As filed with the Securities and Exchange Commission on March 26, 1997
Registration No. 333-22709
333-22709-01
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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THE CIT GROUP HOLDINGS, INC. CIT CAPITAL TRUST I
(Exact name of registrant (Exact name of registrant
as specified in its charter) as specified in its declaration of trust)
DELAWARE DELAWARE
(State or other jurisdiction (State or other jurisdiction
of incorporation or organization) of incorporation or organization)
13-2994534 52-6841645
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
6153 6719
(Primary Standard Industrial (Primary Standard Industrial
Classification Code Number) Classification Code Number)
1211 Avenue of the Americas
New York, New York 10036
(212) 536-1950
(Address, including zip code, and telephone number,
including area code of registrant's
principal executive offices)
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ERNEST D. STEIN, ESQ.
Executive Vice President General Counsel and Secretary
THE CIT GROUP HOLDINGS, INC.
1211 Avenue of the Americas, New York, New York 10036 (212) 536-1950
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
ANDRE WEISS, ESQ.
SCHULTE ROTH & ZABEL LLP
900 THIRD AVENUE NEW YORK, NEW YORK 10022
(Phone) (212) 756-2000
(Fax) (212) 593-5955
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Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General instruction G, check the following box. [ ]
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
SUBJECT TO COMPLETION, DATED MARCH 26, 1997
PROSPECTUS
Offer for All Outstanding
7.70% Preferred Capital Securities
in Exchange for
7.70% Preferred Capital Securities
Which Have Been Registered Under the Securities Act of 1933
of
CIT CAPITAL TRUST I
fully and unconditionally guaranteed, as described herein, by
THE CIT GROUP HOLDINGS, INC.
The Exchange Offer and Withdrawal Rights will
expire at 5:00 p.m., New York City time,
on , 1997, unless extended.
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CIT Capital Trust I, a statutory business trust formed under the laws of
the State of Delaware (the "Trust") and The CIT Group Holdings, Inc., a Delaware
corporation, (the "Company"), hereby offer, upon the terms and subject to the
conditions set forth in this Prospectus (as the same may be amended or
supplemented from time to time, the "Prospectus") and in the accompanying Letter
of Transmittal (which together constitute the "Exchange Offer"), to exchange up
to $250,000,000 aggregate liquidation amount of its 7.70% Preferred Capital
Securities (the "New Capital Securities") which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement (as defined herein) of which this Prospectus constitutes
a part, for a like liquidation amount of its outstanding 7.70% Preferred Capital
Securities (the "Old Capital Securities"), of which $250,000,000 aggregate
liquidation amount is outstanding. Pursuant to the Exchange Offer, the Company
is also exchanging its guarantee of the payment of Distributions (as defined
herein) and payments on liquidation or redemption of the Old Capital Securities
(the "Old Guarantee") for a like guarantee of the New Capital Securities (the
"New Guarantee") and all of its 7.70% Junior Subordinated Debentures (the "Old
Junior Subordinated Debentures"), of which $257,732,000 aggregate principal
amount is outstanding, for like aggregate principal of its 7.70% Junior
Subordinated Debentures (the "New Junior Subordinated Debentures"), which New
Guarantee and New Junior Subordinated Debentures also have been registered under
the Securities Act. The Old Capital Securities, the Old Guarantee and the Old
Junior Subordinated Debentures are collectively referred to herein as the "Old
Securities" and the New Capital Securities, the New Guarantee and the New Junior
Subordinated Debentures are collectively referred to herein as the "New
Securities."
(Continued on Following Page)
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SEE "RISK FACTORS" BEGINNING ON PAGE 17 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY HOLDERS WHO TENDER OLD CAPITAL SECURITIES IN THE EXCHANGE
OFFER.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Date of this Prospectus is March , 1997.
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(Cover Page Continued)
The terms of the New Securities will be identical in all material respects
to the respective terms of the Old Securities, except that (i) the New
Securities will have been registered under the Securities Act and therefore will
not be subject to certain restrictions on transfer applicable to the Old
Securities, (ii) the New Capital Securities will not provide for any increase in
the Distribution rate thereon as a consequence of a failure to take certain
actions in connection with their registration under the Securities Act and (iii)
the New Junior Subordinated Debentures will not provide for any increase in the
interest rate thereon as a consequence of a failure to take certain actions in
connection with their registration under the Securities Act.
The New Capital Securities are being offered for exchange in order to
satisfy certain obligations of the Company and the Trust under the Registration
Rights Agreement dated as of February 25, 1997 (the "Registration Rights
Agreement") among the Company, the Trust and the Initial Purchasers (as defined
herein). The New Junior Subordinated Debentures and the New Guarantee are being
offered for exchange under the Registration Rights Agreement. In the event that
the Exchange Offer is consummated, any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer and the New Capital
Securities issued in the Exchange Offer will vote together as a single class for
purposes of determining whether holders of the requisite percentage in
outstanding liquidation amount thereof have taken certain actions or exercised
certain rights under the Declaration of Trust.
The New Capital Securities and the Old Capital Securities (together, the
"Capital Securities") will represent undivided beneficial interests in the
assets of the Trust. The Company is the owner of all of the beneficial interests
represented by common securities of the Trust (the "Common Securities" and,
collectively with the Capital Securities, the "Trust Securities"). The Bank of
New York is the Property Trustee of the Trust. The Trust exists for the sole
purposes of issuing the Trust Securities, investing the proceeds thereof in the
Junior Subordinated Debentures and engaging only in activities necessary or
incidental thereto. The Junior Subordinated Debentures will mature on February
15, 2027 (the "Stated Maturity"). The New Capital Securities will have a
preference under certain circumstances with respect to cash distributions and
amounts payable on liquidation, redemption or otherwise over the Common
Securities. See "Description of New Capital Securities -- Subordination of
Common Securities."
As used herein, (i) the "Indenture" means the Indenture, dated as of
February 25, 1997, between the Company and The Bank of New York as trustee, (ii)
the "Declaration" means the Amended and Restated Declaration of Trust relating
to the Trust among the Company, as Depositor, The Bank of New York,as Property
Trustee (the "Property Trustee"), The Bank of New York (Delaware), as Delaware
Trustee (the "Delaware Trustee"), and the Regular Trustees named therein
(collectively, with the Property Trustee and Delaware Trustee, the "Issuer
Trustees"), and (iii) the "Guarantee Agreement" means the Guarantee Agreement,
dated as of February 25, 1997, relating to the Guarantee between the Company and
The Bank of New York, as trustee (the "Guarantee Trustee"). In addition, as the
context may require, unless expressly stated otherwise, (i) "Capital Securities"
means the Old Capital Securities and the New Capital Securities, (ii) "Junior
Subordinated Debentures" means the Old Junior Subordinated Debentures and the
New Junior Subordinated Debentures and (iii) "Guarantee" means the Old Guarantee
and the New Guarantee.
Holders of the New Capital Securities will be entitled to receive
cumulative cash distributions accruing from February 25, 1997 and payable
semi-annually in arrears on the 15th day of February and August of each year,
commencing August 15, 1997, at the annual rate of 7.70% of the liquidation
amount of $1,000 per New Capital Security ("Distribution"). The distribution
rate and the distribution payment dates and other payment dates for the New
Capital Securities will correspond to the interest rate and interest payment
dates and other payment dates on the New Junior Subordinated Debentures, which
will be the sole assets of the Trust. Pursuant to the New Guarantee, the Company
will guarantee the payment of Distributions and payments on liquidation of the
Trust or redemption of the New Capital Securities, but only in each case to the
extent of funds held by the Trust, as described herein. See "Description of New
Guarantee." If the Company does not make interest payments on the Junior
Subordinated Debentures held by the Trust, the Trust will have insufficient
funds to pay Distributions on the New Capital Securities. The Company's
obligations under the New Guarantee, taken together with its obligations under
the New Junior Subordinated Debentures and the Indenture, including its
obligation to pay all costs, expenses and liabilities of the Trust (other than
with respect to the New Capital Securities), will constitute a full and
unconditional guarantee of all of the Trust's obligations under the New Capital
Securities.
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(Cover Page Continued)
The obligations of the Company under the New Guarantee and the New Junior
Subordinated Debentures will be subordinate and junior in right of payment to
all Indebtedness (as defined in "Description of New Junior Subordinated
Debentures -- Subordination") of the Company and will be structurally
subordinated to all liabilities and obligations of the Company's subsidiaries.
As of December 31, 1996, the Company had approximately $14.6 billion aggregate
principal amount of Indebtedness outstanding, and the Company's subsidiaries had
approximately $2.1 billion of indebtedness or other liabilities, in addition to
other contractual obligations. The terms of the New Junior Subordinated
Debentures place no limitation on the amount of Indebtedness that may be
incurred by the Company or on the amount of liabilities and obligations that may
be incurred by the Company's subsidiaries. See "Description of New Junior
Subordinated Debentures -- Subordination."
The Company will have the right to defer payment of interest on the New
Junior Subordinated Debentures at any time or from time to time for a period not
exceeding 10 consecutive semi-annual periods with respect to each deferral
period (each, an "Extension Period"), provided that no Extension Period may
extend beyond the Stated Maturity of the New Junior Subordinated Debentures.
Upon the termination of any such Extension Period and the payment of all amounts
then due on any Interest Payment Date (as defined herein), the Company may elect
to begin a new Extension Period subject to the requirements set forth herein.
Accordingly, there could be multiple Extension Periods of varying lengths
throughout the term of the New Junior Subordinated Debentures. During any
Extension Period, distributions on the New Capital Securities will also be
deferred and the Company may not, and may not permit any subsidiary of the
Company to, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, the Company's
capital stock or (ii) make any payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any debt securities that rank pari passu
with or junior to the New Junior Subordinated Debentures or make any guarantee
payments with respect to any guarantee by the Company of the debt securities of
any subsidiary of the Company if such guarantee ranks pari passu with or junior
to the New Junior Subordinated Debentures (other than (a) dividends or
distributions in common stock of the Company, (b) payments under the New
Guarantee, (c) any declaration of a dividend in connection with the
implementation of a shareholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto, and (d) purchases of common stock related to the issuance of
common stock or rights under any of the Company's benefit plans). During an
Extension Period, interest on the New Junior Subordinated Debentures will
continue to accrue (and the amount of Distributions to which holders of the New
Capital Securities are entitled will accumulate) at the rate of 7.70% per annum,
compounded semi-annually to the extent permitted by applicable law, and holders
of the New Capital Securities will be required to accrue interest income for
United States federal income tax purposes prior to receipt of the cash related
to such interest income. See "Description of New Junior Subordinated Debentures
- -- Option to Extend Interest Payment Period" and "Certain United States Federal
Income Tax Consequences -- Interest Income and Original Issue Discount."
The New Junior Subordinated Debentures will not be redeemable prior to
February 15, 2007 unless a Special Event (as defined herein) has occurred. The
New Junior Subordinated Debentures will be redeemable prior to maturity at the
option of the Company, subject to the receipt of any necessary prior approval of
the Board of Governors of the Federal Reserve System (the "Federal Reserve") or
the Ministry of Finance of Japan ("MOF" and, together with the Federal Reserve,
the "Regulatory Authorities"), (i) on or after February 15, 2007, in whole or in
part, at a redemption price equal to 103.6220% of the principal amount thereof
on February 15, 2007, declining ratably on each February 15 thereafter to 100%
on or after February 15, 2017, plus the accrued and unpaid interest thereon, or
(ii) at any time, in whole (but not in part), upon the occurrence and
continuation of a Special Event, at a redemption price equal to 100% of the
principal amount thereof plus accrued interest thereon to the date of
prepayment, subject to the further conditions described under "Description of
New Junior Subordinated Debentures -- Redemption." The New Capital Securities
will be subject to mandatory redemption, in whole or in part, upon repayment of
the New Junior Subordinated Debentures at maturity or their earlier redemption,
in an amount equal to the amount of related New Junior Subordinated Debentures
maturing or being redeemed and at a redemption price equal to the redemption
price of such New Junior Subordinated Debentures, in each case plus accumulated
and unpaid Distributions thereon to the date of redemption.
Upon the occurrence and continuation of a Special Event, the Company will
have the right, subject to the receipt of any necessary prior approval of the
Regulatory Authorities, to dissolve the Trust and cause the New Junior
Subordinated Debentures to be distributed to the holders of the New Capital
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(Cover Page Continued)
Securities and the Common Securities in liquidation of the Trust. See
"Description of New Capital Securities -- Redemption -- Special Event Redemption
or Distribution of New Junior Subordinated Debentures."
In the event of the liquidation of the Trust, after satisfaction of the
claims of creditors of the Trust, if any, as provided by applicable law, the
holders of the New Capital Securities will be entitled to receive a liquidation
amount of $1,000 per New Capital Security plus accumulated and unpaid
Distributions thereon to the date of payment, which may be in the form of a
distribution of such amount in New Junior Subordinated Debentures as described
above. If such liquidation amount can be paid only in part because the Trust has
insufficient assets available to pay in full the aggregate liquidation amount,
then the amounts payable directly by the Trust on the New Capital Securities
shall be paid on a pro rata basis. The holder(s) of the Common Securities will
be entitled to receive distributions upon any such liquidation pro rata with the
holders of the New Capital Securities, except that if an Indenture Event of
Default (as defined herein) has occurred and is continuing, the New Capital
Securities will have a priority over the Common Securities. See "Description of
New Capital Securities -- Liquidation Distribution Upon Dissolution."
The Company and the Trust are making the Exchange Offer of the New Capital
Securities in reliance on the position of the staff of the Division of
Corporation Finance of the Securities and Exchange Commission (the "Commission")
as set forth in certain interpretive letters addressed to third parties in other
transactions. However, neither the Company nor the Trust has sought its own
interpretive letter and there can be no assurance that the staff of the Division
of Corporation Finance of the Commission would make a similar determination with
respect to the Exchange Offer as it has in such interpretive letters to third
parties. Based on these interpretations by the staff of the Division of
Corporation Finance, and subject to the two immediately following sentences, the
Company and the Trust believe that New Capital Securities issued pursuant to
this Exchange Offer in exchange for Old Capital Securities may be offered for
resale, resold and otherwise transferred by a holder thereof (other than a
holder who is a broker-dealer) without further compliance with the registration
and prospectus delivery requirements of the Securities Act of 1933, as amended
(the "Securities Act"), provided that such New Capital Securities are acquired
in the ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such New Capital Securities. However, any holder of Old Capital Securities who
is an "affiliate" of the Company or the Trust or who intends to participate in
the Exchange Offer for the purpose of distributing New Capital Securities, or
any broker-dealer who purchased Old Capital Securities from the Trust to resell
pursuant to Rule 144A under the Securities Act ("Rule 144A") or any other
available exemption under the Securities Act, (a) will not be able to rely on
the interpretations of the staff of the Division of Corporation Finance of the
Commission set forth in the above-mentioned interpretive letters, (b) will not
be permitted or entitled to tender such Old Capital Securities in the Exchange
Offer and (c) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or other transfer
of such Old Capital Securities unless such sale is made pursuant to an exemption
from such requirements. In addition, as described below, if any broker-dealer
holds Old Capital Securities acquired for its own account as a result of
market-making or other trading activities and exchanges such Old Capital
Securities for New Capital Securities, then such broker-dealer must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an "affiliate" of the Company or the Trust, (ii)
any New Capital Securities to be received by it are being acquired in the
ordinary course of its business, (iii) it has no arrangement or understanding
with any person to participate in a distribution (within the meaning of the
Securities Act) of such New Capital Securities, and (iv) if such holder is not a
broker-dealer, such holder is not engaged in, and does not intend to engage in,
a distribution (within the meaning of the Securities Act) of such New Capital
Securities. In addition, the Company and the Trust may require such holder, as a
condition to such holder's eligibility to participate in the Exchange Offer, to
furnish to the Company and the Trust (or an agent thereof) in writing
information as to the number of "beneficial owners" (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended) on behalf of whom
such holder holds the Capital Securities to be exchanged in the Exchange Offer.
Each broker-dealer that receives New Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge that it acquired the Old Capital
Securities for its own account as the result of market-making activities or
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(Cover Page Continued)
other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such New Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the positions taken by the staff of the Division of Corporation Finance
of the Commission in the interpretive letters referred to above, the Company and
the Trust believe that broker-dealers who acquired Old Capital Securities for
their own accounts, as a result of market-making activities or other trading
activities ("Participating Broker-Dealers") may fulfill their prospectus
delivery requirements with respect to the New Capital Securities received upon
exchange of such Old Capital Securities (other than Old Capital Securities which
represent an unsold allotment from the original sale of the Old Capital
Securities) with a prospectus meeting the requirements of the Securities Act,
which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights Agreement, the Company
and the Trust have agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer in
connection with resales of such New Capital Securities for a period ending 180
days after the Registration Statement of which this Prospectus constitutes a
part is declared effective. See "Plan of Distribution." Any Participating
Broker-Dealer who is an "affiliate" of the Company or the Trust may not rely on
such interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. See "The Exchange Offer -- Resales of New Capital Securities."
In that regard, each Participating Broker-Dealer who surrenders Old
Capital Securities pursuant to the Exchange Offer will be deemed to have agreed,
by execution of the Letter of Transmittal, that, upon receipt of notice from the
Company or the Trust of the occurrence of any event or the discovery of any fact
which makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or which causes this Prospectus to
omit to state a material fact necessary in order to make the statements
contained or incorporated by reference herein, in light of the circumstances
under which they were made, not misleading or of the occurrence of certain other
events specified in the Registration Rights Agreements, such Participating
Broker-Dealer will suspend the sale of New Capital Securities (or the New
Guarantee or the New Junior Subordinated Debentures, as applicable) pursuant to
this Prospectus until the Company or the Trust has amended or supplemented this
Prospectus to correct such misstatement or omission and has furnished copies of
the amended or supplemented Prospectus to such Participating Broker-Dealer or
the Company or the Trust has given notice that the sale of the New Capital
Securities (or the New Guarantee or the New Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be.
Prior to the Exchange Offer, there has been no public market for the Old
Capital Securities. The New Capital Securities will be a new issue of securities
for which there currently is no market. Although the Initial Purchasers have
informed the Company and the Trust that they each currently intend to make a
market in the New Capital Securities, they are not obligated to do so, and any
such market making may be discontinued at any time without notice. Accordingly,
there can be no assurance as to the development or liquidity of any market for
the New Capital Securities. Neither the Company nor the Trust currently intends
to apply for listing of the New Capital Securities on any securities exchange or
for quotation through the National Association of Securities Dealers Automated
Quotation System.
Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all the same rights and will be
subject to the same limitations applicable thereto under the Declaration of
Trust (except for those rights which terminate upon consummation of the Exchange
Offer). Following consummation of the Exchange Offer, the holders of Old Capital
Securities will continue to be subject to all of the existing restrictions upon
transfer thereof and neither the Company nor the Trust will have any further
obligation to such holders (other than under certain limited circumstances) to
provide for registration under the Securities Act of the Old Capital Securities
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(Cover Page Continued)
held by them. To the extent that any Old Capital Securities are tendered and
accepted in the Exchange Offer, a holder's ability to sell untendered Old
Capital Securities could be adversely affected. See "Risk Factors --
Consequences of a Failure to Exchange Old Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on_____________, 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Company and the Trust (in which case the term "Expiration Date" shall
mean the latest date and time to which the Exchange Offer is extended). Tenders
of Old Capital Securities may be withdrawn at any time on or prior to the
Expiration Date. The Exchange Offer is not conditioned upon any minimum
liquidation amount of Old Capital Securities being tendered for exchange.
However, the Exchange Offer is subject to certain events and conditions which
may be waived by the Company or the Trust and to the terms and provisions of the
Registration Rights Agreement. The Company has agreed to pay all expenses of the
Exchange Offer. See "The Exchange Offer -- Fees and Expenses." Each New Capital
Security will pay cumulative Distributions from the most recent Distribution
Date on the Old Capital Securities surrendered in exchange for such New Capital
Securities or, if no Distributions have been paid on such Old Capital
Securities, from February 25, 1997. Holders of the Old Capital Securities whose
Old Capital Securities are accepted for exchange will not receive accumulated
Distributions on such Old Capital Securities for any period from and after the
last Distribution Date on such Old Capital Securities prior to the original
issue date of the New Capital Securities or, if no such Distributions have been
paid, will not receive any accumulated Distributions on such Old Capital
Securities, and will be deemed to have waived the right to receive any
Distributions on such Old Capital Securities accumulated from and after such
Distribution Date or, if no such interest has been paid or duly provided for,
from and after February 25, 1997. This Prospectus, together with the Letter of
Transmittal, is being sent to all registered holders of Old Capital Securities
as of March___, 1997.
Neither the Company nor the Trust will receive any cash proceeds from the
issuance of the New Capital Securities offered hereby. No dealer-manager is
being used in connection with this Exchange Offer. See "Use of Proceeds" and
"Plan of Distribution."
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY
SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY
PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
AFFAIRS OF THE COMPANY OR THE TRUST SINCE THE DATE HEREOF.
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NOTICE TO BENEFIT PLANS
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), NO
ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S
INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THE CAPITAL SECURITIES OR ANY INTEREST
THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ENTITLED TO THE EXEMPTIVE RELIEF
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE")
96-23, 95-60, 91-38, 90-1 OR 84-14 OR OTHER APPLICABLE EXEMPTION WITH RESPECT TO
SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE CAPITAL SECURITIES OR
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ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND
HOLDING THEREOF THAT IT EITHER (A) IS NOT A PLAN OR A PLAN ASSET ENTITY AND IS
NOT PURCHASING SUCH SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN OR
(B) IS ENTITLED TO THE EXEMPTIVE RELIEF UNDER PTCE 96-23, 95-60, 91-38, 90-1 OR
84-14 OR OTHER APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE OR HOLDING.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports and other information with the Commission. Such reports
and other information can be inspected and copied at the offices of the
Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549; Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies of such material can be obtained from the Public Reference Section
of the Commission, at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Certain of the Company's securities are listed on
the New York Stock Exchange and reports and other information concerning the
Company can also be inspected at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005. The Commission also maintains a
Web site (http://www.sec.gov) that contains reports and other information
regarding the Company.
No separate financial statements of the Trust have been included or
incorporated by reference herein. The Company does not believe such financial
statements would be material to holders of the Capital Securities because (i)
all of the voting securities of the Trust will be owned, directly or indirectly,
by the Company, a reporting company under the Exchange Act, (ii) the Trust has
no independent operations but exists for the sole purpose of issuing securities
representing undivided beneficial interests in its assets and investing the
proceeds thereof in Junior Subordinated Debentures issued by the Company, and
(iii) the obligations of the Trust under the Capital Securities are guaranteed
by the Company to the extent described herein. See "Relationship Among the New
Capital Securities, the New Junior Subordinated Debentures and the New
Guarantee."
This Prospectus constitutes a part of a registration statement on Form S-4
(the "Registration Statement") filed by the Company and the Trust with the
Commission under the Securities Act. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, and
reference is hereby made to the Registration Statement and to the exhibits
relating thereto for further information with respect to the Company and the New
Securities. Any statements contained herein concerning the provisions of any
document are not necessarily complete, and, in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission by the Company are
incorporated by reference in this Prospectus:
(a) The Company's Annual Reports on Form 10-K for the year ended
December 31, 1996, together with the report of KPMG Peat Marwick LLP,
independent certified public accountants; and
(b) The Company's Current Reports on Form 8-K dated January 23, 1997
(as amended by Form 8-K/A dated February 14, 1997) and February 13, 1997.
7
<PAGE>
All documents filed by the Company pursuant to Sections 13(a) and (c), 14,
or 15(d) of the Exchange Act after the date hereof and prior to the termination
of the offering of the securities offered hereby shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein do not purport to be complete, and
where reference is made to the particular provisions of such contract or other
document, such provisions are qualified in all respects by reference to all of
the provisions of such contract or other document.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon request, a copy of any or all of the foregoing
documents described above which have been or may be incorporated by reference in
this Prospectus other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Such request should
be directed to:
Corporate Secretary
The CIT Group Holdings, Inc.
1211 Avenue of the Americas
New York, New York 10036
(212) 536-1950
8
<PAGE>
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SUMMARY
This summary is qualified by the more detailed information and financial
statements appearing elsewhere, or incorporated by reference, in this
Prospectus. Prospective investors are urged to read this Prospectus in its
entirety.
CIT Capital Trust I
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) the Declaration of Trust executed by the Company, The Bank of New York,
as Property Trustee, The Bank of New York (Delaware), as Delaware Trustee, and
the Regular Trustees named therein, and (ii) the filing of a certificate of
trust with the Delaware Secretary of State on February 19, 1997. The Trust's
business and affairs are conducted by the Trustees: The Bank of New York, as
Property Trustee, The Bank of New York (Delaware) as Delaware Trustee, and three
individual Regular Trustees who are employees or officers of or affiliated with
the Company. The Trust exists for the exclusive purposes of (i) issuing and
selling the Trust Securities and effecting the Exchange Offer for the New
Capital Securities, (ii) using the proceeds from the sale of the Trust
Securities to acquire the Old Junior Subordinated Debentures issued by the
Company, (iii) exchanging the Old Junior Subordinated Debentures for the New
Subordinated Debentures in the Exchange Offer and (iv) engaging in only those
other activities necessary or incidental thereto (such as registering the
transfer of the Trust Securities). Accordingly, the New Junior Subordinated
Debentures will be the sole assets of the Trust, and payments under the New
Junior Subordinated Debentures will be the sole revenues of the Trust. All of
the Common Securities of the Trust are and will be owned by the Company.
The Company
The CIT Group Holdings, Inc. (the "Company"), a Delaware corporation, is a
successor to a company founded in St. Louis, Missouri on February 11, 1908. It
has its principal executive offices at 1211 Avenue of the Americas, New York,
New York 10036, and its telephone number is (212) 536-1950. The Company,
operating directly or through its subsidiaries primarily in the United States,
engages in financial services activities through a nationwide distribution
network. The Company provides financing primarily on a secured basis to
commercial borrowers, ranging from middle-market to larger companies, and to a
lesser extent to consumers. While these secured lending activities reduce the
risk of losses from extending credit, the Company's results of operations can
also be affected by other factors, including general economic conditions,
competitive conditions, the level and volatility of interest rates,
concentrations of credit risk, and government regulation and supervision. The
Company does not finance the development or construction of commercial real
estate. The Company has eight strategic business units which offer commercial
and consumer financing, and factoring products and services to clients.
The Dai-Ichi Kangyo Bank, Limited ("DKB") owns eighty percent (80%) of the
issued and outstanding shares of common stock of the Company. DKB purchased a
sixty percent (60%) common stock interest in the Company from Manufacturers
Hanover Corporation ("MHC") at year-end 1989 and acquired an additional twenty
percent (20%) common stock interest in the Company on December 15, 1995 from CBC
Holding (Delaware) Inc. (formerly known as MHC Holdings (Delaware) Inc.) ("CBC
Holding"). DKB has an option, expiring December 15, 2000, to purchase the
remaining twenty percent (20%) common stock interest from CBC Holding and its
parent.
CBC Holding became a direct, wholly owned subsidiary of Chemical Banking
Corporation ("CBC") after the merger between MHC and CBC on December 31, 1991.
On March 31, 1996, CBC was merged into The Chase Manhattan Corporation ("CMC"),
and CMC became the sole stockholder of CBC Holding.
DKB is registered as a bank holding company with the Board of Governors of
the Federal Reserve System (the "Federal Reserve") and is also regulated by
governmental authorities in Japan, including the Ministry of Finance of Japan
("MOF" and, together with the Federal Reserve, the "Regulatory Authorities"). As
a subsidiary of DKB, the Company is also subject to examination and regulation
by the Regulatory Authorities.
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9
<PAGE>
- --------------------------------------------------------------------------------
The Exchange Offer
The Exchange Offer ............. Up to $250,000,000 aggregate liquidation
amount of New Capital Securities are being
offered in exchange for a like aggregate
liquidation amount of Old Capital Securities.
The Company will issue, promptly after the
Expiration Date, $1,000 liquidation amount of
New Capital Securities in exchange for each
$1,000 liquidation amount of outstanding Old
Capital Securities tendered and accepted in
connection with the Exchange Offer. The
Company and the Trust are making the Exchange
Offer in order to satisfy obligations under
the Registration Rights Agreement relating to
the Old Capital Securities. For a description
of the procedures for tendering Old Capital
Securities, see "The Exchange Offer--
Procedures for Tendering Old Capital
Securities."
Expiration Date ................ 5:00 p.m., New York City time, on __________,
1997 (such time on such date being
hereinafter called the "Expiration Date")
unless the Exchange Offer is extended by the
Company and the Trust (in which case the term
"Expiration Date" shall mean the latest date
and time to which the Exchange Offer is
extended). See "The Exchange Offer --
Expiration Date; Extensions; Amendments."
Conditions to the
Exchange Offer .............. The Exchange Offer is subject to certain
conditions, which may be waived by the
Company and the Trust in their sole
discretion. The Exchange Offer is not
conditioned upon any minimum liquidation
amount of Old Capital Securities being
tendered. See "The Exchange Offer--
Conditions to the Exchange Offer." The
Company and the Trust reserve the right in
their sole and absolute discretion, subject
to applicable law, at any time and from time
to time, (i) to delay the acceptance of the
Old Capital Securities for exchange, (ii) to
terminate the Exchange Offer if certain
specified conditions have not been satisfied,
(iii) to extend the Expiration Date of the
Exchange Offer and retain all Old Capital
Securities tendered pursuant to the Exchange
Offer, subject, however, to the right of
holders of Old Capital Securities to withdraw
their tendered Old Capital Securities, or
(iv) to waive any condition or otherwise
amend the terms of the Exchange Offer in any
respect. See "The Exchange Offer-- Expiration
Date; Extensions; Amendments."
Withdrawal Rights .............. Tenders of Old Capital Securities may be
withdrawn at any time on or prior to the
Expiration Date by delivering a written
notice of such withdrawal to the Exchange
Agent in conformity with certain procedures
set forth below under "The Exchange Offer --
Withdrawal Rights."
Procedures for Tendering
Old Capital Securities ...... Tendering holders of Old Capital Securities
must complete and sign a Letter of
Transmittal in accordance with the
instructions contained therein and forward
the same by mail, facsimile or hand delivery,
together with any other required documents,
to the Exchange Agent, together with the Old
Capital Securities to be tendered or in
compliance with the specified procedures for
guaranteed delivery of Old Capital
Securities. Certain brokers, dealers,
commercial banks, trust companies and other
nominees may also effect tenders by
book-entry transfer. Holders of Old Capital
Securities registered in the name of a
broker, dealer, commercial bank, trust
company or other nominee are urged to contact
such person promptly if they wish to tender
Old Capital Securities pursuant to the
Exchange Offer. See "The Exchange Offer --
Procedures for Tendering Old Capital
Securities."
Letters of Transmittal and certificates
representing Old Capital Securities should
not be sent to the Company or to the Trust.
Such documents should only be sent to the
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
Exchange Agent. Questions regarding how to
tender and requests for information should be
directed to the Exchange Agent. See "The
Exchange Offer-- Exchange Agent."
Resales of
New Capital Securities ...... The Company and the Trust are making the
Exchange Offer in reliance on the position of
the staff of the Division of Corporation
Finance of the Commission as set forth in
certain interpretive letters addressed to
third parties in other transactions. However,
neither the Company nor the Trust has sought
its own interpretive letter and there can be
no assurance that the staff of the Division
of Corporation Finance of the Commission
would make a similar determination with
respect to the Exchange Offer as it has in
such interpretive letters to third parties.
Based on these interpretations by the staff
of the Division of Corporation Finance, and
subject to the two immediately following
sentences, the Company and the Trust believe
that New Capital Securities issued pursuant
to this Exchange Offer in exchange for Old
Capital Securities may be offered for resale,
resold and otherwise transferred by a holder
thereof (other than a holder who is a
broker-dealer) without further compliance
with the registration and prospectus delivery
requirements of the Securities Act, provided
that such New Capital Securities are acquired
in the ordinary course of such holder's
business and that such holder is not
participating, and has no arrangement or
understanding with any person to participate,
in a distribution (within the meaning of the
Securities Act) of such New Capital
Securities. However, any holder of Old
Capital Securities who is an "affiliate" of
the Company or the Trust or who intends to
participate in the Exchange Offer for the
purpose of distributing the New Capital
Securities, or any broker-dealer who
purchased the Old Capital Securities from the
Trust to resell pursuant to Rule 144A or any
other available exemption under the
Securities Act, (a) will not be able to rely
on the interpretations of the staff of the
Division of Corporation Finance of the
Commission set forth in the above-mentioned
interpretive letters, (b) will not be
permitted or entitled to tender such Old
Capital Securities in the Exchange Offer and
(c) must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any sale or
other transfer of such Old Capital Securities
unless such sale is made pursuant to an
exemption from such requirements. In
addition, as described below, if any
broker-dealer holds Old Capital Securities
acquired for its own account as a result of
market-making or other trading activities and
exchanges such Old Capital Securities for New
Capital Securities, then such broker-dealer
must deliver a prospectus meeting the
requirements of the Securities Act in
connection with any resales of such New
Capital Securities.
Each holder of Old Capital Securities who
wishes to exchange Old Capital Securities for
New Capital Securities in the Exchange Offer
will be required to represent that (i) it is
not an "affiliate" of the Company or the
Trust, (ii) any New Capital Securities to be
received by it are being acquired in the
ordinary course of its business, (iii) it has
no arrangement or understanding with any
person to participate in a distribution
(within the meaning of the Securities Act) of
such New Capital Securities, and (iv) if such
holder is not a broker-dealer, such holder is
not engaged in, and does not intend to engage
in, a distribution (within the meaning of the
Securities Act) of such New Capital
Securities.
Each broker-dealer that receives New Capital
Securities for its own account pursuant to
the Exchange Offer must acknowledge that it
acquired the Old Capital Securities for its
own account as the result of market-making
activities or other trading activities and
must agree that it will deliver a prospectus
meeting the requirements of the Securities
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
Act in connection with any resale of such New
Capital Securities. The Letter of Transmittal
states that by so acknowledging and by
delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. Based on the position taken
by the staff of the Division of Corporation
Finance of the Commission in the interpretive
letters referred to above, the Company and
the Trust believe that broker-dealers who
acquired Old Capital Securities for their own
accounts as a result of market-making
activities or other trading activities
("Participating Broker-Dealers") may fulfill
their prospectus delivery requirements with
respect to the New Capital Securities
received upon exchange of such Old Capital
Securities (other than Old Capital Securities
which represent an unsold allotment from the
original sale of the Old Capital Securities)
with a prospectus meeting the requirements of
the Securities Act, which may be the
prospectus prepared for an exchange offer so
long as it contains a description of the plan
of distribution with respect to the resale of
such New Capital Securities. Accordingly,
this Prospectus, as it may be amended or
supplemented from time to time, may be used
by a Participating Broker-Dealer in
connection with resales of New Capital
Securities received in exchange for Old
Capital Securities where such Old Capital
Securities were acquired by such
Participating Broker-Dealer for its own
account as a result of market-making or other
trading activities. Subject to certain
provisions set forth in the Registration
Rights Agreement and to the limitations
described below under "The Exchange Offer--
Resale of New Capital Securities," the
Company and the Trust have agreed that this
Prospectus, as it may be amended or
supplemented from time to time, may be used
by a Participating Broker-Dealer in
connection with resales of such New Capital
Securities for a period ending 180 days after
the Registration Statement of which this
Prospectus constitutes a part is declared
effective. See "Plan of Distribution." Any
Participating Broker-Dealer who is an
"affiliate" of the Company or the Trust may
not rely on such interpretive letters and
must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any resale
transaction. See "The Exchange Offer--
Resales of New Capital Securities."
Exchange Agent ................. The exchange agent with respect to the
Exchange Offer is The Bank of New York (the
"Exchange Agent"). The addresses, and
telephone and facsimile numbers of the
Exchange Agent are set forth in "The Exchange
Offer -- Exchange Agent" and in the Letter of
Transmittal.
Use of Proceeds ................ Neither the Company nor the Trust will
receive any cash proceeds from the issuance
of the New Capital Securities offered hereby.
See "Use of Proceeds."
Certain United States Federal
Income Tax Consequences;
ERISA Considerations ......... Holders of Old Capital Securities should
review the information set forth under
"Certain United States Federal Income Tax
Consequences" and "ERISA Considerations"
prior to tendering Old Capital Securities in
the Exchange Offer.
The New Capital Securities
Securities Offered ............. Up to $250,000,000 aggregate liquidation
amount of the Trust's 7.70% Preferred Capital
Securities which have been registered under
the Securities Act (liquidation amount of
$1,000 per Capital Security). The terms of
the New Capital Securities will be identical
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
in all material respects to the terms of the
Old Capital Securities, except that the New
Capital Securities will have been registered
under the Securities Act and therefore will
not be subject to certain restrictions on
transfer applicable to the Old Capital
Securities and will not provide for any
increase in the Distribution rate thereon.
See "The Exchange Offer -- Purpose and
Effect," "Description of the New Capital
Securities" and "Description of the Old
Securities." The Holders of the New Capital
Securities will be entitled to a preference
in certain circumstances with respect to
Distributions and amounts payable on
redemption, liquidation or otherwise over the
Common Securities.
Distributions .................. Holders of the New Capital Securities will be
entitled to receive cumulative cash
distributions at an annual rate of 7.70% of
the liquidation amount of $1,000 per New
Capital Security, accruing from February 25,
1997 and payable semi-annually in arrears on
the 15th day of February and August of each
year commencing on August 15, 1997. The
distribution rate and the distribution and
other payment dates for the New Capital
Securities will correspond to the interest
rate and interest and other payment dates on
the Junior Subordinated Debentures. See
"Description of New Capital Securities."
The New Junior
Subordinated Debentures ..... The Trust invested the proceeds from the
issuance of the Old Capital Securities and
Common Securities in an equivalent amount of
Old Junior Subordinated Debentures of the
Company. In connection with the Exchange
Offer, the Trust will exchange its Old Junior
Subordinated Debentures for the New Junior
Subordinated Debentures having identical
terms in all material respects to the Old
Junior Subordinated Debentures. The New
Junior Subordinated Debentures will mature on
February 15, 2027. The New Junior
Subordinated Debentures will rank subordinate
and junior in right of payment to all
Indebtedness of the Company. In addition, the
Company's obligations under the New Junior
Subordinated Debentures will be structurally
subordinated to all existing and future
liabilities and obligations of its
subsidiaries. See "Risk Factors-- Ranking of
Subordinate Obligations Under the New
Guarantee and the New Junior Subordinated
Debentures", "Risk Factors-- Status of
Company as Holding Company" and "Description
of New Junior Subordinated Debentures--
Subordination."
New Guarantee ................. Payment of distributions out of moneys held
by the Trust, and payments on liquidation of
the Trust or the redemption of New Capital
Securities, are guaranteed by the Company to
the extent the Trust has funds available
therefor. If the Company does not make
principal or interest payments on the New
Junior Subordinated Debentures, the Trust
will not have sufficient funds to make
Distributions on the New Capital Securities,
in which event the New Guarantee shall not
apply to such Distributions. The Company's
obligations under the New Guarantee, taken
together with its obligations under the New
Junior Subordinated Debentures and the
Indenture, including its obligation to pay
all costs, expenses and liabilities of the
Trust (other than with respect to the New
Capital Securities), will constitute a full
and unconditional guarantee of all of the
Trust's obligations under the New Capital
Securities. See "Description of New
Guarantee" and "Relationship Among the New
Capital Securities, the New Junior
Subordinated Debentures and the New
Guarantee." The obligations of the Company
under the New Guarantee will be subordinate
and junior in right of payment to all
Indebtedness of the Company. See "Risk
Factors -- Ranking of Subordinated
Obligations Under the New Guarantee and the
New Junior Subordinated Debentures" and
"Description of New Guarantee."
Right to Defer Interest........ The Company will have the right to defer
payment of interest on the New Junior
Subordinated Debentures by extending the
interest payment period on the New Junior
Subordinated Debentures, from time to time,
for up to 10 consecutive semi-annual periods,
provided that no such deferral may extend
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13
<PAGE>
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beyond the Stated Maturity of the New Junior
Subordinated Debentures. There could be
multiple Extension Periods of varying lengths
throughout the term of the New Junior
Subordinated Debentures, which in the
aggregate may exceed 10 semi-annual periods.
During an Extension Period distributions on
the New Capital Securities will also be
deferred and the Company may not, and may not
permit any subsidiary of the Company to, (i)
declare or pay any dividends or distributions
on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, the
Company's capital stock or (ii) make any
payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any
debt securities that rank pari passu with or
junior to the New Junior Subordinated
Debentures or make any guarantee payments
with respect to any guarantee by the Company
of the debt securities of any subsidiary of
the Company if such guarantee ranks pari
passu with or junior to the New Junior
Subordinated Debentures (other than (a)
dividends or distributions in common stock of
the Company, (b) payments under the New
Guarantee, (c) any declaration of a dividend
in connection with the implementation of a
shareholders' rights plan, or the issuance of
stock under any such plan in the future, or
the redemption or repurchase of any such
rights pursuant thereto, and (d) purchases of
common stock related to the issuance of
common stock or rights under any of the
Company's benefit plans). During an Extension
Period, interest on the New Junior
Subordinated Debentures will continue to
accrue (and the amount of Distributions to
which holders of the New Capital Securities
are entitled will accumulate) at the rate of
7.70% per annum, compounded semiannually to
the extent permitted by applicable law.
During an Extension Period, holders of New
Capital Securities will be required to
include the interest on their pro rata share
of the New Junior Subordinated Debentures in
their gross income as original issue discount
("OID") even though the cash payments
attributable thereto have not been made. See
"Description of New Junior Subordinated
Debentures-- Option to Extend Interest
Payment Period" and "Certain United States
Federal Income Tax Consequences -- Interest
Income and Original Issue Discount."
Redemption ..................... The New Junior Subordinated Debentures will
be redeemable by the Company (i) in whole or
in part on or after February 15, 2007; at a
redemption price equal to 103.6220% of the
principal amount thereof on February 15,
2007, declining ratably on each February 15
thereafter to 100% on or after February 15,
2017, plus accrued and unpaid interest
thereon, or (ii) at any time, in whole but
not in part, upon the occurrence of a Special
Event, in either case subject to any
necessary prior approval of the Regulatory
Authorities and the further conditions
described under "Description of New Junior
Subordinated Debentures--Redemption." The
redemption price for New Junior Subordinated
Debentures redeemed as a result of a Special
Event will be 100% of the principal amount of
such New Junior Subordinated Debentures plus
accrued and unpaid interest thereon. If the
New Junior Subordinated Debentures are
redeemed, the Trust must redeem New Capital
Securities having an aggregate liquidation
amount equal to the aggregate principal
amount of the New Junior Subordinated
Debentures so redeemed. The New Capital
Securities will also be redeemed upon
maturity of the New Junior Subordinated
Debentures. See "Description of New Capital
Securities -- Redemption."
Liquidation of the Trust ...... Upon the occurrence and continuation of a
Special Event, the Company will have the
right, subject to any necessary prior
approval of the Regulatory Authorities, to
dissolve the Trust and cause the New Junior
Subordinated Debentures to be distributed to
the holders of the New Capital Securities and
the Common Securities in liquidation of the
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14
<PAGE>
- --------------------------------------------------------------------------------
Trust. See "Description of New Capital
Securities-- Redemption-- Special Event
Redemption or Distribution of New Junior
Subordinated Debentures."
In the event of the liquidation of the Trust,
after satisfaction of the claims of creditors
of the Trust, if any, as provided by
applicable law, the holders of the New
Capital Securities will be entitled to
receive a liquidation amount of $1,000 per
New Capital Security plus accumulated and
unpaid Distributions thereon to the date of
payment, which may be in the form of a
distribution of such amount in New Junior
Subordinated Debentures as described above.
If such Liquidation Distribution (as defined
herein) can be paid only in part because the
Trust has insufficient assets available to
pay in full the aggregate Liquidation
Distribution, then the amounts payable
directly by the Trust on the New Capital
Securities shall be paid on a pro rata basis.
The holder(s) of the Common Securities will
be entitled to receive distributions upon any
such liquidation pro rata with the holders of
the New Capital Securities, except that if an
Indenture Event of Default has occurred and
is continuing, the New Capital Securities
shall have a priority over the Common
Securities. See "Description of New Capital
Securities -- Liquidation Distribution Upon
Dissolution."
Ratings ........................ It is expected that the New Capital
Securities will be rated aa3 by Moody's
Investors Service, Inc. ("Moody's"), A by
Standard & Poor's Ratings Services ("Standard
& Poor's") and A by Duff & Phelps Credit
Rating Co. ("Duff & Phelps"). There can be no
assurance that any rating will remain in
effect for any given period of time or that a
rating will not be lowered or withdrawn by
the assigning rating agency if, in its
judgment, circumstances so warrant. There can
be no assurance whether any other rating
agency will rate the New Capital Securities,
or if one does, what rating would be assigned
by such other rating agency. A security
rating is not a recommendation to buy, sell
or hold securities and may be subject to
revision or withdrawal at any time by the
assigning rating organization.
Absence of Market for the
New Capital Securities ....... The New Capital Securities will be a new
issue of securities for which there currently
is no market. Although Lehman Brothers Inc.,
Chase Securities Inc., Salomon Brothers Inc
and UBS Securities LLC, the initial
purchasers of the Old Capital Securities (the
"Initial Purchasers"), have informed the
Company and the Trust that they each
currently intend to make a market in the New
Capital Securities, they are not obligated to
do so, and any such market making may be
discontinued at any time without notice.
Accordingly, there can be no assurance as to
the development or liquidity of any market
for the New Capital Securities. The Trust and
the Company do not intend to apply for
listing of the New Capital Securities on any
securities exchange or for quotation through
the National Association of Securities
Dealers Automated Quotation System.
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15
<PAGE>
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THE CIT GROUP HOLDINGS, INC.
SUMMARY CONSOLIDATED FINANCIAL DATA
This summary is qualified in its entirety by the detailed information and
financial statements included in the documents incorporated herein by reference.
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Dollar amounts in millions
<S> <C> <C> <C> <C> <C>
Finance income ................. $ 1,646.2 $ 1,529.2 $ 1,263.8 $ 1,111.9 $ 1,091.5
Interest expense ............... 848.3 831.5 614.0 508.0 552.0
---------- ---------- ---------- ---------- ----------
Net finance income .......... 797.9 697.7 649.8 603.9 539.5
Fees and other income .......... 244.1 184.7 174.4 133.8 113.8
---------- ---------- ---------- ---------- ----------
Operating revenue ........... 1,042.0 882.4 824.2 737.7 653.3
---------- ---------- ---------- ---------- ----------
Salaries and general operating
expenses .................... 393.1 345.7 337.9 282.2 261.6
Provision for credit
losses ...................... 111.4 91.9 96.9 104.9 103.2
Depreciation on operating lease
equipment ................... 121.7 79.7 64.4 39.8 16.7
---------- ---------- ---------- ---------- ----------
Operating expenses .......... 626.2 517.3 499.2 426.9 381.5
---------- ---------- ---------- ---------- ----------
Income before provision for
income taxes and extraordinary
item ......................... 415.8 365.1 325.0 310.8 271.8
Provision for income taxes ..... 155.7 139.8 123.9 128.5 105.3
---------- ---------- ---------- ---------- ----------
Income before extraordinary
item ..................... $ 260.1 $ 225.3 $ 201.1 $ 182.3 $ 166.5
Extraordinary item-loss
on early extinguishment
of debt, net of income
tax benefit .................. -- -- -- -- (4.2)
---------- ---------- ---------- ---------- ----------
Net Income .................. $ 260.1 $ 225.3 $ 201.1 $ 182.3 $ 162.3
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Dollar amounts in millions
<S> <C> <C> <C> <C> <C>
Finance receivables .............. $16,996.6 $15,795.5 $14,794.4 $12,624.1 $11.771.5
Reserve for credit losses ........ (220.8) (206.0) (192.4) (169.4) (158.5)
Net finance receivables .......... 16,775.8 15,589.5 14,602.0 12,454.7 11,613.0
Operating lease equipment, net ... 1,402.1 1,113.0 867.9 751.9 462.8
Total assets ..................... 18,932.5 17,420.3 15,959.7 13,725.0 13,026.1
Capitalization:
Commercial paper ............... 5,827.0 6,105.6 5,660.2 6,516.1 6,173.5
Variable rate senior notes ..... 3,717.5 3,827.5 3,812.5 1,686.5 1,477.8
Fixed rate senior notes ........ 4,761.2 3,337.0 2,619.4 2,389.0 2,476.6
Subordinated fixed rate notes .. 300.0 300.0 300.0 200.0 200.0
Stockholders' equity ........... 2,075.4 1,914.2 1,793.0 1,692.2 1,601.1
Ratio of total debt to
stockholders' equity .......... 7.04-1 7.09-1 6.91-1 6.38-1 6.45-1
</TABLE>
- --------------------------------------------------------------------------------
16
<PAGE>
RISK FACTORS
Holders of the Old Capital Securities should carefully review the
information contained elsewhere in this Prospectus and should particularly
consider the following matters. Unless as otherwise stated or the context
otherwise requires in the Risk Factors set forth below, the New Capital
Securities and the Old Capital Securities will be referred to as the "Capital
Securities," the New Junior Subordinate Debentures and the Old Junior
Subordinate Debentures will be referred to as the "Junior Subordinated
Debentures," and the Old Guarantee and the New Guarantee will be referred to as
the "Guarantee." To the extent any of the information contained or incorporated
by reference in this Offering Memorandum constitutes a "forward-looking
statement" as defined in Section 27A of the Securities Act or Section 21E of the
Exchange Act, the risk factors set forth below are cautionary statements
identifying important factors that could cause actual results to differ
materially from those in the forward-looking statement.
Ranking of Subordinated Obligations under the New Guarantee and the New Junior
Subordinated Debentures
The obligations of the Company under the Guarantee issued by the Company
for the benefit of the holders of Capital Securities and under the Junior
Subordinated Debentures will be unsecured and rank subordinate and junior in
right of payment to all Indebtedness of the Company. At December 31, 1996, the
Indebtedness of the Company aggregated approximately $14.6 billion. Neither the
Indenture, the Guarantee nor the Declaration (as defined herein) places any
limitation on the amount of secured or unsecured Indebtedness that may be
incurred by the Company. See "Description of Guarantee -- Status of the
Guarantee" and "Description of Junior Subordinated Debentures -- Subordination."
Status of Company as Holding Company
As a holding company, the ability of the Company to make payments of
interest and principal on the Junior Subordinated Debentures will be dependent
primarily upon the receipt of dividends and other distributions from the
Company's subsidiaries. The right of the Company to participate in any
distribution of assets of any subsidiary upon such subsidiary's liquidation or
reorganization or otherwise (and thus the ability of holders of the Capital
Securities to benefit indirectly from such distribution), will be subject to the
prior claims of creditors of that subsidiary, except to the extent that any
claims of the Company as a creditor of such subsidiary may be recognized as
such. Accordingly, the Capital Securities will effectively be subordinated to
all existing and future liabilities and obligations of the Company's
subsidiaries, and holders of the Capital Securities should look only to the
assets of the Company for payments on the Capital Securities. As of December 31,
1996, the Company's subsidiaries had approximately $2.1 billion of indebtedness
or other liabilities, in addition to other contractual obligations.
Enforcement of Certain Rights by Holders of Capital Securities
If a Trust Enforcement Event (as defined herein) occurs and is continuing,
then the holders of Capital Securities would rely on the enforcement by the
Property Trustee (as defined herein) of its rights as a holder of the Junior
Subordinated Debentures against the Company. The holders of a majority in
liquidation amount of the Capital Securities will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Property Trustee or to direct the exercise of any trust or power conferred
upon the Property Trustee under the Declaration, including the right to direct
the Property Trustee to exercise the remedies available to it as a holder of the
Junior Subordinated Debentures. If the Property Trustee fails to enforce its
rights with respect to the Junior Subordinated Debentures held by the Trust, any
record holder of Capital Securities may institute legal proceedings directly
against the Company to enforce the Property Trustee's rights under such Junior
Subordinated Debentures without first instituting any legal proceedings against
such Property Trustee or any other person or entity.
If the Company were to default on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Trust would lack funds for the
payment of Distributions or amounts payable on redemption of the Capital
Securities or otherwise, and, in such event, holders of the Capital Securities
would not be able to rely upon the Guarantee for payment of such amounts.
However, in the event the Company failed to pay interest on or principal of the
Junior Subordinated Debentures on the payment date on which such payment is due
and payable, then a holder of Capital Securities may directly institute a
proceeding against the Company under the Indenture for enforcement of payment to
17
<PAGE>
such holder of the interest on or principal of such Junior Subordinated
Debentures having a principal amount equal to the aggregate liquidation amount
of the Capital Securities of such holder (a "Direct Action"). In connection with
such Direct Action, the Company will be subrogated to the rights of such holder
of Capital Securities under the Declaration to the extent of any payment made by
the Company to such holder of Capital Securities in such Direct Action. Except
as set forth herein, holders of Capital Securities will not be able to exercise
directly any other remedy available to the holders of Junior Subordinated
Debentures or assert directly any other rights in respect of the Junior
Subordinated Debentures. See "Description of New Capital Securities --
Enforcement of Certain Rights by Holders of New Capital Securities",
"Description of New Guarantee" and "Description of New Junior Subordinated
Debentures -- Indenture Events of Default." The Declaration provides that each
holder of New Capital Securities by acceptance thereof agrees to the provisions
of the New Guarantee and the Indenture.
Option to Extend Interest Payment Period; Tax Consequences
The Company will have the right under the Indenture to defer the payment
of interest on the Junior Subordinated Debentures at any time or from time to
time for a period not exceeding 10 consecutive semi-annual periods, provided
that no Extension Period may extend beyond the Stated Maturity of the Junior
Subordinated Debentures. As a consequence of any such deferral, semi-annual
Distributions on the Capital Securities by the Trust will be deferred during any
such Extension Period but would continue to accumulate at the rate of 7.70% per
annum, compounded semi-annually during any such Extension Period. During any
such Extension Period, the Company may not, and may not permit any subsidiary of
the Company to, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of the
Company's capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu with or junior to the Junior Subordinated
Debentures or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu with or junior to the Junior Subordinated Debentures
(other than (a) dividends or distributions in common stock of the Company, (b)
payments under the Guarantee, (c) any declaration of a dividend in connection
with the implementation of a shareholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, and (d) purchases of common stock related to the
issuance of common stock or rights under any of the Company's benefit plans).
Prior to the termination of any such Extension Period, the Company may further
extend the Extension Period, provided that no Extension Period may exceed 10
consecutive semi-annual periods or extend beyond the Stated Maturity of the
Junior Subordinated Debentures. Upon the termination of any Extension Period and
the payment of all amounts then due on any Interest Payment Date, the Company
may elect to begin a new Extension Period subject to the above requirements. See
"Description of New Capital Securities -- Distributions" and "Description of New
Junior Subordinated Debentures -- Option to Extend Interest Payment Period."
Should the Company defer payment of interest on the Junior Subordinated
Debentures, a holder of Capital Securities will be required to accrue income (in
the form of OID) for United States federal income tax purposes in respect of its
pro rata share of the Junior Subordinated Debentures held by the Trust (which
will include a holder's pro rata share of the stated interest and the de minimus
OID on the Junior Subordinated Debentures). As a result, a holder of Capital
Securities will include such OID in gross income for United States federal
income tax purposes in advance of the receipt of cash attributable to such
income, and will not receive the cash related to such income from the Trust if
the holder disposes of the Capital Securities prior to the record date for the
payment of Distributions with respect to such Extension Period. See "Certain
United States Federal Income Tax Consequences -- Interest Income and Original
Issue Discount."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, should the Company elect to exercise such
right in the future, the market price of the Capital Securities is likely to be
adversely affected. A holder that disposes of its Capital Securities during an
Extension Period, therefore, might not receive the same return on its investment
as a holder that continues to hold its Capital Securities. In addition, as a
result of the Company's right to defer interest payments, the market price of
the Capital Securities (which represent preferred undivided beneficial interests
18
<PAGE>
in the Junior Subordinated Debentures) may be more volatile than the market
prices of other similar securities where the issuer does not have such right to
defer interest payments.
Special Event Redemption; Proposed Tax Legislation
Upon the occurrence and continuation of a Special Event, the Company will
have the right, subject to any necessary prior approval of the Regulatory
Authorities and the further conditions described under "Description of New
Junior Subordinated Debentures -- Redemption," to redeem the Junior Subordinated
Debentures in whole (but not in part), for 100% of the principal amount plus
accrued and unpaid interest, within 90 days following the occurrence of such
Special Event and thereby cause a mandatory redemption of the Capital Securities
and Common Securities. A "Special Event" means a Tax Event, a Regulatory Capital
Event or an Investment Company Event (each as defined herein).
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill")
was introduced in the 104th Congress which would have, among other things,
generally denied interest deductions on a debt instrument that had a maximum
term of more than 20 years and that is not shown as indebtedness on the separate
balance sheet of the issuer or, where the instrument is issued to a related
party (other than a corporation), where the holder or some other related party
issues a related instrument that is not shown as indebtedness on the issuer's
consolidated balance sheet. This provision of the Bill was proposed to be
effective generally for instruments issued on or after December 7, 1995. If this
provision were to apply to the Junior Subordinated Debentures, the Company would
not be able to deduct the interest on the Junior Subordinated Debentures.
However, on March 29, 1996, the Chairmen of the Senate Finance and House Ways
and Means Committees issued a joint statement (the "Joint Statement") to the
effect that it was their intention that the effective date of the Bill, if
enacted, would be no earlier than the date of appropriate Congressional action.
In addition, subsequent to the publication of the Joint Statement, Senator
Daniel Patrick Moynihan and Representatives Sam M. Gibbons and Charles B. Rangel
wrote letters (the "Democrat Letters") to Treasury Department officials
concurring with the view expressed in the Joint Statement. The 104th Congress
adjourned without enacting the Bill. Similar legislation was reproposed by the
Treasury Department on February 6, 1997, as part of President Clinton's Fiscal
1998 Budget Proposal (the "Proposed Legislation"). The Proposed Legislation
would, however, generally deny an interest deduction with respect to an
instrument not shown as indebtedness on the separate or consolidated balance
sheet of the issuer (as described above) and with a maximum term of more than 15
years (as contrasted to a maximum term of more than 20 years under the provision
of the Bill). Such provision is proposed to be effective generally for
instruments issued on or after the date of the first committee action. If the
effective date contained in the Proposed Legislation is followed, the
above-described provision would not apply to the Junior Subordinated Debentures.
There can be no assurance however, that current or future legislative or
administrative proposals or final legislation will not adversely affect the
ability of the Company to deduct interest on the Junior Subordinated Debentures
or otherwise affect the tax treatment described herein. Such a change,
therefore, could give rise to a Tax Event, which would permit the Company, upon
receiving an opinion of counsel, to cause a redemption of the Capital Securities
or to dissolve the Trust and distribute the Junior Subordinated Debentures to
the holders of Trust Securities in liquidation of the Trust, as described more
fully under "Description of New Capital Securities -- Redemption -- Special
Event Redemption or Distribution of New Junior Subordinated Debentures."
Liquidation Distribution of Junior Subordinated Debentures
Upon the occurrence and continuation of a Special Event the Company will
have the right, subject to any necessary prior approval of the Regulatory
Authorities, to dissolve the Trust and cause the Junior Subordinated Debentures
to be distributed to the holders of the Capital Securities and the Common
Securities in liquidation of the Trust. In addition, upon liquidation of the
Trust and certain other events, the Junior Subordinated Debentures may be
distributed to such holders. Under current United States federal income tax law
and interpretations thereof and assuming, as expected, the Trust is treated as a
grantor trust for United States federal income tax purposes, a distribution by
the Trust of the Junior Subordinated Debentures pursuant to a liquidation of the
Trust will not be a taxable event to the Trust or to holders of the Capital
Securities, and will result in a holder of the Capital Securities receiving
directly such holder's pro rata share of the Junior Subordinated Debentures
19
<PAGE>
(previously held indirectly through the Trust). If, however, the Trust is
liquidated because the Trust is subject to United States federal income tax with
respect to income accrued or received on the Junior Subordinated Debentures as a
result of the occurrence of a Tax Event or otherwise, the distribution of Junior
Subordinated Debentures to holders of the Capital Securities by the Trust could
be a taxable event to the Trust and each holder, and holders of the Capital
Securities may be required to recognize gain or loss as if they had exchanged
their Capital Securities for the Junior Subordinated Debentures they received
upon the liquidation of the Trust. See "Certain United States Federal Income Tax
Consequences -- Distribution of New Junior Subordinated Debentures or Cash
Upon Liquidation of the Trust."
There can be no assurance as to the market prices for Capital Securities
or Junior Subordinated Debentures that may be distributed in exchange for
Capital Securities if a liquidation of the Trust occurs. Accordingly, the
Capital Securities that an investor may purchase, whether pursuant to the offer
made hereby or in the secondary market, or the Junior Subordinated Debentures
that a holder of Capital Securities may receive on liquidation of the Trust, may
trade at a discount to the price that the investor paid to purchase the Capital
Securities. Because holders of Capital Securities may receive Junior
Subordinated Debentures on termination of the Trust, prospective purchasers of
Capital Securities are also making an investment decision with regard to the
Junior Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein. See "Description
of New Capital Securities -- Redemption -- Special Event Redemption or
Distribution of New Junior Subordinated Debentures" and "Description of New
Junior Subordinated Debentures -- General."
Limited Voting Rights
Holders of Capital Securities generally will have limited voting rights
relating only to the modification of the Capital Securities and certain other
matters described herein. Holders of Capital Securities will not be entitled to
vote to appoint, remove or replace any of the Trustees (as defined below), which
voting rights are vested exclusively in the holder of the Common Securities. The
Trustees and the Company may amend the Declaration without the consent of
holders of Capital Securities to ensure that the Trust will be classified as a
grantor trust for United States federal income tax purposes; provided, however,
that such action shall not adversely affect in any material respect the
interests of such holders. See "Description of Capital Securities -- Voting
Rights; Amendment of the Declaration."
Bank Regulatory Restrictions on Operations of the Trust
Because the Trust is a subsidiary of the Company and the Company is a
subsidiary of DKB, the Trust and its activities are subject to examination and
regulation by the Regulatory Authorities. Under certain circumstances, including
any determination that the Company's relationship to the Trust results in an
unsafe and unsound banking practice, the Regulatory Authorities will have the
authority to issue orders which could restrict the ability of the Trust to make
distributions on or to redeem the Capital Securities.
Market Prices
There can be no assurance as to the market prices for Capital Securities
or Junior Subordinated Debentures that may be distributed in exchange for
Capital Securities if a termination of the Trust occurs. Accordingly, the
Capital Securities that an investor may purchase whether pursuant to the offer
made hereby or in the secondary market, or the Junior Subordinated Debentures
that a holder of Capital Securities may receive in liquidation of the Trust, may
trade at a discount from the price that the investor paid to purchase the
Capital Securities offered hereby. Because holders of Capital Securities may
receive Junior Subordinated Debentures in liquidation of the Trust and because
Distributions are otherwise limited to payments received on the Junior
Subordinated Debentures, prospective purchasers of Capital Securities are also
making an investment decision with regard to the Junior Subordinated Debentures
and should carefully review all the information regarding the Junior
Subordinated Debentures contained herein. See "Description of the New Junior
Subordinated Debentures."
20
<PAGE>
Consequences of a Failure to Exchange Old Capital Securities
The Old Capital Securities have not been registered under the Securities
Act or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the registration requirements of
the Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Old Capital
Securities which remain outstanding after consummation of the Exchange Offer
will continue to bear a legend reflecting such restrictions on transfer. In
addition, upon consummation of the Exchange Offer, holders of Old Capital
Securities which remain outstanding will not be entitled to any rights to have
such Old Capital Securities registered under the Securities Act or to any
similar rights under the Registration Rights Agreement (subject to certain
limited exceptions). The Company and the Trust do not intend to register under
the Securities Act any Old Capital Securities which remain outstanding after
consummation of the Exchange Offer (subject to such limited exceptions, if
applicable).
To the extent that Old Capital Securities are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Capital Securities
could be adversely affected. In addition, although the Old Capital Securities
have been designated for trading in the Private Offerings, Resale and Trading
through Automatic Linkages ("PORTAL") market, to the extent that Old Capital
Securities are tendered and accepted in connection with the Exchange Offer, any
trading market for Old Capital Securities which remain outstanding after the
Exchange Offer could be adversely affected.
The New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will constitute a single
series of Capital Securities under the Trust Agreement and, accordingly, will
vote together as a single class for purposes of determining whether holders of
the requisite percentage in outstanding Liquidation Amount thereof have taken
certain actions or exercised certain rights under the Declaration of Trust. See
"Description of the New Capital Securities."
The Company has agreed that, if the Exchange Offer is not consummated by
September 23, 1997, cash penalty amounts may be payable by the Company to the
holders of the Old Capital Securities. See "Description of The Old Securities"
and "The Exchange Offer."
Absence of a Public Market
The Old Capital Securities were issued to, and the Company believes are
currently owned by, a relatively small number of beneficial owners. The Old
Capital Securities have not been registered under the Securities Act and will be
subject to restrictions on transferability to the extent that they are not
exchanged for the New Capital Securities. Although the New Capital Securities
will generally be permitted to be resold or otherwise transferred by the holders
(who are not affiliates of the Company or the Trust) without compliance with the
registration requirements under the Securities Act, they will constitute a new
issue of securities with no established trading market. The Company and the
Trust have been advised by the Initial Purchasers that the Initial Purchasers
presently intend to make a market in the New Capital Securities. However, the
Initial Purchasers are not obligated to do so and any market-making activity
with respect to the New Capital Securities may be discontinued at any time
without notice. In addition, such market-making activity will be subject to the
limits imposed by the Securities Act and the Exchange Act and may be limited
during the Exchange Offer. Accordingly, no assurance can be given that an active
public or other market will develop for the New Capital Securities or the Old
Capital Securities or as to the liquidity of or the trading market for the New
Capital Securities or the Old Capital Securities. If an active public market
does not develop, the market price and liquidity of the New Capital Securities
may be adversely affected.
If a public trading market develops for the New Capital Securities, future
trading prices of such securities will depend on many factors, including, among
other things, prevailing interest rates, results of operations and the market
for similar securities. Depending on prevailing interest rates, the market for
similar securities and other factors, including the financial condition of the
Company, the New Capital Securities may trade at a discount.
Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of the
21
<PAGE>
Securities Act) of the Company or the Trust may publicly offer for sale or
resell the New Capital Securities only in compliance with the provisions of Rule
144 under the Securities Act.
Each broker-dealer that receives New Capital Securities for its own
account in exchange for Old Capital Securities, where such Old Capital
Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. See
"Plan of Distribution."
Exchange Offer Procedures
Issuance of the New Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Trust of such Old Capital Securities, a properly completed and
duly executed Letter of Transmittal and all other required documents. Therefore,
holders of the Old Capital Securities desiring to tender such Old Capital
Securities in exchange for New Capital Securities should allow sufficient time
to ensure timely delivery. The Trust is under no duty to give notification of
defects or irregularities with respect to the tenders of Old Capital Securities
for exchange.
Ratings
The Old Capital Securities are rated aa3 by Moody's, A by Standard & Poor's
and A by Duff & Phelps. It is expected that the New Capital Securities will be
rated aa3 by Moody's, A by Standard & Poor's and A by Duff & Phelps. There can
be no assurance that any rating will remain in effect for the New Capital
Securities for any given period of time or that a rating will not be lowered or
withdrawn by the assigning rating agency if, in its judgment, circumstances so
warrant. There can be no assurance whether any other rating agency will rate the
New Capital Securities, or if one does, what rating would be assigned by such
rating agency. A security rating in not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time by the
assigning rating organization.
22
<PAGE>
USE OF PROCEEDS
Neither the Company nor the Trust will receive any cash proceeds from the
issuance of the New Capital Securities offered hereby. The New Capital
Securities will be exchanged for Old Capital Securities in like Liquidation
Amounts which will be retired and cancelled.
All of the proceeds from the sale of the Old Capital Securities were
invested by the Trust in the Old Junior Subordinated Debentures. The net
proceeds from the sale of such Old Junior Subordinated Debentures will provide
additional working funds for the Company and its subsidiaries and be used
initially to reduce short-term borrowings (presently represented by commercial
paper) incurred primarily for the purpose of originating and purchasing
receivables in the ordinary course of business. The amounts which the Company
itself may use in connection with its business and which the Company may furnish
to particular subsidiaries are not now determinable. From time to time the
Company may also use the proceeds to finance the bulk purchase of receivables
and/or the acquisition of other finance-related businesses.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's consolidated ratios of earnings to fixed charges for each of
the periods indicated are set forth below:
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Dollar Amounts in Millions
<S> <C> <C> <C> <C> <C>
Net income ............................... $ 260.1 $ 225.3 $ 201.1 $ 182.3 $ 162.3
Provision for income taxes ............... 155.7 139.8 123.9 128.5 105.3
Extraordinary item-loss
on early extinguishment
of debt, net of income tax benefit ...... -- -- -- -- 4.2
------- -------- ------- ------- -------
Earnings before provision for
income taxes and extraordinary item ..... 415.8 365.1 325.0 310.8 271.8
------- -------- ------- ------- -------
Fixed Charges:
Interest and debt expenses
on indebtedness ...................... 848.3 831.5 614.0 508.0 552.0
Interest factor--one third of rentals
on real and personal properties ...... 8.1 7.9 7.9 8.0 8.3
------- -------- ------- ------- -------
Total fixed charges ...................... 856.4 839.4 621.9 516.0 560.3
------- -------- ------- ------- -------
Total earnings before provisions for
income taxes, extraordinary item
and fixed charges ................. $1,272.2 $1,204.5 $ 946.9 $ 826.8 $ 832.1
======== ======== ======= ======= =======
Ratios of Earnings to Fixed Charges ...... 1.49 1.44 1.52 1.60 1.49
</TABLE>
23
<PAGE>
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a
subsidiary of the Company and, accordingly, the accounts of the Trust will be
included in the consolidated financial statements of the Company. The Capital
Securities will be presented in the consolidated balance sheet of the Company as
a separate line item directly above stockholders' equity and captioned
"Redeemable Preferred Capital Securities of subsidiary holding solely parent
company's debentures" and appropriate disclosures about the Capital Securities,
the Guarantee and the Junior Subordinated Debentures will be included in the
notes to the consolidated financial statements. For financial reporting
purposes, the Company will record Distributions payable on the Capital
Securities as an expense in its consolidated statements of income.
CAPITALIZATION
The following table sets forth the unaudited historical consolidated
capitalization of the Company and its subsidiaries as of December 31, 1996, and
as adjusted to give effect to the consummation of the offering of the Capital
Securities hereby.
At December 31
1996 Pro forma
--------- ---------
in Millions
Commercial paper ............................... $ 5,827.0 $ 5,827.0
Variable rate senior notes ..................... 3,717.5 3,717.5
Fixed rate senior and
subordinated notes .......................... 5,061.2 5,061.2
--------- ---------
Total debt ................................. 14,605.7 14,605.7
Redeemable Preferred Capital
Securities of subsidiary holding
solely parent company's debentures (1) ....... -- 250.0
Stockholders' equity ........................... 2,075.4 2,075.4
--------- ---------
Total capitalization ....................... $16,681.1 $16,931.1
========= =========
- ---------
(1) The Redeemable Preferred Capital Securities of subsidiary holding solely
parent company's debentures reflects the Capital Securities. The Trust is a
wholly owned subsidiary of the Company and holds the Junior Subordinated
Debentures as its sole asset.
24
<PAGE>
THE TRUST
The Trust is a statutory business trust formed under the Delaware Business
Trust Act, as amended (the "Trust Act"), pursuant to a declaration of trust (as
so amended and restated, the "Declaration") and the filing of a certificate of
trust as filed with the Secretary of State of the State of Delaware. The Company
acquired Common Securities in an aggregate liquidation amount equal to at least
3% of the total capital of the Trust. The Trust used all of the proceeds derived
from the issuance of the Old Capital Securities and the Common Securities to
purchase the Old Junior Subordinated Debentures and, accordingly, the assets of
the Trust consist solely of the Old Junior Subordinated Debentures. The Trust
exists for the exclusive purposes of (i) issuing and selling the Trust
Securities representing undivided beneficial ownership interests in the assets
of the Trust and effecting the Exchange Offer for the New Capital Securities,
(ii) investing the gross proceeds from the sale of the Trust Securities in the
Old Junior Subordinated Debentures, (iii) exchanging the Old Junior Subordinated
Debentures for the New Junior Subordinated Debentures in the Exchange Offer, and
(iv) engaging in only those other activities necessary or incidental thereto.
Pursuant to the Declaration, there are initially five trustees (the
"Trustees") for the Trust. Three of the Trustees (the "Regular Trustees") are
individuals who are employees or officers of or who are affiliated with the
Company. The fourth trustee is a financial institution that is unaffiliated with
the Company (the "Property Trustee"). The fifth trustee is an entity that
maintains its principal place of business in the State of Delaware and otherwise
meets the requirements of applicable law (the "Delaware Trustee"). Initially,
The Bank of New York is acting as Property Trustee, and its affiliate, The Bank
of New York (Delaware), is acting as Delaware Trustee until, in each case,
removed or replaced by the holder of the Common Securities. The Bank of New York
is also acting as trustee under the Guarantee (the "Guarantee Trustee").
The Property Trustee will hold title to the New Junior Subordinated
Debentures for the benefit of the holders of the Trust Securities, and the
Property Trustee will have the power to exercise all rights, powers and
privileges with respect to the New Junior Subordinated Debentures under the
Indenture (as defined herein) as the holder of the New Junior Subordinated
Debentures. In addition, the Property Trustee will maintain exclusive control of
a segregated non-interest bearing bank account (the "Property Account") to hold
all payments made in respect of the New Junior Subordinated Debentures for the
benefit of the holders of the Trust Securities. The Guarantee Trustee will hold
the New Guarantee for the benefit of the holders of the Capital Securities. The
Company, as the holder of all the Common Securities, will have the right to
appoint, remove or replace any of the Trustees and to increase or decrease the
number of Trustees, provided that the number of Trustees shall be at least
three; provided further that at least one Trustee shall be a Delaware Trustee,
at least one Trustee shall be the Property Trustee and at least one Trustee
shall be a Regular Trustee.
Under the Indenture the Company, as borrower, has paid and agreed to
continue to pay all fees and expenses related to the organization and operations
of the Trust (including any taxes, duties, assessments or governmental charges
of whatever nature (other than withholding taxes) imposed by the United States
or any other domestic taxing authority upon the Trust) and the offering of the
Capital Securities and be responsible for all debts and obligations of the Trust
(other than with respect to the Capital Securities). See "Description of New
Capital Securities -- Expenses and Taxes."
For so long as the Capital Securities remain outstanding, the Company will
covenant (i) to maintain directly or indirectly 100% ownership of the Common
Securities, (ii) to cause the Trust to remain a statutory business trust and not
to voluntarily dissolve, wind-up, liquidate or be terminated, except as
permitted by the Declaration, (iii) to use its commercially reasonable efforts
to ensure that the Trust will not be an "investment company" for purposes of the
Investment Company Act of 1940, as amended, and (iv) to take no action that
would be reasonably likely to cause the Trust to be classified as an association
or a publicly traded partnership taxable as a corporation for United States
federal income tax purposes.
The rights of the holders of the Capital Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration and the Trust Act. See "Description of New Capital Securities." The
Declaration and the New Guarantee also incorporate by reference the terms of the
Trust Indenture Act.
The location of the principal executive office of the Trust is c/o The CIT
Group Holdings, Inc., Attn. Chief Financial Officer, 1211 Avenue of the
Americas, New York, New York 10036 and its telephone number is (212) 536-1950.
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THE COMPANY
The CIT Group Holdings, Inc. (the "Company"), a Delaware corporation, is a
successor to a company founded in St. Louis, Missouri on February 11, 1908. It
has its principal executive offices at 1211 Avenue of the Americas, New York,
New York 10036, and its telephone number is (212) 536-1950. The Company,
operating directly or through its subsidiaries primarily in the United States,
engages in financial services activities through a nationwide distribution
network. The Company provides financing primarily on a secured basis to
commercial borrowers, ranging from middle-market to larger companies, and to a
lesser extent to consumers. While these secured lending activities reduce the
risk of losses from extending credit, the Company's results of operations can
also be affected by other factors, including general economic conditions,
competitive conditions, the level and volatility of interest rates,
concentrations of credit risk, and government regulation and supervision. The
Company does not finance the development or construction of commercial real
estate. The Company has eight strategic business units which offer commercial
and consumer financing, and factoring products and services to clients.
The Dai-Ichi Kangyo Bank, Limited ("DKB") owns eighty percent (80%) of the
issued and outstanding shares of common stock of the Company. DKB purchased a
sixty percent (60%) common stock interest in the Company from Manufacturers
Hanover Corporation ("MHC") at year-end 1989 and acquired an additional twenty
percent (20%) common stock interest in the Company on December 15, 1995 from CBC
Holding (Delaware) Inc. (formerly known as MHC Holdings (Delaware) Inc.) ("CBC
Holding"). DKB has an option, expiring December 15, 2000, to purchase the
remaining twenty percent (20%) common stock interest from CBC Holding and its
parent.
CBC Holding became a direct, wholly owned subsidiary of Chemical Banking
Corporation ("CBC") after the merger between MHC and CBC on December 31, 1991.
On March 31, 1996, CBC was merged into The Chase Manhattan Corporation ("CMC"),
and CMC became the sole stockholder of CBC Holding.
In accordance with a stockholders agreement among DKB, CMC, as direct
successor to CBC and indirect successor to MHC, and the Company, dated as of
December 29, 1989, as amended by an Amendment to Stockholders' Agreement, dated
December 15, 1995 (the "Stockholders Agreement"), one nominee of the Board of
Directors is designated by CMC. The Stockholders Agreement also contains
restrictions with respect to the transfer of the stock of the Company to third
parties.
BUSINESS AND SERVICES
Commercial Lending and Leasing
Business Credit
The CIT Group/Business Credit offers revolving and term loans secured by
accounts receivable, inventories and fixed assets to medium and larger-sized
companies. Such loans are used by clients primarily for acquisitions,
refinancings, debtor-in-possession and turnaround financings. The CIT
Group/Business Credit sells participation interests in such loans to other
lenders and will occasionally purchase participation interests in such loans
originated by other lenders. Business is developed through direct calling
efforts and through other sources originated by new business development
officers. The CIT Group/Business Credit is headquartered in New York City, with
sales and customer service offices in New York, Chicago, Dallas, Los Angeles,
Atlanta and Charlotte.
Capital Equipment Financing
The CIT Group/Capital Equipment Financing specializes in customized secured
financing and leasing for medium-sized and large corporations in the form of
single investor leases, debt and equity portions of leveraged leases, operating
leases, direct loans, and sale and leaseback arrangements for major capital
equipment and other income producing assets. Such business is developed directly
with large companies and through third parties. A business group within The CIT
Group/Capital Equipment Financing augments its marketing efforts and provides
services relating to its area of expertise. The CIT Group/Capital Investments is
a registered broker-dealer and a member of the National Association of
Securities Dealers, Inc. and acts as an agent, broker, and advisor in financing
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and leasing transactions. To strategically align all small to medium-ticket
equipment financing into a single nationwide franchise, The CIT Group/Capital
Equipment Financing, during January 1997, transferred $1.5 billion of its
equipment related portfolio to and consolidated certain operations with The CIT
Group/Industrial Financing. The CIT Group/Capital Equipment Financing is
headquartered in New York City, with sales offices in twenty cities, including
New York, Chicago and Los Angeles.
Credit Finance
The CIT Group/Credit Finance offers revolving and term loans to small and
medium-sized companies secured by accounts receivable, inventories, and fixed
assets. Such loans are used by clients for working capital, in refinancings,
acquisitions, leveraged buyouts, reorganizations, restructurings, turnarounds
and Chapter 11 financing and confirmation plans. Business is developed through
direct calling efforts and through other sources developed by new business
development officers. The CIT Group/Credit Finance is headquartered in New York
City, with sales and customer service offices in New York, Chicago and Los
Angeles and loan production offices in five other cities.
Industrial Financing
The CIT Group/Industrial Financing offers secured equipment financing and
leasing products, including direct secured loans, leases, revolving lines of
credit, sale and leaseback arrangements, vendor financing and specialized
wholesale and retail financing for distributors and manufacturers, portfolio
acquisition, business aircraft financing, third party financing and medical
equipment financing. The CIT Group/Industrial Financing is headquartered in
Livingston, New Jersey with a nationwide network of local offices and sales
offices in twenty-two cities, including Tempe, Arizona and Atlanta, Georgia,
which also serve as regional and customer service offices.
Commercial Services
The CIT Group/Commercial Services offers a full range of domestic and
international customized credit protection and lending services. These services
include factoring, working capital and term loans, receivable management
outsourcing, bulk purchases of accounts receivable, import and export financing
and letter of credit programs. The CIT Group/Commercial Services is
headquartered in New York City, with full service offices in New York, Los
Angeles, Dallas and Charlotte and sales offices in Miami and Hong Kong.
Bookkeeping and collection functions are located in a service center in
Danville, Virginia.
Consumer Related Lending
Consumer Finance
The CIT Group/Consumer Finance offers loans and lines of credit secured
primarily by first or second mortgages on residential real estate. The CIT
Group/Consumer Finance originates business through various channels including
direct marketing to consumers, mortgage brokers and correspondent institutional
relationships. This business is headquartered in Livingston, New Jersey with 25
offices servicing brokers in over 40 states. Three regional correspondent
offices purchase loans from third parties. A national home equity center engages
in nationwide direct marketing. Servicing and collection support is provided by
The CIT Group/Sales Financing asset service center located in Oklahoma City,
Oklahoma and by The CIT Group/ Consumer Finance quality control and document
center located in Marlton, New Jersey.
Sales Financing
The CIT Group/Sales Financing, working through dealers, manufacturers and
brokers provides retail secured financing on a nationwide basis for the purchase
of recreational vehicles, manufactured housing and recreational boats. The CIT
Group/Sales Financing also purchases portfolios of these assets from banks,
savings and loans, investment banks and others, offers to manufacturers retail
and wholesale "private label" financing programs, and provides servicing for
portfolios owned by other financial institutions, U.S. government agencies, and
securitization trusts. The CIT Group/Sales Financing is headquartered in
Livingston, New Jersey with an asset service center in Oklahoma City, Oklahoma,
and covers the United States from six regional business centers located in
Atlanta, Boston, Kansas City, Sacramento, Oklahoma City and Seattle.
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Other
Equity Investments and Venture Capital
The CIT Group/Equity Investments and its subsidiary The CIT Group/Venture
Capital originate and participate in merger and acquisition transactions,
purchasing private equity and equity-related securities, and arranging
transaction financing. These units also invest in emerging growth opportunities
in selected industries, including the life sciences, information technology,
communications and consumer products. Business is developed through direct
solicitation, or through referrals from investment banking firms, financial
intermediaries, or the Company's other business units. The CIT Group/Venture
Capital is a federal licensee under the Small Business Investment Act of 1958.
The CIT Group/Equity Investments and The CIT Group/Venture Capital are
headquartered in Livingston, New Jersey.
Multi-National Marketing
Supplementing the Company's marketing efforts, the Company's Multi-National
Marketing Group promotes the services of the Company's various business units to
the U.S. subsidiaries of foreign corporations in need of asset-based financing.
Business is developed through referrals from DKB and through direct calling
efforts. The Multi-National Marketing Group is located in New York City.
REGULATION
DKB is a bank holding company within the meaning of the Bank Holding
Company Act of 1956 (the "Act"), and is registered as such with the Federal
Reserve Board. As a result, DKB and the Company are subject to certain
provisions of the Act. In general, the Act limits the activities in which a bank
holding company and its subsidiaries may engage to those of banking or managing
or controlling banks or performing services for their subsidiaries and to
continuing activities which the Federal Reserve Board has determined to be "so
closely related to banking or managing or controlling banks as to be a proper
incident thereto." The Company's current principal business activities
constitute permissible activities for a subsidiary of a bank holding company.
The operations of the Company and its subsidiaries are subject, in certain
instances, to supervision and regulation by governmental authorities and may be
subject to various laws and judicial and administrative decisions imposing
various requirements and restrictions, including among other things, regulating
credit granting activities, establishing maximum interest rates and finance
charges, regulating customers' insurance coverages, requiring disclosures to
customers, governing secured transactions, and setting collection, repossession,
and claims handling procedures and other trade practices. In most states the
consumer sales finance and loan business and the consumer second mortgage and
home equity line of credit businesses are subject to licensing or regulation. In
some states the industrial finance business is subject to similar licensing or
regulation. The consumer second mortgage, home equity line of credit, sales
finance, and loan businesses, including those conducted by the Company, are also
subject to a number of Federal statutes, including the Federal Consumer Credit
Protection Act, which requires, among other things, disclosure of the finance
charge in terms of an annual percentage rate, as well as the total dollar cost.
In the judgment of management, existing statutes and regulations have not
had a materially adverse effect on the business conducted by the Company and its
subsidiaries. However, it is not possible to forecast the nature of future
legislation, regulations, judicial decisions, orders, or interpretations, nor
their impact upon the future business, earnings, or otherwise, of the Company
and its subsidiaries.
The Company is not itself a bank holding company and hence the Regulatory
Authorities do not require the Company separately to maintain any specified
levels of capital. DKB is required by MOF to maintain certain levels of capital
for bank regulatory purposes.
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THE EXCHANGE OFFER
Purpose and Effect
In connection with the sale of the Old Capital Securities, the Company and
the Trust entered into the Registration Rights Agreement with the Initial
Purchasers, pursuant to which the Company and the Trust agreed, among other
things, to file and to use their reasonable efforts to cause to become effective
with the Commission a registration statement with respect to the exchange of the
Old Capital Securities for capital securities with terms identical in all
material respects to the terms of the Old Capital Securities. A copy of the
Registration Rights Agreement has been filed as an Exhibit to the Registration
Statement of which this Prospectus is a part. The Exchange Offer is being made
to satisfy the contractual obligations of the Company and the Trust under the
Registration Rights Agreement. The form and terms of the New Capital Securities
are identical in all material respects to the form and terms of the Old Capital
Securities, except that the New Capital Securities have been registered under
the Securities Act and therefore will not be subject to certain restrictions on
transfer applicable to the Old Capital Securities and will not provide for any
increase in the Distribution rate thereon. In that regard, the Old Capital
Securities provide, among other things, that, if the Exchange Offer is not
consummated by September 23, 1997, additional interest (the "Additional
Interest") will become payable in respect of the Old Junior Subordinated
Debentures (including in respect of amounts accruing during any Extension
Period), and corresponding additional distributions (the "Additional
Distributions") will become payable on the Old Capital Securities, at the rate
of 0.25% per annum applicable to the principal amount of the Old Junior
Subordinated Debentures or the liquidation amount of Old Capital Securities, as
the case may be, for the period from and including such date to, but excluding,
the date on which the Exchange Offer is consummated. All accrued Additional
Interest (and corresponding Additional Distributions) will be paid by the
Company on each Distribution payment date to DTC by wire transfer of immediately
available funds or by federal funds check and to holders of certificated
securities by wire transfer to the accounts specified by them or by mailing
checks to their registered addresses if no such accounts have been specified.
See "Risk Factors -- Consequences of a Failure to Exchange Old Capital
Securities" and "Description of the Old Securities."
The Exchange Offer is not being made to, nor will the Company or the Trust
accept tenders for exchange from, holders of Old Capital Securities in any
jurisdiction in which the Exchange Offer or the acceptance thereof would not be
in compliance with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Trust or any other person who has obtained a
properly completed bond power from the registered holder, or any person whose
Old Capital Securities are held of record by The Depository Trust Company who
desires to deliver such Old Capital Securities by book-entry transfer at The
Depository Trust Company.
Pursuant to the Exchange Offer, the Company will exchange as soon as
practicable after the date hereof, the Old Guarantee for the New Guarantee and
all of the Old Junior Subordinated Debentures, of which $257,732,000 aggregate
principal amount is outstanding, for like aggregate principal of the New Junior
Subordinated Debentures. The New Guarantee and New Junior Subordinated
Debentures have been registered under the Securities Act.
Terms of the Exchange
The Company and the Trust hereby offer, upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal, to exchange up to $250,000,000 aggregate liquidation amount of New
Capital Securities for a like aggregate liquidation amount of Old Capital
Securities properly tendered on or prior to the Expiration Date (as defined
below) and not properly withdrawn in accordance with the procedures described
below. The Trust will issue, promptly after the Expiration Date, an aggregate
liquidation amount of up to $250,000,000 of New Capital Securities in exchange
for a like principal amount of outstanding Old Capital Securities tendered and
accepted in connection with the Exchange Offer. Holders may tender their Old
Capital Securities in any integral multiple of $1,000. The Exchange Offer is not
conditioned upon any minimum liquidation amount of Old Capital Securities being
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tendered. As of the date of this Prospectus $250,000,000 aggregate liquidation
amount of the Old Capital Securities is outstanding.
Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Old Capital Securities which are
not tendered, or are tendered but not accepted in connection with the Exchange
Offer, will remain outstanding and be entitled to the benefits of the
Declaration of Trust, but will not be entitled to any further registration
rights under the Registration Rights Agreement, except under limited
circumstances. See "Risk Factors -- Consequences of a Failure to Exchange Old
Capital Securities" and "Description of the Old Securities." If any tendered Old
Capital Securities are not accepted for exchange because of an invalid tender,
the occurrence of certain other events set forth herein or otherwise,
certificates for any such unaccepted Old Capital Securities will be returned,
without expense, to the tendering holder thereof promptly after the Expiration
Date.
Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
The Company will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the Exchange Offer. See "-- Fees and
Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR THE TRUSTEES OF THE
TRUST MAKE ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL SECURITIES AS TO WHETHER
TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OLD CAPITAL
SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN
AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL SECURITIES
MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER
AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO TENDER AFTER
READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR
ADVISERS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
Expiration Date; Extensions; Amendments
The term "Expiration Date" means 5:00 p.m., New York City time, on , 1997
unless the Exchange Offer is extended by the Company and the Trust (in which
case the term "Expiration Date" shall mean the latest date and time to which the
Exchange Offer is extended). The Company and the Trust expressly reserve the
right in their sole and absolute discretion, subject to applicable law, at any
time and from time to time, (i) to delay the acceptance of the Old Capital
Securities for exchange, (ii) to terminate the Exchange Offer (whether or not
any Old Capital Securities have theretofore been accepted for exchange) if the
Company and the Trust determine, in their sole and absolute discretion, that any
of the events or conditions referred to under "-- Conditions to the Exchange
Offer" have occurred or exist or have not been satisfied, (iii) to extend the
Expiration Date of the Exchange Offer and retain all Old Capital Securities
tendered pursuant to the Exchange Offer, subject, however, to the right of
holders of Old Capital Securities to withdraw their tendered Old Capital
Securities as described under "-- Withdrawal Rights," and (iv) to waive any
condition or otherwise amend the terms of the Exchange Offer in any respect. If
the Exchange Offer is amended in a manner determined by the Company and the
Trust to constitute a material change, or if the Company and the Trust waive a
material condition of the Exchange Offer, the Company or the Trust will promptly
disclose such amendment by means of a prospectus supplement that will be
distributed to the registered holders of the Old Capital Securities, and the
Company and the Trust will extend the Exchange Offer to the extent required by
Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Company or the Trust may choose to make any public
announcement and subject to applicable law, neither the Company nor the Trust
shall have any obligation to publish, advertise or otherwise communicate any
such public announcement other than by issuing a release to an appropriate news
agency.
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Acceptance or Exchange and Issuance of New Capital Securities
Upon the terms and subject to the conditions of the Exchange Offer, the
Company and the Trust will exchange, and will issue to the Exchange Agent, New
Capital Securities for Old Capital Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under "-- Withdrawal Rights")
promptly after the Expiration Date. In all cases, delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of (i) Old Capital Securities or a book-entry confirmation
of a book-entry transfer of Old Capital Securities into the Exchange Agent's
account at The Depositary Trust Company ("DTC"), (ii) the Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and (iii) any other documents required by the Letter of
Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC.
Subject to the terms and conditions of the Exchange Offer, the Company and
the Trust will be deemed to have accepted for exchange, and thereby exchanged,
Old Capital Securities validly tendered and not withdrawn as, if and when the
Company or the Trust gives oral or written notice to the Exchange Agent of the
Company's and the Trust's acceptance of such Old Capital Securities for exchange
pursuant to the Exchange Offer. The Exchange Agent will act as agent for the
Company and the Trust for the purpose of receiving tenders of Old Capital
Securities, Letters of Transmittal and related documents, and as agent for
tendering holders for the purpose of receiving Old Capital Securities, Letters
of Transmittal and related documents and transmitting New Capital Securities to
validly tendering holders. Such exchange will be made promptly after the
Expiration Date. If for any reason whatsoever, acceptance for exchange or the
exchange of any Old Capital Securities tendered pursuant to the Exchange Offer
is delayed (whether before or after the Company's and the Trust's acceptance for
exchange of Old Capital Securities) or the Company or the Trust extends the
Exchange Offer or is unable to accept for exchange or exchange Old Capital
Securities tendered pursuant to the Exchange Offer, then, without prejudice to
the Company or the Trust's rights set forth herein, the Exchange Agent may,
nevertheless, on behalf of the Company and the Trust and subject to Rule
14e-1(c) under the Exchange Act, retain tendered Old Capital Securities and such
Old Capital Securities may not be withdrawn except to the extent tendering
holders are entitled to withdrawal rights as described under "-- Withdrawal
Rights."
Pursuant to the Letter of Transmittal, a holder of Old Capital Securities
will warrant and agree in the Letter of Transmittal that it has full power and
authority to tender, exchange, sell, assign and transfer Old Capital Securities,
that the Trust will acquire good, marketable and unencumbered title to the
tendered Old Capital Securities, free and clear of all liens, restrictions,
charges and encumbrances, and the Old Capital Securities tendered for exchange
are not subject to any adverse claims or proxies. The holder also will warrant
and agree that it will, upon request, execute and deliver any additional
documents deemed by the Company, the Trust or the Exchange Agent to be necessary
or desirable to complete the exchange, sale, assignment, and transfer of the Old
Capital Securities tendered pursuant to the Exchange Offer.
Procedures For Tendering Old Capital Securities
Valid Tender. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees and any other required documents, must be
received by the Exchange Agent at its address set forth under "-- Exchange
Agent," and either (i) tendered Old Capital Securities must be received by the
Exchange Agent, or (ii) such Old Capital Securities must be tendered pursuant to
the procedures for book-entry transfer set forth below and a book-entry
confirmation must be received by the Exchange Agent, in each case on or prior to
the Expiration Date, or (iii) the guaranteed delivery procedures set forth below
must be complied with.
If less than all of the Old Capital Securities are tendered, a tendering
holder should fill in the amount of Old Capital Securities being tendered in the
appropriate box on the Letter of Transmittal. The entire amount of Old Capital
Securities delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise indicated.
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THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book Entry Transfer. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange Offer
within two business days after the date of this Prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Old Capital Securities by causing DTC to
transfer such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. However, although delivery of
Old Capital Securities may be effected through book-entry transfer into the
Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees and any other required documents, must in any case be delivered to
and received by the Exchange Agent at its address set forth under "-- Exchange
Agent" on or prior to the Expiration Date, or the guaranteed delivery procedure
set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (b) such registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of Transmittal.
In the case of (a) or (b) above, such certificates for Old Capital Securities
must be duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the Letter of Transmittal
guaranteed by a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as an "eligible guarantor institution," including (as such terms
are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association (an "Eligible Institution"), unless surrendered
on behalf of such Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent on or before the Expiration Date, or the
procedures for book-entry transfer cannot be completed on a timely basis, such
Old Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of
Transmittal, is received by the Exchange Agent, as provided below, on or
prior to Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing
all tendered Old Capital Securities, in proper form for transfer, together
with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees and any other
documents required by the Letter of Transmittal, are received by the
Exchange Agent within five New York Stock Exchange trading days after the
date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
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Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a
book-entry confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees and any other
documents required by the Letter of Transmittal. Accordingly, the delivery of
New Capital Securities might not be made to all tendering holders at the same
time, and will depend upon when Old Capital Securities, book-entry confirmations
with respect to Old Capital Securities and other required documents are received
by the Exchange Agent.
The acceptance by the Company and the Trust for exchange of Old Capital
Securities tendered pursuant to any of the procedures described above will
constitute a binding agreement between the tendering holder, the Company and the
Trust upon the terms and subject to the conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Trust, in its sole
discretion, whose determination shall be final and binding on all parties. The
Company and the Trust reserve the absolute right, in their sole and absolute
discretion, to reject any and all tenders determined by them not to be in proper
form or the acceptance of which, or exchange for, may, in the view of counsel to
the Company and the Trust, be unlawful. The Company and the Trust also reserve
the absolute right, subject to applicable law, to waive any of the conditions of
the Exchange Offer as set forth under "--Conditions to the Exchange Offer" or
any condition or irregularity in any tender of Old Capital Securities of any
particular holder whether or not similar conditions or irregularities are waived
in the case of other holders.
The Company and the Trust's interpretation of the terms and conditions of
the Exchange Offer (including the Letter of Transmittal and the instructions
thereto) will be final and binding. No tender of Old Capital Securities will be
deemed to have been validly made until all irregularities with respect to such
tender have been cured or waived. Neither the Company, the Trust, any affiliates
or assigns of the Company, the Trust, the Exchange Agent nor any other person
shall be under any duty to give any notification of any irregularities in
tenders or incur any liability for failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Company or
the Trust, proper evidence satisfactory to the Company or the Trust, in its sole
discretion, of such person's authority to so act must be submitted.
A beneficial owner of Old Capital Securities that are held by or
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
Resales of New Capital Securities
The Company and the Trust are making the Exchange Offer for the Old
Capital Securities in reliance on the position of the staff of the Division of
Corporation Finance of the Commission as set forth in certain interpretive
letters addressed to third parties in other transactions. However, neither the
Company nor the Trust sought its own interpretive letter and there can be no
assurance that the staff of the Division of Corporation Finance of the
Commission would make a similar determination with respect to the Exchange Offer
as it has in such interpretive letters to third parties. Based on these
interpretations by the staff of the Division of Corporation Finance, and subject
to the two immediately following sentences, the Company and the Trust believe
that New Capital Securities issued pursuant to this Exchange Offer in exchange
for Old Capital Securities may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Capital Securities
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are acquired in the ordinary course of such holder's business and that such
holder is not participating, and has no arrangement or understanding with any
person to participate, in a distribution (within the meaning of the Securities
Act) of such New Capital Securities. However, any holder of Old Capital
Securities who is an "affiliate" of the Company or the Trust or who intends to
participate in the Exchange Offer for the purpose of distributing New Capital
Securities, or any broker-dealer who purchased Old Capital Securities from the
Trust to resell pursuant to Rule 144A or any other available exemption under the
Securities Act, (a) will not be able to rely on the interpretations of the staff
of the Division of Corporation Finance of the Commission set forth in the
above-mentioned interpretive letters, (b) will not be permitted or entitled to
tender such Old Capital Securities in the Exchange Offer and (c) must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any sale or other transfer of such Old Capital Securities
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds Old Capital Securities
acquired for its own account as a result of market-making or other trading
activities and exchanges such Old Capital Securities for New Capital Securities,
then such broker-dealer must deliver a prospectus meeting the requirements of
the Securities Act in connection with any resales of such New Capital
Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an "affiliate" of the Company or the Trust, (ii)
any New Capital Securities to be received by it are being acquired in the
ordinary course of its business, (iii) it has no arrangement or understanding
with any person to participate in a distribution (within the meaning of the
Securities Act) of such New Capital Securities, and (iv) if such holder is not a
broker-dealer, such holder is not engaged in, and does not intend to engage in,
a distribution (within the meaning of the Securities Act) of such New Capital
Securities. In addition, the Company and the Trust may require such holder, as a
condition to such holder's eligibility to participate in the Exchange Offer, to
furnish to the Company and the Trust (or an agent thereof) in writing
information as to the number of "beneficial owners" (within the meaning of Rule
13d-3 under the Exchange Act) on behalf of whom such holder holds the Capital
Securities to be exchanged in the Exchange Offer. Each broker-dealer that
receives New Capital Securities for its own account pursuant to the Exchange
Offer must acknowledge that it acquired the Old Capital Securities for its own
account as the result of market-making activities or other trading activities
and must agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Capital Securities. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. Based on the position
taken by the staff of the Division of Corporation Finance of the Commission in
the interpretive letters referred to above, the Company and the Trust believe
that broker-dealers who acquired Old Capital Securities for their own accounts
as a result of market-making activities or other trading activities
("Participating Broker-Dealers") may fulfill their prospectus delivery
requirements with respect to the New Capital Securities received upon exchange
of such Old Capital Securities (other than Old Capital Securities which
represent an unsold allotment from the original sale of the Old Capital
Securities) with a prospectus meeting the requirements of the Securities Act,
which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Capital Securities Registration Rights
Agreement, the Company and the Trust have agreed that this Prospectus, as it may
be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such New Capital Securities for a
period ending 180 days after the Expiration Date or, if earlier, when all such
New Capital Securities have been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution." Any Participating Broker-Dealer who
is an "affiliate" of the Company or the Trust may not rely on such interpretive
letters and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
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In that regard, each Participating Broker-Dealer who surrenders Old
Capital Securities pursuant to the Exchange Offer will be deemed to have agreed,
by execution of the Letter of Transmittal, that, upon receipt of notice from the
Company or the Trust of the occurrence of any event or the discovery of any fact
which makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or which causes this Prospectus to
omit to state a material fact necessary in order to make the statements
contained or incorporated by reference herein, in light of the circumstances
under which they were made, not misleading or of the occurrence of certain other
events specified in the Registration Rights Agreements, such Participating
Broker-Dealer will suspend the sale of New Capital Securities (or the New
Guarantee or the New Junior Subordinated Debentures, as applicable) pursuant to
this Prospectus until the Company or the Trust has amended or supplemented this
Prospectus to correct such misstatement or omission and has furnished copies of
the amended or supplemented Prospectus to such Participating Broker-Dealer or
the Company or the Trust has given notice that the sale of the New Capital
Securities (or the New Guarantee or the New Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be.
Withdrawal Rights
Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at one of its addresses set forth under "-- Exchange Agent"
on or prior to the Expiration Date. Any such notice of withdrawal must specify
the name of the person who tendered the Old Capital Securities to be withdrawn,
the aggregate principal amount of Old Capital Securities to be withdrawn, and
(if certificates for such Old Capital Securities have been tendered) the name of
the registered holder of the Old Capital Securities as set forth on the Old
Capital Securities, if different from that of the person who tendered such Old
Capital Securities. If Old Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such Old
Capital Securities, the tendering holder must submit the serial numbers shown on
the particular Old Capital Securities to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, except in
the case of Old Capital Securities tendered for the account of an Eligible
Institution. If Old Capital Securities have been tendered pursuant to the
procedures for book-entry transfer set forth in "-- Procedures for Tendering Old
Capital Securities," the notice of withdrawal must specify the name and number
of the account at DTC to be credited with the withdrawal of Old Capital
Securities, in which case a notice of withdrawal will be effective if delivered
to the Exchange Agent by written, telegraphic, telex or facsimile transmission.
Withdrawals of tenders of Old Capital Securities may not be rescinded. Old
Capital Securities properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any subsequent time on
or prior to the Expiration Date by following any of the procedures described
above under "-- Procedures for Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company and the
Trust, in their sole discretion, whose determination shall be final and binding
on all parties. Neither the Company, the Trust, any affiliates or assigns of the
Company, the Trust, the Exchange Agent nor any other person shall be under any
duty to give any notification of any irregularities in any notice of withdrawal
or incur any liability for failure to give any such notification. Any Old
Capital Securities which have been tendered but which are withdrawn will be
returned to the holder thereof promptly after withdrawal.
Distributions on the New Capital Securities
Holders of Old Capital Securities whose Old Capital Securities are
accepted for exchange will not receive accumulated Distributions on such Old
Capital Securities for any period from and after the last Distribution Date with
respect to such Old Capital Securities prior to the original issue date of the
New Capital Securities or, if no such Distributions have been made, will not
receive any accumulated Distributions on such Old Capital Securities, and will
be deemed to have waived the right to receive any Distributions on such Old
Capital Securities accumulated from and after such Distribution Date or, if no
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such Distributions have been made, from and after February 25, 1997. However,
because Distributions on the New Capital Securities will accumulate from
February 25, 1997, the amount of the Distributions received by holders whose Old
Capital Securities are accepted for exchange will not be affected by the
exchange.
Conditions to the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Trust will not be required to accept for
exchange, or to exchange, any Old Capital Securities for any New Capital
Securities, and, as described below, may terminate the Exchange Offer (whether
or not any Old Capital Securities have theretofore been accepted for exchange)
or may waive any conditions to or amend the Exchange Offer, if any of the
following conditions have occurred or exists or have not been satisfied:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the New Capital Securities issued
pursuant to the Exchange Offer in exchange for Old Capital Securities to
be offered for resale, resold and otherwise transferred by holders thereof
(other than broker-dealers and any such holder which is an "affiliate" of
the Company or the Trust within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act provided that such New Capital
Securities are acquired in the ordinary course of such holders' business
and such holders have no arrangement or understanding with any person to
participate in the distribution of such New Capital Securities;
(b) any action or proceeding shall have been instituted or threatened
in any court or by or before any governmental agency or body with respect
to the Exchange Offer which, in the Company's and the Trust's judgment,
would reasonably be expected to impair the ability of the Company or the
Trust to proceed with the Exchange Offer;
(c) any law, statute, rule or regulation shall have been adopted or
enacted which, in the Company's and the Trust's judgment, would reasonably
be expected to impair the ability of the Company or the Trust to proceed
with the Exchange Offer;
(d) a banking moratorium shall have been declared by United States
federal or Delaware or New York state authorities which, in the Company's
and the Trust's judgment, would reasonably be expected to impair the
ability of the Company or the Trust to proceed with the Exchange Offer;
(e) trading on the New York Stock Exchange or generally in the
United States over-the-counter market shall have been suspended by order
of the Commission or any other governmental authority which, in the
Company's and the Trust's judgment, would reasonably be expected to impair
the ability of the Company or the Trust to proceed with the Exchange
Offer; or
(f) a stop order shall have been issued by the Commission or any
state securities authority suspending the effectiveness of the
Registration Statement or proceedings shall have been initiated or, to the
knowledge of the Company or the Trust, threatened for that purpose; or
(g) any change, or any development involving a prospective change,
in the business or financial affairs of the Company or the Trust or any of
their subsidiaries have occurred which, in the sole judgment of the
company and the Trust, might materially impair the ability of the Company
or the Trust to proceed with the Exchange Offer.
If the Company and the Trust determine in their sole and absolute
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, the Company and the Trust may, subject to applicable
law, terminate the Exchange Offer (whether or not any Old Capital Securities
have theretofore been accepted for exchange) or may waive any such condition or
otherwise amend the terms of the Exchange Offer in any respect. If such waiver
or amendment constitutes a material change to the Exchange Offer, the Company
and the Trust will promptly disclose such waiver by means of a prospectus
supplement that will be distributed to the registered holders of the Old Capital
Securities, and the Company and the Trust will extend the Exchange Offer to the
extent required by Rule 14e-1 under the Exchange Act.
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Exchange Agent
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Delivery of the Letters of Transmittal and any other required documents,
questions, requests for assistance, and requests for additional copies of this
Prospectus or of the Letter of Transmittal should be directed to the Exchange
Agent as follows:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Telephone: (212) 815-
Facsimile: (212) 815-5595
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
Fees and Expenses
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company will also pay brokerage houses and
other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus and related documents
to the beneficial owners of Old Capital Securities, and in handling or tendering
for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Capital Securities in connection with the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with the Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering holder.
Neither the Company nor the Trust will make any payment to brokers,
dealers or others soliciting acceptances of the Exchange Offer.
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DESCRIPTION OF NEW CAPITAL SECURITIES
Pursuant to the terms of the Declaration of Trust, the Regular Trustees,
on behalf of the Trust, have issued the Old Capital Securities and the Common
Securities, and will issue the New Capital Securities. The New Capital
Securities will represent undivided beneficial interests in the assets of the
Trust and the holders thereof will be entitled to a preference with respect to
Distributions and amounts payable on redemption of the Trust Securities or
liquidation of the Trust over the Common Securities. The Declaration of Trust
has been qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the Trust Act.
This summary of certain provisions of the New Capital Securities, the
Common Securities and the Declaration of Trust does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the Declaration of Trust, including the definitions therein of
certain terms. The term "Capital Securities" used in this section refers to the
New Capital Securities, which will have substantially identical terms to the Old
Capital Securities. See "Description of Old Securities." The term "Guarantee"
refers to the New Guarantee, which will have identical terms to the Old
Guarantee. See "The New Guarantee." Except as otherwise indicated, the term
"Capital Securities" refers to New Capital Securities.
General
The Capital Securities will rank pari passu, and payments will be made
thereon pro rata, with the Common Securities, except as described under "--
Subordination of Common Securities." Legal title to the New Junior Subordinated
Debentures will be held by the Property Trustee in trust for the benefit of the
holders of the Capital Securities and the Common Securities. The Guarantee
executed by the Company for the benefit of the holders of the Capital Securities
will be a guarantee on a subordinated basis with respect to the Capital
Securities but will not guarantee payment of Distributions or amounts payable on
redemption or liquidation of the Capital Securities when the Trust does not have
sufficient funds available to make such payments. See "Description of
Guarantee." The Company's obligations under the Guarantee, taken together with
its obligations under the New Junior Subordinated Debentures and the Indenture,
including its obligation to pay all costs, expenses and liabilities of the Trust
(other than with respect to the Capital Securities), constitute a full and
unconditional guarantee of all of the Trust's obligations under the Capital
Securities.
Holders of the Capital Securities have no preemptive or similar rights.
Distributions
Distributions on each Capital Security will be payable at the annual rate
of 7.70% of the liquidation amount of $1,000, payable semi-annually in arrears
on the 15th day of February and August of each year. Distributions will
accumulate from the date of original issuance and commence on August 15, 1997.
The amount of Distributions payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months.
Distributions on the Capital Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
Distributions. The revenue of the Trust available for distribution to holders of
its Capital Securities will be limited to payments under the New Junior
Subordinated Debentures in which the Trust will invest the proceeds from the
issuance and sale of the Capital Securities and the Common Securities. See
"Description of New Junior Subordinated Debentures." If the Company does not
make interest payments on the New Junior Subordinated Debentures, the Property
Trustee will not have funds available to pay Distributions on the Capital
Securities.
The Company will have the right under the Indenture to defer the payment
of interest on the New Junior Subordinated Debentures at any time or from time
to time for a period not exceeding 10 consecutive semi-annual periods (each, an
"Extension Period"), provided that no Extension Period may extend beyond the
Stated Maturity of the New Junior Subordinated Debentures. Accordingly, there
could be multiple Extension Periods of varying lengths throughout the term of
the New Junior Subordinated Debentures, which in the aggregate may exceed 10
semi-annual periods. As a consequence of any such extension, semi-annual
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Distributions on the Capital Securities will be deferred by the Trust during any
such Extension Period. Distributions to which holders of the Capital Securities
are entitled will accumulate and compound semi-annually to the extent permitted
by applicable law at the rate per annum of 7.70% thereof from the relevant
payment date for such Distributions. The term "Distributions" as used herein
shall include any such compounded amounts unless the context otherwise requires.
During any such Extension Period, the Company may not, and may not permit any
subsidiary of the Company to, (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect to,
any of the Company's capital stock or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu with or junior to the New Junior
Subordinated Debentures or make any guarantee payments with respect to any
guarantee by the Company of the debt securities of any subsidiary of the Company
if such guarantee ranks pari passu with or junior in interest to the New Junior
Subordinated Debentures (other than (a) dividends or distributions in common
stock of the Company, (b) payments under the Guarantee, (c) any declaration of a
dividend in connection with the implementation of a shareholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, and (d) purchases of common
stock related to the issuance of common stock or rights under any of the
Company's benefit plans). Prior to the termination of any such Extension Period,
the Company may further extend the Extension Period, provided that no Extension
Period may exceed 10 consecutive semi-annual periods or extend beyond the Stated
Maturity of the New Junior Subordinated Debentures. Upon the termination of any
such Extension Period and the payment of all amounts then due on any Interest
Payment Date, the Company may elect to begin a new Extension Period subject to
the foregoing requirements. See "Description of New Junior Subordinated
Debentures -- Option to Extend Interest Payment Period." The Company has no
current intention of exercising its right to defer payments of interest by
extending the interest payment period of the New Junior Subordinated Debentures.
In the event that any date on which Distributions are payable on the
Capital Securities is not a Business Day, then payment of the Distributions
payable on such date will be made on the next succeeding day that is a Business
Day (and without any additional Distributions or other payment in respect of any
such delay), with the same force and effect as if made on the date such payment
was originally payable (each date on which Distributions are payable in
accordance with the foregoing, a "Distribution Date"). A "Business Day" shall
mean any day other than a Saturday or a Sunday, or a day on which banking
institutions in The City of New York are authorized or required by law or
executive order to remain closed or a day on which the corporate trust office of
the Property Trustee or the Indenture Trustee (as defined herein) is closed for
business.
Distributions on the Capital Securities (other than distributions on a
Redemption Date) will be payable to the holders thereof as they appear on the
register of the Trust on the relevant record dates, which shall be the first day
of the month of the relevant Distribution Date. Distributions payable on any
Capital Securities that are not punctually paid on any Distribution Date will
cease to be payable to the person in whose name such Capital Securities are
registered on the relevant record date, and such defaulted Distribution will
instead be payable to the person in whose name such Capital Securities are
registered on the special record date or other specified date determined in
accordance with the Declaration.
Redemption
Mandatory Redemption. Unless a Special Event has occurred, the Capital
Securities will not be redeemable prior to February 15, 2007. Upon the repayment
or redemption, in whole or in part, of the New Junior Subordinated Debentures,
whether at Stated Maturity or upon earlier redemption as provided in the
Indenture, the proceeds from such repayment or redemption shall be applied by
the Property Trustee to redeem Capital Securities and Common Securities upon not
less than 30 nor more than 60 days' notice prior to the date fixed for repayment
or redemption. If less than all of the New Junior Subordinated Debentures are to
be repaid or redeemed on a Redemption Date, then the proceeds from such
repayment or redemption shall be allocated to the redemption pro rata of the
Capital Securities and the Common Securities.
Special Event Redemption or Distribution of New Junior Subordinated
Debentures. If a Special Event shall occur and be continuing, the Company will
have the right, subject to the receipt of any necessary prior approval of the
Regulatory Authorities, to either (i) redeem within 90 days following the
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occurrence of such Special Event the New Junior Subordinated Debentures on the
date of redemption (the "Redemption Date") in whole (but not in part) and
thereby cause a mandatory redemption of the Capital Securities in whole (but not
in part) at a redemption price with respect to the Capital Securities equal to
the redemption price in respect of the New Junior Subordinated Debentures or
(ii) dissolve the Trust and, after satisfaction of the claims of creditors of
the Trust as provided by applicable law, cause the New Junior Subordinated
Debentures to be distributed to the holders of the Capital Securities in
liquidation of the Trust; provided, however, that upon the occurrence of a Tax
Event, prior to exercising the rights described under clause (i) above, the
Company shall be required to have received an opinion of counsel, rendered by a
law firm having a recognized national tax practice, to the effect that,
notwithstanding the exercise by the Company of such rights described under
clause (ii) above, either (x) such Tax Event would still exist or (y) the
Capital Securities would not constitute Tier I Capital (or its then equivalent)
of a bank holding company. Under current United States federal income tax law
and interpretations thereof and assuming, as expected, the Trust is treated as a
grantor trust, a distribution of the New Junior Subordinated Debentures should
not be a taxable event to holders of the Capital Securities. Should there occur
a change in law, a change in legal interpretation, certain Tax Events or other
circumstances, however, the distribution could be a taxable event to holders of
the Capital Securities. See "Certain United States Federal Income Tax
Consequences -- Distribution of New Junior Subordinated Debentures or Cash Upon
Liquidation of the Trust."
If the Company does not elect either option described above, the Capital
Securities will remain outstanding until the repayment of the New Junior
Subordinated Debentures, whether at maturity or redemption, and in the event a
Tax Event has occurred and is continuing, the Company will be obligated to pay
any additional taxes, duties, assessments and other governmental charges (other
than withholding taxes) to which the Trust has become subject as a result of a
Tax Event.
A "Special Event" means a Tax Event, a Regulatory Capital Event or an
Investment Company Event. A "Tax Event" means the receipt by the Company of an
opinion of counsel, rendered by a law firm having a recognized national tax
practice, to the effect that, as a result of any amendment to, change in or
announced proposed change in the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, or as a result of any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is adopted or which proposed change, pronouncement or decision is
announced on or after the date of original issuance of the Capital Securities,
there is more than an insubstantial risk that (i) the Trust is, or will be
within 90 days of the date of such opinion, subject to United States federal
income tax with respect to income received or accrued on the New Junior
Subordinated Debentures, (ii) interest payable by the Company on such New Junior
Subordinated Debentures is not, or within 90 days of the date of such opinion
will not be, deductible by the Company, in whole or in part, for United States
federal income tax purposes, or (iii) the Trust is, or will be within 90 days of
the date of such opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
A "Regulatory Capital Event" means that the Company shall have received
an opinion of independent bank regulatory counsel experienced in such matters to
the effect that, as a result of (a) any amendment to or change (including any
announced prospective change) in the laws (or any regulations thereunder) of the
United States or any rules, guidelines or policies of the Federal Reserve
applicable to bank holding companies or (b) any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is announced on or after the date of original issuance of the Capital
Securities, the Capital Securities would not constitute, or within 90 days of
the date thereof would not constitute, Tier I Capital (or its then equivalent)
of a bank holding company; provided, however, that the distribution of the
Junior Subordinated Debentures in connection with the liquidation of the Trust
by the Company shall not in and of itself constitute a Regulatory Capital Event
unless such liquidation shall have occurred in connection with a Tax Event or an
Investment Company Event. For purposes of determining whether a Regulatory
Capital Event has occurred, the opinion of independent bank regulatory counsel
shall treat the Company as if it is a bank holding company subject to the laws
and regulations of the United States, any rules, guidelines and policies of the
Federal Reserve, and any administrative pronouncements and judicial decisions
applicable to bank holding companies. See "Regulatory Treatment."
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"Investment Company Event" means the receipt by the Trust of an opinion of
counsel, rendered by a law firm having a recognized national securities
practice, to the effect that, as a result of the occurrence of a change in law
or regulation or a change in interpretation or application of law or regulation
by any legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law"), the Trust is or will be considered an "investment
company" that is required to be registered under the Investment Company Act of
1940, as amended, which Change in 1940 Act Law becomes effective on or after the
date of original issuance of the Capital Securities.
Redemption Procedures
Capital Securities redeemed on each Redemption Date shall be redeemed at
the redemption price in respect of the New Junior Subordinated Debentures (the
"Redemption Price") with the applicable proceeds from the contemporaneous
redemption or payment at Stated Maturity of the New Junior Subordinated
Debentures. Redemptions of the Capital Securities shall be made and the
Redemption Price shall be payable on each Redemption Date only to the extent
that the Trust has sufficient funds available for the payment of such Redemption
Price. See also "-- Subordination of Common Securities."
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each holder of Capital Securities to
be redeemed at its registered address. If the Trust gives a notice of redemption
in respect of the Capital Securities, then, by 12:00 noon, New York City time,
on the Redemption Date, to the extent funds are available, the Property Trustee
will deposit irrevocably with DTC or its nominee funds sufficient to pay the
applicable Redemption Price for all securities held in DTC and will give DTC
irrevocable instructions and authority to pay the Redemption Price to the
holders of the Capital Securities. See "-- Book-Entry Issuance." If any Capital
Securities are held in certificated form, the Trust, to the extent funds are
available, will irrevocably deposit with the paying agent for such Capital
Securities funds sufficient to pay the applicable Redemption Price and will give
the paying agent irrevocable instructions and authority to pay the Redemption
Price to the holders thereof upon surrender of their certificates evidencing the
Capital Securities. Notwithstanding the foregoing, Distributions payable on or
prior to the Redemption Date for any Capital Security called for redemption
shall be payable to the holders of such Capital Security on the relevant record
dates for the related Distribution Dates. If notice of redemption shall have
been given and funds deposited as required, then upon the date of such deposit,
all rights of the holders of such Capital Securities so called for redemption
will cease, except the right of the holders of such Capital Securities to
receive the Redemption Price, but without interest on such Redemption Price, and
such Capital Securities will cease to be outstanding. In the event that any date
fixed for redemption of Capital Securities is not a Business Day, then payment
of the Redemption Price payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on the date such
payment was originally payable. If payment of the Redemption Price in respect of
Capital Securities called for redemption is improperly withheld or refused and
not paid either by the Trust or by the Company pursuant to the Guarantee as
described under "Description of New Guarantee," then Distributions on such
Capital Securities will continue to accrue at the then applicable rate, from the
Redemption Date originally established by the Trust for the Capital Securities
to the date such Redemption Price is actually paid and the actual payment date
will be deemed to be the date fixed for redemption for purposes of calculating
the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding Capital Securities by tender, in the open
market or by private agreement.
The Trust may not redeem fewer than all of the outstanding Capital
Securities unless all accrued and unpaid distributions have been paid on all
Capital Securities for all semi-annual distribution periods terminating on or
prior to the date of redemption. If less than all of the Trust Securities issued
by the Trust are to be redeemed on a Redemption Date, then the aggregate amount
of such Trust Securities to be redeemed shall be allocated pro rata among the
Capital Securities and the Common Securities. If the Capital Securities are in
book-entry form, they will be redeemed as described below under "Book-Entry
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Issuance." If not, the particular Capital Securities to be redeemed shall be
selected on a pro rata basis not more than 60 days prior to the Redemption Date
by the Property Trustee from the outstanding Capital Securities not previously
called for redemption. The Property Trustee shall promptly notify the Trust
registrar in writing of the Capital Securities selected for redemption and, in
the case of any Capital Security selected for partial redemption, the
liquidation amount thereof to be redeemed. For all purposes of the Declaration,
unless the context otherwise requires, all provisions relating to the redemption
of Capital Securities shall relate, in the case of any Capital Security redeemed
or to be redeemed only in part, to the portion of the aggregate liquidation
amount of Capital Securities which has been or is to be redeemed.
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and the Common Securities, as applicable, shall be made pro rata
based on the liquidation amount of such Capital Securities and Common
Securities; provided, however, that if on any Distribution Date or Redemption
Date an Indenture Event of Default shall have occurred and be continuing, no
payment of any Distribution on, or Redemption Price of, any of the Common
Securities, and no other payment on account of the redemption, liquidation or
other acquisition of such Common Securities, shall be made unless payment in
full in cash of all accumulated and unpaid Distributions on all of the
outstanding Capital Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the Redemption Price the full amount
of such Redemption Price on all of the outstanding Capital Securities then
called for redemption, shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on, or Redemption Price of, the Capital Securities
then due and payable.
Liquidation Distribution Upon Dissolution
Pursuant to the Declaration, the Trust shall automatically dissolve upon
expiration of its term and shall dissolve on the first to occur of: (i) certain
events of bankruptcy, dissolution or liquidation of the Company; (ii) the
distribution of the New Junior Subordinated Debentures to the holders of the
Capital Securities and Common Securities; (iii) the repayment of all of the
Capital Securities in connection with the maturity or redemption of all of the
New Junior Subordinated Debentures; and (iv) the entry by a court of competent
jurisdiction of an order for the dissolution of the Trust.
If an early dissolution occurs as described in clause (i), (ii) or (iv)
above, the Trust shall be liquidated by the Trustees as expeditiously as the
Trustees determine to be possible by distributing, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, to the
holders of the Capital Securities and Common Securities their pro rata interest
in the New Junior Subordinated Debentures. If such distribution does not occur,
then such holders will be entitled to receive out of the assets of the Trust
available for distribution to holders, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, an amount equal to, in the
case of holders of Capital Securities, the aggregate of the liquidation amount
plus accrued and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"). If such Liquidation Distribution
can be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Capital Securities shall be paid on a pro rata
basis. The holder(s) of the Common Securities will be entitled to receive
distributions upon any such liquidation pro rata with the holders of the Capital
Securities, except that if an Indenture Event of Default has occurred and is
continuing, the Capital Securities shall have a priority over the Common
Securities.
After the liquidation date is fixed for any distribution of New Junior
Subordinated Debentures to holders of the Capital Securities (i) the Capital
Securities will no longer be deemed to be outstanding, (ii) DTC or its nominee,
as a record holder of Capital Securities, will receive a registered global
certificate or certificates representing the New Junior Subordinated Debentures
to be delivered upon such distribution and (iii) any certificates representing
Capital Securities held in certificated form will be deemed to represent New
Junior Subordinated Debentures having a principal amount equal to the
liquidation amount of such Capital Securities, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid Distributions on such
Capital Securities until such certificates are presented for cancellation
whereupon the Company will issue to such holder, and the Indenture Trustee will
authenticate, a certificate representing such New Junior Subordinated
Debentures.
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Trust Enforcement Events
An Indenture Event of Default constitutes a Trust Enforcement Event under
the Declaration with respect to the Trust Securities, provided that pursuant to
the Declaration, the holder of the Common Securities will be deemed to have
waived any Trust Enforcement Event with respect to the Common Securities until
all Trust Enforcement Events with respect to the Capital Securities have been
cured, waived or otherwise eliminated. Until such Trust Enforcement Event with
respect to the Capital Securities has been so cured, waived or otherwise
eliminated, the Property Trustee will be deemed to be acting solely on behalf of
the holders of the Capital Securities and only the holders of the Capital
Securities will have the right to direct the Property Trustee with respect to
certain matters under the Declaration, and therefore the Indenture.
Upon the occurrence of a Trust Enforcement Event, the Indenture Trustee
(as defined herein) or the Property Trustee as the holder of the New Junior
Subordinated Debentures will have the right under the Indenture to declare the
principal of and interest on the New Junior Subordinated Debentures to be
immediately due and payable. Each of the Company and the Trust is required to
file annually with the Property Trustee an officer's certificate as to its
compliance with all conditions and covenants under the Declaration.
If the Property Trustee fails to enforce its rights with respect to the
Junior Subordinated Debentures held by the Trust, any record holder of Capital
Securities may institute legal proceedings directly against the Company to
enforce the Property Trustee's rights under such New Junior Subordinated
Debentures without first instituting any legal proceedings against such Property
Trustee or any other person or entity. In addition, if a Trust Enforcement Event
has occurred and is continuing and such event is attributable to the failure of
the Company to pay interest, principal or other required payments on the New
Junior Subordinated Debentures issued to the Trust on the date such interest,
principal or other payment is otherwise payable, then a record holder of Capital
Securities may, on or after the respective due dates specified in the New Junior
Subordinated Debentures, institute a proceeding directly against the Company
under the Indenture for enforcement of payment on New Junior Subordinated
Debentures having a principal amount equal to the aggregate liquidation amount
of the Capital Securities held by such holder (a "Direct Action"). In connection
with such Direct Action, the Company will be subrogated to the rights of such
record holder of Capital Securities to the extent of any payment made by the
Company to such record holder of Capital Securities.
Voting Rights; Amendment of the Declaration
Except as provided below and under "Description of New Guarantee --
Amendments and Assignment" and as otherwise required by law and the Declaration,
the holders of the Capital Securities will have no voting rights.
So long as any New Junior Subordinated Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee or
executing any trust or power conferred on the Property Trustee with respect to
such Junior Subordinated Debentures, (ii) waive any past default that is
waivable under the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the New Junior Subordinated Debentures
shall be due and payable, or (iv) consent to any amendment, modification or
termination of the Indenture or such New Junior Subordinated Debentures, where
such consent shall be required, without, in each case, obtaining the prior
approval of the holders of a majority in aggregate liquidation amount of all
outstanding Capital Securities; provided, however, that where a consent under
the Indenture would require the consent of each holder of New Junior
Subordinated Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior consent of each holder of Capital Securities.
The Trustees shall not revoke any action previously authorized or approved by a
vote of the holders of the Capital Securities except pursuant to a subsequent
vote of the holders of the Capital Securities. The Property Trustee shall notify
each holder of record of the Capital Securities of any notice of default which
it receives with respect to the New Junior Subordinated Debentures. In addition
to obtaining the foregoing approvals of the holders of the Capital Securities,
prior to taking any of the foregoing actions, the Trustees shall receive an
opinion of counsel experienced in such matters to the effect that the Trust will
not be classified as other than a grantor trust for United States federal income
tax purposes on account of such action.
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The Declaration may be amended from time to time by a majority of the
Regular Trustees (and in certain circumstances the Property Trustee or the
Delaware Trustee), without the consent of the holders of the Capital Securities,
(i) to cure any ambiguity, to correct or supplement any provisions in the
Declaration that may be inconsistent with any other provision, or to make any
other provisions with respect to matters or questions arising under the
Declaration that shall not be inconsistent with the other provisions of the
Declaration or (ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the Trust will
be classified as a grantor trust for United States federal income tax purposes
at all times that any Capital Securities and Common Securities are outstanding
or to ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act, or to ensure that the Capital
Securities would constitute Tier I Capital of a bank holding company (assuming
solely for this purpose that the Company was treated as a bank holding company);
provided, however, that such action shall not adversely affect in any material
respect the interests of any holder of Capital Securities or Common Securities,
and any amendments of the Declaration shall become effective when notice thereof
is given to the holders of Capital Securities and Common Securities. The
Declaration may be amended by a majority of the Regular Trustees with (i) the
consent of holders representing not less than a majority (based upon liquidation
amounts) of the outstanding Capital Securities and Common Securities and (ii)
receipt by the Regular Trustees of an opinion of counsel to the effect that such
amendment or the exercise of any power granted to the Regular Trustees in
accordance with such amendment will not affect the Trust's status as a grantor
trust for United States federal income tax purposes or the Trust's exemption
from status as an "investment company" under the Investment Company Act;
provided, further that without the consent of each holder of Capital Securities
and Common Securities affected thereby, the Declaration may not be amended to
(i) change the amount or timing of any Distribution on the Capital Securities
and Common Securities or otherwise adversely affect the amount of any
Distribution required to be made in respect of the Capital Securities and Common
Securities as of a specified date or (ii) restrict the right of a holder of
Capital Securities or Common Securities to institute suit for the enforcement of
any such payment on or after such date.
Any required approval of holders of Capital Securities may be given at a
meeting of holders of Capital Securities convened for such purpose or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Capital Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be given to
each holder of record of Capital Securities in the manner set forth in the
Declaration.
No vote or consent of the holders of Capital Securities will be required
for the Trust to redeem and cancel its Capital Securities in accordance with the
Declaration.
Notwithstanding that holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Company, the Trustees or any affiliate of the
Company or any Trustees, shall, for purposes of such vote or consent, be treated
as if they were not outstanding.
Expenses and Taxes
In the Indenture, the Company, as borrower, has agreed to pay all debts
and other obligations (other than with respect to the Capital Securities) and
all costs and expenses of the Trust (including costs and expenses relating to
the organization of the Trust, the fees and expenses of the Trustees and the
costs and expenses relating to the operation of the Trust) and to pay any and
all taxes and all costs and expenses with respect thereto (other than United
States withholding taxes) to which the Trust might become subject. The foregoing
obligations of the Company under the Indenture are for the benefit of, and shall
be enforceable by, any person to whom any such debts, obligations, costs,
expenses and taxes are owed (a "Creditor") whether or not such Creditor has
received notice thereof. Any such Creditor may enforce such obligations of the
Company directly against the Company, and the Company has irrevocably waived any
right or remedy to require that any such Creditor take any action against the
Trust or any other person before proceeding against the Company. The Company has
also agreed in the Indenture to execute such additional agreements as may be
necessary or desirable to give full effect to the foregoing.
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Registrar and Transfer Agent
The Bank of New York will act as registrar and transfer agent for the
Capital Securities.
Registration of transfers of Capital Securities will be effected without
charge by or on behalf of the Trust, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Trust will not be required (i) to register or cause to be
registered the transfer or exchange of the Capital Securities during a period
beginning at the opening of business 15 days before the day of the mailing of
the relevant notice of redemption and ending at the close of business on the day
of mailing of such notice of redemption or (ii) to register or cause to be
registered the transfer or exchange of any Capital Securities so selected for
redemption, except in the case of any Capital Securities being redeemed in part,
any portion thereof not to be redeemed.
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and continuance of
a Trust Enforcement Event, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after such Trust Enforcement
Event, must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Declaration at the request of any holder of Capital
Securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby. If no Trust Enforcement Event
has occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the
Declaration or is unsure of the application of any provision of the Declaration,
and the matter is not one on which holders of Capital Securities are entitled
under the Declaration to vote, then the Property Trustee may, but shall be under
no duty to, take such action as is directed by the Company and, if not so
directed, shall take such action as it deems advisable and in the best interests
of the holders of the Capital Securities and the Common Securities and will have
no liability except for its own bad faith, negligence or willful misconduct.
Payment and Paying Agency
Payments in respect of the Global Capital Securities (as defined herein)
shall be made to DTC, which shall credit the relevant accounts at DTC on the
applicable Distribution Dates or, if the Capital Securities are held in
certificated form, such payments shall be made by check mailed to the address of
the holder entitled thereto as such address shall appear on the register
maintained by the registrar. The paying agent (the "Paying Agent") shall
initially be the Property Trustee and any co-paying agent chosen by the Property
Trustee and acceptable to the Regular Trustees and the Company. The Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and the Company. In the event that the Property Trustee shall
no longer be the Paying Agent, the Regular Trustees shall appoint a successor
(which shall be a bank or trust company acceptable to the Regular Trustees and
the Company) to act as Paying Agent.
Mergers, Consolidations, Amalgamations or Replacements of the Trust
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below. The Trust may, at the request of the Company, with the consent
of the Regular Trustees and without the consent of the holders of the Capital
Securities, the Delaware Trustee or the Property Trustee, merge with or into,
consolidate, amalgamate, be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to a trust organized as such
under the laws of any State; provided that (i) such successor entity (if not the
Trust) either (a) expressly assumes all of the obligations of the Trust with
respect to the Trust Securities or (b) substitutes for the Capital Securities
other securities having substantially the same terms as the Capital Securities
(the "Successor Securities") so long as the Successor Securities rank the same
as the Capital Securities rank in priority with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) if the Trust is not
the successor entity, the Company expressly appoints a trustee of such successor
entity possessing the same powers and duties as the Property Trustee as the
holder of the Junior Subordinated Debentures, (iii) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
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Capital Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (iv) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Capital Securities (including any Successor Securities) in any material respect,
(v) such successor entity has a purpose identical to that of the Trust, (vi)
prior to such merger, consolidation, amalgamation, replacement, conveyance,
transfer, or lease, the Company has received an opinion from independent counsel
to the Trust experienced in such matters to the effect that (a) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Capital Securities (including any Successor Securities) in any material respect
and (b) following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, (1) neither the Trust nor such successor entity
will be required to register as an investment company under the Investment
Company Act and (2) the Trust or the successor entity will continue to be
classified as a grantor trust for United States federal income tax purposes,
(vii) the Company or any permitted successor or assignee owns all of the Common
Securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee, and (viii) such successor entity (if not the Trust) expressly
assumes all of the obligations of the Trust with respect to the Trustees.
Notwithstanding the foregoing, the Trust shall not, except with the consent of
holders of 100% in aggregate liquidation amount of the Trust Securities,
consolidate, amalgamate, merge with or into, be replaced by or convey, transfer
or lease its properties and assets substantially as an entirety to any other
entity or permit any other entity to consolidate, amalgamate, merge with or
into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Trust or the successor entity to
be classified as other than a grantor trust for United States federal income tax
purposes and each holder of Trust Securities not to be treated as owning an
undivided interest in the New Junior Subordinated Debentures.
Merger or Consolidation of Trustees
Any corporation into which the Property Trustee, the Delaware Trustee or
any Regular Trustee that is not a natural person may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of such Trustee, shall be the successor of such Trustee under the Declaration,
provided such corporation shall be otherwise qualified and eligible.
Miscellaneous
The Regular Trustees are authorized and directed to conduct the affairs of
and to operate the Trust in such a way that the Trust will not be deemed to be
an "investment company" required to be registered under the Investment Company
Act or classified as other than a grantor trust for United States federal income
tax purposes and so that the New Junior Subordinated Debentures will be treated
as indebtedness of the Company for United States federal income tax purposes. In
this connection, the Company and the Regular Trustees are authorized to take any
action, not inconsistent with applicable law, the Certificate of Trust or the
Declaration, that the Company and the Regular Trustees determine in their
discretion to be necessary or desirable for such purposes, as long as such
action does not materially adversely affect the interests of the holders of the
Capital Securities.
The Trust may not borrow money, issue debt, or mortgage or pledge any of
its assets.
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DESCRIPTION OF NEW JUNIOR SUBORDINATED DEBENTURES
The New Junior Subordinated Debentures are to be issued under a Junior
Subordinated Indenture (the "Indenture") between the Company and The Bank of New
York, as trustee (the "Indenture Trustee"). This summary of certain terms and
provisions of the New Junior Subordinated Debentures and the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Indenture. Where used in this section, the term "Capital
Securities" refers to the New Capital Securities unless the context otherwise
requires.
General
Concurrently with the issuance of the Old Capital Securities, the Trust
invested the proceeds thereof and the consideration paid by the Company for the
Common Securities in the Old Junior Subordinated Debentures issued by the
Company. The New Junior Subordinated Debentures will be in the principal amount
equal to the aggregate liquidation amount of the New Capital Securities plus the
Company's concurrent investment in the Common Securities. The Junior
Subordinated Debentures will bear interest at the annual rate of 7.70% of the
principal amount thereof, payable semi-annually in arrears on the 15th day of
February and August of each year (each, an "Interest Payment Date"), commencing
August 15, 1997, to the person in whose name each Junior Subordinated Debenture
is registered, subject to certain exceptions, at the close of business on the
first day of the month of the relevant Interest Payment Date. It is anticipated
that, until the liquidation, if any, of the Trust, each Junior Subordinated
Debenture will be held in the name of the Property Trustee in trust for the
benefit of the holders of the Capital Securities and the Common Securities. The
amount of interest payable for any period will be computed on the basis of a
360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Junior Subordinated Debentures is not a Business Day,
then payment of the interest payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), with the same force and effect as if made on the
date such payment was originally payable. Accrued interest that is not paid on
the applicable Interest Payment Date will bear additional interest on the amount
thereof (to the extent permitted by law) at the rate per annum of 7.70% thereof,
compounded semi-annually. The term "interest" as used herein shall include
semi-annual interest payments and interest on semi-annual interest payments not
paid on the applicable Interest Payment Date, as applicable.
The New Junior Subordinated Debentures will mature on February 15, 2027
(the "Stated Maturity").
The New Junior Subordinated Debentures will be unsecured and will rank
junior and be subordinate in right of payment to all Indebtedness (as defined
below) of the Company. The Indenture does not limit the incurrence or issuance
of other secured or unsecured debt of the Company, whether under the Indenture
or any existing or other indenture that the Company may enter into in the future
or otherwise. See "-- Subordination."
The general provisions of the Indenture do not afford holders of the New
Junior Subordinated Debentures protection in the event of a highly leveraged or
other transaction involving the Company that may adversely affect holders of the
New Junior Subordinated Debentures.
Option to Extend Interest Payment Period
So long as no Indenture Event of Default has occurred and is continuing,
the Company has the right under the Indenture to defer the payment of interest
at any time or from time to time for a period not exceeding 10 consecutive
semi-annual periods with respect to each Extension Period, provided that no
Extension Period may extend beyond the Stated Maturity of the New Junior
Subordinated Debentures. At the end of such Extension Period, the Company must
pay all interest then accrued and unpaid (together with interest thereon at the
annual rate of 7.70%, compounded semi-annually, to the extent permitted by
applicable law). During an Extension Period, interest will continue to accrue
and holders of New Junior Subordinated Debentures (or holders of Capital
Securities while the Capital Securities are outstanding) will be required to
accrue interest income (as OID) for United States federal income tax purposes.
See "Certain United States Federal Income Tax Consequences -- Interest Income
and Original Issue Discount."
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During any such Extension Period, the Company may not, and may not permit
any subsidiary of the Company to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank pari passu with or junior in interest
to the New Junior Subordinated Debentures or make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any subsidiary
of the Company if such guarantee ranks pari passu with or junior in interest to
the Junior Subordinated Debentures (other than (a) dividends or distributions in
common stock of the Company, (b) payments under the New Guarantee, (c) any
declaration of a dividend in connection with the implementation of a
shareholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, and
(d) purchases of common stock related to the issuance of common stock or rights
under any of the Company's benefit plans). Prior to the termination of any such
Extension Period, the Company may further extend the Extension Period, provided
that no Extension Period may exceed 10 consecutive semi-annual periods or extend
beyond the Stated Maturity of the New Junior Subordinated Debentures. Upon the
termination of any such Extension Period and the payment of all amounts then due
on any Interest Payment Date, the Company may elect to begin a new Extension
Period subject to the above requirements. No interest shall be due and payable
during an Extension Period, except at the end thereof. The Company must give the
Property Trustee, the Regular Trustees and the Indenture Trustee notice of its
election of such Extension Period not less than one Business Day prior to such
record date. The Property Trustee shall give notice of the Company's election to
begin a new Extension Period to the holders of the Capital Securities.
Redemption
The New Junior Subordinated Debentures are not redeemable prior to
February 15, 2007 unless a Special Event has occurred. The New Junior
Subordinated Debentures are redeemable prior to maturity at the option of the
Company, subject to the receipt of any necessary prior approval of the
Regulatory Authorities, on or after February 15, 2007 in whole or in part at any
time at the redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest, if any, to the date of redemption,
if redeemed during the twelve-month period beginning on February 15 of the years
indicated below:
Year Percentage
---- ------------
2007 .................................................... 103.6220%
2008 .................................................... 103.2598%
2009 .................................................... 102.8976%
2010 .................................................... 102.5354%
2011 .................................................... 102.1732%
2012 .................................................... 101.8110%
2013 .................................................... 101.4488%
2014 .................................................... 101.0866%
2015 .................................................... 100.7244%
2016 .................................................... 100.3622%
On or after February 15, 2017, the redemption price will be 100%, plus
accrued and unpaid interest, if any, to the date of redemption.
The New Junior Subordinated Debentures are also redeemable at any time in
whole (but not in part), within 90 days of the occurrence of a Special Event, at
a redemption price (the "Special Event Prepayment Price") of 100% of the
principal amount of such New Junior Subordinated Debentures, plus accrued and
unpaid interest thereon to the date of prepayment; provided, however, that upon
the occurrence of a Tax Event, prior to exercising the rights described in this
paragraph, the Company shall be required to have received an opinion of counsel,
rendered by a law firm having a recognized national tax practice, to the effect
that, even if the Company were to liquidate the Trust and distribute the New
Junior Subordinated Debentures directly to holders of the Trust Securities,
either (i) such Tax Event would still exist or (ii) the Capital Securities would
not constitute Tier I Capital (or its then equivalent) of a bank holding
company.
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If the New Junior Subordinated Debentures are redeemed, the Trust must
redeem Trust Securities having an aggregate liquidation amount equal to the
aggregate principal amount of New Junior Subordinated Debentures so redeemed.
See "Description of New Capital Securities -- Mandatory Redemption."
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of New Junior Subordinated
Debentures to be redeemed at its registered address. Unless the Company defaults
in payment of the redemption price, on and after the redemption date interest
ceases to accrue on such New Junior Subordinated Debentures or portions thereof
called for redemption.
Certain Covenants of the Company
The Company will covenant in the Indenture that if and so long as the
Trust is the holder of all New Junior Subordinated Debentures, the Company, as
borrower, will pay to the Trust all fees and expenses related to the Trust and
the offering of the Capital Securities and will pay, directly or indirectly, all
ongoing costs, expenses and liabilities of the Trust (including any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States or any domestic taxing authority
upon the Trust but excluding obligations under the Capital Securities).
The Company will also covenant that at such time as (x) there shall have
occurred any event of which the Company has actual knowledge that with the
giving of notice or the lapse of time, or both, would constitute an Indenture
Event of Default with respect to New Junior Subordinated Debentures and in
respect of which the Company shall not have taken reasonable steps to cure, (y)
the Company shall be in default with respect to its payment of any obligations
under the Guarantee or (z) the Company shall have given notice of its election
of an Extension Period as provided in the Indenture and shall not have rescinded
such notice, or such Extension Period, or any extension thereof, shall be
continuing, it will not, and will not permit any subsidiary of the Company to,
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Company's
capital stock or (ii) make any payment of principal, interest or premium, if
any, on or repay or repurchase or redeem any debt securities of the Company that
rank pari passu with or junior in interest to the New Junior Subordinated
Debentures or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu with or junior in interest to the New Junior
Subordinated Debentures (other than (a) dividends or distributions in common
stock of the Company, (b) payments under the Guarantee, (c) any declaration of a
dividend in connection with the implementation of a shareholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, and (d) purchases of common
stock related to the issuance of common stock or rights under any of the
Company's benefit plans).
Subordination
In the Indenture, the Company has covenanted and agreed that any New
Junior Subordinated Debentures issued thereunder will be subordinated and junior
in right of payment to all Indebtedness to the extent provided in the Indenture.
Upon any payment or distribution of assets of the Company upon any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, the holders of Indebtedness will first be
entitled to receive payment in full of principal of and premium, if any, and
interest, if any, on such Indebtedness before the holders of New Junior
Subordinated Debentures or the Property Trustee on behalf of the holders of
Capital Securities will be entitled to receive or retain any payment in respect
of the principal of and premium, if any, or interest, if any, on the New Junior
Subordinated Debentures; provided, however, that holders of Indebtedness shall
not be entitled to receive payment of any such amounts to the extent that such
holders would be required by the subordination provisions of such Indebtedness
to pay such amounts over to the obligees on trade accounts payable or other
liabilities arising in the ordinary course of the Company's business.
In the event of the acceleration of the maturity of any New Junior
Subordinated Debentures, the holders of all Indebtedness outstanding at the time
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of such acceleration will first be entitled to receive payment in full of all
amounts then due thereon (including any amounts due upon acceleration) before
the holders of New Junior Subordinated Debentures will be entitled to receive or
retain any payment in respect of the principal of and premium, if any, or
interest, if any, on the New Junior Subordinated Debentures; provided, however,
that holders of Indebtedness shall not be entitled to receive payment of any
such amounts to the extent that such holders would be required by the
subordination provisions of such Indebtedness to pay such amounts over to the
obligees on trade accounts payable or other liabilities arising in the ordinary
course of the Company's business.
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the New Junior Subordinated Debentures may be made if there
shall have occurred and be continuing a default in any payment with respect to
Indebtedness, or an event of default with respect to any Indebtedness resulting
in the acceleration of the maturity thereof, or if any judicial proceeding shall
be pending with respect to any such default.
"Indebtedness" means with respect to any person, whether recourse is to
all or a portion of the assets of such person and whether or not contingent, (i)
every obligation of such person for money borrowed; (ii) every obligation of
such person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such person; (iv) every obligation of such person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such person; (vi) every
obligation of such person for claims (as defined in Section 101(4) of the United
States Bankruptcy Code of 1978, as amended) in respect of derivative products
such as interest and foreign exchange rate contracts, commodity contracts and
similar arrangements; and (vii) every obligation of the type referred to in
clauses (i) through (vi) of another person and all dividends of another person
the payment of which, in either case, such person has guaranteed or is
responsible or liable, directly or indirectly, as obligor or otherwise; provided
that "Indebtedness" shall not include (i) any obligations which, by their terms,
are expressly stated to rank pari passu in right of payment with, or to not be
superior in right of payment to, the New Junior Subordinated Debentures, (ii)
any Indebtedness of the Company which when incurred and without respect to any
election under Section 1111(b) of the United States Bankruptcy Code of 1978, as
amended, was without recourse to the Company, (iii) any Indebtedness of the
Company to any of its subsidiaries, (iv) Indebtedness of the Company to any
employee of the Company, or (v) any indebtedness in respect of debt securities
issued to any trust, or a trustee of such trust, partnership or other entity
affiliated with the Company that is a financing entity of the Company in
connection with the issuance of such financing entity of securities that are
similar to the Capital Securities.
The Indenture places no limitation on the amount of additional
Indebtedness that may be incurred by the Company or any indebtedness or other
liabilities that may be incurred by the Company's subsidiaries. As of December
31, 1996, Indebtedness of the Company aggregated approximately $14.6 billion,
and the Company's subsidiaries had approximately $2.1 billion of indebtedness or
other liabilities, in addition to other contractual obligations, to which the
New Junior Subordinated Debentures would be effectively subordinated.
Indenture Events of Default
The Indenture provides that any one or more of the following described
events with respect to the New Junior Subordinated Debentures that has occurred
and is continuing constitutes an "Indenture Event of Default" with respect to
the New Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on the New Junior
Subordinated Debentures when due (subject to the deferral of any due date
in the case of an Extension Period); or
(ii) failure to pay any principal on the New Junior Subordinated
Debentures when due whether at maturity, upon redemption by declaration or
otherwise; or
(iii) failure to observe or perform in any material respect any other
covenant contained in the Indenture for 90 days after written notice to
the Company from the Indenture Trustee or the holders of at least 25% in
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aggregate outstanding principal amount of outstanding New Junior
Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of
the Company.
The holders of a majority in aggregate outstanding principal amount of New
Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee. The Indenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of New Junior Subordinated Debentures may declare
the principal due and payable immediately upon an Indenture Event of Default,
and, should the Indenture Trustee or such holders of such New Junior
Subordinated Debentures fail to make such declaration, the holders of at least
25% in aggregate liquidation amount of the Capital Securities shall have such
right. The holders of a majority in aggregate outstanding principal amount of
New Junior Subordinated Debentures may annul such declaration and waive the
default if the default (other than the non-payment of the principal of New
Junior Subordinated Debentures which has become due solely by such acceleration)
has been cured and a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with the
Indenture Trustee, and should the holders of such New Junior Subordinated
Debentures fail to annul such declaration and waive such default, the holders of
a majority in aggregate liquidation amount of the Capital Securities shall have
such right.
The holders of a majority in aggregate outstanding principal amount of the
New Junior Subordinated Debentures affected thereby may, on behalf of the
holders of all the New Junior Subordinated Debentures, waive any past default,
except a default in the payment of principal or interest (unless such default
has been cured and a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with the
Indenture Trustee) or a default in respect of a covenant or provision which
under the Indenture cannot be modified or amended without the consent of the
holder of each outstanding New Junior Subordinated Debenture, and should the
holders of such New Junior Subordinated Debentures fail to waive such default,
the holders of a majority in aggregate liquidation amount of the Capital
Securities shall have such right. The Company is required to file annually with
the Indenture Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Indenture.
In case an Indenture Event of Default shall occur and be continuing, the
Property Trustee will have the right to declare the principal of and the
interest on such New Junior Subordinated Debentures and any other amounts
payable under the Indenture to be forthwith due and payable and to enforce its
other rights as a creditor with respect to such New Junior Subordinated
Debentures.
Enforcement of Certain Rights by Holders of Capital Securities
If an Indenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or principal
on the New Junior Subordinated Debentures on the date such interest or principal
is otherwise payable, a holder of Capital Securities may institute a Direct
Action for payment. The Company may not amend the Indenture to remove the
foregoing right to bring a Direct Action without the prior written consent of
the holders of all of the Capital Securities. Notwithstanding any payment made
to such holder of Capital Securities by the Company in connection with a Direct
Action, the Company shall remain obligated to pay the principal of or interest
on the New Junior Subordinated Debentures held by the Trust or the Property
Trustee and the Company shall be subrogated to the rights of the holder of such
Capital Securities with respect to payments on the Capital Securities to the
extent of any payments made by the Company to such holder in any Direct Action.
The holders of Capital Securities will not be able to exercise directly any
other remedy available to the holders of the New Junior Subordinated Debentures.
Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture provides that the Company shall not consolidate with or
merge into any other Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, unless (i) in case the
Company consolidates with or merges into another Person or conveys, transfers or
leases its properties and assets substantially as an entirety to any Person, the
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successor Person is organized under the laws of the United States or any state
or the District of Columbia, and such successor Person expressly assumes the
Company's obligations on the New Junior Subordinated Debentures issued under the
Indenture; (ii) immediately after giving effect thereto, no Indenture Event of
Default, and no event which, after notice or lapse of time or both, would become
an Indenture Event of Default, shall have happened and be continuing; (iii) if
at the time any Capital Securities are outstanding, such transaction is
permitted under the Declaration and the New Guarantee and does not give rise to
any breach or violation of the Declaration or the New Guarantee; (iv) any such
lease shall provide that it will remain in effect so long as any New Junior
Subordinated Debentures are outstanding; and (v) certain other conditions as
prescribed in the Indenture are met.
Modification of Indenture
From time to time the Company and the Indenture Trustee may, without the
consent of the holders of the New Junior Subordinated Debentures, amend, waive
or supplement the Indenture for specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies (provided that any such
action does not materially adversely affect the interest of the holders of New
Junior Subordinated Debentures) and qualifying, or maintaining the qualification
of, the Indenture under the Trust Indenture Act. The Indenture contains
provisions permitting the Company and the Indenture Trustee, with the consent of
the holders of not less than a majority in principal amount of outstanding New
Junior Subordinated Debentures affected, to modify the Indenture in a manner
affecting the rights of the holders of such New Junior Subordinated Debentures;
provided that no such modification may, without the consent of the holder of
each outstanding New Junior Subordinated Debenture so affected, (i) change the
stated maturity of New Junior Subordinated Debentures, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon (except such extension as is contemplated hereby) or (ii) reduce the
percentage of principal amount of New Junior Subordinated Debentures the holders
of which are required to consent to any such modification of the Indenture,
provided that, so long as any Capital Securities remain outstanding, no such
modification may be made that adversely affects the holders of such Capital
Securities in any material respect, and no termination of the Indenture may
occur, and no waiver of any Indenture Event of Default or compliance with any
covenant under the Indenture may be effective, without the prior consent of the
holders of at least a majority of the aggregate liquidation amount of the
outstanding Capital Securities unless and until the principal of the New Junior
Subordinated Debentures and all accrued and unpaid interest thereon have been
paid in full and certain other conditions are satisfied.
Defeasance and Discharge
The Indenture provides that the Company, at the Company's option: (a) will
be discharged from any and all obligations in respect of the New Junior
Subordinated Debentures (except for certain obligations to register the transfer
or exchange of New Junior Subordinated Debentures, replace stolen, lost or
mutilated New Junior Subordinated Debentures, maintain paying agencies and hold
moneys for payment in trust) or (b) need not comply with certain restrictive
covenants of the Indenture (including that described in the second paragraph
under "Certain Covenants of the Company"), in each case if the Company deposits,
in trust with the Indenture Trustee, money or U.S. Government Obligations which
through the payment of interest thereon and principal thereof in accordance with
their terms will provide money in an amount sufficient to pay all the principal
of, and interest and premium, if any, on the New Junior Subordinated Debentures
on the dates such payments are due in accordance with the terms of such New
Junior Subordinated Debentures. To exercise any such option, the Company is
required to deliver to the Indenture Trustee an opinion of counsel to the effect
that the deposit and related defeasance would not cause the holders of the New
Junior Subordinated Debentures to recognize income, gain or loss for United
States federal income tax purposes and, in the case of a discharge pursuant to
clause (a), such opinion shall be accompanied by a private letter ruling to such
effect received by the Company from the United States Internal Revenue Service
or a revenue ruling pertaining to a comparable form of transaction to such
effect published by the United States Internal Revenue Service.
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Distributions of Junior Subordinated Debentures; Book-Entry Issuance
Under certain circumstances involving the termination of the Trust, New
Junior Subordinated Debentures may be distributed to the holders of the Capital
Securities in liquidation of the Trust after satisfaction of liabilities to
creditors of the Trust as provided by applicable law. If distributed to holders
of Capital Securities in liquidation, the New Junior Subordinated Debentures
will initially be issued in the form of global securities and certificated
securities. DTC, or any successor depositary, will act as depositary for such
global securities. It is anticipated that the depositary arrangements for such
global securities would be substantially identical to those in effect for the
Capital Securities. For a description of global securities and certificated
securities, see "Book-Entry Issuance."
There can be no assurance as to the market price of any New Junior
Subordinated Debentures that may be distributed to the holders of Capital
Securities.
Payment and Paying Agents
The Company initially will act as Paying Agent with respect to the New
Junior Subordinated Debentures except that, if the New Junior Subordinated
Debentures are distributed to the holders of the Capital Securities in
liquidation of such holders' interests in the Trust, the Indenture Trustee will
act as the Paying Agent. The Company at any time may designate additional Paying
Agents or rescind the designation of any Paying Agent or approve a change in the
office through which any Paying Agent acts, except that the Company will be
required to maintain a Paying Agent at the place of payment.
Any moneys deposited with the Indenture Trustee or any Paying Agent, or
then held by the Company in trust, for the payment of the principal of and
premium, if any, or interest on any New Junior Subordinated Debentures and
remaining unclaimed for two years after such principal and premium, if any, or
interest has become due and payable shall, at the request of the Company, be
repaid to the Company and the holder of such New Junior Subordinated Debentures
shall thereafter look, as a general unsecured creditor, only to the Company for
payment thereof.
Governing Law
The Indenture and the New Junior Subordinated Debentures will be governed
by and construed in accordance with the laws of the State of New York.
Information Concerning the Indenture Trustee
The Indenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act of 1939, as amended. Subject to such provisions, the Indenture
Trustee is under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of New Junior Subordinated Debentures,
unless offered reasonable indemnity by such holder against the costs, expenses
and liabilities which might be incurred thereby. The Indenture Trustee is not
required to expend or risk its own funds or otherwise incur personal financial
liability in the performance of its duties if the Indenture Trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to it.
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DESCRIPTION OF NEW GUARANTEE
The Old Guarantee was executed and delivered by the Company concurrently
with the issuance by the Trust of the Old Capital Securities for the benefit of
the holders from time to time of such Capital Securities. As soon as practicable
after the Expiration Date, the Old Guarantee will be exchanged by the Company
for the New Guarantee. The Bank of New York will act as trustee ("Guarantee
Trustee") under the New Guarantee. This summary of certain provisions of the New
Guarantee does not purport to be complete and is subject to, and qualified in
its entirety by reference to, all of the provisions of the New Guarantee,
including the definitions therein of certain terms. The Guarantee Trustee will
hold the New Guarantee for the benefit of the holders of the Trust Securities.
General
The Company will irrevocably and unconditionally agree to pay in full on a
subordinated basis, to the extent set forth herein, the Guarantee Payments (as
defined below) to the holders of the Trust Securities, as and when due,
regardless of any defense, right of set-off or counterclaim that the Trust may
have or assert other than the defense of payment. The following payments with
respect to the Capital Securities, to the extent not paid by or on behalf of the
Trust (the "Guarantee Payments"), will be subject to the New Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on the Trust
Securities, to the extent that the Trust has sufficient funds available therefor
at the time, (ii) the redemption price with respect to any Trust Securities
called for redemption, to the extent that the Trust has sufficient funds
available therefor at such time, or (iii) upon a voluntary or involuntary
dissolution, winding up or liquidation of the Trust (unless the New Junior
Subordinated Debentures are distributed to holders of the Trust Securities), the
lesser of (a) the aggregate liquidation amount of the Trust Securities and all
accrued and unpaid Distributions thereon to the date of payment and (b) the
amount of assets of the Trust remaining available for distribution to holders of
Trust Securities. The Company's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Company to the
holders of the applicable Trust Securities or by causing the Trust to pay such
amounts to such holders.
The New Guarantee will be an irrevocable guarantee on a subordinated basis
of the Trust's obligations under the Trust Securities, but will apply only to
the extent that the Trust has sufficient funds available to make such payments.
If the Company does not make interest payments on the New Junior
Subordinated Debentures held by the Trust, the Trust will not be able to pay
Distributions on the Trust Securities and will not have funds legally available
therefor. The New Guarantee will rank subordinate and junior in right of payment
to all general liabilities of the Company. See "-- Status of the New Guarantee."
The New Guarantee does not limit the incurrence or issuance of other secured or
unsecured debt of the Company, whether under the Indenture or any existing or
other indenture that the Company may enter into in the future or otherwise.
The Company has, through the New Guarantee, the New Junior Subordinated
Debentures and the Indenture, taken together, fully and unconditionally
guaranteed all of the Trust's obligations under the Trust Securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full and unconditional
guarantee of the Trust's obligations under the Trust Securities. See
"Relationship Among the New Capital Securities, the New Junior Subordinated
Debentures and the New Guarantee -- General."
Status of the New Guarantee
The New Guarantee will constitute an unsecured obligation of the Company
and will rank subordinate and junior in right of payment to all Indebtedness of
the Company. The New Guarantee does not place a limitation on the amount of
additional Indebtedness that may be incurred by the Company.
The New Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the Guarantor to enforce its rights under the New Guarantee without
first instituting a legal proceeding against any other person or entity). The
Guarantee will be held for the benefit of the holders of the Trust Securities.
The New Guarantee will not be discharged except by payment of the Guarantee
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Payments in full to the extent not paid by the Trust or upon distribution of the
Junior Subordinated Debentures to the holders of the Trust Securities in
exchange for all of the Trust Securities.
Amendments and Assignment
Except with respect to any changes that do not materially adversely affect
the rights of holders of the Trust Securities (in which case no vote will be
required), the New Guarantee may not be amended without the prior approval of
the holders of not less than a majority of the aggregate liquidation amount of
the outstanding Capital Securities. The manner of obtaining any such approval
will be as set forth under "Description of New Capital Securities -- Voting
Rights; Amendment of the Declaration." All guarantees and agreements contained
in the New Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the registered
holders of the Trust Securities then outstanding.
Events of Default
An event of default under the New Guarantee will occur upon the failure of
the Company to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate liquidation amount of the Capital Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee in respect of the New
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the New Guarantee.
Any holder of the Capital Securities may institute a legal proceeding
directly against the Company to enforce its rights under the New Guarantee
without first instituting a legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the New Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Company in performance of the New Guarantee, undertakes to
perform only such duties as are specifically set forth in each New Guarantee
and, after default with respect to the New Guarantee, must exercise the same
degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by the
New Guarantee at the request of any holder of any Trust Security unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
Termination of the New Guarantee
The New Guarantee will terminate and be of no further force and effect
upon full payment of the redemption price of all of the Trust Securities, upon
full payment of the amounts payable upon liquidation of the Trust or upon
distribution of New Junior Subordinated Debentures to the holders of the Trust
Securities in exchange for all of the Trust Securities. The New Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of the Trust Securities must restore payment of any sums paid
under the Trust Securities or the New Guarantee.
Governing Law
The New Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
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RELATIONSHIP AMONG THE NEW CAPITAL SECURITIES,
THE NEW JUNIOR SUBORDINATED DEBENTURES AND THE NEW GUARANTEE
Payments of Distributions and other amounts due on the New Capital
Securities (to the extent the Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of New Guarantee." If and to the extent that the
Company does not make payments under the New Junior Subordinated Debentures, the
Trust will not pay Distributions or other amounts due on the New Capital
Securities. The New Guarantee does not cover payment of Distributions when the
Trust does not have sufficient funds to pay such Distributions. In such event, a
holder of New Capital Securities may institute a legal proceeding directly
against the Company under the Indenture to enforce payment of such Distributions
to such holder after the respective due dates. Taken together, the Company's
obligations under the New Junior Subordinated Debentures, the Indenture and the
New Guarantee provide, in the aggregate, a full and unconditional guarantee of
payments of distributions and other amounts due on the New Capital Securities.
No single document standing alone or operating in conjunction with fewer than
all of the other documents constitutes such guarantee. It is only the combined
operation of these documents that has the effect of providing a full and
unconditional guarantee of the Trust's obligations under the New Capital
Securities. The obligations of the Company under the New Guarantee and the New
Junior Subordinated Debentures are subordinate and junior in right of payment to
all Indebtedness of the Company.
Sufficiency of Payments
As long as payments of interest and other payments are made when due on
the New Junior Subordinated Debentures, such payments will be sufficient to
cover Distributions and other payments due on the New Capital Securities,
primarily because (i) the aggregate principal amount of the New Junior
Subordinated Debentures will be equal to the sum of the aggregate stated
liquidation amount of the New Capital Securities and the Common Securities; (ii)
the interest rate and interest and other payment dates on the New Junior
Subordinated Debentures will match the Distribution rate and Distribution and
other payment dates for the related New Capital Securities; (iii) the Company
will pay for all and any costs, expenses and liabilities of the Trust except the
Trust's obligations under the New Capital Securities; and (iv) the Declaration
further provides that the Trust will not engage in any activity that is not
consistent with the limited purposes of the Trust.
Notwithstanding anything to the contrary in the Indenture, the Company has
the right to set-off any payment it is otherwise required to make thereunder
with and to the extent the Company has theretofore made, or is concurrently on
the date of such payment making, a related payment under the New Guarantee.
Enforcement Rights of Holders of New Capital Securities
A holder of New Capital Securities may institute a legal proceeding
directly against the Company to enforce its rights under the New Guarantee
without first instituting a legal proceeding against the Guarantee Trustee, the
Trust or any other person or entity.
A default or event of default under any Indebtedness of the Company will
not constitute a default or Indenture Event of Default. In addition, in the
event of payment defaults under, or acceleration of, Indebtedness of the
Company, the subordination provisions of the Indenture provide that no payments
may be made in respect of the New Junior Subordinated Debentures until such
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on the New Junior
Subordinated Debentures would constitute an Indenture Event of Default under the
Indenture.
Limited Purpose of Trust
The New Capital Securities evidence a beneficial interest in the assets of
the Trust, and the Trust exists for the sole purpose of issuing the Capital
Securities and the Common Securities and investing the proceeds thereof in
Junior Subordinated Debentures. A principal difference between the rights of a
holder of New Capital Securities and a holder of New Junior Subordinated
Debentures is that a holder of New Junior Subordinated Debentures is entitled to
receive from the Company the principal amount of and interest accrued on New
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Junior Subordinated Debentures held, while a holder of New Capital Securities is
entitled to receive Distributions from the Trust (or from the Company under the
New Guarantee) if and to the extent the Trust has funds available for the
payment of such Distributions.
Rights Upon Termination
Upon any voluntary or involuntary termination, winding-up or liquidation
of the Trust involving the liquidation of the New Junior Subordinated
Debentures, the holders of the New Capital Securities will be entitled to
receive, out of assets held by the Trust, the liquidation distribution in cash.
See "Description of New Capital Securities -- Liquidation Distribution Upon
Dissolution." Upon any voluntary or involuntary liquidation or bankruptcy of the
Company, the Property Trustee, as holder of the New Junior Subordinated
Debentures, would be a subordinated creditor of the Company, subordinated in
right of payment to all Indebtedness, but entitled to receive payment in full of
principal and interest before any stockholders of the Company receive payments
or distributions. Since the Company is the guarantor under the New Guarantee and
has agreed to pay for all costs, expenses and liabilities of the Trust (other
than the Trust's obligations to the holders of the Capital Securities), the
positions of a holder of New Capital Securities and a holder of the New Junior
Subordinated Debentures relative to other creditors and to stockholders of the
Company in the event of liquidation or bankruptcy of the Company would be
substantially the same.
DESCRIPTION OF THE OLD SECURITIES
The terms of the Old Securities are identical in all material respects to
the New Securities, except that (i) the Old Securities have not been registered
under the Securities Act, are subject to certain restrictions on transfer and
are entitled to certain rights under the Registration Rights Agreement (which
rights will terminate upon consummation of the Exchange Offer, except under
limited circumstances); (ii) the New Capital Securities will not provide for any
increase in the Distribution rate thereon; and (iii) the New Junior Subordinated
Debentures will not provide for any increase in the interest rate thereon. The
Old Securities provide that, in the event that the Exchange Offer is not
consummated by September 23, 1997, additional interest (the "Additional
Interest") will become payable in respect of the old Junior Subordinated
Debentures (including in respect of amounts accruing during any Extension
Period), and corresponding additional distributions (the "Additional
Distributions") will become payable on the Old Capital Securities, at the rate
of 0.25% per annum applicable to the principal amount of the Old Junior
Subordinated Debentures or the liquidation amount of Old Capital Securities, as
the case may be, for the period from and including such date to, but excluding,
the date on which the Exchange Offer is consummated. All accrued Additional
Interest (and corresponding Additional Distributions) will be paid by the
Company on each Distribution payment date to DTC by wire transfer of immediately
available funds or by federal funds check and to holders of certificated
securities by wire transfer to the accounts specified by them or by mailing
checks to their registered addresses if no such accounts have been specified.
Accordingly, holders of Old Capital Securities should review the information set
forth under "Risk Factors -- Certain Consequences of a Failure to Exchange Old
Capital Securities" and "Description of the New Securities."
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Schulte Roth & Zabel LLP, special United States federal
income tax counsel to the Company and the Trust ("Tax Counsel"), the following
summary accurately describes the material United States federal income tax
consequences that may be relevant to the purchase, ownership and disposition of
the New Capital Securities. Unless otherwise stated, this summary deals only
with Capital Securities held as capital assets by United States Holders (defined
below) who purchase the Capital Securities upon original issuance at their
original offering price. As used herein, a "United States Holder" means (i) a
person that is a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate the income
of which is subject to United States federal income taxation regardless of its
source, or (iv) a trust if a court within the United States is able to exercise
primary supervision over the administration of such trust and one or more United
States fiduciaries have the authority to control all the substantial decisions
of such trust. The tax treatment of a holder may vary depending on his, her or
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its particular situation. This summary does not address all the tax consequences
that may be relevant to a particular holder or to holders who may be subject to
special tax treatment, such as banks, real estate investment trusts, regulated
investment companies, insurance companies, dealers in securities or currencies,
or tax-exempt investors. In addition, this summary does not include any
description of any alternative minimum tax consequences or the tax laws of any
state, local or foreign government that may be applicable to a holder of New
Capital Securities. This summary is based on the Internal Revenue Code of 1986,
as amended (the "Code"), the Treasury regulations promulgated thereunder and
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change, possibly on a retroactive basis. The authorities
on which this summary is based are subject to various interpretations and the
opinions of Tax Counsel are not binding on the Internal Revenue Service ("IRS")
or the courts, either of which could take a contrary position. Moreover, no
rulings have been or will be sought from the IRS with respect to the
transactions described herein. Accordingly, there can be no assurance that the
IRS will not challenge the opinions expressed herein or that a court would not
sustain such a challenge. Nevertheless, Tax Counsel has advised that it is of
the view that, if challenged, the opinions expressed herein would be sustained
by a court with jurisdiction in a properly presented case.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE CAPITAL
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN, AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR
OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION OF THE CAPITAL
SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS SEE "DESCRIPTION OF CAPITAL
SECURITIES -- REDEMPTION -- SPECIAL EVENT REDEMPTION OR DISTRIBUTION OF JUNIOR
SUBORDINATED DEBENTURES."
Classification of the Trust
In connection with the issuance of the New Capital Securities, Tax Counsel
is of the opinion that under current law and assuming full compliance with the
terms of the Declaration and other documents, the Trust will be classified as a
grantor trust and not as an association taxable as a corporation for United
States federal income tax purposes. Accordingly, for United States federal
income tax purposes, each holder of New Capital Securities will be treated as
owning an undivided beneficial interest in the New Junior Subordinated
Debentures and, thus, will be required to include in its gross income its pro
rata share of interest income or OID that is paid or accrued on the New Junior
Subordinated Debentures.
Classification of the New Junior Subordinated Debentures
The Company, the Trust and the holders of the New Capital Securities (by
the acceptance of a beneficial interest in a Capital Security) will agree to
treat the New Junior Subordinated Debentures as indebtedness for all United
States tax purposes. In connection with the issuance of the New Junior
Subordinated Debentures, Tax Counsel is of the opinion that, under current law,
and based on certain representations, facts and assumptions set forth in such
opinion, the New Junior Subordinated Debentures will be classified as
indebtedness for United States federal income tax purposes.
Interest Income and Original Issue Discount
Under the applicable Treasury regulations, the New Junior Subordinated
Debentures will not be treated as issued with OID within the meaning of section
1273(a) of the Code. Accordingly, except as set forth below, stated interest on
the New Junior Subordinated Debentures generally will be taxable to a holder as
ordinary income at the time it is paid or accrued in accordance with such
holder's regular method of tax accounting.
If, however, the Company exercises its right to defer payments of
interest on the New Junior Subordinated Debentures, the New Junior Subordinated
Debentures will become OID instruments at such time and all holders of the New
Junior Subordinated Debentures and, consequently, holders of the New Capital
Securities will be required to accrue their pro rata share of OID (which will
include both the stated interest and de minimis OID on the New Junior
Subordinated Debentures) on a daily economic accrual basis during the Extension
Period even though the Company will not pay stated interest on the New Junior
Subordinated Debentures until the end of the Extension Period, and even though
some holders may use the cash method of tax accounting. Moreover, thereafter the
New Junior Subordinated Debentures will be taxed as OID instruments for as long
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as they remain outstanding. Thus, even after the end of an Extension Period, all
holders would be required to continue to include the stated interest (and de
minimis OID) on the New Junior Subordinated Debentures in income on a daily
basis, regardless of their method of tax accounting and in advance of receipt of
the cash attributable to such income. Under the OID economic accrual rules, a
holder would accrue an amount of interest income each year that approximates the
stated interest payments called for under the terms of the New Junior
Subordinated Debentures, and actual cash payments of stated interest on the New
Junior Subordinated Debentures would not be reported separately as taxable
income. Any amount of OID included in a holder's gross income (whether or not
during an Extension Period) with respect to a New Capital Security will increase
such holder's tax basis in such New Capital Security, and the amount of
Distributions received by a holder in respect of such accrued OID will reduce
the tax basis of such New Capital Security.
The Treasury regulations described above have not yet been addressed in
any rulings or other interpretations by the IRS, and it is possible that the IRS
could take a contrary position. If the IRS were to assert successfully that the
stated interest on the New Junior Subordinated Debentures was OID regardless of
whether the Company exercises its option to defer payments of interest on such
debentures, all holders of New Capital Securities would be required to include
such stated interest (and de minimis OID) in income on a daily economic accrual
basis as described above.
Corporate holders of New Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized by such
holders with respect to the New Capital Securities.
Distribution of New Junior Subordinated Debentures or Cash upon Liquidation of
the Trust
As described under the caption "Description of New Junior Subordinated
Debentures -- Distribution of New Junior Subordinated Debentures" New Junior
Subordinated Debentures may be distributed to holders in exchange for the
Capital Securities and in liquidation of the Trust. Under current law, such a
distribution would be non-taxable, and will result in the holder receiving
directly its pro rata share of the New Junior Subordinated Debentures previously
held indirectly through the Trust, with a holding period and aggregate tax basis
equal to the holding period and aggregate tax basis such holder had in its
Capital Securities before such distribution. If, however, the liquidation of the
Trust were to occur because the Trust is subject to United States federal income
tax with respect to income accrued or received on the New Junior Subordinated
Debentures, the distribution of the New Junior Subordinated Debentures to
holders could be a taxable event to the Trust and to each holder and a holder
may be required to recognize gain or loss as if the holder had exchanged its New
Capital Securities for the New Junior Subordinated Debentures it received upon
liquidation of the Trust. A holder would accrue interest in respect of the New
Junior Subordinated Debentures received from the Trust in the manner described
above under "-- Interest Income and Original Issue Discount."
Under certain circumstances described herein (see "Description of New
Capital Securities -- Special Event Redemption or Distribution of New Junior
Subordinated Debentures"), the New Junior Subordinated Debentures may be
redeemed for cash, with the proceeds of such redemption distributed to holders
in redemption of their New Capital Securities. Under current law, such a
redemption would constitute a taxable disposition of the redeemed New Capital
Securities for United States federal income tax purposes, and a holder would
recognize gain or loss as if it sold such redeemed New Capital Securities for
cash. See "-- Sales of New Capital Securities."
Sales of New Capital Securities
A holder that sells New Capital Securities (including a redemption of New
Capital Securities) will recognize gain or loss equal to the difference between
the amount realized by such holder on the sale of the New Capital Securities
(except to the extent that such amount realized is characterized as a payment in
respect of accrued but unpaid interest on such holder's allocable share of the
New Junior Subordinated Debentures that the holder had not included in gross
income previously) and the holder's adjusted tax basis in the New Capital
Securities sold. Such gain or loss generally will be a capital gain or loss and
generally will be taxable as a long-term capital gain or loss if the New
Securities have been held for more than one year. Subject to certain limited
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exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
Exchange Offer
The exchange of the Old Junior Subordinated Debentures for the New Junior
Subordinated Debentures pursuant to the Exchange Offer should not be treated as
an "exchange" for United States federal income tax purposes because the New
Junior Subordinated Debentures should not be considered to differ materially in
kind or extent from the Old Junior Subordinated Debentures. Rather, the New
Junior Subordinated Debentures received by the Trust should be treated as a
continuation of the Old Junior Subordinated Debentures in the hands of the
Trust. As a result, there should be no United States federal income tax
consequences to a holder exchanging Old Capital Securities for New Capital
Securities pursuant to the Exchange Offer. Accordingly, the New Capital
Securities should be treated as having the same issue date and issue price as
the Old Capital Securities for United States federal income tax purposes.
Proposed Tax Law Changes
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill")
was introduced in the 104th Congress which would have, among other things,
generally denied interest deductions for interest or OID on an instrument issued
by a corporation that has a maximum term of more than 20 years and that is not
shown as indebtedness on the separate balance sheet of the issuer or, where the
instrument is issued to a related party (other than a corporation) where the
holder or some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. This provision of
the Bill was proposed to be effective generally for instruments issued on or
after December 7, 1995. If this provision were to apply to the New Junior
Subordinated Debentures, the Company would not be able to deduct the interest on
the New Junior Subordinated Debentures. However, on March 29, 1996, the Chairmen
of the Senate Finance and House Ways and Means Committees issued the Joint
Statement to the effect that it was their intention that the effective date of
the Bill, if enacted, would be no earlier than the date of appropriate
Congressional action. In addition, subsequent to the publication of the Joint
Statement, Senator Daniel Patrick Moynihan and Representatives Sam M. Gibbons
and Charles B. Rangel wrote the Democrat Letters to Treasury Department
officials concurring with the views expressed in the Joint Statement. The 104th
Congress adjourned without enacting the Bill. Similar legislation was reproposed
by the Treasury Department on February 6, 1997, as part of President Clinton's
Fiscal 1998 Budget Proposal (the "Proposed Legislation"). The Proposed
Legislation would, however, generally deny an interest deduction with respect to
an instrument not shown as indebtedness on the separate or consolidated balance
sheet of the issuer (as described above) and with a maximum term of more than 15
years (as contrasted to a maximum term of more than 20 years under the provision
of the Bill). Such provision is proposed to be effective generally for
instruments issued on or after the date of the first committee action. If the
effective date contained in the Proposed Legislation is followed, the
above-described provision would not apply to the New Junior Subordinated
Debentures.There can be no assurance, however, that current or future
legislative or administrative proposals or final legislation will not adversely
affect the ability of the Company to deduct interest on the New Junior
Subordinated Debentures or otherwise affect the tax treatment described herein.
Such a change, therefore, could give rise to a Tax Event, which would permit the
Company, upon receiving an opinion of counsel, to cause the redemption of the
New Capital Securities or to terminate the Trust and distribute the New Junior
Subordinated Debentures to the holders of Trust Securities in liquidation of the
Trust, as described more fully under "Description of New Capital Securities --
Special Event Redemption or Distribution of New Junior Subordinated Debentures."
Non-United States Holders
As used herein, the term "Non-United States Holder" means any person that
is not a United States Holder (as defined above). As discussed above, the New
Capital Securities will be treated as evidence of an indirect beneficial
ownership interest in the New Junior Subordinated Debentures. See "--
Classification of the Trust." Thus, under present United States federal income
tax law, and subject to the discussion below concerning backup withholding:
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(a) no withholding of United States federal income tax will be
required with respect to the payment by the Trust or any paying agent of
principal or interest (which for purposes of this discussion includes any
OID) with respect to the New Capital Securities (or on the New Junior
Subordinated Debentures) to a Non-United States Holder, provided (i) that
the beneficial owner of the Capital Securities ("Beneficial Owner") does
not actually or constructively own 10% or more of the total combined
voting power of all classes of stock of the Company entitled to vote
within the meaning of section 871(h)(3) of the Code and the regulations
thereunder, (ii) the Beneficial Owner is not a controlled foreign
corporation that is related to the Company through stock ownership, (iii)
the Beneficial Owner is not a bank whose receipt of interest with respect
to the New Capital Securities (or on the New Junior Subordinated
Debentures) is described in section 881(c)(3)(A) of the Code and (iv) the
Beneficial Owner satisfies the statement requirement (described generally
below) set forth in section 871(h) and section 881(c) of the Code and the
regulations thereunder; and
(b) no withholding of United States federal income tax will be
required with respect to any gain realized by a Non-United States Holder
upon the sale or other disposition of the New Capital Securities (or the
New Junior Subordinated Debentures).
To satisfy the requirement referred to in (a)(iv) above, the Beneficial
Owner, or a financial institution holding the New Capital Securities (or the New
Junior Subordinated Debentures) on behalf of such owner, must provide, in
accordance with specified procedures, to the Trust or its paying agent, a
statement to the effect that the Beneficial Owner is not a United States Holder.
Pursuant to current temporary Treasury regulations, these requirements will be
met if (1) the Beneficial Owner provides his name and address, and certifies,
under penalties of perjury, that it is not a United States person (which
certification may be made on an IRS Form W-8 (or successor form)) or (2) a
financial institution holding the New Capital Securities on behalf of the
Beneficial Owner certifies, under penalties of perjury, that such statement has
been received by it and furnishes a paying agent with a copy thereof.
If a Non-United States Holder cannot satisfy the requirements of the
"portfolio interest" exception described in (a) above, payments of interest
(including any OID) made to such Non-United States Holder will be subject to a
30% withholding tax unless the Beneficial Owner provides the Company or its
paying agent, as the case may be, with a properly executed (1) IRS Form 1001 (or
successor form) claiming an exemption from, or a reduction of, such withholding
tax under the benefit of a United States tax treaty or (2) IRS Form 4224 (or
successor form) stating that interest paid with respect to the New Capital
Securities (or on the New Junior Subordinated Debentures) is not subject to
withholding tax because it is effectively connected with the Beneficial Owner's
conduct of a trade or business in the United States.
If a Non-United States Holder is engaged in a trade or business in the
United States and interest with respect to the New Capital Securities (or on the
New Junior Subordinated Debentures) is effectively connected with the conduct of
such trade or business, the Non-United States Holder, although exempt from the
withholding tax discussed above, will be subject to United States federal income
tax on such interest income on a net income basis in the same manner as if it
were a United States Holder. In addition, if such Non-United States Holder is a
foreign corporation, it may be subject to a branch profits tax equal to 30% of
its effectively connected earnings and profits for the taxable year, subject to
adjustments. For this purpose, such interest income would be included in such
foreign corporation's effectively connected earnings and profits.
Any gain realized upon the sale or other disposition of the New Capital
Securities (or the New Junior Subordinated Debentures) generally will not be
subject to United States federal income tax unless (i) such gain is effectively
connected with a trade or business carried on within the United States by the
Non-United States Holder, (ii) in the case of a Non-United States Holder who is
an individual, such individual is present in the United States for 183 days or
more in the taxable year of such sale, exchange or retirement, and certain other
conditions are met, or (iii) in the case of any gain representing accrued
interest with respect to the New Capital Securities (or on the New Junior
Subordinated Debentures), the requirements described above are not satisfied.
As discussed above, legislation was introduced in the 104th Congress that
would have denied an interest deduction to the Company for the interest payable
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on the New Junior Subordinated Debentures. Such legislation also may have caused
the New Junior Subordinated Debentures to have been classified as equity (rather
than indebtedness) of the Company for United States federal income purposes and,
thus, caused the income derived from the New Junior Subordinated Debentures to
be characterized as dividend income rather than interest income for such
purposes. Dividend income is not eligible for the "portfolio interest" exception
described in (a) above. Therefore, if such legislation had been enacted, income
derived by a Non-United States Holder on the New Capital Securities may have
been subject to the 30% United States federal withholding tax described above,
unless a reduction or elimination of such tax was available under an applicable
tax treaty or such dividend income was effectively connected with a trade or
business carried on in the United States by such Non-United States Holder. The
104th Congress adjourned without enactinq such legislation. As discussed above,
similar legislation was reproposed as part of President Clinton's Fiscal 1998
Budget Proposal. Such legislation is proposed to be effective generally for
instruments issued on or after the date of the first committee action. If the
effective date of such legislation is followed, it would not apply to the New
Junior Subordinated Debentures. However, it is possible that legislation could
be enacted in the future that could affect the characterization of income
derived from the New Capital Securities (or the New Junior Subordinated
Debentures) or otherwise adversely affect a Non-United States Holder. See "--
Proposed Tax Law Changes."
Information Reporting and Backup Withholding
Income on the New Capital Securities (or the New Junior Subordinated
Debentures) held of record by United States Holders (other than corporations and
other exempt holders) will be reported annually to such holders and to the IRS.
The Regular Trustees currently intend to deliver such reports to holders of
record prior to January 31 following each calendar year. It is anticipated that
persons who hold New Capital Securities (or the New Junior Subordinated
Debentures) as nominees for beneficial holders will report the required tax
information to beneficial holders on Form 1099.
"Backup withholding" at a rate of 31% will apply to payments of interest
to non-exempt United States Holders unless the holder furnishes its taxpayer
identification number in the manner prescribed in applicable Treasury
regulations, certifies that such number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions.
No information reporting or backup withholding will be required with
respect to payments made by the Trust or any paying agent to Non-United States
Holders if a statement described in (a)(iv) under "Non-United States Holders"
has been received and the payor does not have actual knowledge that the
beneficial owner is a United States person.
In addition, backup withholding and information reporting will not apply
if payments of the principal, interest, OID or premium with respect to the New
Capital Securities (or on the New Junior Subordinated Debentures) are paid or
collected by a foreign office of a custodian, nominee or other foreign agent on
behalf of the Beneficial Owner, or if a foreign office of a foreign broker (as
defined in applicable Treasury regulations) pays the proceeds of the sale of the
New Capital Securities to the owner thereof. If, however, such nominee,
custodian, agent or broker is, for United States federal income tax purposes, a
United States person, a controlled foreign corporation or a foreign person that
derives 50% or more of its gross income for certain periods from the conduct of
a trade or business in the United States, such payments will not be subject to
backup withholding but will be subject to information reporting, unless (1) such
custodian, nominee, agent or broker has documentary evidence in its records that
the Beneficial Owner is not a United States person and certain other conditions
are met or (2) the Beneficial Owner otherwise establishes an exemption.
Payment of the proceeds from disposition of New Capital Securities (or the
New Junior Subordinated Debentures) to or through a United States office of a
broker is subject to information reporting and backup withholding unless the
holder or beneficial owner establishes an exemption from information reporting
and backup withholding.
Any amounts withheld from a holder of the New Capital Securities (or the
New Junior Subordinated Debentures) under the backup withholding rules will be
allowed as a refund or a credit against such holder's United States federal
income tax liability, provided the required information is furnished to the IRS.
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BOOK-ENTRY ISSUANCE
The New Capital Securities will be represented by one or more Capital
Securities registered in global form ("the Global Capital Securities").
Except as set forth below, the Global Capital Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the Global Capital
Securities may not be exchanged for Capital Securities in certificated form
except in the limited circumstances described below. See "Exchange of Book-Entry
Capital Securities for Certificated Capital Securities."
Other Capital Securities will be issued only in registered, certificated
(i.e., non-global) form. Other Capital Securities may not be exchanged for
beneficial interests in any Global Capital Securities except in the limited
circumstances described below. See "Exchange of Certificated Capital Securities
for Book-Entry Capital Securities."
Depositary Procedures
DTC has advised the Trust and the Company that DTC is a limited-purpose
trust company created to hold securities for its participating organizations
(collectively, the "Participants") and to facilitate the clearance and
settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The Participants
include securities brokers and dealers (including the Initial Purchasers),
banks, trust companies, clearing corporations and certain other organizations.
Access to DTC's system is also available to other entities such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interest and transfer of ownership interest
of each actual purchaser of each security held by or on behalf of DTC are
recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Trust and the Company that, pursuant to
procedures established by it, (i) upon deposit of the New Global Capital
Securities, DTC will credit the accounts of Participants designated by the
Initial Purchasers with portions of the principal amount of the Old Global
Capital Securities and (ii) ownership of such interests in the New Global
Capital Securities will be shown on, and the transfer of ownership thereof will
be effected only through, records maintained by DTC (with respect to the
Participants) or by the Participants and the Indirect Participants (with respect
to other owners of beneficial interests in the Global Capital Securities).
Investors in the Restricted Global Capital Securities may hold their
interests therein directly through DTC if they are participants in such system,
or indirectly through organizations (including Euroclear and CEDEL) which are
participants in such system. Investors in the Regulation S Global Capital
Securities must initially hold their interests therein through Euroclear or
CEDEL, if they are participants in such systems, or indirectly through
organizations which are participants in such systems. After the expiration of
the Restricted Period (but not earlier), investors may also hold interests in
the Regulation S Global Capital Securities through organizations other than
Euroclear and CEDEL that are participants in the DTC system. Euroclear and CEDEL
will hold interests in the Regulation S Global Capital Securities on behalf of
their participants through customers' securities accounts in their respective
names on the books of their respective depositaries, which are Morgan Guaranty
Trust Company of New York, Brussels office, as operator of Euroclear, and
Citibank, N.A., as operator of CEDEL. The depositaries, in turn, will hold such
interests in the Regulation S Global Capital Securities in customers' securities
accounts in the depositaries' names on the books of DTC. All interest in a
Global Capital Security, including those held through Euroclear or CEDEL, may be
subject to the procedures and requirements of DTC. Those interests held through
Euroclear or CEDEL may also be subject to the procedures and requirements of
such system. The laws of some states require that certain persons take physical
delivery in certificated form of securities that they own. Consequently, the
ability to transfer beneficial interests in a Global Capital Security to such
persons will be limited to that extent. Because DTC can act only on behalf of
Participants, which in turn act on behalf of Indirect Participants and certain
banks, the ability of a person having beneficial interests in a Global Capital
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Security to pledge such interests to persons or entities that do not participate
in the DTC system, or otherwise take actions in respect of such interests, may
be affected by the lack of a physical certificate evidencing such interests. For
certain other restrictions on the transferability of the Capital Securities, see
"Exchange of Book-Entry Capital Securities for Certificated Capital Securities"
below.
Except as described below, owners of interests in the New Global Capital
Securities will not have New Capital Securities registered in their name, will
not received physical delivery of Capital Securities in certificated form and
will not be considered the registered owners or holders thereof for any purpose.
Payments in respect of the Global Capital Security registered in the name
DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder. The Property Trustee will treat the persons
in whose names the Capital Securities, including the Global Capital Securities,
are registered as the owners thereof for the purpose of receiving such payments
and for any and all other purposes whatsoever. Consequently, neither the
Property Trustee nor any agent thereof has or will have any responsibility or
liability for (i) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Capital Securities, or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global Capital Securities or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants. DTC has
advised the Trust and the Company that its current practice, upon receipt of any
payment in respect of securities such as the Capital Securities, is to credit
the accounts of the relevant Participants with the payment on the payment date
unless DTC has reason to believe it will not receive payment on such payment
date. Payments by the Participants and the Indirect Participants to the
beneficial owners of Capital Securities will be governed by standing
instructions and customary practices and will be the responsibility of the
Participants or the Indirect Participants and will not be the responsibility of
DTC, the Property Trustee or the Trust. Neither the Trust nor the Property
Trustee will be liable for any delay by DTC or any of its Participants in
identifying the beneficial owners of the New Capital Securities, and the Trust
and the Property Trustee may conclusively rely on and will be protected in
relying on instructions from DTC or its nominee for all purposes.
Except for trades involving only Euroclear or CEDEL participants,
interests in the Global Capital Securities will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will
therefore settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its participants.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or CEDEL will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
New Capital Securities described herein, cross-market transfers between the
Participants in DTC, on the one hand, and Euroclear or CEDEL participants, on
the other hand, will be effect through DTC in accordance with DTC's rules on
behalf of Euroclear or CEDEL, as the case may be, by its respective depositary;
however, such cross-market transactions will require delivery of instructions to
Euroclear or CEDEL, as the case may be, by the counterparty in such system in
accordance with the rules and procedures and within the established deadlines
(Brussels time) of such system. Euroclear or CEDEL, as the case may be, will, if
the transaction meets its settlement requirements, deliver instructions to its
respective depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant Global Capital Securities in
DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Euroclear participants and CEDEL
participants may not deliver instructions directly to the depositaries for
Euroclear or CEDEL.
Because of time zone differences, the securities account of a Euroclear or
CEDEL participant purchasing an interest in a Global Capital Security from a
Participant in DTC will be credited, and any such crediting will be reported to
the relevant Euroclear of CEDEL participant, during the securities settlement
processing day (which must be a business day for Euroclear and CEDEL)
immediately following the settlement date of DTC. Cash received in Euroclear or
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CEDEL as a result of sales of interest in a Global Capital Security by or
through a Euroclear or CEDEL participant to a Participant in DTC will be
received with value on the settlement date of DTC but will be available in the
relevant Euroclear or CEDEL cash account only as of the business day for
Euroclear or CEDEL following DTC's settlement date.
DTC has advised the Trust and the Company that it will take any action
permitted to be taken by a holder of Capital Securities only at the direction of
one or more Participants to whose account with DTC interests in the Global
Capital Securities are credited. However, if there is an Event of Default, DTC
reserves the right to exchange the Global Capital Securities for legended
Capital Securities in certificated form and to distribute such Capital
Securities to its Participants.
The information in this section concerning DTC, Euroclear and CEDEL and
their book-entry systems has been obtained from sources that the Trust and the
Company believe to be reliable, but neither the Trust nor the Company takes
responsibility for the accuracy thereof.
Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures
to facilitate transfers of interest in the Regulation S Global Capital
Securities and in the Restricted Global Capital Securities among participants in
DTC, Euroclear and CEDEL, they are under no obligation to perform or to continue
to perform such procedures, and such procedures may be discontinued at any time.
Neither the Trust nor the Property Trustee will have any responsibility for the
performance by DTC, Euroclear or CEDEL or their respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
Exchange of Book-Entry Capital Securities for Certificated Capital Securities
A Global Capital Security is exchangeable for Capital Securities in
registered certificated form if (i) DTC (x) notifies the Trust that it is
unwilling or unable to continue as Depositary for the Global Capital Security
and the Trust thereupon fails to appoint a successor Depositary or (y) has
ceased to be a clearing agency registered under the Exchange Act, (ii) the
Company in its sole discretion elects to cause the issuance of the Capital
Securities in certificated form or (iii) there shall have occurred and be
continuing an Event of Default or any event which after notice or lapse of time
or both would be an Event of Default under the Declaration. In addition,
beneficial interests in a Global Capital Security may be exchanged for
certificated Capital Securities upon request but only upon at least 20 days'
prior written notice given to the Property Trustee by or on behalf of DTC in
accordance with customary procedures. In all cases, certificated Capital
Securities delivered in exchange for any Global Capital Security or beneficial
interests therein will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the Depositary (in accordance with
its customary procedures) and will bear, in the case of the Restricted Global
Capital Security, the restrictive legend referred to in "Notice to Investors."
Exchange of Certificated Capital Securities for Book-Entry Capital Securities
Other Capital Securities which will be issued in certificated form may not
be exchanged for beneficial interests in any Global Capital Security unless such
exchange occurs in connection with a transfer of such Other Capital Securities
and the transferor first delivers to the Property Trustee a written certificate
to the effect that such transfer will comply with the appropriate transfer
restrictions applicable to such Capital Securities as set forth in Appendix A
hereto. In the case of any such exchange for an interest in the Regulation S
Global Capital Security, such transfer must occur pursuant to Regulation S or
Rule 144 (if available).
ERISA CONSIDERATIONS
Generally, employee benefit plans that are subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of
the Code ("Plans"), may purchase Capital Securities, subject to the investing
fiduciary's determination that the investment in Capital Securities satisfies
ERISA's fiduciary standards and other requirements applicable to investments by
the Plan.
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The Department of Labor ("DOL") has issued a regulation (29 C.F.R. ss.
2510.3-101) (the "DOL Regulation") concerning the definition of what constitutes
the assets of a Plan. The DOL Regulation provides that as a general rule, the
underlying assets and properties of corporations, partnerships, trusts and
certain other entities in which a plan makes an "equity" investment will be
deemed for purposes of ERISA to be assets of the investing plan unless certain
exceptions apply.
There can be no assurance that any of the exceptions set forth in the DOL
regulation will apply to the purchase of Capital Securities offered hereby and,
as a result, an investing Plan's assets could be considered to include an
undivided interest in the Junior Subordinated Debentures held by the Trust. In
the event that assets of the Trust are considered assets of an investing Plan,
the Company, the Trustees and other persons, in providing services with respect
to the Junior Subordinated Debentures, may be considered fiduciaries to such
Plan and subject to the fiduciary responsibility provisions of Title I of ERISA
(including the prohibited transaction provisions thereof). In addition, the
prohibited transaction provisions of Section 4975 of the Code could apply with
respect to transactions engaged in by any "disqualified person," as defined
below, involving such assets unless a statutory or administrative exemption
applies.
Even if they are not fiduciaries, the Company and/or any of its affiliates
may be considered a "party in interest" (within the meaning of ERISA) or a
"disqualified person" (within the meaning of Section 4975 of the Code) with
respect to certain Plans. The acquisition and ownership of Capital Securities by
a Plan (or by an individual retirement arrangement or other plan described in
Section 4975(e)(1) of the Code) may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Capital
Securities are acquired pursuant to and in accordance with an applicable
exemption. As a result, Plans with respect to which the Company or any of its
affiliates is a party in interest or a disqualified person should not acquire
Capital Securities unless such Capital Securities are acquired pursuant to and
in accordance with an applicable prohibited transaction exemption.
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief for direct or indirect prohibited transactions
resulting from the purchase or holding of the Capital Securities, assuming that
assets of a Trust were deemed to be "plan assets" of Plans investing in such
Trust (see above). Those class exemptions are PTCE 96-23 (for certain
transactions determined by in-house asset managers), PTCE 95-60 (for certain
transactions involving insurance company general accounts), PTCE 91-38 (for
certain transactions involving bank collective investment funds), PTCE 90-1 (for
certain transactions involving insurance company separate accounts), and PTCE
84-14 (for certain transactions determined by independent qualified asset
managers).
Because the Capital Securities may be deemed to be equity interests in a
Trust for purposes of applying ERISA and Section 4975 of the Code, the Capital
Securities may not be purchased or held by any Plan, any entity whose underlying
assets include "plan assets" by reason of any Plan's investment in the entity (a
"Plan Asset Entity") or any person investing "plan asset" of any Plan, unless
such purchaser or holder is eligible for the exemptive relief available under
PTCE 96-23, 95-60, 91-38, 90-1, or 84-14. Any purchaser or holder of the Capital
Securities or any interest therein will be deemed to have represented by its
purchase and holding thereof that it either (a) is not a Plan or a Plan Asset
Entity and is not purchasing such securities on behalf of or with "plan assets"
of any Plan or (b) is eligible for the exemptive relief available under PTCE
96-23, 95-60, 91-38, 90-1 or 84-14 with respect to such purchase or holding. See
"Notice to Investors" herein.
Notwithstanding the foregoing, it is possible that the New Capital
Securities may qualify as "publicly offered securities" under the DOL Regulation
if, in addition to the exchange pursuant to any effective registration
statement, they are also "widely held" and "freely transferable" at the time of
the Exchange Offer. Under the DOL Regulation, a class of securities is "widely
held" only if it is a class of securities owned by 100 or more investors
independent of the issuer and each other. Although it is possible that at the
time of the Exchange Offer the New Capital Securities will be "widely held", no
assurances can be given that that will be true. If the New Capital Securities
are "publicly offered securities" at the time of the Exchange Offer, the assets
of the Trust would not be assets of the Investing Plans as of such time. If the
New Capital Securities did not qualify as "publicly offered securities," the
foregoing discussion about plan assets in the preceding paragraphs would also be
applicable to the New Capital Securities.
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Any Plans or other entities whose assets include Plan assets subject to
ERISA or Section 4975 of the Code proposing to acquire Capital Securities or New
Capital Securities should consult with their own counsel.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own
account in connection with the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Capital
Securities. This Prospectus, as it may be amended or supplemented from time to
time, may be used by Participating Broker-Dealers during the period referred to
below in connection with resales of New Capital Securities received in exchange
for Old Capital Securities if such Old Capital Securities were acquired by such
Participating Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities. The Company has agreed that this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of such New Capital
Securities for a period ending 180 days after the Registration Statement of
which this Prospectus constitutes a part is declared effective. See "The
Exchange Offer -- Resales of New Capital Securities." Neither the Company nor
the Trust will receive any cash proceeds from the issuance of the New Capital
Securities offered hereby. New Capital Securities received by broker-dealers for
their own accounts in connection with the Exchange Offer may be sold from time
to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the New Capital
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such New Capital Securities. Any broker-dealer that resells
New Capital Securities that were received by it for its own account in
connection with the Exchange Offer and any broker or dealer that participates in
a distribution of such New Capital Securities may be deemed to be an
"underwriter" within the meaning of the Securities Act, and any profit on any
such resale of New Capital Securities and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
Neither the Company nor the Trustees shall be liable for any delay by the
Depository or any Participant or Indirect Participant in identifying the
beneficial owners of the related New Capital Securities and each such person may
conclusively rely on, and shall be protected in relying on, instructions from
the Depository for all purposes (including with respect to the registration and
delivery, and the respective principal amounts, of the New Capital Securities to
be issued).
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Capital
Securities will be passed upon for the Trust by Richards, Layton & Finger,
Wilmington, Delaware. The validity of the Junior Subordinated Debentures and the
Guarantee will be passed upon for the Company and for the Trust by Schulte Roth
& Zabel LLP, New York, New York. Certain United States federal income taxation
matters also will be passed upon for the Company and the Trust by Schulte Roth &
Zabel LLP. Paul N. Roth, a director of the Company, is a partner of Schulte Roth
& Zabel LLP.
EXPERTS
The financial statements listed under the heading "Exhibits, Financial
Statement Schedule and Reports on Form 8-K" in CIT's 1996 Annual Report on Form
10-K have been incorporated by reference herein in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, also
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
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================================================================================
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given or
made, such information or representation must not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the securities
described in this Prospectus or an offer to sell or the solicitation of an offer
to buy such securities in any circumstances in which such offer or solicitation
is unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that the information
contained herein is correct as of any time subsequent to the date of such
information.
-----------------------
TABLE OF CONTENTS
Page
----
Available Information ..................................................... 7
Documents Incorporated by Reference ....................................... 7
Summary ................................................................... 9
Summary Consolidated Financial Data ....................................... 16
Risk Factors .............................................................. 17
Use of Proceeds ........................................................... 23
Ratio of Earnings to Fixed Charges ........................................ 23
Accounting Treatment ...................................................... 24
Capitalization ............................................................ 24
The Trust ................................................................. 25
The Company ............................................................... 26
The Exchange Offer ........................................................ 29
Description of New Capital Securities ..................................... 38
Description of New Junior
Subordinated Debentures ................................................. 47
Description of New Guarantee .............................................. 54
Relationship Among the New Capital
Securities, the New Junior Subordinated
Debentures and the New Guarantee ........................................ 56
Description of the Old Securities ......................................... 57
Certain United States Federal Income Tax
Consequences ............................................................ 57
Book-Entry Issuance ....................................................... 63
ERISA Considerations ...................................................... 65
Plan of Distribution ...................................................... 67
Legal Matters ............................................................. 67
Experts ................................................................... 67
Until ________, 1997 (180 days after the date of this Prospectus) all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus when
acting as underwriters and with respect to their unsold allotment of
subscriptions.
================================================================================
================================================================================
CIT CAPITAL TRUST I
Offer for all Outstanding
7.70% Preferred Capital Securities
In Exchange for
7.70% Preferred Capital Securities
Registered under the Securities Act of 1933
Fully and Unconditionally
Guaranteed to the Extent Set Forth Herein by
The CIT Group
Holdings, Inc.
-----------------------
PROSPECTUS
_________, 1997
-----------------------
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Subsection (a) of Section 145 of the General Corporation Law of Delaware
empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation except that no indemnification may be made in
respect of any claim, issue, or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine that despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Section 145 further provides that to the extent a director, officer,
employee, or agent of a corporation has been successful in the defense of any
action, suit, or proceeding referred to in subsections (a) and (b) or in the
defense of any claim, issue, or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith; that indemnification provided for by Section 145 shall not
be deemed exclusive of any other rights to which the indemnified party may be
entitled; and empowers the corporation to purchase and maintain insurance on
behalf of any person acting in any of the capacities set forth in the second
preceding paragraph against any liability asserted against him or incurred by
him in any such capacity or arising out of his status as such whether or not the
corporation would have the power to indemnify him against such liabilities under
Section 145.
The By-Laws of The CIT Group Holdings, Inc. provide for indemnification of
directors and officers of The CIT Group Holdings, Inc. to the full extent
permitted by Delaware law.
Article X of the By-Laws of The CIT Group Holdings, Inc. provides, in
effect, that, in addition to any rights afforded to an officer, director or
employee of The CIT Group Holdings, Inc. by contract or operation of law, The
CIT Group Holdings, Inc. may indemnify any person who is or was a director,
officer, employee, or agent of The CIT Group Holdings, Inc., or of any other
corporation which he served at the request of The CIT Group Holdings, Inc.,
against any and all liability and reasonable expense incurred by him in
connection with or resulting from any claim, action, suit, or proceeding
(whether brought by or in the right of The CIT Group Holdings, Inc. or such
other corporation or otherwise), civil or criminal, in which he may have become
involved, as a party or otherwise, by reason of his being or having been such
director, officer, employee, or agent of The CIT Group Holdings, Inc. or such
other corporation, whether or not he continues to be such at the time such
liability or expense is incurred, provided that such person acted in good faith
and in what he reasonably believed to be the best interests of The CIT Group
Holdings, Inc. or such other corporation, and, in connection with any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
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Article X further provides that any person who is or was a director,
officer, employee, or agent of The CIT Group Holdings, Inc. or any direct or
indirect wholly-owned subsidiary of The CIT Group Holdings, Inc. shall be
entitled to indemnification as a matter of right if he has been wholly
successful, on the merits or otherwise, with respect to any claim, action, suit,
or proceeding of the type described in the foregoing paragraph.
In addition, The CIT Group Holdings, Inc. maintains directors' and
officers' reimbursement and liability insurance pursuant to standard form
policies with aggregate limits of $90,000,000. The risks covered by such
policies do not exclude liabilities under the Securities Act of 1933.
The Amended and Restated Declaration of Trust of CIT Capital Trust I and
the Indenture provide for indemnification of each of the Regular Trustees and
other Trustees of the Trust by the Registrants against any and all expenses and
liabilities other than under circumstances of willful bad faith conduct or gross
negligence.
Item 21. Exhibits and Financial Statement Schedules
EXHIBIT
NUMBER DESCRIPTION
---------- ---------------
*1.1 Amended and Restated Purchase Agreement, dated February 21, 1997,
among The CIT Group Holdings, Inc., CIT Capital Trust I, Lehman
Brothers Inc., Chase Securities Inc., Salomon Brothers Inc, and UBS
Securities LLC
*3.1 Amended and Restated Declaration of Trust of CIT Capital Trust I,
dated as of February 25, 1997, between The CIT Group Holdings, Inc.,
The Bank of New York, The Bank of New York (Delaware), Albert R.
Gamper, Jr., Joseph M. Leone, and Corinne M. Taylor
*3.2 Restated Certificate of Incorporation of The CIT Group Holdings,
Inc., as amended as of December 29, 1989 (incorporated by reference
to Exhibit 3(a) to Form 10-K filed by The CIT Group Holdings, Inc.
for the fiscal year ended December 31, 1989)
*3.3 By-Laws of The CIT Group Holdings, Inc., as amended as of December
29, 1989 (incorporated by reference to Exhibit 3(b) to Form 10-K
filed by The CIT Group Holdings, Inc. for the fiscal year ended
December 31, 1989)
*4.1 Indenture, dated as of February 25, 1997, between The CIT Group
Holdings, Inc. and The Bank of New York
*4.2 Registration Rights Agreement, dated as of February 25, 1997, among
The CIT Group Holdings, Inc., CIT Capital Trust I, Lehman Brothers
Inc., Chase Inc., Salomon Brothers Inc, and UBS Securities LLC
*4.3 Form of 7.70% Preferred Capital Security of CIT Capital Trust I
(included as part of Exhibit 3.1)
*4.4 Form of 7.70% Junior Subordinated Debenture of The CIT Group
Holdings, Inc. (included as part of Exhibit 4.1)
*4.5 Guarantee Agreement, dated as of February 25, 1997
**5.1 Opinion of Schulte Roth & Zabel LLP, as to the legality of the 7.70%
Junior Subordinated Debentures of The CIT Group Holdings, Inc. and
the Guarantee of The CIT Group Holdings, Inc.
**5.2 Opinion of Richards Layton & Finger, as to the legality of the 7.70%
Preferred Capital Securities of CIT Capital Trust I
**8.1 Opinion of Schulte Roth & Zabel LLP as to tax matters
**12.1 Calculation of Ratio of Earnings to Fixed Charges (incorporated by
reference to Exhibit 12 to Form 10-K filed by The CIT Group
Holdings, Inc. for the fiscal year ended December 31, 1996.)
**23.1 Consent of KPMG Peat Marwick LLP
**23.2 Consent of Schulte Roth & Zabel LLP (included as part of Exhibit
5.1)
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EXHIBIT
NUMBER DESCRIPTION
---------- ---------------
**23.3 Consent of Richards Layton & Finger (included as part of Exhibit
5.2)
*24.1 Powers of Attorney of The CIT Group Holdings, Inc.
*25.1 Form T-1 of The Bank of New York as to the Amended and Restated
Declaration of Trust
*25.2 Form T-1 of The Bank of New York as to the Guarantee Agreement
*25.3 Form T-1 of The Bank of New York as to the Indenture
*99.1 Form of Letter of Transmittal
*99.2 Form of Notice of Guaranteed Delivery
*99.3 Form of Exchange Agent Agreement
- ------------
* Previously filed
** Filed herewith
Item 22. Undertakings
(1) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(2) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrants pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrants will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(3) The undersigned Registrants hereby undertake to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection(a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Trust Indenture Act.
(4) The undersigned Registrants undertake:
(a) to file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section 10(a)(3) of
the Securities Act of 1933 (the "Securities Act");
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most
recent post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in this Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
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prospectus filed with the Securities and Exchange Commission pursuant
to rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in
this Registration Statement when it becomes effective;
(iii) to include any material information with respect to the
play of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
(b) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(5) The undersigned Registrants hereby undertake to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4,10(b),11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of this Registration Statements through
the date of responding to the request.
(6) The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and State of New York, on March 26, 1997.
THE CIT GROUP HOLDINGS, INC.
By: /S/ ERNEST D. STEIN
---------------------------------------
Ernest D. Stein
Executive Vice President, General
Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Date
--------- ----
* March 26, 1997
- ------------------------------------
Albert R. Gamper, Jr.
President, Chief Executive
Officer, and Director
(Principal executive officer)
* March 26, 1997
- ------------------------------------
Hisao Kobayashi
Director
* March 26, 1997
- ------------------------------------
Takasuke Kaneko
Director
* March 26, 1997
- ------------------------------------
Kenji Nakamura
Director
* March 26, 1997
- ------------------------------------
Joseph A. Pollicino
Director
* March 26, 1997
- ------------------------------------
Paul N. Roth
Director
* March 26, 1997
- ------------------------------------
Peter J. Tobin
Director
* March 26, 1997
- ------------------------------------
Keiji Torii
Director
II-5
<PAGE>
Signature Date
--------- ----
* March 26, 1997
- ------------------------------------
Yukihara Uno
Director
* March 26, 1997
- ------------------------------------
Yasuo Tsunemi
Director
/S/ JOSEPH M. LEONE March 26, 1997
- ------------------------------------
Joseph M. Leone
Executive Vice President
and Chief Financial Officer
(principal financial
and accounting officer)
*By: /S/ ERNEST D. STEIN March 26, 1997
-------------------------------
Ernest D. Stein
Attorney-in-fact
Original powers of attorney authorizing Albert R. Gamper, Jr., Ernest D.
Stein, and Donald J. Rapson and each of them to sign the Registration Statement
and amendments thereto on behalf of the directors and officers of the Registrant
indicated above are held by The CIT Group Holdings, Inc. and available for
examination pursuant to Item 302(b) of Regulation S-T.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and State of New York, on March 26, 1997.
CIT CAPITAL TRUST I.
By: /S/ ALBERT R. GAMPER, JR.
------------------------------
Albert R. Gamper, Jr.
Regular Trustee
By: /S/ JOSEPH M. LEONE
------------------------------
Joseph M. Leone
Regular Trustee
By: /S/ CORINNE M. TAYLOR
-------------------------------
Corinne M. Taylor
Regular Trustee
II-7
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
Exhibit No. Description Page
---------- --------------- ------
<S> <C>
*1.1 Amended and Restated Purchase Agreement, dated February 21, 1997,
among The CIT Group Holdings, Inc., CIT Capital Trust I, Lehman
Brothers Inc., Chase Securities Inc., Salomon Brothers Inc, and UBS
Securities LLC
*3.1 Amended and Restated Declaration of Trust of CIT Capital Trust I,
dated as of February 25, 1997, between The CIT Group Holdings, Inc.,
The Bank of New York, The Bank of New York (Delaware), Albert R.
Gamper, Jr., Joseph M. Leone, and Corinne M. Taylor
*3.2 Restated Certificate of Incorporation of The CIT Group Holdings,
Inc., as amended as of December 29, 1989 (incorporated by reference
to Exhibit 3(a) to Form 10-K filed by The CIT Group Holdings, Inc.
for the fiscal year ended December 31, 1989)
*3.3 By-Laws of The CIT Group Holdings, Inc., as amended as of December
29, 1989 (incorporated by reference to Exhibit 3(b) to Form 10-K
filed by The CIT Group Holdings, Inc. for the fiscal year ended
December 31, 1989)
*4.1 Indenture, dated as of February 25, 1997, between The CIT Group
Holdings, Inc. and The Bank of New York
*4.2 Registration Rights Agreement, dated as of February 25, 1997, among
The CIT Group Holdings, Inc., CIT Capital Trust I, Lehman Brothers
Inc., Chase Inc., Salomon Brothers Inc, and UBS Securities LLC
*4.3 Form of 7.70% Preferred Capital Security of CIT Capital Trust I
(included as part of Exhibit 3.1)
*4.4 Form of 7.70% Junior Subordinated Debenture of The CIT Group
Holdings, Inc. (included as part of Exhibit 4.1)
*4.5 Guarantee Agreement, dated as of February 25, 1997
**5.1 Opinion of Schulte Roth & Zabel LLP, as to the legality of the 7.70%
Junior Subordinated Debentures of The CIT Group Holdings, Inc. and
the Guarantee of The CIT Group Holdings, Inc.
**5.2 Opinion of Richards Layton & Finger, as to the legality of the 7.70%
Preferred Capital Securities of CIT Capital Trust I
**8.1 Opinion of Schulte Roth & Zabel LLP as to tax matters
**12.1 Calculation of Ratio of Earnings to Fixed Charges (incorporated by
reference to Exhibit 12 to Form 10-K filed by The CIT Group
Holdings, Inc. for the fiscal year ended December 31, 1996.)
**23.1 Consent of KPMG Peat Marwick LLP
**23.2 Consent of Schulte Roth & Zabel LLP (included as part of Exhibit
5.1)
**23.3 Consent of Richards Layton & Finger (included as part of Exhibit
5.2)
*24.1 Powers of Attorney of The CIT Group Holdings, Inc.
*25.1 Form T-1 of The Bank of New York as to the Amended and Restated
Declaration of Trust
*25.2 Form T-1 of The Bank of New York as to the Guarantee Agreement
*25.3 Form T-1 of The Bank of New York as to the Indenture
*99.1 Form of Letter of Transmittal
*99.2 Form of Notice of Guaranteed Delivery
*99.3 Form of Exchange Agent Agreement
- ------------
* Previously filed
** Filed herewith
</TABLE>
[LETTERHEAD OF SCHULTE ROTH & ZABEL LLP]
March 25, 1997
The CIT Group Holdings, Inc.
CIT Capital Trust I
1211 Avenue of the Americas
New York, New York 10036
Dear Sirs:
We have acted as special counsel to The CIT Group Holdings, Inc. (the
"Corporation") and CIT Capital Trust I (the "Trust") in connection with the
Registration Statement on Form S-4 (No. 333-22709 and No. 333-22709-01) (as
amended through the date hereof, the "Registration Statement"), filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), relating to (i) the 7.70% Preferred
Capital Securities (the "Capital Securities"), which represent preferred
undivided beneficial ownership interests in the assets of the Trust, (ii) the
7.70% Junior Subordinated Debentures due 2027 (the "Debentures"), issued by the
Corporation, and (iii) the guarantee by the Corporation of the payment of
distributions out of moneys held by the Trust and payments on liquidation of the
Trust or the redemption of Capital Securities (the "Guarantee"), each described
in the prospectus which forms a part of the Registration Statement (the
"Prospectus").
The Debentures were issued pursuant to an indenture, dated as of February
25, 1997, between the Corporation and The Bank of New York, as indenture
trustee, filed as Exhibit 4.1 to the Registration Statement (the "Indenture").
The Guarantee was issued pursuant to the Guarantee Agreement, dated as of
February 25, 1997, between the Corporation, as guarantor, and The Bank of New
York, as guarantee trustee, filed as Exhibit 4.5 to the Registration Statement
(the "Guarantee Agreement").
<PAGE>
The CIT Group Holdings, Inc.
CIT Capital Trust I
March 25, 1997
Page 2
In connection with this opinion, we have examined signed copies of the
Registration Statement and originals or copies of such records of the
Corporation and the Trust and such agreements, certificates of public officials,
certificates of officers or representatives of the Corporation, the Trust and
others, and such other documents, certificates and corporate or other records as
we have deemed necessary or appropriate as a basis for this opinion.
As to all maters of fact, we have relied upon and assumed the accuracy of
statements and representations of officers and other representatives of the
Corporation, the Trust and others.
In our examination, we have assumed the genuiness of all signatures, the
legal capacity of natural persons signing or delivering any instrument, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such latter documents.
We have also assumed that: (a) all documents were duly executed and
delivered by each of the parties thereto prior to the issuance of any of the
securities covered by the Registration Statement; (b) at the time of such
execution, each such party, other than the Corporation and the Trust, was duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and had all requisite power and authority to
execute, deliver and perform its obligations under such documents; (c) the
execution and delivery of such documents and performance of such obligations had
been duly authorized by all necessary actions on the part of each such party,
other than the Corporation and the Trust; and (d) such documents are the legal,
valid and binding obligation of each such party, other than the Corporation and
the Trust, and are enforceable against each such party, other than the
Corporation and the Trust, in accordance with their terms.
Based upon the foregoing, we are of the opinion that:
1. The Debentures constitute valid and binding obligations of the
Corporation, enforceable in accordance with their terms, subject as to
enforcement of remedies to applicable bankruptcy, reorganization, fraudulent
conveyance, insolvency, moratorium or other laws affecting creditors' rights
generally from time to time in effect and to general principles of equity, and
will be entitled to the benefits of the Indenture.
2. The Guarantee constitutes the valid and binding obligation of the
Corporation, enforceable in accordance with its terms, subject as to enforcement
of remedies to applicable bankruptcy, reorganization, fraudulent conveyance,
insolvency, moratorium or other laws affecting creditors' rights generally from
<PAGE>
The CIT Group Holdings, Inc.
CIT Capital Trust I
March 25, 1997
Page 3
time to time in effect and to general principles of equity, and will be entitled
to the benefits of the Guarantee Agreement.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm appearing under the
heading "Legal Matters" in the Prospectus. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act or the General Rules and Regulations of
the Commission thereunder.
Very truly yours
/s/ Schulte Roth & Zabel
{Letterhead of Richards, Layton & Finger]
March 25, 1997
CIT Capital Trust I
c/o The CIT Group Holdings, Inc.
1211 Avenue of the Americas
New York, New York 10036
Re: CIT Capital Trust I
Ladies and Gentlemen:
We have acted as special Delaware counsel for CIT Capital Trust I, a
Delaware business trust (the "Trust"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our examination
of documents has been limited to the examination of originals or copies of the
following:
(a) The Certificate of Trust of the Trust, dated February 19, 1997 (the
"Certificate"), as filed in the office of the Secretary of State of the State of
Delaware (the "Secretary of State") on February 19, 1997;
(b) The Declaration of Trust of the Trust, dated as of February 19, 1997,
between The CIT Group Holdings, Inc., a Delaware corporation (the "Company"),
and The Bank of New York (Delaware);
(c) The Registration Statement (the "Registration Statement") on Form S-4,
including a prospectus (the "Prospectus") relating to the 7.70% Cumulative
Preferred Capital Securities of the Trust representing undivided beneficial
interests in the Assets of the Trust (each, a "Preferred
<PAGE>
CIT Capital Trust I
March 25, 1997
Page 2
Security" and collectively, the "Preferred Securities"), as filed by the Company
and the Trust with the Securities and Exchange Commission on March 4, 1997;
(d) The Amended and Restated Declaration of Trust of the Trust, dated as of
February 25, 1997 (including Exhibits A and B thereto), among the Company, the
trustees of the Trust named therein, and the holders, from time to time, of
undivided beneficial interests in the assets of the Trust (the "Declaration of
Trust"), attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated March 25, 1997,
obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are used
as defined in the Declaration of Trust.
For purposes of this opinion, we have not reviewed any documents other than
the documents listed above, and we have assumed that there exists no provision
in any document that we have not reviewed that bears upon or is inconsistent
with the opinions stated herein. We have conducted no independent factual
investigation or our own but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed to be true,
complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Declaration of
Trust constitutes the entire agreement among the parties thereto with respect to
the subject matter thereof, including with respect to the creation, operation
and termination of the Trust, and that the Declaration of Trust and the
Certificate are in full force and effect and have not been amended, (ii) except
to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Preferred Security is to be issued by the Trust (collectively, the "Preferred
Security Holders") of a Preferred Security Certificate for such Preferred
Security and the payment for the Preferred Security acquired by it, in
accordance with the Declaration of Trust and the Prospectus, and (vii) that the
Preferred Securities are issued and sold to the Preferred Security Holders in
<PAGE>
CIT Capital Trust I
March 25, 1997
Page 3
accordance with the Declaration of Trust and the Prospectus. We have not
participated in the preparation of the Registration Statement and assume no
responsibility for its contents.
This opinion is limited to the laws of the State of Delaware (excluding the
securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal laws
and rules and regulations relating thereto. Our opinions are rendered only with
respect to Delaware laws and rules, regulations and orders thereunder which are
currently in effect.
Based upon the foregoing, and upon our examination of such questions of law
and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good standing
as a business trust under the Delaware Business Act, 12 Del. C. ss. 3801, et
seq.
2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the Trust, will
be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Declaration of
Trust.
We consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement. In addition, we hereby
consent to the use of our name under the heading "Legal Matters" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of Persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
[LETTERHEAD OF SCHULTE ROTH & ZABEL LLP]
March 25, 1997
The CIT Group Holdings, Inc.
CIT Capital Trust I
1211 Avenue of the Americas
New York, New York 10036
Dear Sirs:
We have acted as special United States tax counsel to The CIT Group
Holdings, Inc. (the "Corporation") and CIT Capital Trust I (the "Trust") in
connection with the Registration Statement on Form S-4 (as amended through the
date hereof, the "Registration Statement"), filed with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), registering the 7.70% Preferred Capital
Securities (the "Capital Securities"), which represent preferred undivided
beneficial ownership interests in the assets of the Trust, the 7.70% Junior
Subordinated Debentures due 2027 (the "Debentures"), issued by the Corporation,
and the guarantee by the Corporation of the payment of distributions out of
moneys held by the Trust and payments on liquidation of the Trust or the
redemption of Capital Securities (the "Guarantee"), each described in the
prospectus which forms a part of the Registration Statement (the "Prospectus").
We hereby confirm that, although the discussion set forth in the
Registration Statement under the heading "CERTAIN UNITED STATES FEDERAL INCOME
TAX CONSEQUENCES" does not purport to discuss all possible United States federal
income tax consequences of the purchase, ownership and disposition of the
Capital Securities, in our opinion such discussion constitutes, in all material
respects, a fair and accurate summary of the United States federal income tax
consequences of the purchase, ownership and disposition of the Capital
Securities, based upon current law. It is possible that contrary positions may
be taken by the Internal Revenue Service and that a court may agree with such
contrary positions.
This opinion is furnished to you solely for your benefit in connection with
the filing of the Registration Statement and, except as set forth below, is not
to be used, circulated, quoted or otherwise referred to for any other purpose or
<PAGE>
The CIT Group Holdings, Inc.
CIT Capital Trust I
March 25, 1997
Page 2
relied upon by any other person without our prior written consent. We hereby
consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to this firm appearing under the heading "Legal
Matters" in the Prospectus. In giving such consent, we do not thereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act or the General Rules and Regulations of the Commission
thereunder.
This opinion is expressed as of the date hereof and applies only to the
disclosure under the heading "CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES" set forth in the Registration Statement filed as of the date
thereof. We disclaim any undertaking to advice you of any subsequent changes of
the facts stated or assumed herein or any subsequent changes in applicable law.
Very truly yours
/s/ Schulte Roth & Zabel
Exhibit 23.1
Independent Auditors' Consent
The Board of Directors
The CIT Group Holdings, Inc.:
We consent to the use of our report dated January 17, 1997, except as to note 21
which is as of February 21, 1997, relating to the consolidated balance sheets of
The CIT Group Holdings, Inc. and subsidiaries as of December 31, 1996 and 1995,
and the related consolidated statements of income, changes in stockholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1996 incorporated by reference in this Registration Statement on
Form S-4 of CIT Capital Trust I and The CIT Group Holdings, Inc., which report
appears in the December 31, 1996 Annual Report on Form 10-K of The CIT Group
Holdings, Inc., and to the reference to our firm under the heading "Experts" in
the Registration Statement.
KPMG Peat Marwick LLP
Short Hills, New Jersey
March 24, 1997
