PROSPECTUS
SUPPLEMENT
(To Prospectus dated January 19, 2006)
U.S. $3,000,000,000 CIT InterNotes®
CIT Group Inc.
We may offer to sell our CIT InterNotes® from time to time. The specific terms of the notes will be set prior to the time of sale and described in a pricing supplement. You should read this prospectus supplement, the prospectus and the applicable pricing supplement carefully before you invest.
We may offer the notes to or through agents for resale. The amount we expect to receive if all of the notes are sold to or through the agents is from $2,905,500,000 to $2,994,000,000, after paying agent discounts and commissions of between $6,000,000 and $94,500,000. We also may offer the notes directly. We have not set a date for termination of our offering.
The agents have advised us that from time to time they may purchase and sell notes in the secondary market, but they are not obligated to make a market in the notes and may suspend or completely stop that activity without any notice at any time. Unless otherwise specified in the applicable pricing supplement, we will not list the notes on any stock exchange.
Investing in the notes involves certain risks, including those described in the “Risk Factors” section beginning on page S-5.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these notes or passed on the adequacy or accuracy of this prospectus supplement, the prospectus or any pricing supplement. Any representation to the contrary is a criminal offense.
Joint Lead Managers and Lead Agents
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Banc of America Securities LLC |
Incapital LLC |
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Agents |
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Bear, Stearns & Co. Inc. |
Charles Schwab & Co., Inc. |
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Citigroup |
Edward D. Jones & Co., L.P. |
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Merrill Lynch & Co. |
Morgan Stanley |
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Raymond James |
RBC Capital Markets |
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UBS Financial Services Inc. |
Wachovia Securities LLC |
Prospectus Supplement dated February 10, 2006.
InterNotes® is a registered servicemark of Incapital Holdings LLC
You should rely only on the information contained or incorporated by reference in this prospectus supplement, the prospectus and the applicable pricing supplement. We and the agents have not authorized anyone else to provide you with different or additional information. We are not making an offer of these notes in any jurisdiction where the offer is not permitted. You should not assume that the information contained or incorporated by reference in this prospectus supplement, the prospectus or the applicable pricing supplement is accurate as of any date other than the date on the front of that document.
TABLE OF CONTENTS
Prospectus Supplement
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About this Prospectus Supplement and the Pricing Supplements |
S-1 |
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S-2 |
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S-3 |
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S-5 |
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Selected Consolidated Financial Information of CIT Group Inc. |
S-6 |
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S-8 |
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S-9 |
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S-20 |
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S-23 |
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S-24 |
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S-25 |
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S-27 |
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Prospectus |
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About this Prospectus |
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Where You Can Find More Information |
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Forward-Looking Statements |
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Description of Debt Securities |
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Description of Capital Stock |
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Use of Proceeds |
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Certain U.S. Federal Income Tax Considerations |
19 |
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Plan of Distribution |
31 |
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Legal Matters |
33 |
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Experts |
33 |
ABOUT THIS PROSPECTUS SUPPLEMENT AND THE PRICING SUPPLEMENTS
Except as the context otherwise requires, or as otherwise specified or used in this prospectus supplement or the prospectus, the terms “we,” “our,” “us,” “the company,” “CIT,” “CIT Group” and “CIT Group Inc.” refer to CIT Group Inc. References in this prospectus supplement to “U.S. dollars” or “U.S. $” or “$” are to the currency of the United States of America.
We may use this prospectus supplement, together with the prospectus and a pricing supplement, to offer CIT InterNotes® from time to time. The total initial public offering price of notes that may be offered by use of this prospectus supplement is $3,000,000,000.
This prospectus supplement sets forth certain terms of the notes that we may offer. It supplements the description of the notes contained in the prospectus, under “Description of Debt Securities.” If information in this prospectus supplement is inconsistent with the prospectus, this prospectus supplement will apply and you should not rely on the information in the prospectus.
Each time we issue notes, we will attach a pricing supplement to this prospectus supplement. The pricing supplement will contain the specific description of the notes being offered and the terms of the offering. The pricing supplement may also add, update or change information in this prospectus supplement or the prospectus. Information in the pricing supplement will replace any inconsistent information in this prospectus supplement, including any changes in the method of calculating interest on any note.
When we refer to the prospectus, we mean the prospectus, dated January 19, 2006. When we refer to a pricing supplement, we mean the pricing supplement that we attach to this prospectus supplement with respect to a particular tranche of notes being issued.
You should read and consider all information contained or incorporated by reference in this prospectus supplement, the prospectus and the pricing supplement before making your investment decision.
S-1
CIT Group Inc., a Delaware corporation, is a global commercial and consumer finance company that was founded in 1908. CIT provides financing and leasing capital for consumers and companies in a wide variety of industries, offering vendor, equipment, commercial, factoring, home lending, student lending and structured financing products, as well as offering management advisory services. CIT operates primarily in North America, with locations in Europe, Latin America, Australia and the Asia-Pacific region.
We provide a wide range of financing and leasing products to small, midsize and larger companies across a wide variety of industries, including manufacturing, retailing, transportation, aerospace, construction, technology, communication, and various service-related industries. Our secured lending, leasing and factoring products include direct loans and leases, operating leases, leveraged and single investor leases, secured revolving lines of credit and term loans, credit protection, accounts receivable collection, import and export financing, debtor-in-possession and turnaround financing, and acquisition and expansion financing. Consumer lending consists primarily of first mortgage lending to consumers, originated largely through a network of brokers and correspondents, and education lending products, principally backed by the U.S. government.
Transactions are generated through direct calling efforts with borrowers, lessees, equipment end-users, vendors, manufacturers and distributors and through referral sources and other intermediaries. In addition, our strategic business units work together in referring transactions to other CIT units to best meet our customers’ overall financing needs. We also buy and sell participations in and syndications of finance receivables and/or lines of credit. From time to time, in the normal course of business, we purchase finance receivables on a wholesale basis (commonly called bulk portfolio purchases) to supplement our origination volume and sell certain finance receivables and equipment under operating leases to reduce concentration risk, for other balance sheet management purposes, or to improve profitability.
CIT’s principal executive offices are located at 1211 Avenue of the Americas, New York, New York 10036. CIT’s telephone number is (212) 536-1211.
S-2
This section summarizes information contained elsewhere or incorporated by reference in this prospectus supplement and the prospectus. This summary is not complete and does not contain all of the information you should consider before investing in the notes. You should read the more detailed information appearing elsewhere or incorporated by reference in this prospectus supplement, the prospectus and in the pricing supplement, including the “Risk Factors” section and our consolidated financial statements and the related notes.
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Issuer |
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CIT Group Inc. |
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Purchasing Agent |
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Incapital LLC |
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Joint Lead Managers and Lead Agents |
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Banc of America Securities LLC and Incapital LLC |
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Agents |
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Bear,
Stearns & Co. Inc. |
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Title of Notes |
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CIT InterNotes® |
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Amount |
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We may issue up to $3,000,000,000 of InterNotes® pursuant to this prospectus supplement. Additional notes may be issued in the future without the consent of or notice to note holders. The notes will not contain any limitations on our ability to issue additional InterNotes® or any other indebtedness. |
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Denominations |
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The notes will be issued and sold in denominations of $1,000 and multiples of $1,000, unless otherwise stated in the pricing supplement. |
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Ranking |
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The notes will be our direct unsecured senior obligations and will rank equally with all of our other unsecured senior indebtedness from time to time outstanding. The notes will be junior to any indebtedness of any of our subsidiaries unless the terms of that indebtedness provide otherwise. |
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Maturities |
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Each note will mature nine months or more from its date of original issuance. |
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Interest |
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Each note will bear interest from its date of original issuance at a fixed or floating rate. |
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Interest on each note will be payable either monthly, quarterly, semi-annually or annually on each interest payment date and on the stated maturity date. Interest also will be paid on the date of redemption or repayment if a note is redeemed or repurchased prior to its stated maturity in accordance with its terms. |
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Principal |
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The principal amount of each note will be payable on its stated maturity date at the corporate trust office of the paying agent or at any other place we may designate. |
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Redemption and Repayment |
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Unless otherwise stated in the applicable pricing supplement, a note will not be redeemable at our option or be repayable at the option of the holder prior to its stated maturity date. The notes will not be subject to any |
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S-3
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sinking fund. |
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Survivor’s Option |
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Specific notes may contain a provision permitting the optional repayment of those notes prior to stated maturity, if requested by the authorized representative of the beneficial owner of those notes, following the death of the beneficial owner of the notes, so long as the notes were owned by the beneficial owner or his or her estate at least six months prior to the request. This feature is referred to as a “Survivor’s Option.” Your notes will not be repaid in this manner unless the pricing supplement for your notes provides for the Survivor’s Option. The right to exercise the Survivor’s Option is subject to limits set by us on: |
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the permitted dollar amount of total exercises by all holders of notes in any calendar year; and |
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the permitted dollar amount of an individual exercise by a holder of a note in any calendar year. |
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Additional details on the Survivor’s Option are described in the section below entitled “Description of the Notes—Survivor’s Option.” |
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Sale and Clearance |
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We will sell notes in the United States only. Notes will be issued in book-entry only form and will clear through The Depository Trust Company. We do not intend to issue notes in certificated form, except as provided in the section below entitled “Registration and Settlement—The Depository Trust Company.” |
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Trustee |
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The trustee for the notes is JPMorgan Chase Bank, N.A. |
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Selling Group |
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The agents and dealers comprising the selling group are broker-dealers and securities firms. The agents, including the Purchasing Agent, will enter into a selling agent agreement with us (the “selling agent agreement”). Dealers who are members of the selling group have executed a master selected dealer agreement with the Purchasing Agent (the “master selected dealer agreement”). The agents and the dealers have agreed to market and sell the notes in accordance with the terms of those respective agreements and all other applicable laws and regulations. You may contact the Purchasing Agent at info@incapital.com for a list of selling group members. |
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S-4
You should carefully consider the following discussion of risks, and the other information, provided and incorporated by reference in this prospectus supplement and the prospectus. The notes will not be an appropriate investment for you if you are not knowledgeable about significant features of the notes, about our financial condition, operations and business or financial matters in general. You should not purchase the notes unless you understand, and know that you can bear, these risks.
The market value of the notes may be affected by factors in addition to credit ratings.
The notes could trade at prices that may be lower than the initial offering price of the notes. In addition to credit ratings that are assigned to the notes, whether or not the notes will trade at lower prices depends on various factors, including prevailing interest rates and markets for similar securities, our financial condition and future prospects and general economic conditions. Further, any credit ratings that are assigned to the notes may not reflect the potential impact of all risks on the market value of the notes.
We may choose to redeem notes when prevailing interest rates are relatively low.
If your notes are redeemable at our option, as specified in the applicable pricing supplement, we may choose to redeem your notes from time to time, especially when prevailing interest rates are lower than the rate borne by the notes. If prevailing rates are lower at the time of redemption, you may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as the interest rate on the notes being redeemed. Our redemption right also may adversely impact your ability to sell your notes as the redemption date or period approaches.
Any Survivor’s Option may be limited in amount.
We will have a discretionary right to limit the aggregate principal amount of notes subject to any Survivor’s Option that may be exercised in any calendar year to an amount equal to the greater of $2,000,000 or 2.0% of the outstanding principal amount of all notes outstanding as of the end of the most recent calendar year. We also have the discretionary right to limit to $250,000 in any calendar year the aggregate principal amount of notes subject to the Survivor’s Option that may be exercised in such calendar year on behalf of any individual deceased beneficial owner of notes. Accordingly, no assurance can be given that exercise of the Survivor’s Option for a desired amount will be permitted in any single calendar year.
The notes may have limited or no liquidity.
There is currently no public market for the notes, and there can be no assurance that a secondary market will develop. In addition, the liquidity of the trading market in the notes, and the market price quoted for the notes, may be adversely affected by changes in the overall market for fixed income securities and by changes in our financial performance or prospects or in the prospects for companies in our industry in general. As a result, we cannot assure you that an active trading market will develop for the notes. If a public market does develop, there can be no assurance that it will continue or that it will be sufficiently liquid to allow you to resell your notes when you want or at a price that you wish to receive for your notes.
S-5
SELECTED CONSOLIDATED FINANCIAL INFORMATION OF CIT GROUP INC.
The following tables set forth selected consolidated financial information regarding CIT’s results of operations and balance sheets. The financial data at December 31, 2004 and December 31, 2003, and for the years ended December 31, 2004 and December 31, 2003, the three months ended December 31, 2002 and the year ended September 30, 2002, were derived from the audited Consolidated Financial Statements of CIT incorporated by reference in this prospectus supplement and the prospectus. The financial data at December 31, 2002, September 30, 2002 and 2001, and December 31, 2000, for the nine months ended September 30, 2001 and for the year ended December 31, 2000 were derived from audited financial statements of CIT that are not incorporated by reference in this prospectus supplement and the prospectus. The financial data at September 30, 2005 and September 30, 2004 and for the nine-month periods then ended were derived from the unaudited consolidated financial statements of CIT included in its Quarterly Report on Form 10-Q, as amended on December 13, 2005, for the quarterly period ended September 30, 2005, which is incorporated by reference in this prospectus supplement and the prospectus. In the opinion of management, such unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the information included therein. Certain prior period balances have been conformed to present period presentation. You should read the selected consolidated financial data below in conjunction with our consolidated financial statements. See “Where You Can Find More Information” in the prospectus.
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Nine Months Ended |
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Year Ended |
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Year Ended |
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Three |
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Year Ended |
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Nine Months |
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Year Ended |
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($ in millions,
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2005(1) |
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2004(1) |
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Results of Operations |
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Net finance margin |
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$ |
1,206.3 |
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1,127.5 |
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$ |
1,569.6 |
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$ |
1,327.8 |
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$ |
344.9 |
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$ |
1,637.1 |
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$ |
1,301.7 |
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$ |
1,447.9 |
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Provisions for credit losses |
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162.4 |
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211.5 |
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214.2 |
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387.3 |
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133.4 |
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788.3 |
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332.5 |
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255.2 |
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Operating margin |
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1,892.5 |
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1,600.3 |
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2,242.5 |
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1,799.8 |
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468.6 |
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1,781.2 |
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1,541.8 |
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2,104.7 |
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Salaries and general operating expenses |
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813.9 |
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740.5 |
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1,046.4 |
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912.9 |
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232.6 |
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921.0 |
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777.4 |
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1,013.7 |
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Goodwill impairment |
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— |
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6,511.7 |
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Goodwill amortization |
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— |
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— |
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— |
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— |
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97.6 |
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86.3 |
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Acquisition related costs |
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— |
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— |
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— |
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— |
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54.0 |
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— |
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Interest expense—TCH |
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— |
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— |
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— |
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— |
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— |
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662.6 |
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98.8 |
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— |
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Gain on redemption of debt |
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— |
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41.8 |
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41.8 |
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50.4 |
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Net income (loss) |
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688.1 |
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549.8 |
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753.6 |
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566.9 |
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141.3 |
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(6,698.7 |
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263.3 |
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611.6 |
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Net income (loss) per share(2) |
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3.31 |
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2.60 |
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3.57 |
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2.68 |
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0.67 |
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(31.66 |
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1.24 |
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2.89 |
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Net income (loss) per share(2) |
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3.24 |
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2.56 |
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3.50 |
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2.66 |
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0.67 |
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(31.66 |
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1.24 |
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2.89 |
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Dividends per share(2) |
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0.45 |
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0.39 |
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0.52 |
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0.48 |
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0.12 |
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— |
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0.25 |
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0.50 |
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September 30, |
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December 31, |
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December 31, |
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December 31, |
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September 30, |
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September 30, |
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December 31, |
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($ in millions) |
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2005 |
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2004 |
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Balance Sheet Data |
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Finance receivables |
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$ |
38,289.1 |
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$ |
34,542.8 |
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$ |
35,048.2 |
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$ |
31,300.2 |
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$ |
27,621.3 |
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$ |
28,459.0 |
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$ |
31,879.4 |
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$ |
33,497.5 |
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Education lending receivables pledged |
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4,396.1 |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Reserve for credit losses |
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652.8 |
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637.9 |
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617.2 |
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643.7 |
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760.8 |
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777.8 |
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492.9 |
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468.5 |
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Operating lease equipment, net |
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9,184.1 |
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7,932.9 |
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8,290.9 |
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7,615.5 |
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6,704.6 |
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6,567.4 |
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6,402.8 |
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7,190.6 |
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Goodwill and intangible assets |
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1,003.8 |
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594.4 |
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596.5 |
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487.7 |
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400.9 |
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402.0 |
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6,569.5 |
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1,971.5 |
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Total assets |
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60,150.2 |
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50,013.7 |
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51,111.3 |
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46,342.8 |
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|
41,932.4 |
|
|
|
|
42,710.5 |
|
|
|
|
51,349.3 |
|
|
|
|
48,689.8 |
|
|
|
Commercial paper |
|
|
5,185.1 |
|
|
4,496.5 |
|
|
|
4,210.9 |
|
|
|
|
4,173.9 |
|
|
|
|
4,974.6 |
|
|
|
|
4,654.2 |
|
|
|
|
8,869.2 |
|
|
|
|
9,063.5 |
|
|
|
Variable-rate bank credit facilities |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
2,118.0 |
|
|
|
|
4,037.4 |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
Variable-rate senior notes |
|
|
14,318.1 |
|
|
11,507.7 |
|
|
|
11,545.0 |
|
|
|
|
9,408.4 |
|
|
|
|
4,906.9 |
|
|
|
|
5,379.0 |
|
|
|
|
9,614.6 |
|
|
|
|
11,130.5 |
|
|
|
Fixed-rate senior notes |
|
|
21,405.9 |
|
|
21,022.2 |
|
|
|
21,715.1 |
|
|
|
|
19,830.8 |
|
|
|
|
19,681.8 |
|
|
|
|
18,385.4 |
|
|
|
|
17,113.9 |
|
|
|
|
17,571.1 |
|
|
|
Non-recourse, secured borrowings—education lending |
|
|
3,737.7 |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
Preferred capital securities |
|
|
252.5 |
|
|
254.2 |
|
|
|
253.8 |
|
|
|
|
255.5 |
|
|
|
|
257.2 |
|
|
|
|
257.7 |
|
|
|
|
260.0 |
|
|
|
|
250.0 |
|
|
|
Total Stockholders’ equity |
|
|
6,611.8 |
|
|
5,837.0 |
|
|
|
6,055.1 |
|
|
|
|
5,394.2 |
|
|
|
|
4,870.7 |
|
|
|
|
4,757.8 |
|
|
|
|
5,947.6 |
|
|
|
|
6,007.2 |
|
|
(footnotes on next page)
S-6
(footnotes from previous page)
|
|
|
|
(1) |
Certain aerospace and rail maintenance costs were reclassified during the quarter ended March 31, 2005 from operating expense to lease margin. These costs include amounts that were reimbursed through rail lease payments and expenditures to place aircraft with new lessors, including improvements and configuration changes. The impact was a reduction to operating margin of $36.1 million and $23.8 million for the nine months ended September 30, 2005 and September 30, 2004. With the exception of the nine months ended September 30, 2004, prior periods have not been reclassified to conform to this presentation. |
|
|
|
|
(2) |
Net income (loss) and dividend per share calculations for the periods preceding September 30, 2002 are based on the number of common shares outstanding (basic and diluted of 211.6 million and 211.7 million, respectively) upon the completion of the July 2002 initial public offering. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or for the |
|
At or for the |
|
At or for the |
|
At or for the |
|
At or for the |
|
At or for the |
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
($ in millions) |
|
2005 |
|
2004 |
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Selected Data and Ratios Profitability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net finance margin as a percentage of average earning assets (“AEA”)(1) |
|
|
3.41 |
% |
|
|
3.94 |
% |
|
|
4.02 |
% |
|
|
3.71 |
% |
|
|
4.22 |
% |
|
|
4.57 |
% |
|
|
4.29 |
% |
|
|
3.56 |
% |
|
|
Ratio of earnings to fixed charges(2) |
|
|
1.77 |
x |
|
|
1.98 |
x |
|
|
1.97 |
x |
|
|
1.68 |
x |
|
|
1.65 |
x |
|
|
(7 |
) |
|
|
1.30 |
x |
|
|
1.39 |
x |
|
|
Other Operating Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and general operating expenses as a percentage of average managed assets (“AMA”)(3) |
|
|
2.05 |
% |
|
|
2.11 |
% |
|
|
2.20 |
% |
|
|
1.99 |
% |
|
|
2.10 |
% |
|
|
1.95 |
% |
|
|
2.05 |
% |
|
|
1.97 |
% |
|
|
Efficiency ratio(4) |
|
|
40.8 |
% |
|
|
40.9 |
% |
|
|
42.6 |
% |
|
|
41.7 |
% |
|
|
38.6 |
% |
|
|
35.8 |
% |
|
|
41.5 |
% |
|
|
43.0 |
% |
|
|
Credit Quality |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60+ days contractual delinquency as a percentage of finance receivables |
|
|
1.76 |
% |
|
|
1.66 |
% |
|
|
1.73 |
% |
|
|
2.16 |
% |
|
|
3.63 |
% |
|
|
3.76 |
% |
|
|
3.46 |
% |
|
|
2.98 |
% |
|
|
Non-accrual loans as a percentage of finance receivables |
|
|
1.14 |
% |
|
|
1.24 |
% |
|
|
1.31 |
% |
|
|
1.81 |
% |
|
|
3.43 |
% |
|
|
3.43 |
% |
|
|
2.67 |
% |
|
|
2.10 |
% |
|
|
Net credit losses as a percentage of average finance receivables |
|
|
0.50 |
% |
|
|
1.06 |
% |
|
|
0.91 |
% |
|
|
1.77 |
% |
|
|
2.32 |
% |
|
|
1.67 |
% |
|
|
1.20 |
% |
|
|
0.71 |
% |
|
|
Reserve for credit losses as a percentage of finance receivables |
|
|
1.53 |
% |
|
|
1.85 |
% |
|
|
1.76 |
% |
|
|
2.06 |
% |
|
|
2.75 |
% |
|
|
2.73 |
% |
|
|
1.55 |
% |
|
|
1.40 |
% |
|
|
Leverage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible stockholders’ equity(5) to managed assets(6) |
|
|
9.50 |
% |
|
|
10.57 |
% |
|
|
10.7 |
% |
|
|
10.4 |
% |
|
|
10.4 |
% |
|
|
9.9 |
% |
|
|
8.6 |
% |
|
|
7.8 |
% |
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total managed assets(6) |
|
$ |
61,288.5 |
|
|
$ |
52,414.1 |
|
|
$ |
53,470.6 |
|
|
$ |
49,735.6 |
|
|
$ |
46,357.1 |
|
|
$ |
47,622.3 |
|
|
$ |
50,877.1 |
|
|
$ |
54,900.9 |
|
|
|
Employees |
|
|
6,165 |
|
|
|
5,700 |
|
|
|
5,860 |
|
|
|
5,800 |
|
|
|
5,835 |
|
|
|
5,850 |
|
|
|
6,785 |
|
|
|
7,355 |
|
|
|
|
|
|
(1) |
“AEA” means average earning assets, which is the average of finance receivables, operating lease equipment, finance receivables held for sale and certain investments, less credit balances of factoring clients. |
|
|
|
|
(2) |
For purposes of determining the ratio of earnings to fixed charges, earnings consist of income before income taxes and fixed charges. Fixed charges consist of interest on indebtedness, minority interest in subsidiary trust holding solely debentures of the Company and one-third of rent expense, which is deemed representative of an interest factor. |
|
|
|
|
(3) |
“AMA” means average managed assets, which is average earning assets plus the average of finance receivables previously securitized and still managed by us. |
|
|
|
|
(4) |
Efficiency ratio is the percentage of salaries and general operating expenses to operating margin, excluding the provision for credit losses. |
|
|
|
|
(5) |
Tangible stockholders’ equity excludes goodwill and other intangible assets. Tangible stockholders’ equity also excludes certain unrealized losses relating to derivative financial instruments and other investments, as these losses are not necessarily indicative of amounts that will be realized. |
|
|
|
|
(6) |
“Managed assets” means assets previously securitized and still managed by us and include (i) financing and leasing assets, (ii) certain investments and (iii) off-balance sheet finance receivables. |
|
|
|
|
(7) |
Earnings were insufficient to cover fixed charges by $6,331.1 million for the year ended September 30, 2002. Earnings for the year ended September 30, 2002 included a non-cash goodwill impairment charge of $6,511.7 million in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets.” The ratio of earnings to fixed charges included fixed charges of $1,497.2 million and a loss before provision for income taxes of $6,331.1 million resulting in a total loss provision for income taxes and fixed charges of $4,833.9 million. |
S-7
The following table sets forth CIT’s capitalization as of September 30, 2005. This table should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the notes to those consolidated financial statements incorporated by reference in this prospectus supplement and the prospectus.
|
|
|
|
|
|
|
|
|
|
|
As of September 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions, except |
|
|
|
|
|
|
(unaudited--restated) |
|
|
|
|
|
|
|
|
|
|
|
Commercial paper |
|
$ |
5,185.1 |
|
|
|
Term debt |
|
|
35,724.0 |
|
|
|
Non-recourse, secured borrowings |
|
|
3,737.7 |
|
|
|
Preferred capital securities |
|
|
252.5 |
|
|
|
|
|
|
|
|
|
|
Total debt |
|
|
44,899.3 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
Preferred stock, $0.01 par value, 100,000,000 authorized; |
|
|
|
|
|
|
Issued and outstanding: |
|
|
|
|
|
|
Series A 14,000,000 with a liquidation preference of $25 per share |
|
|
350.0 |
|
|
|
Series B 1,500,000 with a liquidation preference of $100 per share |
|
|
150.0 |
|
|
|
Common stock, $0.01 par value, 600,000,000 authorized; 212,284,056 issued and 200,268,812 outstanding |
|
|
2.1 |
|
|
|
Additional paid in capital net of deferred compensation of $54.4 |
|
|
10,598.7 |
|
|
|
Accumulated deficit |
|
|
(3,905.7 |
) |
|
|
Accumulated other comprehensive income |
|
|
(50.6 |
) |
|
|
Treasury stock, 12,015,244 shares, at cost |
|
|
(532.7 |
) |
|
|
|
|
|
|
|
|
|
Total common stockholders’ equity |
|
|
6,111.8 |
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
6,611.8 |
|
|
|
|
|
|
|
|
|
|
Total capitalization |
|
$ |
51,511.1 |
|
|
|
|
|
|
|
|
S-8
The following description of the particular terms of the notes being offered supplements and, to the extent inconsistent with or to the extent otherwise specified in an applicable pricing supplement, replaces the description of the general terms and provisions of the debt securities set forth under the headings “Description of Debt Securities” in the prospectus. Unless otherwise specified in an applicable pricing supplement, the notes will have the terms described below. Capitalized terms used but not defined below have the meanings given to them in the prospectus and in the indenture relating to the notes.
General
The InterNotes®, or the notes, being offered by this prospectus supplement, the prospectus and the applicable pricing supplement will be issued under an indenture (the “indenture”), dated January 20, 2006, between CIT Group Inc. and JPMorgan Chase Bank, N.A., as trustee (the “trustee”). Unless the pricing supplement specifies to the contrary, with respect to each separate issue of notes issued under the indenture, the trustee will serve as registrar, paying agent, transfer agent and authenticating agent. The terms of the indenture are more fully described in the prospectus. The indenture may be supplemented from time to time. The indenture does not limit the aggregate amount of debt securities that may be issued under it and provides that the debt securities may be issued under it from time to time in one or more series. The following statements are summaries of the material provisions of the indenture and the notes. These summaries do not purport to be complete and are qualified in their entirety by reference to the indenture, including for the definitions of certain terms. If you want to know more about the terms of any of the notes, you should refer to the indenture. We have filed as an exhibit to our shelf registration statement (File No. 333-131159) filed with the Securities and Exchange Commission or the SEC, the indenture pursuant to which the notes will be issued. If we use a capitalized term in this prospectus supplement that is not defined, that term will have the same meaning as in the prospectus and/or the indenture.
The notes constitute a single series of debt securities for purposes of the indenture and are limited to an aggregate principal amount of up to $3,000,000,000. We may increase the foregoing limit, however, without the consent of any holders of the notes, by appropriate corporate action if in the future we wish to sell additional notes.
Notes issued in accordance with this prospectus supplement, the prospectus and the applicable pricing supplement will have the following general characteristics:
|
|
|
|
|
|
• |
the notes will be our direct unsecured senior obligations and will rank equally with all of our other unsecured senior indebtedness from time to time outstanding; |
|
|
|
|
|
|
• |
the notes may be offered from time to time by us through the Purchasing Agent and each note will mature on a day that is at least nine months from its date of original issuance; |
|
|
|
|
|
|
• |
each note will bear interest from its date of original issuance at a fixed or floating rate; |
|
|
|
|
|
|
• |
the notes will not be subject to any sinking fund; and |
|
|
|
|
|
|
• |
the minimum denomination of the notes will be $1,000 (unless otherwise stated in the pricing supplement). |
In addition, the pricing supplement relating to each offering of notes will describe specific terms of the notes, including:
|
|
|
|
|
|
• |
whether the note is a fixed rate note or a floating rate note; |
|
|
|
|
|
|
• |
the price, which may be expressed as a percentage of the aggregate initial public offering price of the notes, at which the notes will be issued to the public; |
|
|
|
|
|
|
• |
the date on which the notes will be issued to the public; |
|
|
|
|
|
|
• |
the stated maturity date of the notes; |
S-9
|
|
|
|
|
|
• |
if the note is a fixed rate note, the rate per year at which the notes will bear interest; |
|
|
|
|
|
|
• |
if the note is a floating rate note, the interest rate basis, the initial interest rate, the interest determination date, the interest reset dates, the interest payment dates, the index maturity, the maximum interest rate and the minimum interest rate, if any, and the spread and/or spread multiplier, if any, and any other terms relating to the particular method of calculating the interest rate for the note (see “Description of the Notes—Floating Rate Notes” for an explanation of the terms relating to floating rate notes); |
|
|
|
|
|
|
• |
the interest payment frequency; |
|
|
|
|
|
|
• |
the purchase price, Purchasing Agent’s discount and net proceeds to us; |
|
|
|
|
|
|
• |
whether the authorized representative of the holder of a beneficial interest in the note will have the right to seek repayment upon the death of the holder as described under “— Survivor’s Option”; |
|
|
|
|
|
|
• |
if the notes may be redeemed at our option or repaid at the option of the holder prior to its stated maturity date, the provisions relating to any such redemption or repayment; |
|
|
|
|
|
|
• |
any special U.S. federal income tax consequences of the purchase, ownership and disposition of the notes; and |
|
|
|
|
|
|
• |
any other significant terms of the notes not inconsistent with the provisions of the indenture. |
We may at any time purchase notes at any price or prices in the open market or otherwise. Notes so purchased by us may, at our discretion, be held, resold or surrendered to the trustee for cancellation.
Payment of Principal and Interest
Principal of and interest on beneficial interests in the notes will be made in accordance with the arrangements then in place between the paying agent and The Depository Trust Company (“DTC”) and its participants as described under “Registration and Settlement—The Depository Trust Company.” Payments in respect of any notes in certificated form will be made as described under “Registration and Settlement—Registration, Transfer and Payment of Certificated Notes.”
Interest on each note will be payable either monthly, quarterly, semi-annually or annually on each interest payment date and at the note’s stated maturity or on the date of redemption or repayment if a note is redeemed or repaid prior to maturity. Interest is payable to the person in whose name a note is registered at the close of business on the regular record date before each interest payment date. Each global note we issue in registered form will be held through DTC and will be registered in the name of Cede & Co., as nominee of DTC. Interest due at a note’s stated maturity or on a date of redemption or repayment will be payable to the person to whom principal is payable.
We will pay any administrative costs imposed by banks in connection with making payments in immediately available funds, but any tax, assessment or governmental charge imposed upon any payments on a note, including, without limitation, any withholding tax, is the responsibility of the holders of beneficial interests in the note in respect of which such payments are made.
Interest and Interest Rates
|
|
|
|
|
|
|
The notes may bear interest at: |
||
|
|
|
||
|
|
• |
a fixed rate; or |
|
|
|
|
|
|
|
|
• |
a floating rate, which may be based on one of the following rates (see “Floating Rate Notes” for a further description of each of these floating rates): |
|
|
|
|
|
|
|
|
|
• |
LIBOR (a note issued with this rate is referred to in this prospectus supplement as a “LIBOR note”); |
S-10
|
|
|
|
|
|
|
|
• |
Treasury Rate (a note issued with this rate is referred to in this prospectus supplement as a “Treasury Rate note”); |
|
|
|
|
|
|
|
|
• |
Federal Funds Rate (a note issued with this rate is referred to in this prospectus supplement as a “Federal Funds Rate note”); |
|
|
|
|
|
|
|
|
• |
Prime Rate (a note issued with this rate is referred to in this prospectus supplement as a “Prime Rate note”); and |
|
|
|
|
|
|
|
|
• |
a rate as otherwise specified in the pricing supplement. |
Each note will accrue interest from its date of original issuance until its stated maturity or earlier redemption or repayment. The applicable pricing supplement will specify a fixed interest rate or a floating rate index or formula. Interest will be payable monthly, quarterly, semi-annually or annually. Interest payments on each note will include the amount of interest accrued from and including the last interest payment date to which interest has been paid (or from and including the date of original issuance if no interest has been paid with respect to the note) to, but excluding, the applicable interest payment date, stated maturity date or date of earlier redemption or repayment, as the case may be.
The interest rate on the notes will in no event be higher than the maximum rate permitted by New York law as the same may be modified by U.S. law of general application.
Interest on a note will be payable beginning on the first interest payment date after its date of original issuance to holders of record on the corresponding regular record date.
Payment of Interest
Unless otherwise specified in the applicable pricing supplement, interest on the notes will be paid as follows:
|
|
|
|
|
Interest Payment Frequency |
|
Interest Payment Dates |
|
|
|
|
|
Monthly |
|
Fifteenth day of each calendar month, beginning in the first calendar month following the month the note is issued. |
|
|
|
|
|
Quarterly |
|
Fifteenth day of every third month, beginning in the third calendar month following the month the note is issued. |
|
|
|
|
|
Semi-annually |
|
Fifteenth day of every sixth month, beginning in the sixth calendar month following the month the note is issued. |
|
|
|
|
|
Annually |
|
Fifteenth day of every twelfth month, beginning in the twelfth calendar month following the month the note is issued. |
The regular record date for any interest payment date will be the first day of the calendar month in which the interest payment date occurs, except that the regular record date for interest due on the note’s stated maturity date or date of earlier redemption or repayment will be that particular date.
With respect to fixed rate notes, the term “business day” means a day other than a Saturday or Sunday and any day that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation (including any executive order) to close in the City of New York. With respect to LIBOR notes, a business day means any day that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation (including any executive order) to close in the City of New York and that is also a London business day (as defined below).
Fixed Rate Notes
Each fixed rate note will bear interest from its date of original issuance at the annual fixed interest rate stated in the applicable pricing supplement.
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Unless the applicable pricing supplement specifies otherwise, interest on fixed rate notes will be computed on the basis of a 360-day year of twelve 30-day months.
If the stated maturity date, date of earlier redemption or repayment or interest payment date for any note is not a business day, principal and interest for that note will be paid on the next business day, and no interest will accrue on the amount payable from, and after, the stated maturity date, date of earlier redemption or repayment or interest payment date.
Floating Rate Notes
Unless the applicable pricing supplement specifies otherwise, floating rate notes will have the terms described below. Each floating rate note will bear interest from its date of original issuance at the floating rate per year based on the interest rate index or other interest rate formula specified in the applicable pricing supplement. Unless the applicable pricing supplement specifies otherwise, the interest rate on each floating rate note will be equal to:
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an interest rate determined by reference to the interest rate index specified in the applicable pricing supplement plus or minus the spread, if any; and/or |
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an interest rate calculated by reference to the interest rate index specified in the applicable pricing supplement multiplied by the spread multiplier, if any. |
The “spread” is the number of basis points (one one-hundredth of a percentage point) specified in the applicable pricing supplement as an adjustment to the interest rate for a floating rate note. The “spread multiplier” is the factor specified in the applicable pricing supplement as an adjustment to the interest rate for a floating rate note.
Any floating rate note may also have either or both of the following terms:
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a maximum limitation, or ceiling, on the rate of interest which may accrue during any interest period (the “maximum interest rate”); and |
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a minimum limitation, or floor, on the rate of interest which may accrue during any interest period (the “minimum interest rate”). |
The applicable pricing supplement for a floating rate note will specify the interest rate index and the spread and/or spread multiplier, if any, or other interest rate formula and the maximum or minimum interest rate, if any.
The calculation agent will compute interest on floating rate notes in the manner set forth below.
If any interest payment date for any floating rate note (other than the note’s stated maturity date or the date of redemption or repayment) would otherwise be a day that is not a business day, then the interest payment date will be postponed to the following day which is a business day, except that in the case of a LIBOR note, if this business day falls in the next succeeding calendar month, then the interest payment date will be the immediately preceding business day. If the stated maturity date (or the date of redemption or repayment) of a floating rate note falls on a day which is not a business day, then we will make the required payment of principal, premium, if any, and/or interest on the following day which is a business day as if it were made on the date this payment was due, and no interest shall accrue as a result of this delayed payment.
We will calculate accrued interest on a floating rate note by adding the interest factors calculated for each day in the period for which we are calculating accrued interest. We will compute the “interest factor” for each day by multiplying the face amount of the floating rate note by the interest rate applicable to the day and dividing the product thereof by 360, or, in the case of any Treasury Rate note, by the actual number of days in the year.
We will reset the rate of interest on each floating rate note daily, weekly, monthly, quarterly, semi-annually or annually or on some other basis as specified in the applicable pricing supplement (the first date on which the reset interest rate becomes effective, being an “interest reset date”). If any interest reset date
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for any floating rate note is not a business day, the interest reset date for that floating rate note shall be postponed to the next succeeding business day, except that in the case of a LIBOR note, if this business day is in the next succeeding calendar month, that interest reset date will be the immediately preceding business day.
The “interest determination dates” are the dates as of which the calculation agent will determine the new interest rate that will take effect on the interest reset date. With respect to determining an interest determination date, unless the applicable pricing supplement specifies to the contrary:
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the interest determination date for a Federal Funds Rate note or Prime Rate note is the second business day before the interest reset date; |
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the interest determination date for a LIBOR note is the second London business day before the interest reset date; and |
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the interest determination date for a Treasury Rate note is the day of the week in which such interest reset date falls on which direct obligations of the United States (“Treasury bills”) would normally be auctioned. Treasury bills are usually sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is usually held on Tuesday. The auction, however, may be held on the preceding Friday. If so, that Friday will be the interest determination date for the interest reset date occurring in the next week. |
“London business day” means any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market.
Unless the applicable pricing supplement specifies otherwise, the interest rate determined with respect to any interest determination date for any floating rate note will become effective on and as of the next succeeding interest reset date. However, the interest rate in effect with respect to any floating rate note for the period from the issue date to the first interest reset date will be the “initial interest rate” as specified in the applicable pricing supplement. The interest rate for a floating rate note will be applicable from and including the interest reset date to which it relates to but not including the next interest reset date or until the note’s stated maturity date or date of earlier redemption or repayment, as the case may be.
Unless otherwise specified in the applicable pricing supplement, the trustee will be the calculation agent and will determine the applicable interest rate on each interest determination date. The calculation agent will, upon the request of the holder of any floating rate note and to the extent available, provide the interest rate then in effect for the note and, if different, the interest rate to be in effect as a result of a determination made on the most recent interest determination date with respect to the note. Unless the pricing supplement specifies otherwise, all percentages resulting from any calculation of the rate of interest on floating rate notes will be rounded, if necessary, to the nearest one hundred thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)). All dollar amounts used in or resulting from that calculation will be rounded to the nearest cent (with one-half cent being rounded upward).
LIBOR Notes. Each LIBOR note will bear interest at a rate calculated using LIBOR and the spread and/or spread multiplier, if any, specified in the applicable pricing supplement.
Unless the applicable pricing supplement specifies otherwise, the calculation agent will determine LIBOR with respect to any interest reset date according to the method specified in the pricing supplement, in accordance with the following provisions:
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if “LIBOR Telerate” is specified as the reporting service in the applicable pricing supplement, LIBOR will be the rate for deposits in U.S. dollars having the index maturity designated in the applicable pricing supplement, commencing on the second London business day immediately following the interest determination date, that appears on the designated LIBOR page as of 11:00 a.m., London time, on that interest determination date; and |
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if “LIBOR Reuters” is specified as the reporting service in the applicable pricing supplement, LIBOR will be the arithmetic mean of the offered rates for deposits in U.S. dollars having the index maturity designated in the applicable pricing supplement, commencing on the second London business day immediately following such Interest determination date, that appear on the designated LIBOR page as of 11:00 a.m., London time, on that interest determination date, provided that at least two such offered rates appear. |
If, the rate index is “LIBOR Reuters,” and fewer than two offered rates appear, or LIBOR Reuters is not available, or if the rate index is “LIBOR Telerate” and no rate appears, or LIBOR Telerate is not available, then we will determine LIBOR as follows:
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The calculation agent will select the principal London offices of four major banks in the London interbank market, and will request each bank to provide its offered quotation for deposits in U.S. dollars for the period of the index maturity designated in the applicable pricing supplement, commencing on the second London business day immediately following the interest determination date, to prime banks in the London interbank market at approximately 11:00 a.m., London time, on the interest determination date and in a principal amount equal to an amount that is representative for a single transaction in the index currency in the market at that time. |
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If at least two of these banks provide a quotation, the calculation agent will compute LIBOR on the interest determination date as the arithmetic mean of the quotations. |
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If fewer than two of these banks provide a quotation, the calculation agent will select three major banks in the City of New York to provide a rate quote. The calculation agent will compute LIBOR on the interest determination date as the arithmetic mean of these quoted rates at approximately 3:00 p.m., New York City time, on the interest determination date in U.S. dollars for loans to leading European banks, having the index maturity designated in the applicable pricing supplement commencing on the second London business day immediately following the interest determination date and in a principal amount that is representative for a single transaction in the market at that time. |
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If none of these banks provides a quotation as mentioned, the rate of interest will be the same as that in effect on the interest determination date. |
The “designated LIBOR page” means (i) if “LIBOR Telerate” is specified in the applicable pricing supplement, the display on Moneyline Telerate (or any successor service) on the page specified in the applicable pricing supplement (or any other page as may replace this page on that service) for the purpose of displaying the London interbank offered rates of major banks or (ii) if “LIBOR Reuters” is specified in the applicable pricing supplement, the display on the Reuters Monitor Money Rates Service (or any successor service) on the page specified in the applicable pricing supplement (or any other page as may replace this page on that service) for the purpose of displaying the London interbank offered rates of major banks.
If neither “LIBOR Reuters” nor “LIBOR Telerate” is specified in the applicable pricing supplement, LIBOR will be determined as if LIBOR Telerate had been specified.
Treasury Rate Notes. Each Treasury Rate note will bear interest at the rate calculated using the Treasury Rate and the spread and/or spread multiplier, if any, specified in the applicable pricing supplement.
Unless the applicable pricing supplement specifies otherwise, “Treasury Rate” means the rate for the auction held on the interest determination date of Treasury bills having the index maturity specified in the applicable pricing supplement as that rate appears on the display on Moneyline Telerate (or any successor service) on page 56 (or any other page as may replace this page on that service) (“Telerate Page 56”) or page 57 (or any other page which replaces this page on that service) (“Telerate Page 57”) under the heading “INVESTMENT RATE.”
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If the rate cannot be set as described above, the calculation agent will use the following methods in succession:
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If the rate is not published as described above by 3:00 p.m., New York City time, on the interest determination date, the Treasury Rate will be the auction average rate of Treasury bills (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as the case may be, and applied on a daily basis) as otherwise announced by the U.S. Department of Treasury. |
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In the event that the auction rate of Treasury bills having the index maturity specified in the applicable pricing supplement is not published by 3:00 p.m., New York City time, on the interest determination date, or if no auction is held, then the Treasury Rate will be the rate (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as the case may be, and applied on a daily basis) on the interest determination date of Treasury bills having the index maturity specified in the applicable pricing supplement as published in H.15(519) under the heading “U.S. Government Securities/Treasury Bills/Secondary Market” or, if not yet published by 3:00 p.m., New York City time, on the interest determination date, the rate on the interest determination date of Treasury bills as published in H.15 Daily Update, or other recognized electronic source used for the purpose of displaying that rate, under the caption “U.S. Government Securities/Treasury Bills/Secondary Market.” |
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If the rate is not yet published in H.15 Daily Update or another recognized electronic source, then the Treasury Rate will be calculated as a yield to maturity (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as the case may be, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 p.m., New York City time, on the interest determination date, of three leading primary U.S. government securities dealers in the City of New York selected by the calculation agent for the issue of Treasury bills with a remaining maturity closest to the applicable index maturity. |
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If fewer than three of the dealers are quoting as mentioned, then the rate of interest will be the same as that in effect on that interest determination date. |
“H.15(519)” means “Statistical Release H.15(519), Selected Interest Rates,” or any successor publication as published weekly by the Board of Governors of the Federal Reserve System.
“H.15 Daily Update” means the daily update of H.15(519), available through the world wide web site of the Board of Governors of the Federal Reserve System at http://www.federalreserve.gov/releases/h15/update, or any successor site or publication.
Federal Funds Rate Notes. Each Federal Funds Rate note will bear interest at the rate calculated using the Federal Funds Rate and the spread and/or spread multiplier, if any, specified in the applicable pricing supplement.
Unless the applicable pricing supplement specifies otherwise, “Federal Funds Rate” means, for an interest determination date, the rate with respect to that date for Federal Funds as published in H.15(519) under the heading “Federal Funds (Effective),” as this rate is displayed on Moneyline Telerate (or any successor service) on page 120 (or any other page as may replace this page on that service) (“Telerate Page 120”).
If the rate cannot be set as described above, the calculation agent will use the following methods in succession:
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If the rate does not appear on Telerate Page 120 or is not yet published by 3:00 p.m. New York City time, on the interest determination date, then the Federal Funds Rate will be the rate with respect to the interest determination date as published in the H.15 Daily Update or another recognized electronic source used for the purpose of displaying this rate under the heading “Federal Funds (Effective).” |
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If the rate is not yet published in H.15 Daily Update or another recognized electronic source by 3:00 p.m., New York City time, on the interest determination date, then the Federal Funds Rate with respect to the interest determination date will be the arithmetic mean of the rates, as of 3:00 p.m., New York City time, on the business day following that interest determination date, for the last transaction in overnight Federal Funds arranged by three leading brokers of Federal Funds transactions in the City of New York selected by the calculation agent. |
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If fewer than three brokers are quoting as mentioned, then the rate of interest will be the same as that in effect on that interest determination date. |
Prime Rate Notes. Each Prime Rate note will bear interest at the rate calculated using the Prime Rate and the spread and/or spread multiplier, if any, specified in the applicable pricing supplement.
Unless the applicable pricing supplement specifies otherwise, “Prime Rate” means, with respect to an interest determination date, the rate set forth on that date in H.15(519) under the heading “Bank Prime Loan” or if not published by 3:00 p.m., New York City time, on the interest determination date, the rate on the interest determination date as published in H.15 Daily Update, or another recognized electronic source used for the purpose of displaying this rate, under the heading “Bank Prime Loan.”
If the rate cannot be set as described above, the calculation agent will use the following methods in succession:
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If the rate is not published in H.15 Daily Update or another recognized electronic source by 3:00 p.m., New York City time, on the interest determination date, then the Prime Rate will be the arithmetic mean of the rates of interest that appear on the Reuters Screen USPRIME 1 page as a bank’s publicly announced prime rate or base lending rate in effect as of 3:00 p.m., New York City time, for that interest determination date. |
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If fewer than four rates appear on the Reuters Screen USPRIME 1 page on that date, then the Prime Rate will be the arithmetic mean of the prime rates or base lending rates quoted by three major banks in the City of New York selected by the calculation agent on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on the interest determination date. |
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If fewer than three banks are quoting as mentioned, then the rate of interest will be the same as that in effect on the interest determination date. |
“Reuters Screen USPRIME 1 page” means the display page designated as page “USPRIME 1” on the Reuters Monitor Money Rates Service (or such other page as may replace the USPRIME 1 page on that service for the purpose of displaying prime rates or base lending rates of major U.S. banks).
Redemption and Repayment
Unless we otherwise provide in the applicable pricing supplement, a note will not be redeemable or repayable prior to its stated maturity date.
If the applicable pricing supplement states that the note will be redeemable at our option prior to its stated maturity date, then on such date or dates specified in the pricing supplement, we may redeem those notes at our option either in whole or from time to time in part, upon not less than 30 days’ written notice to the holder of those notes.
If the pricing supplement states that your note will be repayable at your option prior to its stated maturity date, we will require receipt of notice of the request for repayment at least 30 but not more than 60 days prior to the date or dates specified in the pricing supplement. We also must receive the completed form entitled “Option to Elect Repayment.” Exercise of the repayment option by the holder of a note is irrevocable.
Since the notes will be represented by a global note, DTC or its nominee will be treated as the holder of the notes; therefore, other than the trustee under the indenture, DTC or its nominee will be the
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only entity that receives notices of redemption of notes from us, in the case of our redemption of notes, and will be the only entity that can exercise the right to repayment of notes, in the case of optional repayment. See “Registration and Settlement.”
To ensure that DTC or its nominee will timely exercise a right to repayment with respect to a particular beneficial interest in a note, the beneficial owner of the interest in that note must instruct the broker or other direct or indirect participant through which it holds the beneficial interest to notify DTC or its nominee of its desire to exercise a right to repayment. Because different firms have different cut-off times for accepting instructions from their customers, each beneficial owner should consult the broker or other direct or indirect participant through which it holds an interest in a note to determine the cut-off time by which the instruction must be given for timely notice to be delivered to DTC or its nominee. Conveyance of notices and other communications by DTC or its nominee to participants, by participants to indirect participants and by participants and indirect participants to beneficial owners of the notes will be governed by agreements among them and any applicable statutory or regulatory requirements.
The redemption or repayment of a note normally will occur on the interest payment date or dates following receipt of a valid notice. Unless otherwise specified in the pricing supplement, the redemption or repayment price will equal 100% of the principal amount of the note plus unpaid interest accrued to the date or dates of redemption or repayment.
We may at any time purchase notes at any price or prices in the open market or otherwise. We may also purchase notes otherwise tendered for repayment by a holder or tendered by a holder’s duly authorized representative through exercise of the Survivor’s Option described below. If we purchase the notes in this manner, we have the discretion to either hold, resell or surrender the notes to the trustee for cancellation.
Survivor’s Option
The “Survivor’s Option” is a provision in a note pursuant to which we agree to repay that note, if requested by the authorized representative of the beneficial owner of that note, following the death of the beneficial owner of the note, so long as the note was owned by that beneficial owner or the estate of that beneficial owner at least six months prior to the request. The pricing supplement relating to each offering of notes will state whether the Survivor’s Option applies to those notes.
If a note is entitled to a Survivor’s Option, upon the valid exercise of the Survivor’s Option and the proper tender of that note for repayment, we will, at our option, repay that note, in whole or in part, at a price equal to 100% of the principal amount of the deceased beneficial owner’s interest in that note plus unpaid interest accrued to the date of repayment.
To be valid, the Survivor’s Option must be exercised by or on behalf of the person who has authority to act on behalf of the deceased beneficial owner of the note (including, without limitation, the personal representative or executor of the deceased beneficial owner or the surviving joint owner with the deceased beneficial owner) under the laws of the applicable jurisdiction.
The death of a person holding a beneficial ownership interest in a note as a joint tenant or tenant by the entirety with another person, or as a tenant in common with the deceased holder’s spouse, will be deemed the death of a beneficial owner of that note, and the entire principal amount of the note so held will be subject to repayment by us upon request. However, the death of a person holding a beneficial ownership interest in a note as tenant in common with a person other than such deceased holder’s spouse will be deemed the death of a beneficial owner only with respect to such deceased person’s interest in the note.
The death of a person who, during his or her lifetime, was entitled to substantially all of the beneficial ownership interests in a note will be deemed the death of the beneficial owner of that note for purposes of the Survivor’s Option, regardless of whether that beneficial owner was the registered holder of that note, if entitlement to those interests can be established to the satisfaction of us and the trustee. A beneficial ownership interest will be deemed to exist in typical cases of nominee ownership, ownership under the Uniform Transfers to Minors Act or Uniform Gifts to Minors Act, community property or other joint ownership arrangements between a husband and wife. In addition, a beneficial ownership interest will be deemed to exist in custodial and trust arrangements where one person has all of the beneficial ownership interests in the applicable note during his or her lifetime.
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We have the discretionary right to limit the aggregate principal amount of notes as to which exercises of the Survivor’s Option shall be accepted by us from authorized representatives of all deceased beneficial owners in any calendar year to an amount equal to the greater of $2,000,000 or 2.0% of the principal amount of all notes outstanding as of the end of the most recent calendar year. We also have the discretionary right to limit to $250,000 in any calendar year the aggregate principal amount of notes as to which exercises of the Survivor’s Option shall be accepted by us from the authorized representative of any individual deceased beneficial owner of notes in such calendar year. In addition, we will not permit the exercise of the Survivor’s Option except in principal amounts of $1,000 and multiples of $1,000.
An otherwise valid election to exercise the Survivor’s Option may not be withdrawn. Each election to exercise the Survivor’s Option will be accepted in the order that elections are received by the trustee, except for any note the acceptance of which would contravene any of the limitations described in the preceding paragraph. Notes accepted for repayment through the exercise of the Survivor’s Option normally will be repaid on the first interest payment date that occurs 20 or more calendar days after the date of the acceptance. For example, if the acceptance date of a note tendered through a valid exercise of the Survivor’s Option is May 1, 2004, and interest on that note is paid monthly, we would normally, at our option, repay that note on the interest payment date occurring on June 15, 2004, because the May 15, 2003 interest payment date would occur less than 20 days from the date of acceptance. Each tendered note that is not accepted in any calendar year due to the application of any of the limitations described in the preceding paragraph will be deemed to be tendered in the following calendar year in the order in which all such notes were originally tendered. If a note tendered through a valid exercise of the Survivor’s Option is not accepted, the trustee will deliver a notice by first-class mail to the registered holder, at that holder’s last known address as indicated in the note register, that states the reason that note has not been accepted for repayment.
With respect to notes represented by a global note, DTC or its nominee is treated as the holder of the notes and will be the only entity that can exercise the Survivor’s Option for such notes. To obtain repayment pursuant to exercise of the Survivor’s Option for a note, the deceased beneficial owner’s authorized representative must provide the following items to the broker or other entity through which the beneficial interest in the note is held by the deceased beneficial owner:
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a written instruction to such broker or other entity to notify DTC of the authorized representative’s desire to obtain repayment pursuant to exercise of the Survivor’s Option; |
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appropriate evidence satisfactory to us and the trustee (i) that the deceased was the beneficial owner of the note at the time of death and his or her interest in the note was owned by the deceased beneficial owner or his or her estate at least six months prior to the request for repayment, (ii) that the death of the beneficial owner has occurred, (iii) of the date of death of the beneficial owner, and (iv) that the representative has authority to act on behalf of the beneficial owner; |
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if the interest in the note is held by a nominee of the deceased beneficial owner, a certificate satisfactory to us and the trustee from the nominee attesting to the deceased’s beneficial ownership of such note; |
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a written request for repayment signed by the authorized representative of the deceased beneficial owner with the signature guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States; |
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if applicable, a properly executed assignment or endorsement; |
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tax waivers and any other instruments or documents that we or the trustee reasonably require in order to establish the validity of the beneficial ownership of the note and the claimant’s entitlement to payment; and |
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any additional information we or the trustee reasonably require to evidence satisfaction of any conditions to the exercise of the Survivor’s Option or to document beneficial ownership or authority to make the election and to cause the repayment of the note. |
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In turn, the broker or other entity will deliver each of these items to the trustee, together with evidence satisfactory to us and the trustee from the broker or other entity stating that it represents the deceased beneficial owner.
We retain the right to limit the aggregate principal amount of notes as to which exercises of the Survivor’s Option applicable to the notes will be accepted in any one calendar year as described above. All questions regarding the eligibility or validity of any exercise of the Survivor’s Option will be determined by us, in our sole discretion, which determination will be final and binding on all parties.
The broker or other entity will be responsible for disbursing payments received from the trustee to the authorized representative. See “Registration and Settlement.”
Forms for the exercise of the Survivor’s Option may be obtained from the trustee at JPMorgan Chase Bank, N.A., 4 New York Plaza--15th Floor, New York, New York 10004, Attention: Worldwide Securities Services.
If applicable, we will comply with the requirements of Section 14(e) of the Exchange Act of 1934, as amended (the “Exchange Act”), and the rules promulgated thereunder, and any other securities laws or regulations in connection with any repayment of notes at the option of the registered holders or beneficial owners thereof.
Meeting of Noteholders
The indenture contains provisions for calling meetings of the holders of the notes and other debt securities issued pursuant to the indenture to consider matters affecting their interests, including, without limitation, the modification of the terms of the notes or the waiver of any default under the terms of the notes or the indenture. CIT or the holders of at least 10% in aggregate principal amount of the notes then outstanding of any series or all series may request that the trustee call a meeting of the holders of the notes of that series or all series, respectively. The quorum for any meeting of the holders of the notes is the presence of the holders of notes who are entitled to vote in aggregate principal amount sufficient to take action upon the business for which such meeting was called. A resolution passed at a duly called and constituted meeting of debt securityholders will be binding on the holders of all debt securities issued pursuant to the indenture, whether or not they are present at the meeting.
Replacement of Notes
If any mutilated note is surrendered to the trustee, we will execute and the trustee will authenticate and deliver in exchange for such mutilated note a new note of the same series and principal amount. If the trustee and we receive evidence to our satisfaction of the destruction, loss or theft of any note and such security or indemnity as may be required by the trustee and us, then we shall execute and the trustee shall authenticate and deliver, in lieu of such destroyed, lost or stolen note, a new note of the same series and principal amount. All expenses (including counsel fees and expenses) associated with issuing the new note shall be borne by the owner of the mutilated, destroyed, lost or stolen note.
Reopening of Issue
We may, from time to time, without the consent of existing noteholders, reopen an issue of notes and issue additional notes with the same terms (including maturity and interest payment terms) as notes issued on an earlier date, except for the issue date, issue price and the first payment of interest. After such additional notes are issued, they will be fungible with the previously issued notes to the extent specified in the applicable pricing supplement.
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The Depository Trust Company
All of the notes we offer will be issued in book-entry only form. This means that we will not issue certificates for notes, except in the limited cases described below. Instead, we will issue global notes in registered form. Each global note will be held through DTC and will be registered in the name of Cede & Co., as nominee of DTC. Accordingly, Cede & Co. will be the holder of record of the notes. Each note represented by a global note evidences a beneficial interest in that global note.
Beneficial interests in a global note will be shown on, and transfers are effected through, records maintained by DTC or its participants. In order to own a beneficial interest in a note, you must be an institution that has an account with DTC or have a direct or indirect account with such an institution. Transfers of ownership interests in the notes will be accomplished by making entries in DTC participants’ books acting on behalf of beneficial owners.
So long as DTC or its nominee is the registered holder of a global note, DTC or its nominee, as the case may be, will be the sole holder and owner of the notes represented thereby for all purposes, including payment of principal and interest, under the indenture. Except as otherwise provided below, you will not be entitled to receive physical delivery of certificated notes and will not be considered the holder of the notes for any purpose under the indenture. Accordingly, you must rely on the procedures of DTC and the procedures of the DTC participant through which you own your note in order to exercise any rights of a holder of a note under the indenture. The laws of some jurisdictions require that certain purchasers of notes take physical delivery of such notes in certificated form. Those limits and laws may impair the ability to transfer beneficial interests in the notes.
Each global note representing notes will be exchangeable for certificated notes of like tenor and terms and of differing authorized denominations in a like aggregate principal amount, only if (1) DTC notifies us that it is unwilling or unable to continue as depositary for the global notes or we become aware that DTC has ceased to be a clearing agency registered under the Exchange Act and, in any such case we fail to appoint a successor to DTC within 90 calendar days, (2) we, in our sole discretion, determine that the global notes shall be exchangeable for certificated notes or (3) an event of default has occurred and is continuing with respect to the notes under the indenture. Upon any such exchange, the certificated notes shall be registered in the names of the beneficial owners of the global note representing the notes.
The following is based on information furnished by DTC:
DTC will act as securities depositary for the notes. The notes will be issued as fully-registered notes registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. Generally, one fully registered global note will be issued for all of the principal amount of the notes. If, however, the aggregate principal amount of the notes exceeds $500,000,000, one certificate will be issued with respect to each $500,000,000 of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such note.
DTC, the world’s largest depositary, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues and money market instruments from 100 countries and territories that DTC’s direct participants deposit with DTC.
DTC also facilitates the post-trade settlement among direct participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between direct participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust
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companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of direct participants of DTC and members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, as well as by The New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly. DTC has Standard & Poor’s highest rating: AAA. The DTC rules applicable to its participants are on file with the SEC. More information about DTC can be found at www.dtcc.com.
Purchases of the notes under the DTC system must be made by or through direct participants, which will receive a credit for the notes on DTC’s records. The beneficial interest of each actual purchaser of each note is in turn to be recorded on the direct and indirect participants’ records. Beneficial owners will not receive written confirmation from DTC of their purchase. Beneficial owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the direct or indirect participant through which the beneficial owner entered into the transaction. Transfers of beneficial interests in the notes are to be accomplished by entries made on the books of direct and indirect participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their beneficial interests in notes, except in the event that use of the book-entry system for the notes is discontinued.
To facilitate subsequent transfers, all notes deposited by direct participants with DTC will be registered in the name of DTC’s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of the notes with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual beneficial owners of the notes; DTC’s records reflect only the identity of the direct participants to whose accounts such notes will be credited, which may or may not be the beneficial owners. The direct and indirect participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct participants, by direct participants to indirect participants, and by direct participants and indirect participants to beneficial owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial owners of the notes may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the notes, such as redemption, tenders, defaults, and proposed amendments to the security documents. For example, beneficial owners of the notes may wish to ascertain that the nominee holding the notes for their benefit has agreed to obtain and transmit notices to beneficial owners. In the alternative, beneficial owners may wish to provide their names and addresses to the registrar of the notes and request that copies of the notices be provided to them directly. Any such request may or may not be successful.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the notes unless authorized by a direct participant in accordance with DTC’s procedures. Under its usual procedures, DTC mails an Omnibus Proxy to us as soon as possible after the regular record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those direct participants to whose accounts the notes are credited on the record date (identified in a listing attached to the Omnibus Proxy).
We will pay principal and or interest payments on the notes in same-day funds directly to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit direct participants’ accounts on the applicable payment date in accordance with their respective holdings shown on DTC’s records upon DTC’s receipt of funds and corresponding detail information. Payments by participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of these participants and not of DTC or any other party, subject to any statutory or regulatory requirements that may be in effect from time to time. Payment of principal and interest to Cede & Co., or such other nominee as may be requested by an authorized representative of
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DTC, is our responsibility, disbursement of such payments to direct participants is the responsibility of DTC, and disbursement of such payments to the beneficial owners is the responsibility of the direct or indirect participant.
We will send any redemption notices to DTC. If less than all of the notes are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each direct participant in such issue to be redeemed.
A beneficial owner, or its authorized representative, shall give notice to elect to have its notes repaid by us, through its direct or indirect participant, to the trustee, and shall effect delivery of such notes by causing the direct participant to transfer that participant’s interest in the global note representing such notes, on DTC’s records, to the trustee. The requirement for physical delivery of notes in connection with a demand for repayment will be deemed satisfied when the ownership rights in the global note representing such notes are transferred by the direct participants on DTC’s records.
DTC may discontinue providing its services as securities depository for the notes at any time by giving us reasonable notice. Under such circumstances, if a successor securities depositary is not obtained, we will print and deliver certificated notes. We may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depositary). In that event, we will print and deliver certificated notes.
The information in this section concerning DTC and DTC’s system has been obtained from sources that we believe to be reliable, but neither we, the Purchasing Agent nor any agent takes any responsibility for its accuracy.
Registration, Transfer and Payment of Certificated Notes
We do not intend to issue certificated notes. If we ever issue notes in certificated form, those notes may be presented for registration, transfer and payment at the office of the registrar or at the office of any transfer agent designated and maintained by us. We have originally designated JPMorgan Chase Bank, N.A. to act in those capacities for the notes. The registrar or transfer agent will make the transfer or registration only if it is satisfied with the documents of title and identity of the person making the request. There will not be a service charge for any exchange or registration of transfer of the notes, but we may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the exchange. At any time, we may change transfer agents or approve a change in the location through which any transfer agent acts. We also may designate additional transfer agents for any notes at any time.
We will not be required to: (1) issue, exchange or register the transfer of any note to be redeemed for a period of 15 days after the selection of the notes to be redeemed; (2) exchange or register the transfer of any note that was selected, called or is being called for redemption, except the unredeemed portion of any note being redeemed in part; or (3) exchange or register the transfer of any note as to which an election for repayment by the holder has been made, except the unrepaid portion of any note being repaid in part.
We will pay principal of and interest on any certificated notes at the offices of the paying agents we may designate from time to time. Generally, we will pay interest on a note by check on any interest payment date other than at stated maturity or upon earlier redemption or repayment to the person in whose name the note is registered at the close of business on the regular record date for that payment. We will pay principal and interest at stated maturity or upon earlier redemption or repayment in same-day funds against presentation and surrender of the applicable notes.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
For a discussion of the material U.S. federal income tax consequences relevant to the purchase, ownership and disposition of the notes, see “Certain U.S. Federal Income Tax Considerations” in the prospectus. Any special U.S. federal income tax consequences relevant to the purchase, ownership and disposition of any tranche of notes not discussed in the prospectus will be addressed in the relevant pricing supplement for such tranche of notes.
ALL PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES RELATING TO THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES.
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EMPLOYEE RETIREMENT INCOME SECURITY ACT
A fiduciary of a pension plan or other employee benefit plan (including a governmental plan, an individual retirement account or a Keogh plan) proposing to invest in the notes should consider this section carefully.
A fiduciary of an employee benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended (commonly referred to as “ERISA”) should consider the fiduciary standards under ERISA in the context of the particular circumstances of such plan before authorizing an investment in the notes. Such fiduciary should consider whether the investment is in accordance with the documents and instruments governing the plan.
In addition, ERISA and the Code prohibit certain transactions (referred to as “prohibited transactions”) involving the assets of a plan subject to ERISA or the assets of an individual retirement account or plan subject to Section 4975 of the Code (referred to as an “ERISA plan”), on the one hand, and persons who have certain specified relationships to such plan (“parties in interest” within the meaning of ERISA or “disqualified persons” within the meaning of the Code), on the other. If we (or an affiliate) are considered a party in interest or disqualified person with respect to an ERISA plan, then the investment in notes by the ERISA plan may give rise to a prohibited transaction.
By purchasing and holding the notes, the person making the decision to invest on behalf of an ERISA plan is representing that the purchase and holding of the notes will not result in a prohibited transaction under ERISA or the Code. Therefore, an ERISA plan should not invest in the notes unless the plan fiduciary or other person acquiring securities on behalf of the ERISA plan determines that neither we nor an affiliate is a party in interest or a disqualified person or, alternatively, that an exemption from the prohibited transaction rules is available. If an ERISA plan engages in a prohibited transaction, the transaction may require “correction” and may cause the ERISA plan fiduciary to incur certain liabilities and the parties in interest or disqualified persons to be subject to excise taxes.
Governmental plans and certain church plans, while not subject to the fiduciary responsibility provisions of ERISA or the prohibited transaction provisions of ERISA and Section 4975 of the Code, may nevertheless be subject to state or other federal laws or regulations that are substantially similar to the foregoing provisions of ERISA and the Code. Fiduciaries of any such plans should consult with their counsel before investing in the notes to determine the need for, and the availability, if necessary, of any exemptive relief under any such laws or regulations.
If you are the fiduciary of an employee benefit plan or other ERISA plan, or an insurance company that is providing investment advice or other features to an employee benefit plan or other ERISA plan, and you propose to invest in the notes with the assets of the ERISA plan, you should consult your own legal counsel for further guidance.
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Under the terms of the selling agent agreement, the notes will be offered from time to time by us to the Purchasing Agent for subsequent resale to the agents and other dealers who are broker-dealers and securities firms. The agents, including the Purchasing Agent, are parties to the selling agent agreement. The notes will be offered for sale in the United States only. Dealers who are members of the selling group have executed a master selected dealer agreement with the Purchasing Agent. We also may appoint additional agents to sell the notes. Any sale of the notes through those additional agents, however, will be on the same terms and conditions to which the original agents have agreed. The Purchasing Agent will purchase the notes at a discount ranging from 0.20% to 3.15% of the non-discounted price for each note sold. However, we also may sell the notes to the Purchasing Agent at a discount greater than or less than the range specified above. The discount at which we sell the notes to the Purchasing Agent will be set forth in the applicable pricing supplement. The Purchasing Agent also may sell notes to dealers at a concession not in excess of the discount it received from us. In certain cases, the Purchasing Agent and the other agents and dealers may agree that the Purchasing Agent will retain the entire discount. We will disclose any particular arrangements in the applicable pricing supplement.
Following the solicitation of orders, each of the agents, severally and not jointly, may purchase notes as principal for its own account from the Purchasing Agent. Unless otherwise set forth in the applicable pricing supplement, these notes will be purchased by the agents and resold by them to one or more investors at a fixed public offering price. After the initial public offering of notes, the public offering price (in the case of notes to be resold at a fixed public offering price), discount and concession may be changed.
We have the sole right to accept offers to purchase notes and may reject any proposed offer to purchase notes in whole or in part. Each agent also has the right, in its discretion reasonably exercised, to reject any proposed offer to purchase notes in whole or in part. We reserve the right to withdraw, cancel or modify any offer without notice. We also may change the terms, including the interest rate we will pay on the notes, at any time prior to our acceptance of an offer to purchase.
Each agent, including the Purchasing Agent, may be deemed to be an “underwriter” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”). We have agreed to indemnify the agents against certain liabilities, including liabilities under the Securities Act, or to contribute to any payments they may be required to make in respect of such liabilities. We also have agreed to reimburse the agents for certain expenses.
No note will have an established trading market when issued. We do not intend to apply for the listing of the notes on any securities exchange. However, we have been advised by the agents that they may purchase and sell notes in the secondary market as permitted by applicable laws and regulations. The agents are not obligated to make a market in the notes, and they may discontinue making a market in the notes at any time without notice. Neither we nor the agents can provide any assurance regarding the development, liquidity or maintenance of any trading market for any notes. All secondary trading in the notes will settle in same-day funds. See “Registration and Settlement.”
In connection with certain offerings of notes, the rules of the SEC permit the Purchasing Agent to engage in transactions that may stabilize the price of the notes. The Purchasing Agent will conduct these activities for the agents. These transactions may consist of short sales, stabilizing transactions and purchases to cover positions created by short sales. A short sale is the sale by the Purchasing Agent of a greater amount of notes than the amount the Purchasing Agent has agreed to purchase in connection with a specific offering of notes. Stabilizing transactions consist of certain bids or purchases made by the Purchasing Agent to prevent or retard a decline in the price of the notes while an offering of notes is in process. In general, these purchases or bids for the notes for the purpose of stabilization or to reduce a syndicate short position could cause the price of the notes to be higher than it might otherwise be in the absence of those purchases or bids. Neither we nor the Purchasing Agent makes any representation or prediction as to the direction or magnitude of any effect that these transactions may have on the price of any notes. In addition, neither we nor the Purchasing Agent makes any representation that, once commenced, these transactions will not be discontinued without notice. The Purchasing Agent is not required to engage in these activities and may end any of these activities at any time.
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The agents or dealers to or through which we may sell notes may engage in transactions with us and perform services for us in the ordinary course of business.
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The notes, the indenture, and the selling agent agreement are governed by, and are to be construed in accordance with, the laws of the state of New York and of the United States, applicable to agreements made and to be performed wholly within those jurisdictions.
This prospectus supplement and the prospectus may be used only for the purposes for which they were published. This prospectus supplement and the prospectus together represent an offer to sell the notes but only under circumstances and in jurisdictions where it is lawful to do so.
We will identify in the applicable pricing supplement whether the notes have been accepted for clearance through the DTC. The CUSIP or the identification number for any other relevant clearing system for each series of notes will be set out in the relevant pricing supplement.
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PROSPECTUS
CIT GROUP INC.
COMMON STOCK
PREFERRED STOCK
SENIOR DEBT SECURITIES
SUBORDINATED DEBT SECURITIES
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CIT Group Inc. may from time to time offer and sell shares of common stock, shares of preferred stock, senior debt securities or subordinated debt securities covered by this prospectus independently, or together in any combination that may include other securities set forth in an accompanying prospectus supplement, for sale directly to purchasers or through underwriters, dealers or agents to be designated at a future date.
We will provide the specific terms and prices of the securities that we may offer in supplements to this prospectus. The prospectus supplements may also add to, update or change information contained in this prospectus. This prospectus may not be used to offer or sell any securities unless accompanied by a prospectus supplement. You should read this prospectus and any applicable prospectus supplement carefully before you invest in the securities.
Our common stock is listed on the New York Stock Exchange under the symbol “CIT.”
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We may sell securities to or through underwriters, dealers or agents. For additional information on the method of sale, you should refer to the section entitled “Plan of Distribution.” The names of any underwriters, dealers or agents involved in the sale of any securities and the specific manner in which they may be offered will be set forth in the prospectus supplement covering the sale of those securities.
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Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
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The date of this prospectus is January 19, 2006.
TABLE OF CONTENTS
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The information contained in this prospectus is not complete and may be changed. You should rely only on the information provided in or incorporated by reference in this prospectus, any prospectus supplement, or documents to which we otherwise refer you. We have not authorized anyone else to provide you with different information. We are not making an offer of any securities in any jurisdiction where the offer is not permitted. You should not assume that the information in this prospectus, any prospectus supplement or any document incorporated by reference is accurate as of any date other than the date of the document in which such information is contained or such other date referred to in such document, regardless of the time of any sale or issuance of a security.
This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the “SEC”) using a “shelf” registration process. This prospectus provides you with a general description of the securities we may offer. Each time we sell or issue securities, we will provide a prospectus supplement and, if applicable, a pricing supplement, that will contain specific information about the terms of that specific offering of securities and the specific manner in which they may be offered. The prospectus supplement and any applicable pricing supplement may also add to, update or change any of the information contained in this prospectus. The prospectus supplement and any applicable pricing supplement may also contain information about any material U.S. federal income tax considerations relating to the securities described in the prospectus supplement. You should read both this prospectus, the applicable prospectus supplement and any applicable pricing supplement, together with the additional information described under “Where You Can Find More Information.” You should read the entire prospectus and the applicable prospectus supplement, including the information incorporated by reference, before making an investment decision. As used in this prospectus, the terms “CIT Group Inc.,” “CIT Group,” “CIT,” “we,” “us,” “our” and “the company” refer to CIT Group Inc., unless the context clearly indicates otherwise.
This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed or will be filed or incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under “Where You Can Find More Information.”
The registration statement that contains this prospectus (including the exhibits to the registration statement) contains additional information about us and the securities offered under this prospectus. That registration statement can be read at the SEC web site (www.sec.gov) or at the SEC offices mentioned under the heading “Where You Can Find More Information.”
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s web site at http://www.sec.gov. You may also read and copy any document we file at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Such information may also be inspected at The New York Stock Exchange, 20 Broad Street, New York, New York 10005. You can also find information about us by visiting our website at www.cit.com. We have included our website address as an inactive textual reference only. Information on our website is not incorporated by reference into and does not form a part of this prospectus.
The SEC allows us to incorporate by reference the information we file with it into this prospectus, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and information that we file later with the SEC will automatically update and supersede the previously filed information. We incorporate by reference the documents listed below and any future filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than any portions of the respective filings that were furnished, under applicable SEC rules, rather than filed, until we complete our offerings of the securities:
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our Annual Report on Form 10-K for the year ended December 31, 2004, as amended by Amendment No. 1 and Amendment No. 2 to such Annual Report; |
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our Definitive Proxy Statement filed with the SEC on April 6, 2005; |
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our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005, as amended by Amendment No. 1 to such Quarterly Report; |
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our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2005, as amended by Amendment No. 1 to such Quarterly Report; |
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our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005, as amended by Amendment No. 1 to such Quarterly Report; |
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our Current Reports on Form 8-K filed with the SEC on January 3, 2005, January 6, 2005, January 7, 2005, January 18, 2005, January 19, 2005, February 24, 2005, March 2, 2005, March 30, 2005, April 20, 2005, July 6, 2005, July 20, 2005, August 16, 2005, August 18, 2005, August 26, 2005, September 15, 2005, September 30, 2005, October 19, 2005, October 20, 2005, November 15, 2005, December 2, 2005, December 9, 2005, December 13, 2005, December 14, 2005, December 22, 2005 and January 18, 2005; and |
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the description of our common stock contained in Form 8-A filed on June 26, 2002, and any amendment or report filed under the Exchange Act for the purpose of updating such description. |
You may request a copy of these filings at no cost by writing or telephoning us at the following address or phone number:
Glenn Votek
Executive Vice President and Treasurer
CIT Group Inc.
1 CIT Drive
Livingston, New Jersey 07039
(973) 740-5000
This prospectus, the prospectus supplement, the documents incorporated by reference in this prospectus and other written reports and oral statements made from time to time by the company may contain “forward-looking statements” within the meaning of the Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations or forecasts of future events. They use words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “project,” “intend,” “plan,” “potential,” “will,” and other words and terms of similar meaning in connection with a discussion of potential future events, circumstances or future operating or financial performance. You can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Any forward-looking statements contained in this prospectus, the prospectus supplement and the documents incorporated by reference in this prospectus are subject to unknown risks, uncertainties and contingencies. Forward-looking statements are included, for example, in the discussions about:
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our liquidity risk management; |
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our credit risk management; |
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our asset and liability risk management; |
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our funding, borrowing costs and net finance margin; |
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our capital, leverage and credit ratings; |
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our operational and legal risks; |
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our ability to remediate the material weakness in internal controls related to income taxes; |
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our growth rates; |
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our commitments to extend credit or purchase equipment; and |
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how we may be affected by legal proceedings. |
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All forward-looking statements involve risks and uncertainties, many of which are beyond our control, which may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. Also, forward-looking statements are based upon management’s estimates of fair values and of future costs, using currently available information. Therefore, actual results may differ materially from those expressed or implied in those statements. Factors that could cause such differences include, but are not limited to:
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risks of economic slowdown, downturn or recession; |
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industry cycles and trends; |
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demographic trends; |
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risks inherent in changes in market interest rates and quality spreads; |
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funding opportunities and borrowing costs; |
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changes in funding markets, including commercial paper, term debt and the asset-backed securitization markets; |
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uncertainties associated with risk management, including credit prepayment, asset/liability, interest rate and currency risks; |
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adequacy of reserves for credit losses, including amounts related to hurricane losses and U.S. hub carrier airlines; |
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risks associated with the value and recoverability of leased equipment and lease residual values; |
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changes in laws or regulations governing our business and operations; |
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changes in competitive factors; and |
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future acquisitions and dispositions of businesses or asset portfolios. |
Any or all of our forward-looking statements here or in other publications may turn out to be wrong, and there are no guarantees about the performance of the company. The company does not assume the obligation to update any forward-looking statement for any reason.
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DESCRIPTION OF DEBT SECURITIES
This section contains a description of the general terms and provisions of the debt securities that may be offered by this prospectus. We may issue senior debt securities and subordinated debt securities under one of two separate indentures to be entered into between us and JPMorgan Chase Bank, N.A., as trustee. Senior debt securities will be issued under a senior indenture and subordinated debt securities will be issued under a subordinated indenture. The senior indenture and the subordinated indenture are referred to in this prospectus individually as the “indenture” and collectively as the “indentures.” The indentures may be supplemented from time to time.
This prospectus briefly outlines some of the provisions of the indentures. The following summary of the material provisions of the indentures is qualified in its entirety by the provisions of the indentures, including definitions of certain terms used in the indentures. Wherever we refer to particular sections or defined terms of the indentures, those sections or defined terms are incorporated by reference in this prospectus or the applicable prospectus supplement. You should review the indentures that are filed as exhibits to the registration statement of which this prospectus forms a part for additional information.
In addition, the material specific financial, legal and other terms as well as any material U.S. federal income tax consequences particular to securities of each series will be described in the prospectus supplement relating to the securities of that series. The prospectus supplement may or may not modify the general terms found in this prospectus and will be filed with the SEC. For a complete description of the terms of a particular series of debt securities, you should read both this prospectus and the prospectus supplement relating to that particular series.
General
Neither indenture limits the amount of debt that we may issue under the indenture or otherwise. Under the indentures, we may issue the securities in one or more series with the same or various maturities, at par or a premium, or with original issue discount.
Unless otherwise specified in the prospectus supplement, the debt securities covered by this prospectus will be our direct unsecured obligations. Senior debt securities will rank equally with our other unsecured and unsubordinated indebtedness. Subordinated debt securities will be unsecured and subordinated in right of payment to the prior payment in full of all of our senior indebtedness. See “—Subordination” below. Any of our secured indebtedness will rank ahead of the debt securities to the extent of the value of the assets securing such indebtedness.
We conduct operations primarily through our subsidiaries and substantially all of our consolidated assets are held by our subsidiaries. Accordingly, our cash flow and our ability to meet our obligations under the debt securities will be largely dependent on the earnings of our subsidiaries and the distribution or other payment of these earnings to us in the form of dividends, loans or advances and repayment of loans and advances from us. Our subsidiaries are separate and distinct legal entities and have no obligation to pay the amounts that will be due on our debt securities or to make any funds available for payment of amounts that will be due on our debt securities. Because we are a holding company, our obligations under our debt securities will be effectively subordinated to all existing and future liabilities of our subsidiaries. Therefore, our rights, and the rights of our creditors, including the rights of the holders of the debt securities, to participate in any distribution of assets of any of our subsidiaries, if such subsidiary were to be liquidated or reorganized, are subject to the prior claims of the subsidiary’s creditors. To the extent that we may be a creditor with recognized claims against our subsidiaries, our claims will still be effectively subordinated to any security interest in, or mortgages or other liens on, the assets of the subsidiary that are senior to us.
The prospectus supplement relating to any series of debt securities being offered will include specific terms relating to the offering. These terms will include, among other terms, some or all of the following, as applicable:
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the title and series of such debt securities, which may include medium-term notes; |
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the total principal amount of the series of debt securities and whether there shall be any limit upon the aggregate principal amount of such debt securities; |
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the date or dates, or the method or methods, if any, by which such date or dates will be determined, on which the principal of the debt securities will be payable; |
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the rate or rates at which such debt securities will bear interest, if any, which rate may be zero in the case of certain debt securities issued at an issue price representing a discount from the principal amount payable at maturity, or the method by which such rate or rates will be determined (including, if applicable, any remarketing option or similar method), and the date or dates from which such interest, if any, will accrue or the method by which such date or dates will be determined; |
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the date or dates on which interest, if any, on such debt securities will be payable and any regular record dates applicable to the date or dates on which interest will be so payable; |
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the place or places where the principal of or any premium or interest on such debt securities will be payable, where any of such debt securities that are issued in registered form may be surrendered for registration of, transfer or exchange, and where any such debt securities may be surrendered for conversion or exchange; |
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if such debt securities are to be redeemable at our option, the date or dates on which, the period or periods within which, the price or prices at which and the other terms and conditions upon which such debt securities may be redeemed, in whole or in part, at our option; |
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provisions specifying whether we will be obligated to redeem or purchase any of such debt securities pursuant to any sinking fund or analogous provision or at the option of any holder of such debt securities and, if so, the date or dates on which, the period or periods within which, the price or prices at which and the other terms and conditions upon which such debt securities will be redeemed or purchased, in whole or in part, pursuant to such obligation, and any provisions for the remarketing of such debt securities so redeemed or purchased; |
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if other than denominations of $1,000 and any integral multiple thereof, the denominations in which any debt securities to be issued in registered form will be issuable and, if other than a denomination of $5,000, the denominations in which any debt securities to be issued in bearer form will be issuable; |
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provisions specifying whether the debt securities will be convertible into other securities of CIT and/or exchangeable for securities of CIT or other issuers and, if so, the terms and conditions upon which such debt securities will be so convertible or exchangeable; |
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if other than the principal amount, the portion of the principal amount (or the method by which such portion will be determined) of such debt securities that will be payable upon declaration of acceleration of the maturity thereof; |
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if other than U.S. dollars, the currency of payment, including composite currencies, of the principal of, and any premium or interest on any of such debt securities; |
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provisions specifying whether the principal of, and any premium or interest on such debt securities will be payable, at the election of CIT or a holder of debt securities, in a currency other than that in which such debt securities are stated to be payable and the date or dates on which, the period or periods within which, and the other terms and conditions upon which, such election may be made; |
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any index, formula or other method used to determine the amount of payments of principal of, any premium or interest on such debt securities; |
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provisions specifying whether such debt securities are to be issued in the form of one or more global securities and, if so, the identity of the depositary for such global security or securities; |
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provisions specifying whether such debt securities are senior debt securities or subordinated debt securities and, if subordinated debt securities, the specific subordination provisions applicable thereto; |
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in the case of subordinated debt securities, provisions specifying the relative degree, if any, to which such subordinated debt securities of the series will be senior to or be subordinated in right of payment to other series of subordinated debt securities or other indebtedness of CIT, as the case |
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may be, whether such other series of subordinated debt securities or other indebtedness is outstanding or not; |
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any deletions from, modifications of or additions to the events of default or covenants of CIT with respect to such debt securities; |
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terms specifying whether the provisions described below under “—Discharge; Defeasance and Covenant Defeasance” will be applicable to such debt securities; |
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terms specifying whether any of such debt securities are to be issued upon the exercise of warrants, and the time, manner and place for such debt securities to be authenticated and delivered; and |
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any other terms of such debt securities and any other deletions from or modifications or additions to the applicable indenture in respect of such debt securities. |
The prospectus supplement relating to debt securities being offered pursuant to this prospectus will be attached to the front of this prospectus.
We may from time to time, without the consent of the existing holders of the debt securities, create and issue further debt securities having the same terms and conditions as the previously issued debt securities in all respects, except for the issue date, issue price and, if applicable, the first payment of interest thereon. Such debt securities will be fungible with the previously issued notes to the extent specified in the applicable prospectus supplement or pricing supplement.
We may also in the future issue debt securities other than the debt securities described in this prospectus. There is no requirement that any other debt securities that we issue be issued under either of the indentures described in this prospectus. Thus, any other debt securities that we may issue may be issued under other indentures or documentation containing provisions different from those included in the indentures or applicable to one or more issues of the debt securities described in this prospectus.
Negative Pledge
Neither indenture limits the amount of other securities that we or our subsidiaries may issue. However, each indenture contains a provision that we refer to in this prospectus as the “Negative Pledge” that provides that we will not pledge or otherwise subject to any lien any of our property or assets to secure indebtedness for money borrowed that is incurred, issued, assumed or guaranteed by us, subject to certain exceptions.
The terms of the Negative Pledge do nevertheless permit us to create:
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liens in favor of any of our subsidiaries; |
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purchase money liens; |
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liens existing at the time of any acquisition that we may make; |
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liens in favor of the United States, any state or governmental agency or department to secure obligations under contracts or statutes; |
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liens securing the performance of letters of credit, bids, tenders, sales contracts, purchase agreements, repurchase agreements, reverse repurchase agreements, bankers’ acceptances, leases, surety and performance bonds and other similar obligations incurred in the ordinary course of business; |
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liens upon any real property acquired or constructed by us primarily for use in the conduct of our business; |
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arrangements providing for our leasing of assets, which we have sold or transferred with the intention that we will lease back these assets, if the lease obligations would not be included as liabilities on our consolidated balance sheet; |
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liens to secure non-recourse debt in connection with our leveraged or single-investor or other lease transactions; |
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consensual liens created in our ordinary course of business that secure indebtedness that would not be included in total liabilities as shown on our consolidated balance sheet; |
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liens created by us in connection with any transaction that we intend to be a sale of our property or assets; |
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liens on property or assets financed through tax-exempt municipal obligations; |
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liens arising out of any extension, renewal or replacement, in whole or in part, of any financing permitted under the Negative Pledge, so long as the lien extends only to the property or assets, with improvements, that originally secured the lien; and |
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liens that secure certain other indebtedness which, in an aggregate principal amount then outstanding, does not exceed 10% of our consolidated net worth. |
In addition, under the subordinated indenture pursuant to which any of our senior subordinated debt is issued, we have agreed not to permit:
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the aggregate amount of senior subordinated indebtedness outstanding at any time to exceed 100% of the aggregate amount of the par value of our capital stock plus our consolidated surplus (including retained earnings); or |
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the aggregate amount of senior subordinated indebtedness and junior subordinated indebtedness outstanding at any time to exceed 150% of the aggregate amount of the par value of the capital stock plus our consolidated surplus (including retained earnings). |
Under the more restrictive of these tests, as of September 30, 2005, we could issue up to approximately $6.1 billion of additional senior subordinated indebtedness.
Consolidation, Merger or Sale
Subject to the provisions of the Negative Pledge described above, the indentures will not prevent us from consolidating or merging with any other person or selling our assets as, or substantially as, an entirety. However, we have agreed not to consolidate with or merge into any other person or convey or transfer or lease substantially all of our properties and assets to any person, unless, among other things:
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the successor entity (if other than the company) expressly assumes by a supplemental indenture the due and punctual payment of the principal of, and any premium and any interest on, all the debt securities then outstanding and the performance and observance of every covenant in the indentures that we would otherwise have to perform as if it were an original party to the indentures; |
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the person to which our properties and assets (as an entirety or substantially as an entirety) are sold expressly assumes, as a part of the purchase price, by a supplemental indenture the due and punctual payment of the principal of, and any premium and any interest on, all the debt securities then |
outstanding and the performance and observance of every covenant in the indentures that we would otherwise have to perform as if it were an original party to the indentures; and
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the company or the successor entity (if other than the company), or purchaser of our properties and assets, as applicable, is not immediately thereafter in default under the indentures. |
The successor entity or purchaser of our properties and assets, as applicable, will assume all our obligations under the indentures as if it were an original party to the indentures. After assuming the obligations, the successor entity will have all our rights and powers under the indentures.
Events of Default
An “event of default” means any one of the following events that occurs with respect to a series of debt securities issued under an indenture:
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we fail to pay interest on any debt security of such series for 30 days after payment was due; |
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we fail to make the principal or any premium payment on any debt security of such series when due; |
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we fail to make any sinking fund payment or analogous obligation when due in respect of any debt securities of such series; |
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we fail to perform any other covenant in the indenture and this failure continues for 30 days after we receive written notice of it (other than any failure to perform in respect of a covenant included in the indenture solely for the benefit of another series of debt securities); |
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any event of default shall have occurred in respect of our indebtedness (including guaranteed indebtedness but excluding any subordinated indebtedness), and, as a result, an aggregate principal amount exceeding $25.0 million of such indebtedness is accelerated prior to its scheduled maturity and such acceleration is not rescinded or annulled within 30 days after we receive written notice; or |
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we or a court take certain actions relating to the bankruptcy, insolvency or reorganization of our company. |
The supplemental indenture or the form of security for a particular series of debt securities may include additional events of default or changes to the events of default described above. The events of default applicable to a particular series of debt securities will be discussed in the prospectus supplement relating to such series. Other than as specified above, a default under our other indebtedness will not be a default under the indentures for the debt securities covered by this prospectus, and a default under one series of debt securities will not necessarily be a default under another series.
If an event of default with respect to outstanding debt securities of any series occurs and is continuing, then the trustee or the holders of at least 25% in principal amount of outstanding debt securities of that series may declare, in a written notice, the principal amount (or specified amount) on all debt securities of that series to be immediately due and payable. In the case of certain events of bankruptcy or insolvency of CIT, all unpaid principal amount (or specified amount) of and all accrued and unpaid interest on the outstanding debt securities of such series shall automatically become immediately due and payable.
The trustee may withhold notice to the holders of our debt securities of any default (except for defaults that involve our failure to pay principal of, premium, if any or interest, if any, or any sinking fund payment, if applicable, on any series of debt securities) if the trustee considers that withholding notice is in the interests of the holders of that series of debt securities.
At any time after a declaration of acceleration with respect to debt securities of any series has been made, the holders of a majority in principal amount (or specified amount) of the outstanding debt securities of that series, by written notice to us and the trustee, may rescind and annul such declaration and its consequences if:
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we have paid or deposited with the trustee a sum sufficient to pay overdue interest and overdue principal other than the accelerated interest and principal; and |
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we have cured or the holders have waived all events of default, other than the non-payment of accelerated principal and interest with respect to debt securities of that series, as provided in the applicable indenture. |
We refer you to the prospectus supplement relating to any series of debt securities that are discount securities for the particular provisions relating to acceleration of a portion of the principal amount of the discount securities upon the occurrence of an event of default.
If a default in the performance or breach of an indenture shall have occurred and be continuing, the holders of not less than a majority in principal amount of the outstanding debt securities of all series under such indenture, by notice to the trustee, may waive any past event of default or its consequences under such indenture. However, an event of default cannot be waived with respect to any series of securities in the following two circumstances:
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a failure to pay the principal of, and premium, if any, or interest on, any security; or |
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a covenant or provision that cannot be modified or amended without the consent of each holder of outstanding securities of that series. |
Other than its duties in case of a default, the trustee is not obligated to exercise any of its rights or powers under an indenture at the request, order or direction of any holders, unless the holders offer the trustee reasonable indemnity. If they provide this reasonable indemnity, the holders of a majority in
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principal amount outstanding of any series of debt securities may, subject to certain limitations, direct the time, method and place of conducting any proceeding or any remedy available to the trustee, or exercising any power conferred upon the trustee, for any series of debt securities.
We are required to deliver to the trustee an annual statement as to our fulfillment of all of our obligations under the indentures.
Modification of Indenture
The indentures contain provisions permitting us and the trustee to amend, modify or supplement the indentures and any supplemental indenture under which the series of debt securities are issued. Generally, these changes require the consent of the holders of at least a majority of the outstanding principal amount of each series of debt securities affected by the change.
However, no modification of the maturity date or principal or interest payment terms, no modification of the currency for payment, no impairment of the right to sue for the enforcement of payment at the maturity of the debt security, no modification of any conversion rights and no modification reducing the percentage required for modifications or modifying the foregoing requirements or reducing the percentage required to waive certain specified covenants is effective against any holder without its consent. In addition, no supplemental indenture shall adversely affect the rights of any holder of senior indebtedness with respect to subordination without the consent of such holder.
In computing whether the holders of the requisite principal amount of outstanding debt securities have taken action under an indenture or any supplemental indenture:
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for an original issue discount security, we will use the amount of the principal that would be due and payable as of that date, as if the maturity of the debt had been accelerated due to a default; and |
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for a debt security denominated in a foreign currency or currencies, we will use the U.S. dollar equivalent of the outstanding principal amount as of that date, using the exchange rate in effect on the date of original issuance of the debt security. |
Subordination
Our subordinated debt securities will, to the extent set forth in the subordinated indenture, be subordinate in right of payment to the prior payment in full of all senior indebtedness. In the event of (1) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relative to CIT or to its creditors, as such, or to its assets, or (2) any voluntary or involuntary liquidation, dissolution or other winding up of CIT, whether or not involving insolvency or bankruptcy or (3) any assignment for the benefit of creditors or (4) the taking of corporate action by CIT in furtherance of any such action or (5) the admitting in writing by CIT of its inability to pay its debts generally as they become due, then and in any such event the holders of senior indebtedness will be entitled to receive payment in full of all amounts due or to become due on or in respect of all senior indebtedness, or provision will be made for such payment in cash, before the holders of our subordinated debt securities are entitled to receive or retain any payment on account of principal of, or any premium or interest on, our subordinated debt securities, and to that end the holders of senior indebtedness will be entitled to receive, for application to the payment thereof, any payment or distribution of any kind or character, whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any of our other indebtedness being subordinated to the payment of our subordinated debt securities, which may be payable or deliverable in respect of the subordinated debt securities in any such case, proceeding, dissolution, liquidation or other winding up event. By reason of such subordination, in the event of liquidation or insolvency of CIT, holders of senior indebtedness and holders of our other obligations that are not subordinated to senior indebtedness may recover more, ratably, than the holders of our subordinated debt securities.
Subject to the payment in full of all senior indebtedness, the rights of the holders of our subordinated debt securities will be subrogated to the rights of the holders of the senior indebtedness to
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receive payments or distributions of cash, property or securities of CIT applicable to such senior indebtedness until the principal of, any premium and interest on, our subordinated debt securities have been paid in full.
No payment of principal (including redemption and sinking fund payments) of, or any premium or interest on, our subordinated debt securities may be made (1) in the event and during the continuation of any default by CIT in the payment of principal, premium, interest or any other amount due on any of our senior indebtedness, or (2) if the maturity of any our senior indebtedness has been accelerated because of a default.
Our subordinated indenture does not limit or prohibit us from incurring additional senior indebtedness, which may include indebtedness that is senior to our subordinated debt securities, but subordinate to our other obligations. Our senior debt securities will constitute senior indebtedness under our subordinated indenture.
The term “senior indebtedness” means all indebtedness of CIT outstanding at any time, except (1) our subordinated debt securities, (2) indebtedness as to which, by the terms of the instrument creating or evidencing the same, it is provided that such indebtedness is subordinated to or ranks equally with our subordinated debt securities, (3) indebtedness of CIT to an affiliate, (4) interest accruing after the filing of a petition initiating any bankruptcy, insolvency or other similar proceeding unless such interest is an allowed claim enforceable against CIT in a proceeding under federal or state bankruptcy laws, (5) trade accounts payable, (6) any indebtedness issued in violation of the instrument creating it and (7) any guarantee of indebtedness. Such senior indebtedness will continue to be senior indebtedness and be entitled to the benefits of the subordination provisions irrespective of any amendment, modification or waiver of any term of such senior indebtedness.
The subordinated indenture provides that the foregoing subordination provisions, insofar as they relate to any particular issue of our subordinated debt securities, may be changed prior to such issuance. Any such change would be described in the related prospectus supplement.
Global Securities
We may issue the global securities in either registered or bearer form, in either temporary or permanent form. Unless the prospectus supplement specifies otherwise, debt securities, when issued, will be represented by a permanent global security or securities, and each permanent global security will be deposited with, or on behalf of, The Depository Trust Company, which we refer to as the Depositary, and registered in the name of a nominee of the Depositary. Investors may elect to hold interests in the global notes through either the Depositary (in the United States), or Clearstream or Euroclear (outside of the United States), if they are participants of those systems, or indirectly through organizations that are participants in those systems. Clearstream and Euroclear will hold interests on behalf of their participants through customers’ securities accounts in Clearstream’s and Euroclear’s names on the books of their respective depositaries, which in turn will hold the interests in customers’ securities accounts in the depositaries’ names on the books of the Depositary. Citibank, N.A. will act as depositary for Clearstream and The Chase Manhattan Bank will act as depositary for Euroclear (in those capacities, the “U.S. Depositaries”). Except under the limited circumstances described below, permanent global securities will not be exchangeable for securities in definitive form and will not otherwise be issuable in definitive form.
Ownership of beneficial interests in a permanent global security will be limited to institutions that have accounts with the Depositary or its nominee (each a “participant”) or persons who may hold interests through participants. In addition, ownership of beneficial interests by participants in that permanent global security will be evidenced only by, and the transfer of that ownership interest will be effected only through, records maintained by the Depositary or its nominee for that permanent global security. Ownership of beneficial interests in that permanent global security by persons who hold through participants will be evidenced only by, and the transfer of that ownership interest within the participant will be effected only through, records maintained by that participant. The Depositary has no knowledge of the actual beneficial owners of securities. Beneficial owners will not receive written confirmation from the Depositary of their purchase, but beneficial owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the participants through
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which the beneficial owners entered the transaction. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of securities in definitive form. These laws may impair your ability to transfer your beneficial interests in that permanent global security.
We have been advised by the Depositary that upon the issuance of a permanent global security and the deposit of that permanent global security with the Depositary, the Depositary will immediately credit on its book-entry registration and transfer system the respective principal amounts represented by that permanent global security to the accounts of participants.
The paying agent will make all payments on securities represented by a permanent global security registered in the name of or held by the Depositary or its nominee to the Depositary or its nominee, as the case may be, as the registered owner and holder of the permanent global security representing the securities. The Depositary has advised us that upon receipt of any payment of principal of, or premium or interest on, if any, a permanent global security, the Depositary will immediately credit, on its book-entry registration and transfer system, accounts of participants with payments in amounts proportionate to their respective beneficial interests in the principal amount of that permanent global security as shown in the records of the Depositary or its nominee. We expect that payments by participants to owners of beneficial interests in a permanent global security held through those participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in “street name” (i.e., the name of a securities broker or dealer), and will be the sole responsibility of those participants, subject to any statutory or regulatory requirements as may be in effect from time to time.
None of CIT, any trustee, any agent of CIT, or any agent of a trustee will be responsible or liable for any aspect of the records relating to or payments made on account of beneficial interests in a permanent global security or for maintaining, supervising, or reviewing any of the records relating to such beneficial interests.
A permanent global security is exchangeable for definitive securities registered in the name of, and a transfer of a permanent global security may be registered to, any person other than the Depositary or its nominee, only if:
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the Depositary notifies us that it is unwilling or unable to continue as Depositary for that permanent global security or if at any time the Depositary ceases to be a clearing agency registered under the Exchange Act, and we do not appoint a successor Depositary within 90 days; |
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we, in our discretion, determine that the permanent global security will be exchangeable for definitive securities in registered form; or |
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an event of default under the applicable indenture shall have occurred and be continuing, as described in the prospectus, and we, the applicable trustee, or the applicable registrar and paying agent notify the Depositary that the permanent global security will be exchangeable for definitive securities in registered form. |
Any permanent global security which is exchangeable will be exchangeable in whole for definitive securities in registered form, of like tenor and of an equal aggregate principal amount as the permanent global security, in denominations of $1,000 and integral multiples thereof. Those definitive securities will be registered in the name or names of such person or persons as the Depositary shall instruct such trustee. We expect that those instructions may be based upon directions received by the Depositary from its participants with respect to ownership of beneficial interests in the permanent global security.
In the event definitive securities are issued, you may transfer the definitive securities by presenting them for registration to the registrar at its New York office, as the case may be. If you transfer less than all of your definitive securities, you will receive a definitive security or securities representing the retained amount from the registrar at its New York office, as the case may be, within 30 days of presentation for transfer. Definitive securities presented for registration must be duly endorsed by the holder or his attorney duly authorized in writing, or accompanied by a written instrument or instruments of transfer in form satisfactory to us or the trustee for the securities, duly executed by the holder or his attorney duly authorized in writing. You can obtain a form of written instrument of transfer from the registrar for the securities at its New York office. We may require you to pay a sum sufficient to cover any tax or other
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governmental charge that may be imposed in connection with any exchange or registration of transfer of definitive securities, but otherwise transfers will be without charge. If we issue definitive securities,
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principal of and interest on the securities will be payable in the manner described below; |
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the transfer of the securities will be registrable; and |
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the securities will be exchangeable for securities bearing identical terms and provisions. |
If we issue definitive securities, we will do so at the office of the paying agent, including any successor paying agent and registrar for the securities.
We may pay interest on definitive securities, other than interest at maturity or upon redemption, by mailing a check to the address of the person entitled to the interest as it appears on the security register at the close of business on the regular record date corresponding to the relevant interest payment date. The term “record date,” as used in this prospectus, means the close of business on the fifteenth day preceding any interest payment date.
Notwithstanding the foregoing, the Depositary, as holder of the securities, or a holder of more than $l million in aggregate principal amount of securities in definitive form, may require a paying agent to make payments of interest, other than interest due at maturity or upon redemption, by wire transfer of immediately available funds into an account maintained by the holder in the United States, by sending appropriate wire transfer instructions. Such paying agent must receive these instructions not less than ten days prior to the applicable interest payment date.
A paying agent will pay the principal and interest payable at maturity or upon redemption by wire transfer of immediately available funds against presentation of a security at the office of the paying agent.
Except as provided above, owners of beneficial interests in a permanent global security will not be entitled to receive physical delivery of securities in definitive form and will not be considered the holders of these securities for any purpose under the applicable indenture, and no permanent global security will be exchangeable, except for another permanent global security of like denomination and tenor to be registered in the name of the Depositary or its nominee. So each person owning a beneficial interest in a permanent global security must rely on the procedures of the Depositary and, if that person is not a participant, on the procedures of the participant through which that person owns its interest, to exercise any rights of a holder under the applicable indenture.
We understand that, under existing industry practices, in the event that we request any action of holders, or an owner of a beneficial interest in a permanent global security desires to give or take any action which a holder is entitled to give or take under the applicable indenture, the Depositary would authorize the participants holding the relevant beneficial interests to give or take this action, and the participants would authorize beneficial owners owning through participants to give or take this action or would otherwise act upon the instructions of beneficial owners owning through them.
Where any debt securities of any series are issued in bearer form, the restrictions and considerations applicable to such debt securities and with respect to the payment, transfer and exchange of such debt securities will be described in the related prospectus supplement.
The Depository Trust Company. The Depositary has advised us that it is a limited-purpose trust company organized under the laws of the State of New York, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered under the Exchange Act. The Depositary was created to hold securities of its participants and to facilitate the clearance and settlement of securities transactions among its participants in securities through electronic book-entry changes in accounts of the participants. By doing so, the Depositary eliminates the need for physical movement of securities certificates. The Depositary’s participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. The Depositary is owned by a number of its participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the Depositary’s book-entry system is also available to others, such as banks, brokers, dealers, and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. The rules applicable to the Depositary and its participants are on file with the SEC.
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We believe that the sources from which the information in this section concerning the Depositary and the Depositary’s system has been obtained are reliable, but we take no responsibility for the accuracy of the information.
Clearstream. Clearstream advises that it is incorporated under the laws of Luxembourg as a professional depositary. Clearstream holds securities for its participating organizations (“Clearstream Participants”) and facilitates the clearance and settlement of securities transactions between Clearstream Participants through electronic book-entry changes in accounts of Clearstream Participants, thereby eliminating the need for physical movement of certificates. Clearstream provides to Clearstream Participants, among other things, services for safekeeping, administration, clearance, and settlement of internationally traded securities and securities lending and borrowing. Clearstream interfaces with domestic markets in several countries. As a professional depositary, Clearstream is subject to regulation by the Luxembourg Monetary Institute. Clearstream Participants are recognized financial institutions around the world, including Agents, securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations and may include the Agents. Indirect access to Clearstream, is also available to others, such as banks, brokers, dealers, and trust companies that clear through or maintain a custodial relationship with a Clearstream Participant either directly or indirectly.
Distributions with respect to debt securities held beneficially through Clearstream will be credited to cash accounts of Clearstream Participants in accordance with its rules and procedures, to the extent received by the U.S. Depositary for Clearstream.
Euroclear. Euroclear advises that it was created in 1968 to hold securities for participants of Euroclear (“Euroclear Participants”) and to clear and settle transactions between Euroclear Participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. Euroclear includes various other services, including securities lending and borrowing and interfaces with domestic markets in several countries. Euroclear is operated by the Euroclear S.A./N.V. (the “Euroclear Operator”), under contract with Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the “Cooperative”). All operations are conducted by the Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator, not the Cooperative. The Cooperative establishes policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants include banks (including central banks), securities brokers and dealers, and other professional financial intermediaries and may include the Agents. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear Participant, either directly or indirectly.
Securities clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear, the related Operating Procedures of the Euroclear System, and applicable Belgian law (collectively, the “Terms and Conditions”). The Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of payments with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear Operator acts under the Terms and Conditions only on behalf of Euroclear Participants and has no record of or relationship with persons holding through Euroclear Participants.
Distributions with respect to debt securities held beneficially through Euroclear will be credited to the cash accounts of Euroclear Participants in accordance with the Terms and Conditions, to the extent received by the U.S. depositary for Euroclear.
Global Clearance and Settlement Procedures
Initial settlement for the securities will be made in immediately available funds. Secondary market trading between participants in the Depositary will occur in the ordinary way in accordance with the Depositary’s rules and will be settled in immediately available funds using the Depositary’s Same-Day Funds Settlement System. Secondary market trading between Clearstream Participants and/or Euroclear Participants will occur in the ordinary way in accordance with the applicable rules and operating
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procedures of Clearstream and Euroclear and will be settled using the procedures applicable to conventional eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly through the Depositary on the one hand, and directly or indirectly through Clearstream or Euroclear Participants, on the other, will be effected in the Depositary in accordance with the Depositary rules on behalf of the relevant European international clearing system by its U.S. Depositary. However, these cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in that system in accordance with its rules and procedures and within its established deadlines (European time). If the transaction meets the settlement requirements, the relevant European international clearing system will deliver instructions to its U.S. depositary to take action to effect final settlement on its behalf by delivering or receiving securities in the Depositary and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to the Depositary. Clearstream Participants and Euroclear Participants may not deliver instructions directly to their respective U.S. depositaries.
Because of time-zone differences, credits of securities received in Clearstream or Euroclear as a result of a transaction with a participant in the Depositary will be made during subsequent securities settlement processing and dated the business day following the Depositary settlement date. Credits or any transactions in securities settled during this processing will be reported to the relevant Euroclear or Clearstream Participants on that following business day. Cash received in Clearstream or Euroclear as a result of sales of notes by or through a Clearstream Participant or a Euroclear Participant to a participant in the Depositary will be received with value on the Depositary settlement date but will be available in the relevant Clearstream or Euroclear cash account only as of the business day following settlement in the Depositary.
Although the Depositary, Clearstream and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of securities among participants of the Depositary, Clearstream and Euroclear, they are under no obligation to perform or continue to perform these procedures and these procedures may be discontinued at any time.
Discharge; Defeasance and Covenant Defeasance
We may discharge certain obligations to the holders of any debt securities of any series that have not already been delivered to the trustee for cancellation and that either have become due and payable or will become due and payable within one year (or scheduled for redemption within one year) if we deposit with the trustee, in trust, funds in the currency in which such debt securities are payable in an amount sufficient to pay the entire indebtedness on such debt securities with respect to principal and any premium and interest to the date of such deposit (if such debt securities have then become due and payable) or to the maturity date of such debt securities, as the case may be.
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We also may, at our option, elect to: |
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discharge any and all of our obligations with respect to the debt securities of such series, except for, among other things, our obligation to register the transfer of or exchange such debt securities and to maintain an office or agency with respect to such debt securities (which we refer to in this prospectus as “defeasance”); or |
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release ourselves from our obligation to comply with certain restrictive covenants under the indentures, and to provide that any failure to comply with such obligations shall not constitute a default or an event of default with respect to such series of debt securities (which we refer to in this prospectus as “covenant defeasance”). |
Defeasance or covenant defeasance, as the case may be, shall be conditioned upon the irrevocable deposit by us with the trustee, in trust, of an amount in U.S. dollars or in the foreign currency in which such debt securities are payable at stated maturity, or government obligations, or both, applicable to such debt securities which, through the scheduled payment of principal and interest in accordance with their terms, will provide money in an amount sufficient to pay the principal of and any premium and interest on such debt securities on the scheduled due dates.
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Such trust may only be established if, among other things: |
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the applicable defeasance or covenant defeasance does not result in a breach or violation of, or constitute a default under, the applicable indenture or any other material agreement or instrument to which we are a party or by which we are bound; |
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no event of default or event which with notice or lapse of time or both would become and an event of default with respect to the debt securities to be defeased shall have occurred and be continuing on the date of establishment of such trust; and |
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we shall have delivered to the trustee an opinion of counsel to the effect that the deposit and related defeasance or covenant defeasance, as the case may be, would not cause the holders of the securities to recognize income, gain or loss for U.S. federal income tax purposes. |
In the case of a defeasance, we must also deliver any ruling to such effect received from or published by the U.S. Internal Revenue Service.
Concerning the Trustee
JPMorgan Chase Bank, N.A., will act as trustee under our senior indenture and our subordinated indenture, as permitted by the terms thereof. At all times, the trustee must be organized and doing business under the laws of the United States, any state thereof or the District of Columbia, and must comply with all applicable requirements under the Trust Indenture Act.
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The trustee may resign at any time by giving us written notice or may be removed: |
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by act of the holders of a majority in principal amount of a series of outstanding debt securities; or |
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if it (i) fails to comply with the obligations imposed upon it under the Trust Indenture Act; (ii) is not organized and doing business under the laws of the United States, any state thereof or the District of Columbia; (iii) becomes incapable of acting as trustee; or (iv) or a court takes certain actions relating to bankruptcy, insolvency or reorganization. |
If the trustee resigns, is removed or becomes incapable of acting, or if a vacancy occurs in the office of the trustee for any cause, we, by or pursuant to a board resolution, will promptly appoint a successor trustee or trustees with respect to the debt securities of such series. We will give written notice to holders of the relevant series of debt securities, of each resignation and each removal of the trustee with respect to the debt securities of such series and each appointment of a successor trustee. Upon the appointment of any successor trustee, we, the retiring trustee and such successor trustee, will execute and deliver a supplemental indenture in which each successor Trustee will accept such appointment and which will contain such provisions as necessary or desirable to transfer to such successor trustee all the rights, powers, trusts and duties of the retiring trustee with respect to the relevant series of debt securities.
The trustee may be contacted at the following address: JPMorgan Chase Bank, N.A., 4 New York Plaza, 15th Floor, New York, New York 10004, Attention: Worldwide Securities Services. The form of senior indenture and the form of subordinated indenture are filed as exhibits to this registration statement. Holders of any series of debt securities may obtain an indenture or any other documents relating to a series of debt securities by contacting us or the trustee or by accessing the SEC’s web site. See “Where You Can Find More Information.”
JPMorgan Chase Bank, N.A. and certain of its affiliates have in the past and may in the future provide banking, investment and other services to us. A trustee under a senior indenture or a subordinated indenture may act as trustee under any of our other indentures.
New York Law to Govern
The indentures will be governed by and construed in accordance with the laws of the State of New York applicable to agreements made or instruments entered into and, in each case, performed in that state.
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This section contains a description of our capital stock. The following summary of the terms of our capital stock is not meant to be complete and is qualified by reference to our certificate of incorporation, as amended, and our by-laws, as amended, which are incorporated by reference into the registration statement of which this prospectus is a part.
As of September 30, 2005, our authorized capital stock consisted of: (1) 600,000,000 shares of common stock, par value $0.01 per share, of which 200,268,812 were issued and outstanding, 12,015,244 were issued and held in treasury; and (2) 100,000,000 shares of preferred stock, par value $0.01 per share, of which 14,000,000 shares of Series A preferred stock, with a liquidation preference of $25 per share, and 1,500,000 shares of Series B preferred stock, with a liquidation preference of $100 per share, were issued and outstanding.
Common Stock
Each share of our common stock entitles the holder thereof to one vote on all matters, including the election of directors, and, except as otherwise required by law or provided in any resolution adopted by our board of directors with respect to any series of preferred stock, the holders of the shares of common stock will possess all voting power. Our certificate of incorporation does not provide for cumulative voting in the election of directors. Generally, all matters to be voted on by the stockholders must be approved by a majority, or, in the case of the election of directors, by a plurality, of the votes cast, subject to state law and any voting rights granted to any of the holders of preferred stock. Notwithstanding the foregoing, approval of the following three matters requires the vote of holders of 662/3% of our outstanding capital stock entitled to vote in the election of directors: (1) amending, repealing or adopting of by-laws by the stockholders; (2) removing directors (which is permitted for cause only); and (3) amending, repealing or adopting any provision that is inconsistent with certain provisions of our certificate of incorporation. The holders of common stock do not have any preemptive rights. There are no subscription, redemption, conversion or sinking fund provisions with respect to the common stock.
Subject to any preferential rights of any outstanding series of preferred stock that our board of directors may create, from time to time, the holders of common stock will be entitled to dividends as may be declared from time to time by the board of directors from funds available therefor. Upon liquidation of CIT, subject to the rights of holders of any preferred stock outstanding, the holders of common stock will be entitled to receive our assets remaining after payment of liabilities proportionate to their pro rata ownership of the outstanding shares of common stock.
Preferred Stock
Our board of directors has the authority, without further action of our stockholders, to issue up to 100,000,000 shares of preferred stock, par value $0.01 per share, in one or more series and to fix the powers, preferences, rights and qualifications, limitations or restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and the number of shares constituting any series or the designations of the series. The issuance of preferred stock could adversely affect the holders of common stock. The potential issuance of preferred stock may have the effect of discouraging, delaying or preventing a change of control of CIT, may discourage bids for the common stock at a premium over market price of the common stock and may adversely affect the market price of the common stock.
Unless the applicable prospectus supplement indicates otherwise, we currently intend to use the net proceeds from any sale of the offered securities to provide additional working funds for us and our subsidiaries. Generally, we use the proceeds from sales of our securities primarily to originate and purchase receivables in the ordinary course of our business. We have not yet determined the amounts that we may use in connection with our business or that we may furnish to our subsidiaries. From time to time, we may also use the proceeds to finance the bulk purchase of receivables and/or the acquisition of other finance-related businesses.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of the material U.S. federal income tax consequences relevant to the purchase, ownership and disposition of the debt securities, common stock and preferred stock offered by this prospectus. This summary is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations promulgated thereunder (“Treasury Regulations”), administrative pronouncements of the U.S. Internal Revenue Service (“IRS”) and judicial decisions, all as currently in effect and all of which are subject to change and to different interpretations. Changes to any of the foregoing authorities could apply on a retroactive basis, and could affect the U.S. federal income tax consequences described below.
This summary does not address all of the U.S. federal income tax considerations that may be relevant to a particular investor’s circumstances, and does not discuss any aspect of U.S. federal tax law other than income taxation or any state, local, non-U.S. tax consequences of the purchase, ownership and disposition of the debt securities, common stock and preferred stock. This summary addresses only debt securities and shares of common or preferred stock held as capital assets within the meaning of the Code (generally, property held for investment) and does not address U.S. federal income tax considerations applicable to investors that may be subject to special tax rules, such as:
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securities dealers or brokers, or traders in securities electing mark-to-market treatment; |
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banks, thrifts, or other financial institutions; |
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insurance companies; |
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regulated investment companies or real estate investment trusts; |
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tax-exempt organizations; |
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persons holding our debt securities or shares, as applicable, as part of a “straddle,” “hedge,” “synthetic security” or “conversion transaction” for U.S. federal income tax purposes, or as part of some other integrated investment; |
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partnerships or other pass-through entities; |
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persons subject to the alternative minimum tax; |
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certain former citizens or residents of the United States; |
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foreign corporations that are classified as “passive foreign investment companies” or “controlled foreign corporations” for U.S. federal income tax purposes; or |
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“U.S. Holders” (as defined below) whose functional currency is not the U.S. dollar. |
In addition, with respect to a particular offering of debt securities or shares of common or preferred stock, the discussion below must be read with the discussion of material U.S. federal income tax consequences that may appear in the relevant prospectus supplement or any pricing supplement, for that offering.
As used herein, a “U.S. Holder” is a beneficial owner of debt securities or shares of common or preferred stock, as the case may be, that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States, (ii) a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate whose income is subject to U.S. federal income tax regardless of its source, or (iv) a trust if (A) a United States court has the authority to exercise primary supervision over the administration of the trust and one or more U.S. persons (as defined under the Code) are authorized to control all substantial decisions of the trust or (B) it has a valid election in place to be treated as a U.S. person.
A “Non-U.S. Holder” is any beneficial owner of a note or share, as the case may be, that, for U.S. federal income tax purposes, is not a U.S. Holder and that is not a partnership (or other entity treated as a partnership for U.S. federal income tax purposes).
If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds debt securities or shares of common or preferred stock, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. A partnership holding debt securities or shares of common or preferred stock, and partners in such a partnership, should
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consult their own tax advisors with regard to the U.S. federal income tax consequences of the purchase, ownership and disposition of the debt securities or shares of common or preferred stock by the partnership.
THE DISCUSSION OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE DEBT SECURITIES, COMMON STOCK AND PREFERRED STOCK IS NOT INTENDED TO BE, NOR SHOULD IT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY PARTICULAR PERSON. ACCORDINGLY, ALL PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES RELATING TO THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE DEBT SECURITIES, COMMON STOCK OR PREFERRED STOCK BASED ON THEIR PARTICULAR CIRCUMSTANCES.
U.S. Federal Income Taxation of U.S. Holders
Debt Securities
Payments of Interest. Except as set forth below, interest on debt securities generally will be taxable to a U.S. Holder as ordinary income from domestic sources at the time that such interest is paid or accrued in accordance with the U.S. Holder's regular method of accounting for U.S. federal income tax purposes.
Original Issue Discount. Special tax accounting rules apply to debt securities issued with “original issue discount” (“OID”) for U.S. federal income tax purposes (“OID debt securities”). In general, debt securities will be treated as issued with OID if the “issue price” of the debt securities is less than their “stated redemption price at maturity” unless the amount of such difference is de minimis (i.e., less than 0.25% of the stated redemption price at maturity multiplied by the number of complete years to maturity). Regardless of the regular method of accounting used by a U.S. Holder for U.S. federal income tax purposes, OID generally must be accrued into gross income on a constant yield basis, in advance of the receipt of some or all of the cash attributable to such OID.
The “issue price” of debt securities will be the initial offering price to the public at which a substantial amount of the debt securities is sold for cash (ignoring sales to bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The “stated redemption price at maturity” of debt securities is the sum of all payments to be made on the debt securities other than “qualified stated interest” payments. A “qualified stated interest” payment is stated interest that is unconditionally payable at least annually at a single fixed rate (appropriately taking into account the length of the interval between payments).
For OID debt securities having a term to maturity of more than one year, the amount of OID includible in gross income by a U.S. Holder of the OID debt securities is the sum of the “daily portions” of OID with respect to the OID debt securities for each day during the taxable year in which such U.S. Holder held the OID debt securities (“accrued OID”). The daily portion is determined by allocating to each day in any “accrual period” a pro rata portion of the OID allocable to such accrual period.
The amount of OID allocable to any accrual period is equal to the excess (if any) of (i) the product of the “adjusted issue price” of the OID debt securities at the beginning of such accrual period and the yield to maturity of the OID debt securities, as determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period, over (ii) the sum of any qualified stated interest payments allocable to the accrual period. For this purpose, accrual periods may be of any length and may vary in length over the term of the OID debt securities provided that each accrual period is no longer than one year and each scheduled payment of principal or interest occurs at the beginning or the end of an accrual period.
The adjusted issue price of OID debt securities at the start of any accrual period is equal to the issue price, increased by the accrued OID for each prior accrual period, and reduced by any prior payments with respect to the OID debt securities that were not qualified stated interest payments. The following rules apply to determine the amount of OID allocable to an accrual period:
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if an interval between payments of qualified stated interest contains more than one accrual period, the amount of qualified stated interest payable at the end of the interval is allocated on a pro rata |
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basis
to each accrual period in the interval and the adjusted issue price at
the beginning of each accrual period in the interval must be increased
by the amount of any qualified stated interest that has accrued prior
to the beginning of the first day of the accrual period but is not payable
until the end of the interval; • if
the accrual period is the final accrual period, the amount of OID allocable
to the final accrual period is the difference between the amount payable
at maturity (other than a payment of qualified stated interest) and the
adjusted issue price of the note at the beginning of the final accrual
period; and • if
all accrual periods are of equal length, except for an initial short accrual
period, the amount of OID allocable to the initial short accrual period
may be computed under any reasonable method. Under
the constant yield method for accruing OID, a U.S. Holder generally will have
to include in gross income increasingly greater amounts of OID in successive
accrual periods. Debt
securities may contain provisions allowing the debt securities to be redeemed
prior to their stated maturity date at our option or at the option of holders.
For purposes of determining yield and maturity, debt securities that may be
redeemed prior to their stated maturity date at the option of the issuer generally
will be treated from the time of issuance as having a maturity date for U.S.
federal income tax purposes on such redemption date if such redemption would
result in a lower yield to maturity. Conversely, debt securities that may be
redeemed prior to their stated maturity date at the option of the holder generally
will be treated from the time of issuance as having a maturity date for U.S.
federal income tax purposes on such redemption date if such redemption would
result in a higher yield to maturity. If the exercise of such an option does
not occur, contrary to the assumptions made as of the issue date, then solely
for purposes of the accrual of OID, the debt securities will be treated as reissued
on the date of the change in circumstances for an amount equal to their adjusted
issue price. We
are required to report to the IRS the amount of OID accrued in respect of OID
debt securities held of record by persons other than corporations and other
exempt holders. Short-Term
Debt Securities. In the case of debt securities that
that have a fixed maturity of one year or less (“short-term debt securities”),
all payments, including all payments of stated interest, will be included in
the stated redemption price at maturity. The short-term debt securities will
be treated for U.S. federal income tax purposes as having been issued with OID
in the amount of the difference between their issue price and stated redemption
price at maturity (unless the U.S. Holder elects to compute OID using tax basis
instead of issue price). In general, U.S. Holders that use the accrual method
of accounting for U.S. federal income tax purposes and certain other U.S. Holders
are required to accrue OID in respect of short-term debt securities into gross
income either on a straight-line basis or, if a U.S. Holder so elects, on a
constant yield basis using daily compounding. U.S. Holders that are individuals
and certain other U.S. Holders that use the cash method of accounting for U.S.
federal income tax purposes are not required to accrue OID on short-term debt
securities in advance of the receipt of payment unless they elect to do so.
If such a U.S. Holder does not elect to accrue OID on short-term debt securities
into gross income, then gain subsequently recognized upon the sale, retirement
or other disposition of the short-term debt securities generally will be treated
as ordinary interest income to the extent of the OID that has accrued through
the date of such disposition. Furthermore, a non-electing U.S. Holder of short-term
debt securities may be required to defer
deductions for a portion of the U.S. Holder's interest expense with respect
to any indebtedness incurred or maintained to purchase or carry the short-term
debt securities. Variable
Rate Debt Securities. Treasury regulations prescribe
special rules for “variable rate debt instruments” that provide for
the payment of interest based on certain floating or objective rates. In general,
debt securities will qualify as variable rate debt instruments (“variable
rate debt securities”) if (i) the issue price of the debt securities does
not exceed the total non-contingent principal payments due in respect of the
debt securities by more than an amount equal to the lesser of (A) 0.015 multiplied
by the product of the total non-contingent principal payments and the number
of complete years to maturity from the issue date and (B) 15% of the total non-contingent
principal payments, and (ii) the debt securities provide for stated interest,
paid or compounded at least annually, at “current values” of (A) one
or more “qualified floating rates,” (B) a single fixed rate and one
or more qualified floating rates, (C) a single “objective rate,” or
(D) a single fixed rate and a single objective rate that is a “qualified
inverse 21 floating rate.” A current value of a rate is the value of the rate
on any date that is no earlier than three months prior to the first day on which
that value is in effect and no later than one year following that first day.
A
“qualified floating rate” is any variable rate where variations in
the value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
variable rate debt securities are denominated. Although a multiple of a qualified
floating rate generally will not itself constitute a qualified floating rate,
a variable rate equal to the product of a qualified floating rate and a fixed
multiple that is greater than 0.65 but not more than 1.35 can constitute a qualified
floating rate. A variable rate equal to the product of a qualified floating
rate and a fixed multiple that is greater than 0.65 but not more than 1.35,
increased or decreased by a fixed rate, will also constitute a qualified floating
rate. In addition, two or more qualified floating rates that can reasonably
be expected to have approximately the same values throughout the term of the
variable rate debt securities (e.g.,
two or more qualified floating rates with values within 25 basis points of each
other as determined on the issue date) will be treated as a single qualified
floating rate. Notwithstanding the foregoing, a variable rate that would otherwise
constitute a qualified floating rate but which is subject to one or more restrictions
such as a maximum numerical limitation (i.e.,
a cap), a minimum numerical limitation (i.e.,
a floor) or a restriction on the amount of increase or decrease in the stated
interest (i.e., a governor) may,
under certain circumstances, fail to be treated as a qualified floating rate
unless such restrictions are fixed throughout the term of the variable rate
debt securities or are reasonably expected to not have a significant effect
the yield on the variable rate debt securities. An
“objective rate” is a rate that is not itself a qualified floating
rate but which is determined using a single fixed formula and that is based
on objective financial or economic information. A rate will not qualify as an
objective rate if it is based on information that is within the control of the
issuer (or a related party) or that is unique to the circumstances of the issuer
(or a related party), such as dividends, profits, or the value of the issuer’s
stock (although a rate does not fail to be an objective rate merely because
it is based on the credit quality of the issuer). An objective rate is a “qualified
inverse floating rate” if the rate is equal to a fixed rate minus a qualified
floating rate, as long as variations in the rate can reasonably be expected
to inversely reflect contemporaneous variations in the qualified floating rate.
The Treasury regulations also provide that if debt securities provide for stated
interest at a fixed rate for an initial period of one year or less followed
by a variable rate that is either a qualified floating rate or an objective
rate and if the variable rate on the issue date is intended to approximate the
fixed rate (e.g., the value of
the variable rate on the issue date does not differ from the value of the fixed
rate by more than 25 basis points), then the fixed rate and the variable rate
together will constitute either a single qualified floating rate or objective
rate, as the case may be. If
variable rate debt securities provide for stated interest at either a single
qualified floating rate or a single objective rate throughout their term, and
such interest is unconditionally payable in cash or property (other than debt
instruments of the issuer) at least annually, then all stated interest on such
variable rate debt securities will constitute qualified stated interest that
is included in gross income by U.S. Holders as received or accrued in accordance
with their regular methods of accounting for U.S. federal income tax purposes.
Thus, such variable rate debt securities generally will not be treated as having
been issued with OID unless the variable rate securities are sold at a discount
from their stated principal amount, subject to a de minimis
exception. In general, the amount of qualified stated interest and OID, if any,
that accrues during an accrual period on such variable rate debt securities
is determined under the rules described above by assuming that the variable
rate is a fixed rate equal to (i) in the case of a qualified floating
rate or qualified inverse floating rate, the value as of the issue date of the
qualified floating rate or qualified inverse floating rate, or (ii) in the case
of an objective rate (other than a qualified inverse floating rate), a fixed
rate that reflects the yield that is reasonably expected for the variable rate
debt securities. The qualified stated interest allocable to an accrual period
is increased (or decreased) if the interest actually paid during an accrual
period exceeds (or is less than) the interest that was accrued under the foregoing
approach. For
other variable rate debt securities, the timing and amount of OID and qualified
stated interest will be determined by converting the variable rate debt securities
into “equivalent fixed rate debt instruments.” The conversion of the
variable rate debt securities into equivalent fixed rate debt instruments generally 22 involves substituting for any qualified floating rate or qualified inverse floating
rate a fixed rate equal to the value of the qualified floating rate or qualified
inverse floating rate, as the case may be, as of the issue date, or substituting
for any objective rate (other than a qualified inverse floating rate) a fixed
rate that reflects the yield that is reasonably expected for the variable rate
debt securities. In the case of variable rate debt securities that provide for
stated interest at a fixed rate in addition to either one or more qualified
floating rates or a qualified inverse floating rate, the fixed rate is initially
converted into a qualified floating rate (or a qualified inverse floating rate,
if the variable rate debt securities provide for a qualified inverse floating
rate). Under such circumstances, the qualified floating rate or qualified inverse
floating rate that replaces the fixed rate must be such that the fair market
value of the variable rate debt securities as of their issue date is approximately
the same as the fair market value of an otherwise identical debt instrument
that provides for either the qualified floating rate or qualified inverse floating
rate rather than the fixed rate. Subsequent to converting the fixed rate into
either a qualified floating rate or a qualified inverse rate, the variable rate
debt securities are then converted into equivalent fixed rate debt instruments
in the manner described above. Once
the variable rate debt securities are converted into equivalent fixed rate debt
instruments pursuant to the foregoing rules, the timing and amount of OID and
qualified stated interest, if any, are determined for the equivalent fixed rate
debt instruments by applying the general OID rules to the equivalent fixed rate
debt instruments. A U.S. Holder of such variable rate debt securities will account
for OID and qualified stated interest as if the U.S. Holder held the equivalent
fixed rate debt instruments. For each accrual period, appropriate adjustments
will be made to the amount of qualified stated interest or OID assumed to have
been accrued or paid with respect to the equivalent fixed rate debt instruments
in the event that such amounts differ from the actual amount of interest accrued
or paid on the variable rate debt securities during the accrual period. Contingent
Payment Debt Securities. If debt securities provide
for variable rates of interest or other contingent payments but fail to qualify
as variable rate debt securities under the rules described above, then the debt
securities may become subject to the Treasury regulations governing “contingent
payment debt instruments” (“contingent payment debt securities”).
Under these Treasury regulations, a U.S. Holder of contingent payment debt securities
generally would be required to accrue interest income each taxable year based
upon a “comparable yield” for a hypothetical fixed rate debt instrument
with no contingent payments but with terms and conditions otherwise similar
to the contingent payment debt securities. We would be required to determine
the comparable yield and prepare, solely for U.S. federal income tax purposes,
a projected payment schedule that includes all non-contingent payments and estimates
of the amount and timing of all contingent payments on the debt securities. If
the actual contingent payments made on the contingent payment debt securities
in a taxable year differ from the projected contingent payments set forth on
the projected payment schedule, adjustments will be made for such differences.
A net positive adjustment for the amount by which actual contingent payments
during the taxable year exceed the projected contingent payments for such taxable
year, will be treated as additional interest income. A net negative adjustment
for the amount by which actual contingent payments during the taxable year are
less than the projected contingent payments for such taxable year (i) first,
will reduce the amount of interest required to be accrued in the current taxable
year, (ii) second, any negative adjustments that exceed the amount of interest
accrued in the current year will be treated as ordinary loss to the extent that
the total interest inclusions previously accrued in respect of the contingent
payment debt securities exceed the total amount of net negative adjustments
treated as ordinary loss in prior taxable years, and (iii) third, any excess
negative adjustments will be treated as a regular negative adjustment in the
succeeding taxable year. Upon
the sale, retirement or other disposition of contingent payment debt securities,
any gain recognized by a U.S. Holder would be treated as ordinary income. Any
loss arising in such a disposition would be treated as an ordinary loss to the
extent of any prior interest inclusions in respect of the contingent payment
debt securities that have not previously been reversed. The balance of such
loss generally would constitute a capital loss. The
U.S. federal income tax treatment of any debt securities that will be treated
as contingent payment debt securities subject to these Treasury regulations
will be more fully described in the relevant prospectus supplement or any applicable
pricing supplement. The rules regarding contingent payment debt 23 securities are
complex. U.S. Holders should carefully examine the relevant prospectus supplement
and any applicable pricing supplement for any such debt securities and should
consult their own tax advisors regarding the U.S. federal income tax consequences
of the ownership and disposition of such debt securities before deciding to
purchase such debt securities. Market
Discount. If a U.S. Holder purchases debt securities
(other than debt securities purchased at original issue at or above the issue
price and other than short-term debt securities) for an amount that is less
than their stated redemption price at maturity, or, in the case of OID debt
securities, their adjusted issue price, the amount of the difference will be
treated as “market discount” for U.S. federal income tax
purposes, unless that difference is less than a specified
de minimis amount. Under the
market discount rules, a U.S. Holder generally will be required to treat any
payments received in respect of the debt securities, other than payments of
qualified stated interest, and any gain derived from the sale, retirement or
other disposition of the debt securities, as ordinary income to the extent of
the market discount that has accrued on the debt securities (on a ratable basis
or, at the election of the U.S. Holder, a constant yield basis) but has not
previously been included in gross income by the U.S. Holder. In addition, a
U.S. Holder may be required to defer until the maturity of the debt securities,
or their earlier disposition in a taxable transaction, the deduction of all
or a portion of any interest expense incurred on indebtedness incurred to purchase
or carry such debt securities. A
U.S. Holder may elect to currently include market discount in gross income as
it accrues, under either a ratable or constant yield method, in which case the
rules described above regarding characterization of payments and gain as ordinary
income and the deferral of interest deductions will not apply. An election to
currently include market discount in gross income, once made, applies to all
market discount obligations acquired by the U.S. Holder on or after the first
taxable year to which the election applies and may not be revoked without the
consent of the IRS. Prospective investors should consult their own tax advisors
before making this election. Acquisition
Premium. If a U.S. Holder acquires OID debt securities
for an amount greater than their adjusted issue price but less than the sum
of all amounts (other than qualified stated interest) payable with respect to
the OID debt securities after the date of acquisition, the OID debt securities
will be treated as acquired at an acquisition premium. For OID debt securities
acquired with acquisition premium, the amount of OID that the U.S. Holder must
include in gross income with respect to the OID debt securities for any taxable
year will be reduced by the portion of acquisition premium properly allocable
to such taxable year. Amortizable
Bond Premium. If a U.S. Holder purchases debt securities
for an amount in excess of the sum of all amounts payable on the debt securities
after the purchase date other than payments of qualified stated interest, the
U.S. Holder will be considered to have purchased the debt securities at a “premium”
for U.S. federal income tax purposes. In such case, the U.S. Holder generally
may elect to amortize the premium over the remaining term of the debt securities,
on a constant yield method, as an offset to interest includible in gross income
with respect to the debt securities, and the U.S. Holder would not be required
to include OID, if any, in gross income in respect of the debt securities. In
the case of debt securities that provide for alternative payment schedules,
the amount of premium generally is determined by assuming that a holder will
exercise or not exercise options in a manner that maximizes the holder's yield,
and that the issuer will exercise or not exercise options in a manner that minimizes
the holder's yield. Any election to amortize premium would apply to all debt
securities (other than debt securities the interest on which is excludable from
gross income) held or subsequently acquired by a U.S. Holder on or after the
first day of the first taxable year to which the election applies and is irrevocable
without the consent of the IRS. Prospective investors should consult their own
tax advisors before making this election. Election
to Treat All Interest as OID. U.S. Holders may elect
to treat all interest in respect of debt securities as OID and to calculate
the amount includible in gross income for any taxable year under the constant
yield method described above. For purposes of this election, interest includes
stated interest, acquisition discount, OID, de minimis
OID, market discount, de minimis
market discount, and unstated interest, as adjusted by any amortizable bond
premium or acquisition premium. If a U.S. Holder makes this election for debt
securities with amortizable bond premium, the election is treated as an election
under the amortizable bond premium rules described above and the electing U.S.
Holder will be required 24 to
amortize bond premium for all other debt instruments with amortizable bond premium
held or subsequently acquired by the U.S. Holder. The election to treat all
interest as OID must be made for the taxable year in which the U.S. Holder acquires
the debt securities, and the election may not be revoked without the consent
of the IRS. Prospective investors should consult their own tax advisors before
making this election. Sale,
Retirement or Other Taxable Disposition of Debt Securities.
Upon the sale, retirement or other taxable disposition of debt securities, a
U.S. Holder generally will recognize U.S. source gain or loss equal to the difference
between the amount realized upon the sale, retirement or other taxable disposition
(other than amounts representing accrued and unpaid qualified stated interest,
which will be taxable as ordinary interest income to the extent not previously
included in gross income) and the U.S. Holder’s adjusted tax basis in the
debt securities. In general, the U.S. Holder’s adjusted tax basis of the
debt securities will equal the U.S. Holder's cost for the debt securities, increased
by all accrued OID or market discount previously included in gross income and
reduced by any amortized premium and any cash payments previously received in
respect of the debt securities other than qualified stated interest payments.
Except as described above with respect to certain short-term debt securities,
contingent payment debt securities and debt securities acquired at a market
discount, and except with respect to gain or loss attributable to changes in
exchange rates (as discussed below), such gain or loss generally will be capital
gain or loss and will be long-term capital gain or loss if at the time of sale,
retirement or other taxable disposition the debt securities have been held for
more than one year. Under current U.S. federal income tax law (presently effective
for taxable years beginning before January 1, 2009), certain non-corporate U.S.
Holders, including individuals, are eligible for preferential rates of U.S.
federal income taxation in respect of long-term capital gains. The deductibility
of capital losses is subject to limitations under the Code. Foreign
Currency Debt Securities. In the case of debt securities
denominated in a foreign currency (“foreign currency debt securities”),
U.S. Holders will need to calculate and convert income into U.S. dollar values,
and may be required to account for gain or loss in respect of exchange rate
fluctuations, in accordance with special rules. In general, if an interest payment
is made in a foreign currency to a U.S. Holder who is not required to accrue
such interest prior to its receipt, the U.S. Holder will be required to include
in gross income the U.S. dollar value of the interest payment, determined by
translating the interest payment at the “spot rate” in effect for
the foreign currency on the date that payment is received, regardless of whether
the payment in fact is converted into U.S. dollars. The U.S. Holder will not
recognize any exchange gain or loss with respect to the receipt of the interest
payment. A
U.S. Holder who is required, under its method of accounting, to accrue interest
on foreign currency debt securities prior to the receipt of the interest payment
will be required to include in gross income for each taxable year the U.S. dollar
value of the interest that has accrued during such year, determined by translating
interest at the average rate of exchange for the period or periods during which
interest accrued. Upon receipt of an interest payment on the foreign currency
debt securities (or the receipt of payment of sale or other disposition proceeds
attributable to unpaid interest that was previously accrued into gross income),
such a U.S. Holder will recognize exchange gain or loss in an amount equal to
the difference between the U.S. dollar value of the payment, determined by translating
the foreign currency received at the spot rate in effect for such foreign currency
on the date received, and the U.S. dollar value of the interest income that
the U.S. Holder has previously included in gross income with respect to the
payment. Any exchange gain or loss generally will be treated as ordinary income
or loss, but will not be treated as interest income or expense, except to the
extent provided in Treasury regulations or administrative pronouncements of
the IRS. For
purposes of translating interest accruals under the foregoing rules, the average
rate of exchange for an interest accrual period generally is the simple average
of the exchange rates in effect for each business day of the application period
(or another average that is reasonably derived and consistently applied by the
U.S. Holder). A U.S.
Holder may elect, however, to translate interest accruals at the spot rate in
effect on the last day of the accrual period (or last day of the taxable year
in the case of an accrual period that straddles the U.S. Holder's taxable year),
or on the date that the interest payment is received if that date is within
five business days of the end of the accrual period. The election would apply
to all foreign currency debt securities held or subsequently acquired by the
U.S. Holder on or after 25 the first day of the first taxable year to which the
election applies and is irrevocable without the consent of the IRS. The
amount of OID on foreign currency debt securities will be determined for any
accrual period in the applicable foreign currency and then translated into U.S.
dollars in the same manner as interest income accrued by a U.S. Holder using
the accrual method of accounting for U.S. federal income tax purposes, as described
above. Likewise, a U.S. Holder will recognize exchange gain or loss when payments
attributable to the OID are made to the extent of the difference between the
U.S. dollar value of the accrued OID (determined in the same manner as for accrued
interest) and the U.S. dollar value of the payment (determined by translating
any foreign currency received at the spot rate for the foreign currency on the
date of payment). For this purpose, all receipts on foreign currency debt securities
will be viewed (i) first, as the receipt of any periodic interest payments provided
under the terms of the foreign currency debt securities, (ii) second, as the
receipt of previously accrued OID (to the extent of such OID), with payments
considered made beginning with the earliest accrual periods, and (iii) thereafter,
as the receipt of principal. If
a U.S. Holder purchases foreign currency debt securities by making payment in
the relevant foreign currency, then the initial tax basis of the foreign currency
debt securities will be the U.S. dollar value of the foreign currency paid,
determined at the time of purchase. In the case of foreign currency debt securities
that are traded on an established securities market, a cash basis U.S. Holder
(or an accrual basis U.S. Holder that so elects) will determine the U.S. dollar
value of the cost of the foreign currency debt securities by translating the
amount paid at the spot rate in effect on the settlement date of the purchase.
A U.S. Holder who purchases foreign currency debt securities with previously
owned foreign currency will recognize exchange gain or loss at the time of purchase
attributable to the difference at the time of purchase, if any, between the
U.S. Holder’s adjusted tax basis in the foreign currency and the fair market
value of the foreign currency debt securities, in U.S. dollars, on the date
of purchase. The exchange gain or loss will be ordinary income or loss. When
determining the amount of any gain or loss recognized by a U.S. Holder on the
sale, retirement or other taxable disposition of foreign currency debt securities,
the amount realized will be the U.S. dollar value of the amount realized in
the foreign currency (other than amounts attributable to accrued but unpaid
interest, which generally will be treated as a payment of interest), determined
at the time of the sale, retirement or other taxable disposition and in accordance
with the U.S. Holder’s applicable method of accounting for U.S. federal
income tax purposes. In the case of foreign currency debt securities that are
denominated in a foreign currency and traded on an established securities market,
a cash basis U.S. Holder (or an accrual basis U.S. Holder that so elects) will
determine the U.S. dollar value of the amount realized by translating at the
spot rate in effect on the settlement date of the sale. A U.S. Holder will recognize
exchange gain or loss attributable to the movement in exchange rates between
the time of purchase and disposition of foreign currency debt securities. Such
gain or loss generally will be treated as ordinary income or loss from U.S.
sources. The amount of exchange gain or loss will be limited to the amount of
overall gain or loss realized on the sale, retirement or other taxable disposition
of the foreign currency debt securities. A
U.S. Holder’s tax basis in foreign currency received as interest on foreign
currency debt securities will be the U.S. dollar value of the interest payment
at the spot rate in effect on the date that the foreign currency is received.
The tax basis in foreign currency received on the sale, retirement or other
taxable disposition of foreign currency debt securities will be equal to the
U.S. dollar value of the foreign currency, determined at the time of the sale,
retirement or other taxable disposition in the manner described above. Any gain
or loss recognized by a U.S. Holder on a taxable disposition of the foreign
currency will be ordinary income or loss, but will not be treated as interest
income or expense, except to the extent provided in Treasury regulations or
administrative pronouncements of the IRS. Special
rules apply to foreign currency debt securities that are denominated in one
of certain hyperinflationary currencies, or that are denominated in multiple
currencies. Prospective investors should carefully examine
the relevant prospectus supplement and any pricing supplement for any such debt
securities and should consult their own tax advisors regarding the U.S. federal
income tax consequences of the ownership and disposition of such debt securities
before deciding to purchase such debt securities. 26 Reportable
Transactions. Treasury regulations dealing with the
disclosure of certain “reportable transactions” could apply to investments
in debt securities in some circumstances. In particular, under the Treasury
regulations, a sale, retirement or other taxable disposition of foreign currency
debt securities would be subject to disclosure requirements if such sale, retirement
or other taxable disposition results in a tax loss in excess of a threshold
amount. Prospective investors in foreign currency debt securities should consult
their own tax advisors to determine the disclosure obligations, if any, with
respect to an investment in the debt securities, including any requirement to
file IRS Form 8886 (Reportable Transaction Disclosure Statement). Common and Preferred Stock Distributions.
A distribution paid by us in respect of common or preferred
stock will constitute a dividend for U.S. federal income tax purposes to the
extent the distribution is paid out of our current or accumulated earnings and
profits, as determined under U.S. federal income tax principles. The gross amount
of any such dividend to a U.S. Holder will be included in the gross income of
the U.S. Holder, as ordinary dividend income from U.S. sources. In general,
distributions in excess of our current or accumulated earnings and profits will
not be taxable to a U.S. Holder to the extent that such distributions to the
U.S. Holder do not exceed the U.S. Holder’s adjusted tax basis in the shares
of common or preferred stock with respect to which the distribution is paid,
but rather will reduce the U.S. Holder’s adjusted tax basis in such common
or preferred stock (but not below zero). To the extent that distributions exceed
our current and accumulated earnings and profits as well as the U.S. Holder’s
adjusted tax basis in the common or preferred stock, such distributions generally
will be taxable as capital gain realized in respect of the common or preferred
stock. Under
current U.S. federal income tax law (presently effective for taxable years beginning
before January 1, 2009), dividends paid to certain non-corporate U.S. Holders,
including individuals, generally will constitute qualified dividend income eligible
for preferential rates of U.S. federal income tax, with a maximum rate of 15%,
provided certain conditions and requirements are satisfied, such as minimum
holding period requirements. U.S. Holders that are corporations may be eligible
for a partial dividends-received deduction with respect to dividend distributions
that are paid in respect of common or preferred stock, subject to certain conditions
and requirements, such as minimum holding period requirements. There can be
no assurance that we will have sufficient current or accumulated earnings and
profits for distributions in respect of common or preferred stock to qualify
as dividends for U.S. federal income tax purposes. U.S.
Holders should be aware that dividends exceeding certain thresholds in relation
to such U.S. Holders’ tax basis in the common or preferred stock could
be characterized as “extraordinary dividends” (as defined in section
1059 of the Code). Generally, a corporate U.S. Holder that receives an extraordinary
dividend is required to reduce its tax basis in the common or preferred stock
by the portion of such dividend that is not taxed because of the dividends received
deduction, and is required to recognize taxable gain to the extent such portion
of the dividend exceeds the U.S. Holder’s tax basis in the common or preferred
stock. U.S. Holders who are individuals and who receive an “extraordinary
dividend” would be required to treat any losses on the sale of the common
or preferred stock as long-term capital losses to the extent that the dividends
received by them qualified for the reduced 15% tax rate on qualified dividend
income, as described above. Prospective investors in common or preferred stock
should consult their own tax advisors with respect to the potential application
of the “extraordinary dividend” rules to an investment in the common
or preferred stock. Sale
or Other Taxable Dispositions of Common or Preferred Stock. In
general, a U.S. Holder will recognize capital gain or loss upon the sale or
other taxable disposition of common or preferred stock in an amount equal to
the difference between the sum of the fair market value of any property and
the amount of cash received in such disposition and such U.S. Holder’s
adjusted tax basis in the common or preferred stock at the time of the disposition.
Any such capital gain will be long-term capital gain if the common or preferred
stock has been held by the U.S. Holder for more than one year. Under current
U.S. federal income tax law (presently effective for taxable years beginning
before January 1, 2009), certain non-corporate U.S. Holders (including individuals)
are eligible for preferential
rates of U.S. federal income tax on long-term capital gains. The ability to
utilize capital losses is subject to limitations under the Code. 27 Redemptions
of Common Stock or Preferred Stock. A redemption of
shares of common or preferred stock generally will be treated under section
302 of the Code as a distribution unless the redemption satisfies one of the
tests set forth in section 302(b) of the Code and is therefore treated as a
sale or exchange of the common or preferred stock that is redeemed. If a redemption
of shares of common or preferred stock is treated as a sale or exchange, the
redemption will be taxable as described under the caption “—Sale or
Exchange of the Shares” above, except that an amount received in respect
of declared but unpaid dividends generally will be taxable as a dividend if
we have sufficient current or accumulated earnings and profits, as described
above under the caption “—Distributions.” A
redemption will be treated as a sale or exchange if it (i) results in a “complete
termination” of a U.S. Holder’s interest in us, (ii) is “substantially
disproportionate” with respect to a U.S. Holder, or (iii) is not “essentially
equivalent to a dividend” with respect to a U.S. Holder, all within the
meaning of Section 302(b) of the Code. In determining whether any of these tests
has been met, shares of common or preferred stock deemed owned by a U.S. Holder
by reason of certain constructive ownership rules, as well as shares actually
owned by such U.S. Holder, must be taken into account. A redemption of shares
of common and preferred stock held by a U.S. Holder generally will qualify for
sale or exchange treatment if the U.S. Holder does not own (actually or constructively)
any shares of any classes of our common or preferred stock following the redemption,
or if the U.S. Holder owns (actually or constructively) only an insubstantial
percentage of our common or preferred stock, the redemption has the effect of
decreasing such ownership percentage and the U.S. Holder does not participate
in our control or management. However, the determination as to whether any of
the tests of section 302(b) of the Code will be satisfied with respect to any
particular U.S. Holder depends upon the facts and circumstances at the time
of the redemption. If
a redemption of shares of common or preferred stock is treated as a distribution,
the entire amount received will be taxable as described under the caption “—Distributions”
above. In such case, a U.S. Holder’s adjusted tax basis in the redeemed
shares of common or preferred stock generally will be transferred to any remaining
shares of common or preferred stock held by such U.S. Holder immediately after
the redemption. If a U.S. Holder does not own any of other shares of common
or preferred stock immediately after the redemption, such tax basis may, under
certain circumstances, be transferred to shares of common or preferred stock
held by a person related to such U.S. Holder, or the tax basis may be entirely
lost. Prospective
investors should consult their own tax advisors for purposes of determining
the tax consequences resulting from redemption of shares of common or preferred
stock in their particular circumstances. Terms
of Preferred Stock. The U.S. federal income tax consequences
of the purchase, ownership or disposition of preferred stock will depend on
a number of factors, including the specific terms of the preferred stock (such
as any put or call option or redemption provisions, any conversion or exchange
features and the price at which the preferred stock is sold). Prospective investors
should carefully examine the relevant prospectus supplement and any applicable
pricing supplement and should consult their own tax advisors, regarding the
material U.S. federal income tax consequences, if any, of the ownership and
disposition of preferred stock based upon their particular circumstances and
the terms of the preferred stock. U.S.
Federal Income Taxation of Non-U.S. Holders Debt
Securities Under
present U.S. federal income tax law, and subject to the discussion below concerning
backup withholding:
(a) payments of principal, interest (including OID, if any) and premium
on the debt securities by CIT or our paying agent to any Non-U.S. Holder will
be exempt from the 30% U.S. federal withholding tax, provided that: • the
Non-U.S. Holder does not own, actually or constructively, 10% or more
of the total combined voting power of all classes of stock of CIT entitled
to vote; 28 • the
Non-U.S. Holder is not a controlled foreign corporation related, directly
or indirectly, to CIT through stock ownership or a bank receiving interest
described in section 881(c)(3)(A) of the Code; • the
interest is not effectively connected with the conduct by the Non-U.S.
Holder of a trade or business within the United States (or, if a tax treaty
applies, is not attributable to a permanent establishment maintained by
the Non-U.S. Holder in the United States); • the
interest is not considered contingent interest under section 871(h)(4)(A)
of the Code and the Treasury regulations thereunder; and • the
statement requirement set forth in section 871(h) or section 881(c) of
the Code has been fulfilled with respect to the beneficial owner, as discussed
below; and
(b) a Non-U.S. Holder generally will not be subject to U.S.
federal income tax on gain realized on the sale, retirement or other taxable
disposition of the debt securities, unless: • the
Non-U.S. Holder is an individual who is present in the U.S. for 183 days
or more in the taxable year of the disposition and certain other conditions
are met; or • the
gain is effectively connected with the Non-U.S. Holder's conduct of a
trade or business in the United States (and, if required by an applicable
tax treaty, is attributable to a permanent establishment maintained by
the Non-U.S. Holder in the United States). The
certification requirement referred to in subparagraph (a) above will be fulfilled
if (i) the beneficial owner of the debt securities certifies on IRS Form W-8BEN
or other successor form, under penalties of perjury, that such beneficial owner
is not a U.S. person and provides its name and address, and (ii) the beneficial
owner files IRS Form W-8BEN or other successor form with the withholding agent,
or in the case of debt securities held on behalf of the beneficial owner by
a securities clearing organization, bank, or other financial institution holding
customers' securities in the ordinary course of its trade or business, such
financial institution files with the withholding agent a statement that it has
received the IRS Form W-8BEN or other successor form from the beneficial owner
and furnishes the withholding agent with a copy. With respect to debt securities
held by a foreign partnership, unless the foreign partnership has entered into
a withholding agreement with the IRS, the foreign partnership generally will
be required to provide an IRS Form W-8IMY or other successor form and to associate
with such form an appropriate certification or other appropriate documentation
from each partner. Prospective investors, including foreign partnerships and
their partners, should consult their tax advisors regarding possible additional
reporting requirements. If
a Non-U.S. Holder of debt securities is engaged in the conduct of a trade or
business in the United States, and if premium (if any) or interest (including
OID) on the debt securities, or gain realized on its sale, retirement or other
taxable disposition of the debt securities is effectively connected with the
conduct of such trade or business (and, if required by an applicable tax treaty,
is attributable to a permanent establishment maintained by the Non-U.S. Holder
in the United States), the Non-U.S. Holder, although exempt from the withholding
tax discussed in the preceding paragraphs, will be subject to regular U.S. federal
income tax on its effectively connected income, generally in the same manner
as a U.S. Holder. See “U.S. Federal Income Taxation of U.S. Holders”
above. In lieu of the certificates described in the preceding paragraph, such
a Non-U.S. Holder will be required to provide to the withholding agent a properly
executed IRS Form W-8ECI or other successor form to claim an exemption from
withholding tax. In addition, a Non-U.S. Holder that is a foreign corporation
may be subject to a 30% branch profits tax (unless reduced or eliminated by
an applicable tax treaty) on its earnings and profits for the taxable year attributable
to its effectively connected income, subject to certain adjustments. Common
and Preferred Stock Distributions.
Except as described below, dividends paid to a Non-U.S.
Holder in respect of common or preferred stock generally will be subject to
U.S. federal withholding tax at a 30% rate, or such lower rate as may be specified
by an applicable tax treaty. In order to claim the benefits of an applicable
tax treaty, a Non-U.S. Holder will be required to satisfy applicable certification
(for example, Internal Revenue Service Form W-8BEN or other applicable form)
and other requirements prior to the distribution date. Non-U.S. Holders eligible
for a reduced rate of U.S. federal withholding tax under an applicable tax treaty 29
may obtain a refund of any amounts withheld in excess of that rate by filing
a refund claim with the IRS. Non-U.S. Holders should consult their own tax advisors
regarding their entitlement to benefits under an applicable income tax treaty
and the requirements for claiming any such benefits. Dividends
paid to a Non-U.S. Holder that are effectively connected with its conduct of
a trade or business within the United States (and, if required by an applicable
income tax treaty, are attributable to a permanent establishment maintained
by the Non-U.S. Holder in the United States) generally are exempt from the 30%
U.S. federal withholding tax. Instead, any such dividends generally will be
subject to U.S. federal income tax in the same manner as if the Non-U.S. Holder
were a U.S. Holder, as described above. See “U.S. Federal Income Taxation
of U.S. Holders” above. Non-U.S. Holders will be required to comply with
certification (for example, Internal Revenue Service Form W-8ECI or applicable
successor form) and other requirements in order for effectively connected income
to be exempt from the 30% U.S. federal withholding tax. A corporate Non-U.S.
Holder also may be subject to an additional “branch profits tax” at
a 30% rate (or such lower rate as may be specified by an applicable tax treaty)
with respect to any effectively connected dividends, subject to certain adjustments.
Sale
or Other Taxable Disposition of Common or Preferred Stock. A
Non-U.S. Holder generally will not be subject to U.S. federal income tax on
gain recognized on a sale or other taxable disposition of common or preferred
stock unless (i) the gain is effectively connected with such Non-U.S. Holder’s
conduct of a trade or business within the United States (and, if required by
an applicable tax treaty, is attributable to a permanent establishment maintained
by the Non-U.S. Holder in the United States); (ii) the Non-U.S. Holder is an
individual who is present in the United States for 183 or more days in the taxable
year of the disposition and certain other conditions are satisfied; or (iii)
we are or have been a United States real property holding corporation for U.S.
federal income tax purposes at any time during the five year period (or shorter
holding period for the common or preferred stock) ending on the date of the
disposition. We have not been, are not and do not anticipate becoming a United
States real property holding corporation for U.S. federal income tax purposes. Gain
from the disposition of shares by a Non-U.S. Holder that is effectively connected
with its conduct of a trade or business within the United States (and, if required
by an applicable tax treaty, is attributable to a permanent establishment maintained
by the Non-U.S. Holder in the United States) generally will be subject to U.S.
federal income tax in the same manner as if the Non-U.S. Holder were a U.S.
Holder, as described above. See “U.S. Federal Income Taxation of U.S. Holders”
above. A corporate Non-U.S. Holder also may be subject to an additional “branch
profits tax” at a 30% rate (or such lower rate as may be specified by an
applicable tax treaty) with respect to any effectively connected gain from the
disposition of shares, subject to certain adjustments. As discussed above under
“—U.S. Holders—Redemption of Common or Preferred Stock,”
the proceeds received from a redemption of shares of common or preferred stock
may be treated as a distribution in certain circumstances, in which case, the
discussion above under “—Distributions” would be applicable.
Terms
of Preferred Stock. The U.S. federal income tax consequences
of the purchase, ownership or disposition of preferred stock will depend on
a number of factors, including the specific terms of the preferred stock (such
as any put or call option or redemption provisions, any conversion or exchange
features and the price at which the preferred stock is sold). Prospective investors
should carefully examine the relevant prospectus supplement and any applicable
pricing supplement, and should consult their own tax advisors, regarding the
material U.S. federal income tax consequences, if any, of the ownership and
disposition of preferred stock based upon their particular circumstances and
the terms of the preferred stock. Backup
Withholding and Information Reporting U.S.
Holders. In general, a U.S. Holder (other than corporations
and other exempt holders) will be subject to information reporting requirements
with respect to (i) payments of principal, premium, and interest (including
OID) paid in respect of, and the proceeds from a sale, redemption or other disposition
before maturity of, the debt securities, and (ii) dividends and other taxable
distributions paid in respect of, and the proceeds from a sale, redemption or
other disposition of, the common or preferred stock. In addition, such a U.S.
Holder may be subject to backup withholding (currently at a 28% rate) on such
payments if the U.S. Holder (i) fails to provide an accurate taxpayer identification
number to the payor; 30 (ii) has been notified by the IRS of a failure to report
all interest or dividends required to be shown on its U.S. federal income tax
returns; or (iii) in certain circumstances, fails to comply with applicable
certification requirements. Any
amounts withheld under the backup withholding rules will be allowed as a refund
or a credit against a U.S. Holder’s U.S. federal income tax liability provided
the required information is furnished to the IRS on a timely basis. U.S. Holders
should consult their tax advisors regarding the application of information reporting
and backup withholding rules in their particular situations, the availability
of an exemption therefrom, and the procedure for obtaining such an exemption,
if applicable. Non-U.S.
Holders. In general, CIT or our paying agent must report
to the IRS and to a Non-U.S. Holder the amount of interest (including OID) on
the debt securities, and dividends on the common or preferred stock, paid to
the Non-U.S. Holder and the amount of U.S. federal withholding tax, if any,
deducted from those payments. Copies of the information returns reporting such
interest and dividend payments and any associated U.S. federal withholding tax
also may be made available to the tax authorities in the country in which the
Non-U.S. Holder resides under the provisions of an applicable tax treaty. A
Non-U.S. Holder generally will not be subject to backup withholding with respect
to payments that we make on the debt securities or shares of common or preferred
stock provided that CIT or our paying agent does not have actual knowledge or
reason to know that the Non-U.S. Holder is a U.S. person (as defined under the
Code), and CIT or our paying agent has received from the Non-U.S. Holder an
appropriate certification of non-U.S. status (i.e., IRS
Form W-8BEN or other applicable IRS Form W-8). Information reporting and, depending
on the circumstances, backup withholding will apply to the payment of the proceeds
of a sale of debt securities or shares of common or preferred stock, as the
case may be, that is effected within the United States or effected outside the
United States through certain U.S.-related financial intermediaries, unless
the Non-U.S. Holder certifies under penalty of perjury as to its non-U.S. status,
and the payor does not have actual knowledge or reason to know that the beneficial
owner is a U.S. person, or the Non-U.S. Holder otherwise establishes an exemption.
Any
amounts withheld under the backup withholding rules will be allowed as a refund
or a credit against a Non-U.S. Holder’s U.S. federal income tax liability
provided the required information is furnished to the Internal Revenue Service
on a timely basis. Non-U.S. Holders of debt securities should consult their
tax advisers regarding the application of information reporting and backup withholding
in their particular situations, the availability of an exemption therefrom,
and the procedure for obtaining an exemption, if applicable. We
may sell the securities covered by this prospectus in any of the following three
ways (or in any combination): • through
underwriters, dealers or remarketing firms; • directly
to one or more purchasers, including to a limited number of institutional
purchasers; or • through
agents. Any
such dealer or agent, in addition to any underwriter, may be deemed to be an
underwriter within the meaning of the Securities Act of 1933, as amended (the
“Securities Act”). Any discounts or commissions received by an underwriter,
dealer, remarketing firm or agent on the sale or resale of securities may be
considered by the SEC to be underwriting discounts and commissions under the
Securities Act. In
addition, we may enter into derivative transactions with third parties, or sell
securities not covered by this prospectus to third parties in privately negotiated
transactions. If the applicable prospectus supplement indicates, in connection
with such a transaction, the third parties may, pursuant to this prospectus
and the applicable prospectus supplement, sell securities covered by this prospectus
and the applicable prospectus supplement. If so, the third party may use securities
borrowed from us or others to settle such sales and may use securities received
from us to close out any related short positions. We may also loan or pledge
securities covered by this prospectus and the applicable prospectus supplement
to third 31
parties, who may sell the loaned securities or, in an event of default in the
case of a pledge, sell the pledged securities pursuant to this prospectus and
the applicable prospectus supplement. The
terms of the offering of the securities with respect to which this prospectus
is being delivered will be set forth in the applicable prospectus supplement
or pricing supplement and will include, among other things: • the
type of and terms of the securities offered; • the
price of the securities; • the
proceeds to us from the sale of the securities; • the
names of the securities exchanges, if any, on which the securities are
listed; • the
name of any underwriters, dealers, remarketing firms or agents and the
amount of securities underwritten or purchased by each of them; • any
over-allotment options under which underwriters may purchase additional
securities from us; • any
underwriting discounts, agency fees or other compensation to underwriters
or agents; and • any
discounts or concessions which may be allowed or reallowed or paid to
dealers. If
underwriters are used in the sale of securities, such securities will be acquired
by the underwriters for their own account and may be resold from time to time
in one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The securities
may be offered to the public either through underwriting syndicates represented
by managing underwriters or directly by one or more underwriters acting alone.
Unless otherwise set forth in the applicable prospectus supplement, the obligations
of the underwriters to purchase the securities described in the applicable prospectus
supplement will be subject to certain conditions precedent, and the underwriters
will be obligated to purchase all such securities if any are purchased by them.
Any public offering price and any discounts or concessions allowed or reallowed
or paid to dealers may be changed from time to time. If
dealers acting as principals are used in the sale of any securities, such securities
will be acquired by the dealers, as principals, and may be resold from time
to time in one or more transactions at varying prices to be determined by the
dealer at the time of resale. The name of any dealer and the terms of the transaction
will be set forth in the applicable prospectus supplement or pricing supplement
with respect to the securities being offered. Securities
may also be offered and sold, if so indicated in the applicable prospectus supplement
or pricing supplement, in connection with a remarketing upon their purchase,
in accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms, which we refer to herein as the “remarketing firms,”
acting as principals for their own accounts or as our agents, as applicable.
Any remarketing firm will be identified and the terms of its agreement, if any,
with us and its compensation will be described in the applicable prospectus
supplement or pricing supplement. Remarketing firms may be deemed to be underwriters,
as that term is defined in the Securities Act in connection with the securities
remarketed thereby. The
securities may be sold directly by us or through agents designated by us from
time to time. In the case of securities sold directly by us, no underwriters
or agents would be involved. Any agents involved in the offer or sale of the
securities in respect of which this prospectus is being delivered, and any commissions
payable by us to such agents, will be set forth in the applicable prospectus
supplement or pricing supplement. Unless otherwise indicated in the applicable
prospectus supplement or pricing supplement, any such agent will be acting on
a best efforts basis for the period of its appointment. We
may authorize agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase the securities to which this prospectus and the applicable
prospectus supplement relates from us at the public offering price set forth
in the applicable prospectus supplement or pricing supplement, plus, if applicable,
accrued interest, pursuant to delayed delivery contracts providing for payment
and delivery on a specified date in the future. Such contracts will be subject
only to those conditions set forth in the applicable prospectus supplement or
pricing supplement, and the applicable prospectus supplement or pricing supplement
will set forth the commission payable for solicitation of such contracts. 32 Agents,
dealers, underwriters and remarketing firms may be entitled, under agreements
entered into with us to indemnification by us against certain civil liabilities,
including liabilities under the Securities Act, or to contribution to payments
they may be required to make in respect thereof. Agents, dealers, underwriters
and remarketing firms may be customers of, engage in transactions with, or perform
services for us or our subsidiaries in the ordinary course of business. Unless
otherwise indicated in the applicable prospectus supplement or pricing supplement,
all securities offered by this prospectus, other than our common stock that
is listed on the New York Stock Exchange, will be new issues with no established
trading market. We may elect to list any of the securities on one or more exchanges,
but, unless otherwise specified in the applicable prospectus supplement or pricing
supplement, we shall not be obligated to do so. In addition, underwriters will
not be obligated to make a market in any securities. No assurance can be given
regarding the activity of trading in, or liquidity of, any securities. Any
underwriter may engage in over-allotment, stabilizing transactions, short covering
transactions and penalty bids in accordance with Regulation M under the Exchange
Act. Over-allotment involves sales in excess of the offering size, which create
a short position. Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a specified maximum.
Short covering transactions involve purchases of the securities in the open
market after the distribution is completed to cover short positions. Penalty
bids permit the underwriters to reclaim a selling concession from a dealer when
the securities originally sold by the dealer are purchased in a covering transaction
to cover short positions. Those activities may cause the price of the securities
to be higher than it would otherwise be. If commenced, the underwriters may
discontinue any of the activities at any time. Unless
otherwise indicated in a supplement to this prospectus, the validity of the
securities will be passed upon for us by Shearman & Sterling LLP, New York,
New York. The
consolidated balance sheets of CIT Group Inc. and its subsidiaries as of December 31,
2004 and December 31, 2003 and the related consolidated statements of income,
stockholders’ equity and cash flows for the years ended December 31,
2004, December 31, 2003, the three months ended December 31, 2002
and the year ended September 30, 2002, and management’s assessment
of the effectiveness of internal control over financial reporting (which is
included in Management’s Report on Internal Control over Financial Reporting
(Restated)) as of December 31, 2004, incorporated in the accompanying prospectus
by reference to CIT Group Inc.’s Current Report on Form 8-K/A dated
December 14, 2005, have been so incorporated by reference in reliance on
the report (which contains an adverse opinion on the effectiveness of internal
control over financial reporting) of PricewaterhouseCoopers LLP, independent
registered public accounting firm, given on the authority of said firm as experts
in auditing and accounting. 33
CIT
Group Inc.
U.S.
$3,000,000,000
CIT
InterNotes®
Prospectus
Supplement
FEBRUARY
10, 2006
