        [ ] American Depository Shares: in whole [ ] in part[ ] Amount to be
converted: $

<TABLE>
      <S>                        <C>
      Date:  ____________        Your Signature: ___________________________________________
                                 (Sign exactly as your name appears on the other side of this
                                 Note)

                                 Signature Guarantee: ________________________________________
                                 (Signature must be guaranteed by an eligible guarantor
                                 institution (banks, stock brokers, savings and loan associations
                                 and credit unions) with membership in an approved guarantee
                                 medallion program pursuant to Securities and Exchange
                                 Commission Rule 17Ad-15)
</TABLE>

      Social Security Number or Taxpayer Identification Number:  ______________

Surrender of the Note to the Trustee

The Holder of the Note hereby surrenders the Note (in whole or in part, and if
in part the part to be converted) to the Trustee for purposes of conversion,
under Article 10 of the Indenture. The surrender of the Note shall be annotated
to the Company or its agent

<TABLE>
      <S>                        <C>
      Date:  ____________        Your Signature: ___________________________________________
                                 (Sign exactly as your name appears on the other side of this
                                 Note)

                                 Signature Guarantee: ________________________________________
                                 (Signature must be guaranteed by an eligible guarantor
                                 institution (banks, stock brokers, savings and loan associations
                                 and credit unions) with membership in an approved guarantee
                                 medallion program pursuant to Securities and Exchange
                                 Commission Rule 17Ad-15)
</TABLE>

      Social Security Number or Taxpayer Identification Number:  ______________

Designation of Delivery for Conversion

Pursuant to Section 10.3 of the Indenture, the Holder designates:

      [ ]  DTC

           or
<PAGE>

     [ ]   the address below as the address for which the delivery of shares
upon conversion should occur.

Holder's Address:_____________________________________________________

<TABLE>
      <S>                        <C>
      Date:  ____________        Your Signature: ___________________________________________
                                 (Sign exactly as your name appears on the other side of this
                                 Note)

                                 Signature Guarantee: ________________________________________
                                 (Signature must be guaranteed by an eligible guarantor
                                 institution (banks, stock brokers, savings and loan associations
                                 and credit unions) with membership in an approved guarantee
                                 medallion program pursuant to Securities and Exchange
                                 Commission Rule 17Ad-15)
</TABLE>

Social Security Number or Taxpayer Identification Number:  ______________

Payment of taxes, capital, stamp, issue and registration duties

The Holder hereby accompanies this Conversion Notice with any required taxes and
capital, stamp, issue and transfer documents as requested by the Conversion
Agent.

<TABLE>
<CAPTION>
      <S>                        <C>
      Date:  ____________        Your Signature: ___________________________________________
                                 (Sign exactly as your name appears on the other side of this
                                 Note)

                                 Signature Guarantee: ________________________________________
                                 (Signature must be guaranteed by an eligible guarantor
                                 institution (banks, stock brokers, savings and loan associations
                                 and credit unions) with membership in an approved guarantee
                                 medallion program pursuant to Securities and Exchange
                                 Commission Rule 17Ad-15)
</TABLE>

Social Security Number or Taxpayer Identification Number:  ______________

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