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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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The CIT Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-2994534
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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
Executive Vice President, General Counsel & Secretary
The CIT Group, Inc.
1211 Avenue of the Americas
New York, NY 10036
(212) 536-1390
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Please send copies of all communications to:
ANDRE WEISS
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
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Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
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If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
(continued on following page)
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(continued from previous page)
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<CAPTION>
CALCULATION OF REGISTRATION FEE
============================================================================================================
Proposed Proposed
maximum maximum
offering aggregate
Title of each class of securities to be Amount to be price per offering Amount of
registered registered(1) unit(2) price(3) Registration fee(4)
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value per share
issuable upon exchange of the Exchangeable
Shares ................................... 103,941,830 $23.8125 $2,475,114,826 $688,081.93
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</TABLE>
(1) Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457 under the Securities Act of 1933. Based on an
estimated number of shares of The CIT Group, Inc. ("CIT") common stock to
be exchanged for exchangeable shares (as defined herein) pursuant to the
combination of CIT and Newcourt Credit Group Inc. ("Newcourt").
(2) Calculated in accordance with Rule 457(c) based on the average of the high
and low price of The CIT Group, Inc. common stock as traded on the New
York Stock Exchange on August 30, 1999.
(3) Estimated solely for the purpose of determining the registration fee.
(4) In accordance with Rule 457(b), the registration fee is offset by
$859,712, which was the fee paid by the registrant to the Securities and
Exchange Commission with respect to the Joint Management Information
Circular and Proxy Statement filed with the Securities and Exchange
Commission on April 20, 1999 (Commission File Number 1-1861).
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We hereby amend this Registration Statement on any date necessary to delay
its effective date until we file a further amendment which specifically states
that this Registration Statement shall become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration Statement
shall become effective as determined by the SEC, acting pursuant to Section 8(a)
of the Securities Act of 1933.
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The information in this Prospectus is not complete and may be changed. We may
not issue these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED September 1, 1999
Prospectus
The CIT Group, Inc.
[ ] Shares of Common Stock
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We are offering shares of our common stock issuable upon exchange of the
exchangeable shares (the "Exchangeable Shares") of our indirect subsidiary, CIT
Exchange Co. ("Exchangeco"). Exchangeco is a limited liability company formed
under the laws of the province of Nova Scotia. Exchangeco issued the
Exchangeable Shares in connection with the combination of CIT and Newcourt
Credit Group Inc.
A holder of Exchangeable Shares may exchange Exchangeable Shares, at any
time before the redemption of the Exchangeable Shares, for an equal number of
shares of our common stock. Exchangeco may redeem any outstanding Exchangeable
Shares for an equal number of shares of our common stock on a date selected by
the Board of Directors of Exchangeco on or after [ o ], 2004. Upon the
occurrence of certain events described in this prospectus, Exchangeco may also
redeem the Exchangeable Shares prior to [ o ], 2004 for an equal number of
shares of our common stock.
We describe the process by which you may exchange or redeem your
Exchangeable Shares for shares of our common stock beginning on page 8 of this
prospectus under the heading "Plan of Distribution."
We are conducting this offer on a continuous basis pursuant to Rule 415
under the Securities Act of 1933 only during the period when the Registration
Statement relating to this prospectus is effective. We will not receive proceeds
from the exchange of the Exchangeable Shares. We will pay all the costs and fees
relating to the registration of the shares covered by this prospectus.
Our common stock trades on the New York Stock Exchange under the symbol
"CIT" and the Toronto Stock Exchange under the symbol "________". The last sales
price of our common stock on ________, 1999 was $____. Unless otherwise
indicated, all "dollar" or "$" references in this prospectus are to United
States dollars.
Our principal executive offices are located at The CIT Group, Inc., 1211
Avenue of the Americas, New York, New York, 10036, telephone (212) 536-1390. In
this Prospectus, "the Corporation," "CIT," "we," "us" and "our" refer to The CIT
Group, Inc. and its subsidiaries.
Holders of Exchangeable Shares should consider carefully the risk factors
beginning on page 3.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is , 1999.
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TABLE OF CONTENTS
Page
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Where You Can Find More Information 2
Forward-Looking Statements 3
Risk Factors 3
CIT 8
Use of Proceeds 8
Plan of Distribution 8
Description of Common Stock 13
Tax Considerations Regarding Exchangeable Shares and Our Common Stock 16
Experts 24
Legal Opinions 25
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file with the
SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the Public Reference Room. We file our SEC materials electronically
with the SEC, so you can also review our filings by accessing the web site
maintained by the SEC at http://www.sec.gov. This site contains reports, proxy
and information statements and other information regarding issuers that file
electronically with the SEC. Certain of our securities are listed on the New
York Stock Exchange and reports and other information concerning us can also be
inspected at the offices of the New York Stock Exchange at 20 Broad Street, New
York, New York 10005. You can also obtain more information about us by visiting
our web site at http://www.citgroup.com.
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
information different from that contained or incorporated by reference in this
prospectus. This prospectus is an offer to sell, or a solicitation of offers to
buy, shares of our common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of our common stock.
The SEC allows us to "incorporate by reference" the information we file
with them, which means we can disclose important information to you by referring
you to those documents. The information included in the following documents is
incorporated by reference and is considered to be a part of this prospectus. The
most recent information that we file with the SEC automatically updates and
supersedes older information. We have previously filed the following documents
with the SEC and are incorporating them by reference into this prospectus:
1. Our Annual Report on Form 10-K for the year ended December 31, 1998;
2. Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999 and June 30, 1999;
3. Our Current Reports on Form 8-K dated January 28, 1999, February 22,
1999, March 8, 1999, March 22, 1999, April 27, 1999, May 10, 1999, May 17, 1999,
June 14, 1999, July 30, 1999, August 5, 1999 and August 18, 1999;
4. The description of our common stock contained in Registration Statement
333-36435 initially filed by us with the SEC on September 26, 1997, which is
incorporated by reference into the registration statement on Form 8-A, filed on
October 29, 1997;
5. Newcourt's quarterly unaudited financial statements for the quarters
ended March 31, 1999 and June 30, 1999 filed on Form 6-K; and
6. Newcourt's audited consolidated financial statements and the auditor's
report thereon for fiscal years ended December 31, 1998 and 1997 filed on Form
6-K.
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We also incorporate by reference into this prospectus, all reports and
other documents subsequently filed by us pursuant to Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until all of the securities being
offered in this Prospectus are sold.
We will provide without charge to each person who receives a prospectus,
including any beneficial owner, a copy of the information that has been
incorporated by reference in this prospectus. If you would like to obtain this
information from us, please direct your request, either in writing or by
telephone, to Jeffrey Simon, Senior Vice President-Investor Relations, The CIT
Group, Inc., 1211 Avenue of the Americas, New York, New York 10036, telephone
(212) 536-1390.
FORWARD-LOOKING STATEMENTS
Some of the statements in this prospectus and the documents that we
incorporate by reference may contain "forward-looking statements" in that they
do not discuss historical fact, but instead note future expectations,
projections, intentions or other items relating to the future. Forward-looking
statements involve numerous known and unknown risks, uncertainties and factors
that may cause our actual results or performance to differ materially from those
contemplated by the forward-looking statements. You should not rely on these
statements as predictions of future events. We do not guarantee that the
transactions and events described in forward-looking statements will happen as
described or that they will happen at all. You can identify forward-looking
statements by the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should," "seeks," "approximately," "intends,"
"plans," "pro forma," "estimates" or "anticipates," or the negative of these
words and phrases, or similar words or phrases.
Forward-looking statements are included, for example, in the discussions
about:
o strategy;
o regulatory risks;
o liquidity;
o credit and residual risk management;
o integration of businesses, systems, operations and personnel;
o asset/liability risk management;
o operational and legal risks;
o Year 2000 issues; and
o how the company may be affected by certain legal proceedings.
These statements involve risks and uncertainties that may be difficult to
predict. Therefore, actual results may differ materially from those expressed or
implied in these statements. Factors that could cause such differences include,
but are not limited to:
o economic conditions and trends;
o industry cycles and trends;
o competitive conditions and trends;
o failure to achieve anticipated growth;
o failure to realize or delays in realizing anticipated cost savings;
o higher than expected costs of integration;
o unanticipated problems in integrating businesses;
o changes in market interest rates, in the relationship between short-term
and long-term rates, or in the relationship between different interest
rate indices;
o disruptions in the commercial paper or capital markets;
o changes in the market for equipment and other collateral due to market
conditions, over-supply, obsolescence or other factors;
o changes in laws or regulations; and
o other risks detailed in our other SEC filings.
We do not intend to update forward-looking information to reflect actual
results or changes in assumptions or other factors that could affect those
statements. We cannot predict your risk in relying on forward-looking statements
in light of the many factors that could affect their accuracy.
RISK FACTORS
You should consider carefully the following factors, in addition to the
other information contained in this prospectus, before exchanging your
Exchangeable Shares for the shares of our common stock.
Risks Related to the Exchange of Exchangeable Shares
Taxability of the Exchange
The exchange of Exchangeable Shares for shares of our common stock is
generally a taxable event in Canada and the United States. Your tax consequences
can vary depending on a number of
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factors, including your residency, the method of the exchange (redemption or
purchase), your ownership percentage and the length of time that the
Exchangeable Shares were held by you prior to an exchange. See "Tax
Considerations Regarding Exchangeable Shares and Our Common Stock" on page 16.
Differences in Canada and U.S. Trading Markets
The Toronto Stock Exchange has conditionally approved the listing of the
Exchangeable Shares on the effective date of the combination of CIT and
Newcourt, subject to Exchangeco fulfilling all of the requirements of The
Toronto Stock Exchange, including distribution of Exchangeable Shares to a
minimum number of public shareholders. Our common stock is listed on the New
York Stock Exchange and The Toronto Stock Exchange. We have agreed that the
shares of our common stock issuable from time to time in exchange for the
Exchangeable Shares will be listed on the New York Stock Exchange and The
Toronto Stock Exchange. There is no current intention to list the Exchangeable
Shares or our common stock on any other stock exchange in Canada or the United
States. As a result of the foregoing, the price at which the Exchangeable Shares
will trade will be based upon the market for the shares on The Toronto Stock
Exchange and the price at which the shares of our common stock will trade will
be based upon the market for the shares on the New York Stock Exchange, The
Toronto Stock Exchange, and the other exchanges upon which they trade. Although
we believe that the market price of the Exchangeable Shares on The Toronto Stock
Exchange and the market price of our common stock on the New York Stock
Exchange, The Toronto Stock Exchange, and such other exchanges will reflect
essentially equivalent values, there can be no assurances that the market price
of the common stock will be identical, or even similar, to the market price of
the Exchangeable Shares.
Qualified Investments and Foreign Property
Provided the Exchangeable Shares remain listed on a prescribed stock
exchange in Canada (which includes The Toronto Stock Exchange), the Exchangeable
Shares will be qualified investments under the Income Tax Act (Canada) for
trusts governed by registered retirement savings plans, registered retirement
income funds, deferred profit sharing plans and registered education savings
plans under the Income Tax Act (Canada). Provided shares of our common stock
remain listed on a prescribed stock exchange in Canada or the United States
(which includes The Toronto Stock Exchange and the New York Stock Exchange),
shares of our common stock will be qualified investments under the Income Tax
Act (Canada) for such plans. Pursuant to the Voting and Exchange Trust
Agreement, your right to direct the voting of the Special Voting Share, par
value $.01 per share, issued by us and deposited with the trustee, and your
rights under the Voting and Exchange Trust Agreement to require us to purchase
all of the outstanding Exchangeable Shares in the event of either the
liquidation, dissolution or winding-up of Exchangeco or us (collectively, the
"Ancillary Rights") will not be qualified investments under the Income Tax Act
(Canada). However, CIBC World Markets Securities Inc. is of the view that the
fair market value of the Ancillary Rights is nominal.
Provided the Exchangeable Shares remain listed on a prescribed stock
exchange in Canada (which currently includes The Toronto Stock Exchange), the
Exchangeable Shares will not be foreign property under the Income Tax Act
(Canada) for trusts governed by registered retirement savings plans, registered
retirement income funds and deferred profit sharing plans, for registered
pension plans or for certain other persons to whom Part XI of the Income Tax Act
is applicable. Ancillary Rights will constitute foreign property. However, CIBC
World Markets Securities Inc. is of the view that the fair market value of the
Ancillary Rights is nominal. Shares of our common stock will, however, be
foreign property for such plans or persons.
Risks Related to the Operations of CIT
Risks of Integration of CIT and Newcourt
The combination of CIT and Newcourt involves the integration of two
companies that have different corporate cultures and that have previously
operated independently. The composition of our management is new and several
senior Newcourt executives have not continued with CIT. Our success will depend
to a significant degree on the compatibility of key executives and our ability
to retain highly-skilled personnel. It is not certain that we will be able to
integrate the two operations without encountering difficulties, including
incompatibility of key executives, the loss of key employees and customers, the
disruption of our respective ongoing businesses or possible inconsistencies in
systems, standards, controls, procedures and policies.
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The integration of Newcourt into CIT will require a substantial amount of
management's time. Diversion of management's attention from the existing
businesses, as well as problems that may arise in connection with the
integration of the operations, may have a material adverse impact on our
revenues and results of operations. Integration may result in additional
expenses, which could negatively affect our revenues and results of operations.
Leasing Transactions and Equipment Risk
We lease various types of equipment to our customers under various types
of leases, including capital leases and operating leases. A capital lease
differs from an operating lease in that the term of a capital lease typically
extends over a significant portion of the leased equipment's useful economic
life. The realization of unrecovered equipment values (or residual values) at
the end of the term of a capital lease is an important element in the leasing
business. An operating lease, however, is substantially shorter in duration
relative to the leased equipment's useful economic life, and carries greater
risks with respect to the leased equipment. These risks include the remarketing
of the leased equipment over its useful economic life, as well as the
realization of equipment carrying values. We will conduct substantial levels of
operating lease business.
Realization of capital lease residual value and operating lease equipment
carrying value depends on many factors that are not within our control,
including general market conditions at the time of expiration of the lease,
whether there has been unusual wear and tear on, or use of, the equipment, the
cost of comparable new equipment, the extent, if any, to which the equipment has
become technologically or economically obsolete during the contract term and the
effects of any additional or amended government regulations.
We record residual values for capital lease transactions based upon our
estimates of future value of the equipment at the expected disposition date. We
derive these estimates from, among other things, historical experience, market
information on sales of used equipment, appraisals and projected obsolescence
trends. We also record periodic depreciation expense on equipment purchased for
operating lease transactions based upon estimates of the equipment's useful life
and the estimated future value of the equipment at the end of its useful life.
These estimates involve uncertainties, and, accordingly, may prove to be
incorrect. If these remaining equipment values, are not realized, either from
the existing leases, from subsequent leases of the same equipment and/or from
the sale of the equipment, then our financial results could suffer materially.
Risks Associated with Securitization Activities
Financial institutions use securitizations for a variety of purposes.
Securitizations provide an additional source of liquidity, remove assets from
balance sheets (thus increasing returns and decreasing on-balance sheet
leverage), and generate gains on the sale of the securitized assets. However,
there are risks associated with engaging in securitization activities resulting
from market volatility and from potentially incorrect assumptions about the
future performance of assets (such as prepayment rates and credit losses).
The execution of, and the gains recognized on, securitization transactions
are affected by market volatility and by changes in market interest rates.
Market volatility can result from a downturn of economic conditions, either
domestically or internationally, from political turmoil, either domestic or
foreign, or from other causes. This volatility could decrease the attractiveness
of securitized debt to investors as they seek safer investments, thus reducing
securitization as a source of liquidity or compelling companies that rely on
securitization transactions for funding to offer higher rates of return in order
to attract sufficient investors, thereby increasing the cost of this funding
source to us and reducing the gain recognized on the sale of the securitized
assets.
In a securitization transaction, a gain on sale and a related retained
interest in the securitized pool are recognized when the assets being
securitized are sold. The value of the retained interest recognized in a
securitization transaction is dependent upon certain assumptions regarding
future performance of the securitized portfolio, including the level of credit
losses and the rate of prepayments. If actual credit losses or prepayment differ
from the original assumptions, the value of the retained interest in the
securitized pool may increase or decrease materially. The value of the retained
interest in the securitized pool may also increase or decrease materially with
changes in market interest rates. Also, if assets being securitized are not
properly hedged, the gain on sale recorded in a securitization transaction may
be affected by changes in market interest rates between the time the assets
being securitized are
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originated and the time assets are sold to the securitization entity.
Changes in the volume of assets securitized or decreases in the value of
retained interests in securitizations due to changes in market interest rates or
higher than expected credit losses on prepayments could have a material adverse
effect on our results of operations.
Impact of Funding Transition
In planning for the funding of our operations, we have provided for a
significant reduction in Newcourt's historical level of securitization of
receivables to fund Newcourt's operations. For the six months ended June 30,
1999 and for the year ended December 31, 1998, securitization gains (net of tax)
constituted approximately 73.0% and 96.9%, respectively, of Newcourt's net
income as compared to 1.8% and 2.4%, respectively, of CIT's. On a pro forma
basis, securitization gains (net of tax) would have constituted approximately
21.0% and 31.1% of the combined company's net income for the six months ended
June 30, 1999 and for the year ended December 31, 1998, respectively. Our goal
is to reduce securitization gains (net of tax) over the next several years to
approximately 15% or less of our net income. In the near term, such reduction in
securitization gains will likely reduce our future earnings compared to the pro
forma combined earnings of CIT and Newcourt on an historical basis.
Liquidity and Capital Raising
Our primary sources of funds are cash flow from operations, commercial
paper borrowings, medium-term notes, other term debt securities and asset-backed
securitization. At June 30, 1999, pro forma combined commercial paper borrowings
were US $7.3 billion and amounts due on term debt within one year were US $10.0
billion.
Our ability to obtain funds and the cost of such funds is dependent on our
credit ratings, our access to the various capital markets, our financial
condition, general economic conditions and business prospects. A deterioration
in these factors could have a material adverse impact on our ability to obtain
financing on attractive terms and therefore could have a material adverse impact
on our results of operations and financial condition.
Reserve for Credit Losses
We maintain a reserve for credit losses on finance receivables in an
amount that we believe will provide adequate protection against potential credit
losses inherent in the portfolio, considering, among other things:
o the nature and financial characteristics of our obligors;
o economic conditions and trends;
o past charge-off experience;
o delinquencies;
o the value of underlying collateral; and
o the existence and reliability of guarantees or recourse to dealers,
manufacturers and vendors.
We cannot be certain that our reserve for credit losses will be adequate
to cover credit losses inherent in the portfolio. Our consolidated reserve for
credit losses could prove to be inadequate because of unanticipated adverse
changes in the economy or events adversely affecting specific customers,
industries or markets. An inadequate reserve for credit losses could have a
material adverse effect on our results of operations.
Interest Rate Risk
Changes in market interest rates or in the relationships between
short-term and long-term market interest rates or between different interest
rate indices (i.e., basis risk) could affect the interest rates that we can
charge differently than they affect the interest rates that we will pay. Such
changes could result in an increase in the interest expense relative to finance
income. An increase in market interest rates also could materially impair the
ability of floating-rate borrowers to meet higher payment obligations, which
could result in an increase in defaults (creating non-performing assets) and in
net credit losses.
Exchange Rate Fluctuations
Approximately 13.9% of the pro forma combined finance income for the six
months ended June 30, 1999 was derived from operations outside the United
States. Our results of operations could be significantly affected by factors
associated with international operations, such as changes in foreign currency
exchange rates and uncertainties relative to
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regional economic or political circumstances, as well as by other risks
sometimes associated with international operations. Since the revenue and
expenses of our foreign operations are generally denominated in local
currencies, exchange rate fluctuations between such local currencies and the
U.S. dollar subject us to currency translation risk with respect to the reported
results of our foreign operations. Also, we may be subject to foreign currency
translation risks when our transactions are denominated in a currency other than
the currency in which we incur expenses related to such transactions. There can
be no assurance that we will not experience fluctuations in financial results
from our operations outside the United States, and there can be no assurance
that we will be able to contractually or otherwise favorably reduce the currency
translation risk associated with our operations.
Regulation
Our business will be subject to various governmental regulations and
supervision. Such regulations and supervision are designed primarily to benefit
and protect customers, rather than investors. For example, various jurisdictions
may often establish maximum allowable finance charges for certain consumer and
commercial loans. If we do not comply with applicable law, we could have our
license to do business revoked or suspended or could be subject to other
penalties. We could also be adversely affected by the adoption of new laws or
regulations or by changes to existing laws and regulations or their
interpretation.
Year 2000 Issues
Year 2000 compliance issues arise out of the inability of computers,
software and other equipment using microprocessors to recognize and properly
process date fields containing a two digit year. We are dependent upon the
proper functioning of our information technology ("IT") systems. We believe that
our Year 2000 compliance program for our higher and medium priority IT systems
has been successfully completed and that our overall Year 2000 compliance
program is 99% complete. Newcourt believes that its Year 2000 compliance program
can be substantially completed on or before September 30, 1999. In order to
avoid distracting IT systems management from the Year 2000 compliance programs
of the combined company and avoid potential infection of Year 2000 compliant IT
systems with non-compliant IT systems, we have determined to defer integration
of CIT's and Newcourt's IT systems until next year.
Significant Year 2000 failures in our IT systems or significant Year 2000
failures in the IT systems of third parties on whom we depend could have a
material adverse effect on our financial condition and results of operations.
Failure of any of these IT systems could also cause an inability to originate
transactions, process invoices or collect payments. Year 2000 failures in third
party IT systems could also cause us to experience substantial increases in
credit losses and liquidity stress.
Relationship with The Dai-Ichi Kangyo Bank, Limited
The Dai-Ichi Kangyo Bank, Limited ("DKB") beneficially owns approximately
27% of our outstanding common stock and Exchangeable Shares, taken together, and
is our largest stockholder. As a result of our relationship with DKB, our
activities may be subject to regulation and regulatory supervision in various
jurisdictions in which we conduct business. Such regulation or supervision may
restrict our ability to engage in new activities or to make new acquisitions. In
addition, we have agreed with DKB not to engage in any activities or enter into
any transactions which would require prior approval of, notice to, or filing
with the Federal Reserve and/or the Ministry of Finance of Japan without
obtaining approval from DKB, and from the Federal Reserve and/or the Ministry of
Finance of Japan, as applicable.
Pursuant to the Voting Agreement entered into by us and Newcourt with DKB,
DKB will be entitled to two seats on our Board of Directors so long as it
beneficially owns more than 10% of our outstanding common stock and Exchangeable
Shares, taken together, and one seat so long as it beneficially owns more than
3% of our outstanding common stock and Exchangeable Shares, taken together.
Ownership interests of our directors or officers in the common stock of DKB or
service as a director or officer or other employee of both us and DKB could
create or appear to create potential conflicts of interest. Our Amended and
Restated Certificate of Incorporation ("Certificate of Incorporation") includes
certain provisions relating to the allocation of business opportunities that may
be suitable either for DKB or for us.
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Shares Eligible for Future Sale by DKB
DKB owns 71,000,000 shares of our common stock and beneficially owns
approximately 27% of our outstanding common stock and the Exchangeable Shares,
taken together. All of the shares of our common stock owned by DKB are eligible
for sale in the U.S. public market pursuant to Rule 144 under the Securities
Act.
In addition, all of such shares could be sold by DKB in the public market
through the exercise of up to five "demand" registrations and an unlimited
number of "piggyback" registrations with respect to our common equity offerings.
Sales of substantial amounts of the shares of our common stock by DKB
could adversely affect the prevailing market price of both the Exchangeable
Shares and our common stock and impair our ability to raise capital by issuing
equity securities. DKB is under no obligation to retain any of its remaining
interest in our common stock.
CIT
We are a leading diversified finance company offering commercial and
consumer financing secured by various types of collateral. We operate almost
exclusively in the United States and market our products and services to
smaller, middle-market and larger businesses and to individuals through a
nationwide distribution network. We have been in business since 1908 and are
recognized as a leader in many of the markets we serve. We believe that our
strong credit risk management expertise and long-standing commitment to our
markets and customers provide us with a competitive advantage.
USE OF PROCEEDS
We will not receive any cash proceeds when you exchange Exchangeable
Shares for shares of our common stock.
PLAN OF DISTRIBUTION
General
Our common stock may be issued to you as follows:
o you may require at any time that your Exchangeable Shares be exchanged
for an equal number of shares of our common stock;
o Exchangeco may redeem the outstanding Exchangeable Shares on or after
[o], 2004, on a date selected by the Board of Directors of Exchangeco,
for an equal number of shares of our common stock;
o Exchangeco may require an early redemption of your Exchangeable Shares
for an equal number of shares of our common stock upon the occurrence of
certain events as more fully described below in "Early Redemption"; and
o upon liquidation of CIT or Exchangeco, you may be required to, or may
elect to, exchange your Exchangeable Shares for an equal number of
shares of our common stock.
In each of the foregoing cases you will continue to be entitled to receive
from Exchangeco, on the designated payment date, any declared but unpaid
dividends, if any, to which you were otherwise entitled. If and to the extent
the dividend is not paid by Exchangeco on the designated payment date, such
dividend in respect of shares acquired by 3026192 Nova Scotia Company, an
unlimited liability company incorporated under the laws of the Province of Nova
Scotia ("Newco"), or by CIT (in accordance with the provisions governing the
Exchangeable Shares) will be paid on such date by Newco or CIT, as the case may
be, for and on behalf of Exchangeco.
Newco, the parent company of Exchangeco, is a wholly owned subsidiary of
CIT.
We have not engaged any broker, dealer or underwriter in connection with
this offering of our common stock.
The following is a summary that highlights some of the rights,
privileges, restrictions and conditions relating to the terms on which our
common stock may be issued to you in exchange for your Exchangeable Shares. The
specific provisions governing the Exchangeable Shares are set forth in the Plan
of Arrangement, including the Exchangeable Share Provisions and the Voting and
Exchange Trust Agreement, each of which is included as an exhibit to the
Registration Statement of which this prospectus is a part. You should read the
Plan of Arrangement, including the Exchangeable Share Provisions and the Form of
Voting and Exchange Trust Agreement, for a more complete understanding of the
Exchangeable Shares.
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Election by Holders to Exchange
As a holder of Exchangeable Shares, you have the right at any time to
retract (that is, to require Exchangeco to redeem) any or all of the
Exchangeable Shares you hold. If you decide to retract your Exchangeable Shares,
you will receive one share of our common stock for each Exchangeable Share. You
may elect to retract your Exchangeable Shares by presenting to Exchangeco or its
transfer agent:
o a certificate or certificates representing the number of Exchangeable
Shares to be retracted;
o a written notice of retraction, the form of which you may obtain from
Exchangeco or its transfer agent, specifying the number of Exchangeable
Shares you want to retract and the retraction date; and
o such other documents as Exchangeco or its transfer agent may require to
effect the retraction of the Exchangeable Shares.
The retraction date is the date you indicate in your notice of retraction
that you want the retraction to occur. The date you indicate may not be less
than 10 nor more than 15 business days after Exchangeco receives your notice of
retraction. The address to which you should send your Exchangeable Shares,
notice of retraction and other documents is listed under "Delivery of Our Common
Stock" on page 12.
Exchangeco must immediately notify Newco of the receipt of any notice of
retraction because Newco has an overriding "retraction call right" to purchase
all of the Exchangeable Shares specified in any notice of retraction. Newco will
advise Exchangeco within five business days of Exchangeco's receipt of the
notice of retraction whether Newco will exercise the retraction call right.
Exchangeco will advise you if Newco does not exercise its retraction call right.
Exchangeco or its transfer agent or Newco, if Newco exercises its
retraction call right, will deliver to you at the address recorded in the
securities register of Exchangeco or the address you specify in the form of
notice of retraction, or hold for pick-up by you at the registered office of
Exchangeco or at the office of its transfer agent, certificates representing the
shares of our common stock.
You may revoke your notice of retraction at any time prior to the close of
business on the business day preceding the retraction date. If you revoke your
notice of retraction, your Exchangeable Shares will not be purchased by Newco or
redeemed by Exchangeco. If you do not revoke your notice of retraction, each
Exchangeable Share that you requested Exchangeco to redeem will be, as described
above, either:
o acquired by Newco if it exercises its retraction call right; or
o redeemed by Exchangeco.
Exchangeco will not be required to redeem Exchangeable Shares if the
redemption would be contrary to solvency requirements or other provisions of
applicable law. In that event, your notice of retraction will give notice to the
Montreal Trust Company of Canada, the trustee under the Voting and Exchange
Trust Agreement, to exercise the trustee's exchange right and require us to
purchase each Exchangeable Share covered by your notice of retractions, but not
redeemed by Exchangeco for one share of our common stock.
If you do give notice of retraction, you will continue to be entitled to
receive from Exchangeco, on the designated payment date, any declared but unpaid
dividends on the Exchangeable Shares which are the subject of the notice of
retraction and which shares were held by you on any dividend record date which
occurs prior to the retraction date. If and to the extent the dividend is not
paid by Exchangeco on the designated payment date, such dividend in respect of
any shares purchased by Newco or us (as discussed above in this section) will be
paid on such date by Newco or us, as the case may be, for and on behalf of
Exchangeco.
Redemption of Exchangeable Shares
On or after [ o ], 2004, on a date selected by the Board of Directors of
Exchangeco, Exchangeco will redeem all of the then outstanding Exchangeable
Shares by delivering, for each Exchangeable Share, one share of our common
stock. Exchangeco will, at least 60 days prior to the redemption date, provide
the registered holders of the Exchangeable Shares with written notice of the
proposed redemption of the Exchangeable Shares. This redemption is subject to
applicable law and to Newco's redemption call right described below.
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Notwithstanding any proposed redemption of the Exchangeable Shares, Newco
has an overriding redemption call right to purchase, on the redemption date, all
but not less than all of the Exchangeable Shares then outstanding (other than
Exchangeable Shares held by us or our subsidiaries). Newco may exercise its
redemption call right by notifying Exchangeco and the transfer agent for the
Exchangeable Shares of its intention to exercise such right at least 60 days
prior to the redemption date. The transfer agent will notify you whether or not
Newco will exercise its redemption call right. If Newco exercises its redemption
call right, you will be obligated to sell your Exchangeable Shares to Newco.
Newco will deliver to the transfer agent for payment to you on the redemption
date, for each Exchangeable Share, one share of our common stock. On the
redemption date, you will continue to be entitled to receive from Exchangeco, on
the designated payment date, any declared but unpaid dividends on such
Exchangeable Shares held by you on any dividend record date which occurred prior
to the redemption date. If and to the extent the dividend is not paid by
Exchangeco on the designated payment date, such dividend in respect of shares
purchased by Newco will be paid on such date by Newco for and on behalf of
Exchangeco.
Early Redemption
Exchangeco has the right to require an early redemption of your
Exchangeable Shares before [ o ], 2004 if any of the following occurs:
(i) there are fewer than 1,000,000 Exchangeable Shares outstanding, other
than Exchangeable Shares held by us and our subsidiaries;
(ii) there is a merger, tender offer or material sale of shares involving
us or any proposal to do so and the Board of Directors of Exchangeco
determines, in good faith and in its sole discretion, that it is not
reasonably practicable substantially to replicate the terms and conditions
of the Exchangeable Shares, in which case the redemption date will be
accelerated to a date before [ o ], 2004 as the Board of Directors of
Exchangeco may determine;
(iii) there is a proposal in which holders of Exchangeable Shares are
entitled to vote as shareholders of Exchangeco (for example, to approve an
amalgamation involving Exchangeco) and the Board of Directors of
Exchangeco determines, in good faith and in its sole discretion, that it
is not reasonably practicable to accomplish the business purpose intended
by the proposal, in which case the redemption date will be the business
date before the record date for the vote of the holders of the
Exchangeable Shares to consider the proposal; or
(iv) there is a failure to take action on any matter on which holders of
Exchangeable Shares are entitled to vote as shareholders of Exchangeco to
approve or disapprove any change in the rights of the holders of the
Exchangeable Shares where the approval or disapproval would be required to
maintain the equivalence of the Exchangeable Shares with our common stock,
in which case the redemption date will be the business date following the
date on which the holders of the Exchangeable Shares failed to take
action.
Liquidation Rights
Exchangeco's Liquidation
If Exchangeco liquidates, dissolves or winds-up or otherwise distributes
its assets among its shareholders for purposes of winding up its affairs, you
will receive from Exchangeco, for each Exchangeable Share, a liquidation payment
equal to one share of our common stock. The liquidation payment will be paid to
you as a holder of Exchangeable Shares before payment is made to any holder of
any class of stock ranking junior to the Exchangeable Shares. The payment of the
liquidation payment is subject to applicable law and to Newco's liquidation call
right described below.
Newco may exercise its liquidation call right by notifying Exchangeco and
the transfer agent for the Exchangeable Shares of its intention to exercise such
right at least 45 days prior to the date of Exchangeco's voluntary liquidation,
dissolution or winding-up and at least five business days prior to Exchangeco's
involuntary liquidation, dissolution or winding-up. The transfer agent will
notify you whether or not Newco exercises its liquidation call right. If Newco
exercises its liquidation call right, Newco will deliver to the transfer agent
for payment to you one share of our common stock for each Exchangeable Share.
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If there is an Exchangeco insolvency event, as a holder of Exchangeable
Shares, you may instruct Montreal Trust Company of Canada, the trustee under the
Voting and Exchange Trust Agreement, to exercise the trustee's exchange right
and require us to purchase any or all of your Exchangeable Shares for the
liquidation payment. An Exchangeco insolvency event means:
o the Board of Directors of Exchangeco decides to institute bankruptcy,
insolvency, reorganization, voluntary liquidation, dissolution, or
winding-up, or composition or readjustment of debt proceedings or to
effect any other distribution of its assets among its stockholders for
the purpose of winding up its affairs;
o Exchangeco's receipt of notice of, or Exchangeco otherwise becoming
aware of, any threatened or instituted claim, suit or other proceedings
with respect to its bankruptcy, insolvency reorganization, involuntary
liquidation, dissolution or winding-up of Exchangeco or to effect any
other distribution of Exchangeco's assets among its stockholders for the
purpose of winding up its affairs and Exchangeco's failure to contest in
good faith any such proceedings commenced within 30 days of becoming
aware of it;
o the entry by a court having jurisdiction in the premises of a decree or
order for relief in respect to Exchangeco in an involuntary case or
proceeding under any applicable Canadian federal bankruptcy, insolvency,
reorganization or other similar law or a decree or order adjudging
Exchangeco a bankrupt or insolvent or approval of a petition seeking
reorganization, arrangement, adjustment or composition of Exchangeco
under any applicable Canadian federal law or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of Exchangeco or any substantial part of its property, or
ordering the winding up or liquidation of Exchangeco's affairs, and the
continuance of any such decree or order for relief in effect for a
period of 60 days;
o Exchangeco's admission in writing of its inability to pay its debts
generally as they become due; or
o Exchangeco not being permitted, pursuant to solvency requirements of
applicable law, to retract the Exchangeable Shares.
Upon notice from the trustee of the exercise of the exchange right, we
will deliver to the trustee for payment to you one share of our common stock for
each outstanding Exchangeable Share.
Upon the liquidation, dissolution or winding-up of Exchangeco or if there
is an Exchangeco insolvency event, you will continue to be entitled to receive
from Exchangeco, on the designated payment date, any declared but unpaid
dividends on such Exchangeable Shares held by you on any dividend record date
which occurred prior to the purchase by Newco under its liquidation call right
or by us by virtue of the trustee's exchange right. If and to the extent the
dividend is not paid by Exchangeco on the designated payment date, such dividend
in respect of shares purchased by Newco (by virtue of the liquidation call
right) or by us (pursuant to the trustees exchange right) will be paid on such
date by Newco or us, as the case may be, for and on behalf of Exchangeco.
CIT's Liquidation
If there is a CIT insolvency event, in order for you to participate on an
equal basis with the holders of our common stock, each outstanding Exchangeable
Share will be automatically exchanged for one share of our common stock. A CIT
insolvency event means:
o our Board of Directors decides to institute bankruptcy, insolvency,
reorganization, voluntary liquidation, dissolution, or winding-up, or
composition or readjustment of debt proceedings or to effect any other
distribution of our assets among our stockholders for the purpose of
winding up our affairs;
o our receipt of notice of, or our otherwise becoming aware of, any
threatened or instituted claim, suit or other proceedings with respect
to our bankruptcy, insolvency reorganization, involuntary liquidation,
dissolution or winding-up or composition or readjustment of debt
proceedings or to effect any other distribution of our assets among our
stockholders for the purpose of winding up our affairs and our failure
to
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contest in good faith any such proceedings commenced within 30 days of
becoming aware of it;
o the entry by a court having jurisdiction in the premises of a decree or
order for relief in respect to us in an involuntary case or proceeding
under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or a decree or order adjudging us a
bankrupt or insolvent or approval of a petition seeking reorganization,
arrangement, adjustment or composition of us under any applicable
federal or state law or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official over us or any
substantial part of our property, or ordering the winding up or
liquidation of our affairs, and the continuance of any such decree or
order for relief in effect for a period of 60 days; or
o our admission in writing of our inability to pay our debts generally as
they become due.
To effect the automatic exchange of Exchangeable Shares for shares of our
common stock, we will be deemed to have purchased each Exchangeable Share
outstanding on the fifth business day prior to the time of the CIT insolvency
event.
If there is an automatic exchange of the Exchangeable Shares for shares of
our common stock, you will continue to be entitled to receive from Exchangeco,
on the designated payment date, any declared but unpaid dividends on such
Exchangeable Shares held by you on any dividend record date which occurred prior
to the purchase by us (under the Automatic Exchange Right). If and to the extent
the dividend is not paid by Exchangeco on the designated payment date, such
dividend in respect of shares purchased by us (under the Automatic Exchange
Right) will be paid on such date by us for and on behalf of Exchangeco.
Exchangeable Share Support Agreement
The Exchangeable Share Support Agreement provides, among other things,
that we will take all actions and do all things necessary or desirable to enable
and permit Exchangeco, in accordance with applicable law, to pay the liquidation
payment, the retraction price or the redemption price to holders of Exchangeable
Shares as set out above. The form of the Exchangeable Share Support Agreement is
included as an exhibit to the Registration Statement of which this Prospectus
constitutes a part, and its description is qualified in its entirety by
reference thereto.
Delivery of Our Common Stock
To retract your Exchangeable Shares, follow the instructions listed under
"Election by Holders to Exchange" on page 9.
As described above, you may also receive shares of our common stock plus
any additional cash amount payable if or when:
o Exchangeco redeems or Newco exercises its redemption call right to
acquire all of the outstanding Exchangeable Shares on the redemption
date;
o Exchangeco liquidates or Newco exercises its liquidation call right; or
o CIT liquidates.
To receive shares of our common stock and any additional cash amount
payable in the above listed circumstances, you must present to Exchangeco or its
transfer agent, Montreal Trust Company of Canada:
o a certificate or certificates representing the number of Exchangeable
Shares to be retracted or purchased; and
o such other documents as Exchangeco or its transfer agent may require to
effect the transfer of your Exchangeable Shares.
Certificates representing the shares of our common stock plus, where
applicable, a cash amount equal to any declared and unpaid dividends will be
delivered by mailing to you at the address recorded in the securities register
of Exchangeco or by holding the certificates representing the shares of our
common stock for pick-up by you at the registered office of Exchangeco or the
office of its transfer agent.
If you instruct the trustee under the Voting and Exchange Trust Agreement
to exercise the trustee's exchange right, in addition to the certificates and
other documents described above, you must also present to Montreal Trust Company
of Canada, as trustee, a notice of exercise of the exchange right in the form
contained on the reverse side of the Exchangeable Share certificates.
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The address to which you should mail your certificates and other documents
is: Montreal Trust Company of Canada, 151 Front Street West, Fifth Floor,
Toronto, Ontario M5J 2N1. The address to which you should hand deliver, or send
by messenger, your certificates and other documents is: Montreal Trust Company
of Canada, 151 Front Street West, Fifth Floor, Toronto, Ontario, M5J 2N1, Attn:
[ ].
DESCRIPTION OF COMMON STOCK
General
Our authorized capital stock consists of 1,260,000,000 shares, of which
(i) 50,000,000 are shares of Preferred Stock, par value $.01 per share, of which
one (1) share is issued and outstanding, and (ii) 1,210,000,000 are shares of
Common Stock, par value $.01 per share, of which _________ are issued and
outstanding and _____________ are held as treasury stock. The following
description of our common stock is intended as a summary only and is qualified
in its entirety by reference to our Certificate of Incorporation, which is on
file with the SEC, and to Delaware corporate law.
Common Stock
Voting Rights
Holders of our common stock are entitled to one vote per share. Holders of
shares of our common stock are not entitled to cumulate their votes for the
election of directors. Generally, all matters to be voted on by stockholders
must be approved by a majority (or, in the case of the election of directors, by
a plurality) of the votes entitled to be cast by all holders of shares of our
common stock present in person or represented by proxy, subject to any voting
rights granted to holders of any of our preferred stock. Except as otherwise
provided by law or by our Certificate of Incorporation, and subject to any
voting rights granted to holders of any of our outstanding preferred stock,
amendments to our Certificate of Incorporation must be approved by a majority
vote of the holders of our outstanding common stock.
Dividends
Holders of our common stock share ratably on a per share basis in any
dividends declared by our Board of Directors, subject to any preferential rights
of any of our outstanding preferred stock.
Other Rights
In the event we merge, reorganize or consolidate with or into another
entity in connection with which shares of our common stock are converted into or
exchangeable for shares of stock, other securities or property (including cash),
all holders of our common stock are entitled to receive the same kind and amount
of shares of stock and other securities and property (including cash).
On our liquidation, dissolution or winding-up, after payment in full of
the amounts required to be paid to holders of our preferred stock, if any, all
holders of our common stock are entitled to share ratably in any assets
available for distribution to holders of shares of our common stock.
Shares of our common stock are not subject to redemption. Shares of our
common stock do not have preemptive rights to purchase additional shares.
Preferred Stock
Our preferred stock will be issuable from time to time in one or more
series, with such designations and preferences for each series as shall be
stated in the resolutions providing for the designation and issue of each such
series adopted by our Board of Directors. Our Board of Directors is authorized
by our Certificate of Incorporation to determine, among other things, the rights
and preferences and the limitations thereon pertaining to each such series. Our
Board of Directors, without stockholder approval, may issue preferred stock with
voting and other rights that could adversely affect the voting power and other
rights of the holders of our common stock and could have certain anti-takeover
effects. Except for one share of our preferred stock issued to the trustee as
the voting share under the Voting and Exchange Trust Agreement, we have no
preferred stock outstanding and we have no current plans to issue any shares of
our preferred stock. The ability of our Board of Directors to issue preferred
stock in the future without stockholder approval could have the effect of
delaying, deferring or preventing a change in control of CIT or the removal of
existing management.
Special Voting Share
Pursuant to the Voting and Exchange Trust Agreement, we issued one voting
share to the trustee who is holding the voting share in trust for
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the benefit of the holders of the Exchangeable Shares (other than us and our
affiliates). The voting share entitles the trustee to vote at any meeting at
which our stockholders are entitled to vote. The voting share will have a number
of votes equal to the number of then outstanding Exchangeable Shares (other than
Exchangeable Shares held by us or our subsidiaries).
Certain Certificate of Incorporation and Bylaw Provisions
Corporate Opportunities
Our Certificate of Incorporation provides that DKB has no duty to refrain
from engaging in the same or similar activities or lines of business as us, and
neither DKB nor any director, officer or other employee thereof (except as
provided below) is liable to us or our stockholders for breach of any fiduciary
duty by reason of any such activities of DKB. In the event that DKB acquires
knowledge of a potential transaction or matter which may be a corporate
opportunity for both DKB and us, DKB has no duty to communicate or offer such
corporate opportunity to us and is not liable to us or our stockholders for
breach of any fiduciary duty as our stockholder by reason of the fact that DKB
pursues or acquires such corporate opportunity for itself, directs such
corporate opportunity to another person or does not communicate information
regarding such corporate opportunity to us.
In the event that any of our directors, officers or other employees who is
also a director or officer or other employee of DKB acquires knowledge of a
potential transaction or matter which may be a corporate opportunity for both us
and DKB, such director, officer or other employee of CIT is deemed to have fully
satisfied and fulfilled their fiduciary duty to us and our stockholders with
respect to such corporate opportunity if such director, officer or other
employee acts in a manner consistent with the following policy:
(1) a corporate opportunity offered to any person who is an officer or
other employee of CIT, and who is also a director but not an officer or other
employee of DKB, belongs to CIT;
(2) a corporate opportunity offered to any person who is a director but
not an officer or other employee of CIT, and who is also a director or officer
or other employee of DKB, belongs to CIT if such opportunity is expressly
offered to such person in writing solely in his or her capacity as a director of
CIT, and otherwise belongs to DKB; and
(3) a corporate opportunity offered to any person who is an officer or
other employee of both CIT and DKB, or an officer of one and an employee of the
other, belongs to CIT if such opportunity is offered to such person in writing
solely in his or her capacity as an officer of CIT, and otherwise belongs to
DKB.
For purposes of the foregoing:
(1) A director of CIT who is Chairman of the CIT Board of Directors or of
a committee thereof shall not be deemed to be an officer or employee of CIT by
reason of holding such position (without regard to whether such position is
deemed an officer of CIT under the Bylaws of CIT), unless such person is a
full-time employee of CIT; and
(2) (A) The term "we," "us," "our" or "CIT" means CIT and all
corporations, partnerships, joint ventures, associations and other entities
controlled directly or indirectly by CIT through the ownership of the
outstanding voting power of such corporation, partnership, joint venture,
association or other entity or otherwise and (B) the term "DKB" means DKB and
all corporations, partnerships, joint ventures, associations and other entities
(other than CIT, defined in accordance with clause (A) of this section (2))
controlled (directly or indirectly) by DKB through the ownership of the
outstanding voting power of such corporation, partnership, joint venture,
association or other entity or otherwise.
The foregoing provisions of our Certificate of Incorporation will expire
on the date that both DKB ceases to own beneficially common stock representing
at least 25% of the voting power of all classes of outstanding common stock and
no person who is a director, officer or employee of CIT is also a director,
officer or employee of DKB or any of its subsidiaries (other than CIT).
Any person purchasing or otherwise acquiring Class A common stock is
deemed to have notice of, and to have consented to, the foregoing provisions of
our Certificate of Incorporation.
Provisions That May Have an Anti-Takeover Effect
Certain provisions contained in our Certificate of Incorporation and
Bylaws summarized below may be deemed to have an anti-takeover effect and may
delay, deter or prevent a tender offer or
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takeover attempt that a stockholder might consider to be in its best interest,
including attempts that might result in a premium being paid over the market
price for the shares held by stockholders.
Our Certificate of Incorporation provides that, subject to any rights of
holders of our preferred stock to elect additional directors under specified
circumstances, the number of directors of CIT is fixed as specified in the
Bylaws. The Bylaws provide that:
(1)subject to any rights of holders of our preferred stock to elect
additional directors under specified circumstances, the number of directors is
fixed at ten (10) unless our Board of Directors votes that such number be
increased or decreased (we currently have 12 directors) and
(2)subject to any rights of holders of our preferred stock, any director
may be removed from office, with or without cause, by vote of the holders of a
majority of the votes entitled to be cast by the holders of all outstanding
shares of our common stock.
In addition, our Certificate of Incorporation and Bylaws provide that,
subject to any rights of holders of our preferred stock, and unless our Board of
Directors otherwise determines, any vacancies may be filled by the affirmative
vote of a majority of the remaining members of the Board, though less than a
quorum, or by a sole remaining director, and except as otherwise provided by
law, any such vacancy may not be filled by the stockholders.
Our Bylaws provide for an advance notice procedure for the nomination,
other than by or at the direction of our Board of Directors, of candidates for
election as directors as well as for other stockholder proposals to be
considered at annual meetings of stockholders. In general, notice of intent to
nominate a director or raise matters at such meetings must be received in
writing by us at our principal executive offices not less than 60 nor more than
90 days prior to the first anniversary of the previous year's annual meeting of
stockholders, subject to adjustment in certain situations, and must contain
certain information concerning the person to be nominated or the matters to be
brought before the meeting and concerning the stockholder submitting the
proposal. Our Certificate of Incorporation and Bylaws also provide that special
meetings of stockholders may be called only by certain specified officers of CIT
or by any such officer at the request in writing of our Board of Directors;
special meetings of stockholders cannot be called by stockholders. In addition,
our Certificate of Incorporation provides that any action required or permitted
to be taken by stockholders may be effected only at a duly called annual or
special meeting of stockholders and may not be effected by a written consent by
stockholders in lieu of such a meeting.
Transactions with Interested Stockholders
We have elected not to be governed by Section 203 of the Delaware General
Corporation Law, which provision requires the vote of at least 66 2/3% of the
outstanding voting stock of a company not owned by an interested stockholder (as
defined) to approve certain business combinations. As a result, any such
proposed business combination by us will require the vote of only a majority of
stockholders.
Limitations on Directors' Liability
Our Certificate of Incorporation provides that no director of CIT shall be
liable to us or our stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability
(1)for any breach of the director's duty of loyalty to us or our
stockholders,
(2)for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
(3)in respect of certain unlawful dividend payments or stock redemptions
or repurchases or
(4)for any transaction from which the director derived an improper
personal benefit. The effect of these provisions will be to eliminate our rights
and the rights of our stockholders (through stockholders' derivative suits on
behalf of CIT) to recover monetary damages against a director for breach of
fiduciary duty as a director (including breaches resulting from grossly
negligent behavior), except in the situations described above.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is The Bank of New
York.
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TAX CONSIDERATIONS REGARDING EXCHANGEABLE SHARES AND
OUR COMMON STOCK
Canadian Federal Income Tax Considerations
The following summary sets forth the opinion of our Canadian counsel,
Goodman Phillips & Vineberg, of the material Canadian federal income tax
considerations generally applicable under the Income Tax Act (Canada) to holders
of Exchangeable Shares who acquire our common stock upon the exchange of
Exchangeable Shares. The following summary is generally applicable to you if,
under Canadian federal income tax law:
o you acquire shares of our common stock upon the exchange of your
Exchangeable Shares;
o for purposes of the Income Tax Act (Canada), you hold your Exchangeable
Shares and will hold shares of our common stock as capital property,
deal at arm's length with Newcourt, CIT, Exchangeco and Newco; and
o you are not affiliated with Newcourt, CIT, Exchangeco or Newco.
This summary does not apply to you if we are or will be a foreign
affiliate of you within the meaning of the Income Tax Act (Canada).
The Exchangeable Shares and shares of our common stock will generally be
considered to be capital property to you unless they are held in the course of
carrying on a business, in an adventure or concern in the nature of trade or as
"mark-to-market" property for purposes of the Income Tax Act (Canada). If you
are a holder of Exchangeable Shares to whom Exchangeable Shares or shares of our
common stock are not capital property, you should consult your own tax advisers
regarding your particular circumstances including, in the case of certain
"financial institutions" (as defined in the Income Tax Act (Canada)), the
potential application to you of the "mark-to-market" rules in the Income Tax Act
(Canada), as the following discussion does not apply to you.
This summary is based on the Income Tax Act (Canada), the regulations
thereunder and our counsel's understanding of the administrative policies and
assessing practices published by Revenue Canada, all in effect as of the date of
this prospectus. This summary takes into account the proposed amendments to the
Income Tax Act (Canada) and the regulations thereunder publicly announced by the
Minister of Finance prior to the date of this prospectus and assumes that all
such proposed amendments will be enacted in their present form. However, we
cannot assure you that the proposed amendments will be enacted in the form
proposed or at all. This summary does not take into account or anticipate any
other changes in law, administrative policy or assessing practice, whether by
judicial, governmental or legislative action or decision, nor does it take into
account provincial, territorial or foreign income tax legislation or
considerations, which may differ from the Canadian federal income tax
considerations described herein. No assurances can be given to you that
subsequent changes in law or administrative policy will not affect or modify the
opinions expressed herein. No advance income tax ruling has been sought or
obtained from Revenue Canada to confirm the tax consequences of any of the
transactions described herein.
This summary is of a general nature only and is not intended to be, and
should not be construed to be, legal, business or tax advice to any particular
shareholder. You should consult your own tax advisors for advice with respect to
your particular circumstances.
For the purposes of the Income Tax Act (Canada), all amounts must be
expressed in Canadian dollars, including dividends, adjusted cost base and
proceeds of disposition; amounts denominated in United States dollars must be
converted into Canadian dollars based on the United States dollar exchange rate
generally prevailing at the time such amounts arise.
Holders of Exchangeable Shares Resident in Canada
The following portion of the summary is applicable to you if you are and
will continue to be a resident or deemed resident of Canada for purposes of the
Income Tax Act (Canada) at all times while you hold Exchangeable Shares or our
common stock.
Dividends
Dividends on Exchangeable Shares. Individuals will be required to include
dividends received or deemed to be received on the Exchangeable Shares in
computing income, subject to the gross-up and dividend tax credit rules
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normally applicable to taxable dividends received from taxable Canadian
corporations.
Subject to the discussion below as to the denial of the dividend deduction,
holders of Exchangeable Shares that are corporations will be required to include
dividends received or deemed to be received on the Exchangeable Shares in
computing income and such dividend will normally be deductible in computing
taxable income. We are a "specified financial institution" for purposes of the
Income Tax Act (Canada), as defined below. Where we are (or any person with whom
we do not deal at arm's length is) a "specified financial institution" at or
immediately before the time a dividend is paid or deemed to be paid; the
dividend deduction for a corporation will generally not apply unless at the time
the dividend is received (or deemed to be received):
o the Exchangeable Shares are listed on a prescribed stock exchange (which
currently includes The Toronto Stock Exchange);
o we control Exchangeco and Newco; and
o the recipient of the dividend (together with persons with whom the
recipient does not deal at arm's length or any partnership or trust of
which the recipient or person is a member or beneficiary, respectively)
does not receive dividends in respect of more than ten percent of the
issued and outstanding Exchangeable Shares.
If you are a specified financial institution for the purposes of the
Income Tax Act (Canada), a dividend received or deemed to be received on the
Exchangeable Shares will be deductible in computing your taxable income only if
either:
o you did not acquire the Exchangeable Shares in the ordinary course of
the business carried on by you within the meaning of the Income Tax Act
(Canada); or
o at the time you receive or are deemed to receive the dividend, the
Exchangeable Shares are listed on a prescribed stock exchange in Canada
(which currently includes The Toronto Stock Exchange) and you, either
alone or together with persons with whom you do not deal at arm's
length, do not receive (and are not deemed to receive) dividends in
respect of more than ten percent of the issued and outstanding
Exchangeable Shares either directly, through a partnership or (in
certain cases) through a trust.
A corporation is a "specified financial institution" for purposes of the
Income Tax Act (Canada) if it is:
(a) a bank, a trust company, a credit union, or an insurance corporation;
(b) a corporation whose principal business is the lending of money to
persons with whom the corporation is dealing at arm's length or the purchasing
of debt obligations issued by such persons or a combination thereof, or a
corporation prescribed to be a financial institution for purposes of Part I.3 of
the Income Tax Act (Canada); or
(c) a corporation controlled by one or more such entities.
A corporation is also a specified financial institution if it is related to one
of the above entities other than a corporation described in (b) above the
principal business of which is the factoring of trade accounts receivable that
(1) the particular corporation acquired from a related person,
(2) arose in the course of an active business carried on by a person (the
"first person") related at that time to the particular corporation, and
(3) at no particular time before that time were held by a person other
than a person who was related to the first person.
Specified financial institutions should consult their own tax advisors.
If you are a "private corporation" (as defined in the Income Tax Act
(Canada)) or any other corporation resident in Canada and controlled or deemed
to be controlled by or for the benefit of an individual (other than a trust) or
a related group of individuals (other than trusts), you will generally be liable
under Part IV of the Income Tax Act (Canada) to pay a refundable tax of 33 1/3%
on dividends received or deemed to be received on the Exchangeable Shares to the
extent that such dividends are deductible in computing your taxable income. If
you are a "Canadian-controlled private corporation" (as defined in the Income
Tax Act (Canada)), you may be liable to pay an additional refundable tax of 6
2/3% on dividends or deemed dividends that are not deductible in computing your
taxable income.
The Exchangeable Shares will be "taxable preferred shares" and "short-term
preferred shares" for purposes of the Income Tax Act (Canada).
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Dividends received or deemed to be received on the Exchangeable Shares will not
be subject to the ten percent tax under Part IV.1 of the Income Tax Act
(Canada). However, Exchangeco will generally be subject to a 66 2/3% tax under
Part VI.1 of the Income Tax Act (Canada) on dividends paid or deemed to be paid
on the Exchangeable Shares and will be entitled to deduct 9/4 of the tax so
payable in computing its taxable income under Part I of the Income Tax Act
(Canada).
Dividends on Shares of Our Common Stock. If you receive dividends on
shares of our common stock, you must include it in your income for the purposes
of the Income Tax Act (Canada). Such dividends received by you as an individual
will not be subject to the gross-up and dividend tax credit rules in the Income
Tax Act (Canada). If you hold shares of our common stock and you are a
corporation, you must include such dividends in computing your income and
generally you will not be entitled to deduct the amount of such dividends in
computing your taxable income. If you hold our common stock and you are a
Canadian-controlled private corporation, you may be liable to pay an additional
refundable tax of 6 2/3% on such dividends. United States non-resident
withholding tax on dividends may be eligible for foreign tax credit or deduction
treatment where applicable under the Income Tax Act (Canada).
Redemption or Exchange of Exchangeable Shares
If Exchangeco redeems an Exchangeable Share (including on a retraction)
(as opposed to Newco purchasing such share as discussed below), you will be
deemed to have received a dividend equal to the amount, if any, by which the
redemption proceeds (the fair market value at that time of shares of our common
stock received from Exchangeco) exceeds the paid-up capital of the Exchangeable
Share (as determined for purposes of the Income Tax Act (Canada)) at the time of
the redemption of the Exchangeable Share. The tax treatment of any such deemed
dividend to you will be as discussed above under "Dividends - Dividends on
Exchangeable Shares," except that the non-deductibility of such dividend to a
corporation that is a specified financial institution may be limited under
subsection 191(4) of the Income Tax Act (Canada). The terms and conditions of
the Exchangeable Shares provide that, for the purposes of subsection 191(4) of
the Income Tax Act (Canada), Exchangeco specified an amount in respect of each
Exchangeable Share equal to the closing sale price of a common share of Newcourt
on The Toronto Stock Exchange on the trading day immediately preceding the
effective date of the combination of CIT and Newcourt, divided by the Exchange
Ratio. If you are or may become a specified financial institution at the time of
redemption of your Exchangeable Shares, you should consult with your tax
advisors for advice with respect to the application of subsection 191(4) of the
Income Tax Act (Canada).
On the redemption (including a retraction) of Exchangeable Shares, you
will generally be considered to have disposed of the Exchangeable Shares for
proceeds of disposition equal to the redemption proceeds less the amount of such
deemed dividend. You will in general realize a capital gain (or a capital loss)
equal to the amount by which the adjusted cost base to you is less than (or
exceeds) such proceeds of disposition. The general tax treatment of capital
gains and capital losses is discussed below under the heading "Taxation of
Capital Gain or Capital Loss." If you are a corporation, in some circumstances
the amount of any such deemed dividend may be treated as proceeds of disposition
and not as a dividend.
If an Exchangeable Share is purchased by Newco (or by us pursuant to the
trustee under the Voting and Exchange Trust Agreement exercising its exchange
right), you will in general realize a capital gain (or a capital loss) to the
extent that the proceeds of disposition of the Exchangeable Share, net of any
reasonable costs of disposition, exceed (or are less than) the adjusted cost
base to you. For these purposes, the proceeds of disposition will be the
aggregate of the fair market value, at the time of the exchange, of the shares
of our common stock received from Newco (or us) on the purchase. See "Taxation
of Capital Gain or Capital Loss" below.
Because of the existence of Newco's call rights and the trustee's exchange
rights, as more fully discussed above under the "Plan of Distribution," you
cannot control whether you will receive shares of our common stock by way of
redemption (or retraction) of the Exchangeable Shares by Exchangeco or by way of
purchase of the Exchangeable Shares by Newco or us. As described above, the
Canadian federal income tax consequences of a redemption differ from those of a
purchase.
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Acquisition and Disposition of Our Shares of Our Common Stock
The cost of a share of our common stock received on the retraction,
redemption or exchange of an Exchangeable Share will be equal to the fair market
value of such share of our common stock at the time of such event, which amount
will be averaged with the adjusted cost base of any other share of our common
stock held at that time by you
as capital property (other than any share of our common stock considered to have
been continually held by you since 1971).
A disposition or deemed disposition of shares of our common stock by you
will generally result in a capital gain (or capital loss) to the extent that the
proceeds of disposition, net of any reasonable costs of disposition, exceed (or
are less than) the adjusted cost base to you of shares of our common stock
immediately before the disposition.
Taxation of Capital Gain or Capital Loss
Three-quarters of any capital gain (the "taxable capital gain") you
realize will be included in your income for the year of disposition.
Three-quarters of any capital loss you realize (the "allowable capital loss")
may be deducted by you against taxable capital gains for the year of
disposition. You may carry back up to three taxation years or forward
indefinitely any excess of allowable capital losses over taxable capital gains
for the year of disposition and deduct it against net taxable capital gains in
those other years to the extent and subject to the limitations prescribed in the
Income Tax Act (Canada).
Capital gains realized by an individual or trust, other than certain
trusts, may give rise to alternative minimum tax under the Income Tax Act
(Canada). If you are a Canadian-controlled private corporation, you may be
liable to pay an additional refundable tax of 6 2/3% on taxable capital gains.
If you are a corporation, the amount of any capital loss arising on a
disposition or deemed disposition of any Exchangeable Share may be reduced by
the amount of dividends received or deemed to have been received by you on such
Exchangeable Share to the extent and under circumstances prescribed by the
Income Tax Act (Canada). Similar rules may apply where a corporation is a member
of a partnership or a beneficiary of a trust that owns Exchangeable Shares or
where a trust or partnership of which a corporation is a beneficiary or a member
is a member of a partnership or a beneficiary of a trust that owns any shares.
Qualified Investments and Foreign Property
Provided the Exchangeable Shares are listed on a prescribed stock exchange
in Canada (which includes The Toronto Stock Exchange), the Exchangeable Shares
will be qualified investments under the Income Tax Act (Canada), for trusts
governed by registered retirement savings plans, registered retirement income
funds, deferred profit sharing plans and registered education savings plans
under the Income Tax Act (Canada). Provided shares of our common stock are
listed on a prescribed stock exchange in Canada or the United States (which
includes The Toronto Stock Exchange and the New York Stock Exchange), shares of
our common stock will be qualified investments under the Income Tax Act (Canada)
for such plans. Pursuant to the Voting and Exchange Trust Agreement, your right
to direct the voting of the Special Voting Share, par value $.01 per share,
issued by us and deposited with the trustee and your rights under the Voting and
Exchange Trust Agreement to require us to purchase all of the outstanding
Exchangeable Shares in the event of either the liquidation, dissolution or
winding-up of Exchangeco or us (collectively, the "Ancillary Rights") will not
be qualified investments under the Income Tax Act (Canada). However, CIBC World
Markets Securities Inc. is of the view that the fair market value of the
Ancillary Rights is nominal.
Also, provided the Exchangeable Shares are listed on a prescribed stock
exchange in Canada (which currently includes The Toronto Stock Exchange), the
Exchangeable Shares will not be foreign property under the Income Tax Act
(Canada), for trusts governed by registered retirement savings plans, registered
retirement income funds and deferred profit sharing plans, for registered
pension plans or for certain other persons to whom Part XI of the Income Tax Act
is applicable. Ancillary Rights will constitute foreign property. However, CIBC
World Markets Securities Inc. is of the view that the fair market value of the
Ancillary Rights is nominal. Shares of our common stock will, however, be
foreign property for such plans or persons.
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Foreign Property Information Reporting
If you are a "specified Canadian entity" for a taxation year or a fiscal period
and your total cost amount of "specified foreign property" which includes the
Exchangeable Shares, the Ancillary Rights and shares of our common stock, at any
time in the year or fiscal period exceeds C$100,000, you will be required to
file an information return in respect of such property which will include
disclosing certain information regarding particulars of your investment in such
property. A specified Canadian entity means a taxpayer resident in Canada in the
year, other than a corporation or a trust exempt from tax under Part I of the
Income Tax Act (Canada), a non-resident-owned investment corporation, a mutual
fund corporation, a mutual fund trust and certain other entities. Holders of
such specified foreign property should consult their tax advisors.
Holders of Exchangeable Shares Not Resident in Canada
This summary applies to you if:
o for purposes of the Income Tax Act (Canada), you have not been and will
not be resident or deemed to be resident in Canada at any time while you
hold or have held the common shares of Newcourt, the Exchangeable Shares
or our common stock;
o your shares are not "taxable Canadian property" (as defined in the
Income Tax Act (Canada)); and
o you do not use or hold and are not deemed to use or hold such shares in
connection with carrying on a business in Canada.
This summary is not applicable to any non-resident of Canada which carries
on an insurance business in Canada and elsewhere, in respect of the Exchangeable
Shares or shares of our common stock that are effectively connected with the
non-resident's Canadian insurance business or that are "designated insurance
property" as defined in the Income Tax Act (Canada).
Generally, the Exchangeable Shares and shares of our common stock will not
be taxable Canadian property if:
o you do not use or hold, and you are not deemed to use or hold, such
shares in connection with carrying on a business in Canada; and
furthermore,
o in the case of the Exchangeable Shares, (1) such shares are listed on a
prescribed stock exchange (which currently includes The Toronto Stock
Exchange); and (2) you, persons with whom you do not deal at arm's
length or you and such persons, have not owned (taking into account any
interest in or option in respect of the shares) 25% or more of the
issued shares of any class or series of the capital stock of Exchangeco
at any time within five years preceding the date of disposition.
If you meet the above conditions, you will not be subject to tax under the
Income Tax Act (Canada) on the exchange of an Exchangeable Share for a share of
our common stock, except to the extent the exchange results in a redemption
(including on a retraction) of an Exchangeable Share, or on the sale or other
disposition of our common stock. If your Exchangeable Share is redeemed
(including on a retraction) by Exchangeco (as opposed to such share being
purchased by Newco or us, as discussed above), you will be deemed to receive a
dividend as described above for holders of Exchangeable Shares resident in
Canada under the heading "Redemption or Exchange of Exchangeable Shares." The
amount of such deemed dividend will be subject to the tax treatment accorded to
dividends described below.
Dividends paid or deemed to be paid on the Exchangeable Shares are subject
to non-resident withholding tax under the Income Tax Act (Canada) at the rate of
25%, although such rate may be reduced under the provisions of an applicable
income tax convention. Under the Canada-United States Income Tax Convention
effective August 16, 1984, as amended, the rate is generally reduced to 15% in
respect of dividends paid to a person who is the beneficial owner of such shares
and who is a resident in the United States for purposes of the said Income Tax
Convention.
United States Federal Tax Considerations
The following summary sets forth the opinion of Schulte Roth & Zabel LLP,
counsel to CIT, as to the material United States federal income and estate tax
considerations relating to the exchange of Exchangeable Shares for shares of our
common stock and the acquisition, ownership and disposition of our common stock,
but does not purport to be a complete analysis of all the potential tax
considerations relating thereto. This summary is
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based on the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), the applicable Treasury Regulations promulgated or proposed thereunder,
judicial authority and current administrative rulings and practice, all of which
are subject to change, possibly on a retroactive basis. This summary deals only
with holders that hold Exchangeable Shares, or will hold our common stock, as
"capital assets" within the meaning of Section 1221 of the Code. This summary
does not address tax considerations applicable to investors that may be subject
to special tax rules, such as banks, tax-exempt organizations, insurance
companies, dealers in securities or currencies, persons that hold Exchangeable
Shares or will hold our common stock as a position in a hedging transaction,
straddle or conversion transaction for tax purposes, or persons that have a
"functional currency" other than the United States dollar. We have not sought
any ruling from the Internal Revenue Service with respect to the statements made
and the conclusions reached in the following summary, and there can be no
assurance that the Internal Revenue Service will agree with such statements and
conclusions.
Investors considering the exchange of Exchangeable Shares for our common
stock should consult their tax advisors with respect to the application of
United States federal income and estate tax laws to their particular
circumstances, as well as any tax consequences arising under the laws of any
state, local or foreign taxing jurisdiction or under any applicable tax treaty.
United States Holders
For purposes of this discussion, the term "United States holder" means a
beneficial owner of Exchangeable Shares or our common stock that is a "United
States person" for United States federal income tax purposes. A "United States
person" is:
o a citizen or resident of the United States;
o a corporation or partnership, including entities treated as corporations
or partnerships for United States federal income tax purposes, created
or organized in or under the laws of the United States or any political
subdivision thereof;
o an estate the income of which is subject to United States federal income
taxation regardless of its source; or
o a trust if a United States court is able to exercise primary supervision
over the administration of such trust and one or more United States
persons have the authority to control all substantial decisions of such
trust.
Exchange of Exchangeable Shares. Assuming the Exchangeable Shares are
treated as issued by Exchangeco for United States federal income tax purposes,
it is anticipated that a United States holder will generally recognize capital
gain or loss upon the exchange of Exchangeable Shares for shares of our common
stock equal to the difference between the fair market value of shares of common
stock received and such holder's adjusted tax basis in the Exchangeable Shares
surrendered in the exchange. Accordingly, the United States holder will have a
tax basis in our common stock received upon the exchange equal to the fair
market value of the common stock on the date of the exchange, and the United
States holder's holding period in our common stock will begin on the day after
the exchange.
Alternatively, an exchange by a United States holder of Exchangeable
Shares for our common stock may be characterized as a tax-free exchange if the
Internal Revenue Service asserts that the Exchangeable Shares should be treated
as issued by CIT for United States federal income tax purposes, or if the
Exchangeable Shares are treated as having been acquired by CIT in exchange for
our common stock in a transaction that qualifies as a reorganization under the
Code. In this regard, we intend to take the position that the Exchangeable
Shares are shares of Exchangeco for United States federal income tax purposes.
It is not possible to predict whether the Exchangeable Shares would be
characterized as our stock, or whether an exchange of Exchangeable Shares for
common stock would otherwise qualify as a tax-free exchange, because such
characterization may be dependent upon future events. If an exchange of
Exchangeable Shares for our common stock qualifies as a tax-free exchange, a
United States holder will not recognize gain or loss upon the exchange, will
have a tax basis in the common stock received in the exchange equal to such
holder's adjusted tax basis in the Exchangeable Shares surrendered, and will
have a holding period in the common stock which includes the holding period in
the Exchangeable Shares.
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Assuming that the Exchangeable Shares are treated as issued by Exchangeco for
United States federal income tax purposes, a United States holder would be
subject to a special adverse tax regime upon its exchange of Exchangeable Shares
for our common stock if Exchangeco were, or were to become, a "passive foreign
investment company" for United States federal income tax purposes (a "PFIC")
during the holder's holding period for its Exchangeable Shares. A corporation
that is not a United States person will be classified as a PFIC for United
States federal income tax purposes for any taxable year during which either (i)
75% or more of its gross income is passive income or (ii) on average for the
taxable year, 50% or more of its assets produce or are held for the production
of passive income. While there can be no assurance with respect to the
classification of Exchangeco as a PFIC, Exchangeco believes that it will not
constitute a PFIC for the current taxable year. At the present time, we do not
intend to engage in any transactions or activities which we believe should cause
Exchangeco to be a PFIC for the current taxable year. If, however, Exchangeco
were to be a PFIC for any taxable year, any gain recognized by a United States
holder that owned Exchangeable Shares during such year would, in most
circumstances, be taxed at rates applicable to ordinary income and would
potentially be subject to other adverse United States federal income tax
consequences. United States holders should consult their own tax advisors
regarding the tax consequences that would result if Exchangeco were to be a PFIC
for any taxable year during the holder's holding period for its Exchangeable
Shares.
Canadian tax, if any, imposed on an exchange of Exchangeable Shares for
our common stock may be available as a credit against a United States holder's
United States federal income tax liability, subject to applicable limitations. A
United States holder who is not eligible for a credit may be able to deduct the
Canadian taxes paid, if any, in computing United States federal income subject
to tax.
Dividends on Shares of Our Common Stock. The amount of any distribution by
us in respect of our common stock will be equal to the amount of cash and the
fair market value, on the date of distribution, of any property distributed.
Generally, any such distribution to a United States holder of our common stock
will be treated:
o first, as a dividend to the extent of our current and accumulated
earnings and profits;
o next, as a tax-free return of capital to the extent of the holder's
adjusted tax basis in our common stock; and
o thereafter as gain from the sale or exchange of such stock.
A United States holder will generally recognize ordinary income to the
extent that any distribution we make is treated as a dividend, and will
generally recognize capital gain to the extent that any distribution we make is
treated as gain from the sale or exchange of the holder's common stock.
Non-United States Holders
For purposes of this discussion, the term "Non-United States holder" means
any beneficial owner of our common stock that is not a United States holder.
Dividends on Exchangeable Shares. Assuming that the Exchangeable Shares
are treated as issued by Exchangeco for United States federal income tax
purposes, dividends received by a Non-United States holder on Exchangeable
Shares generally will not be subject to withholding of United States federal
income tax. If, however, the Internal Revenue Service were to assert
successfully that the Exchangeable Shares should be treated as issued by CIT,
Non-United States holders of Exchangeable Shares would be subject to the rules
described below under "-- Non-United States Holders -Dividends on Shares of Our
Common Stock" and "-- Information Reporting and Backup Withholding -- Non-United
States Persons."
Dividends on Shares of Our Common Stock. Dividends paid to a Non-United
States holder of our common stock will generally be subject to withholding of
United States federal income tax at a rate of 30% (or such reduced rate as may
be specified by an applicable income tax treaty) unless the dividend is
effectively connected with the conduct of a trade or business by the Non-United
States holder in the United States. Under current Treasury Regulations,
dividends paid to an address in a foreign country are presumed to be paid to a
resident of that country, unless the payor has knowledge to the contrary, for
purposes of the 30% withholding tax discussed above and, under the
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current interpretation of the Treasury Regulations, for purposes of determining
the applicability of a tax treaty rate. Under Treasury Regulations that are
effective for payments made after December 31, 2000, however, Non-United States
holders wishing to claim the benefit of an applicable treaty rate would be
required to satisfy specific certification requirements.
A Non-United States holder will generally be taxed in the same manner as a
United States holder on dividends paid that are effectively connected with the
conduct of a trade or business by the Non-United States holder in the United
States. If such Non-United States holder is a corporation, it may also be
subject to a United States branch profits tax on such effectively connected
income at a 30% rate or such lower rate as may be specified by an applicable
income tax treaty. Even though such effectively connected dividends are subject
to United States federal income tax, and may be subject to the branch profits
tax, they will not be subject to United States withholding tax if the Non-United
States holder satisfies specific certification requirements.
Disposition of Shares of Our Common Stock; Exchange of Exchangeable
Shares. A Non-United States holder generally will not be subject to United
States federal income tax or withholding tax on any gain recognized on the sale,
exchange or other disposition of our common stock, or upon the exchange of
Exchangeable Shares for our common stock, unless: (i) the gain is effectively
connected with the conduct of a trade or business by the Non-United States
holder in the United States or, if a tax treaty applies, is attributable to a
permanent establishment of the Non-United States holder in the United States;
(ii) in the case of a Non-United States holder who is an individual, the holder
is present in the United States for 183 days or more during the taxable year of
the disposition and some other conditions are satisfied; or (iii) the holder is
subject to tax pursuant to the provisions of the Code applicable to some United
States expatriates.
If an individual Non-United States holder is described in clause (i) or
(iii) above, the holder will be taxed on the net gain derived from the sale,
exchange or other disposition at regular United States federal income tax rates.
If an individual Non-United States holder is described in clause (ii) above, the
holder generally will be subject to withholding tax at a 30% rate on the gain
derived from the sale, exchange or other disposition, which gain may be offset
by such holder's United States capital losses. If a Non-United States holder
that is a corporation is described under clause (i) above, it will be taxed on
such gain under regular graduated United States federal income tax rates and, in
addition, in some circumstances will be subject to the 30% branch profits tax
discussed above, unless it qualifies for a lower rate under an applicable income
tax treaty.
Our discussion of the United States federal income tax consequences of a
sale, exchange or other disposition of our common stock by a Non-United States
holder assumes that we are not and have not been during certain periods
preceding the sale, exchange or other disposition a "United States real property
holding corporation" (a "USRPHC"), and our stock does not constitute a "United
States real property interest" (a "USRPI"), as each are defined in Section
897(c) of the Code. Under present law, we would be a USRPHC if the fair market
value of our USRPIs is at least equal to 50% of the sum of the fair market value
of:
o our USRPIs;
o our interests in real property located outside the United States; and
o our other assets which are used or held for use in a trade or business.
We believe we are not a USRPHC and do not expect to become a USRPHC in the
future. However, if we were a USRPHC at any time during the shorter of the
five-year period preceding a Non-United States holder's disposition of our
common stock and the period during which such holder held our common stock, and
provided our common stock is "regularly traded on an established securities
market" for United States federal income tax purposes, our common stock would
constitute a USRPI to the Non-United States holder if such holder held, directly
or indirectly, common stock with a fair market value in excess of 5% of the fair
market value of all our common stock outstanding at any time during such period.
Federal Estate Tax Consequences to a Non-United States Holder. Shares of
our common stock actually or beneficially held, other than through a non-United
States corporation, by an individual Non-United States holder at the time of his
or her death, or previously transferred subject to some retained rights or
powers, will be included in the
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value of such holder's gross estate for United States federal estate tax
purposes unless otherwise provided by an applicable estate tax treaty.
Information Reporting and Backup Withholding
General. Dividends paid on our common stock may be subject to information
reporting requirements and backup withholding tax at a rate of 31%. We must
annually report to the Internal Revenue Service and to each United States holder
and Non-United States holder the amount of dividends paid to such holder and the
amount of United States federal income tax, if any, withheld on such amounts.
Copies of the information returns reporting any dividends paid and backup
withholding tax collected may be made available to the tax authorities in the
country in which a Non- United States holder resides, under an applicable income
tax treaty.
Any amounts withheld from a payment to a holder of our common stock under
the backup withholding rules generally will be allowed as a credit against such
holder's United States federal income tax liability and may entitle that holder
to a refund, provided that the required information is furnished in a timely
manner to the Internal Revenue Service.
United States Holders. United States holders are generally not subject to
backup withholding tax unless the United States holder is not an exempt
recipient and fails to provide a correct taxpayer identification number or
certification of non-United States or other exempt status or fails to report in
full dividend or interest income. Generally, individuals are not exempt
recipients, whereas corporations and certain other entities are exempt
recipients.
Non-United States Holders. Backup withholding generally will not apply to
dividends paid prior to January 1, 2001 to a Non-United States holder at an
address outside the United States. However, under Treasury Regulations generally
applicable to dividend payments made after December 31, 2000, dividend payments
to a Non-United States holder will generally be subject to backup withholding
unless applicable certification requirements are satisfied.
Information reporting requirements and backup withholding will not apply
to any exchange of Exchangeable Shares as described herein or the payment of the
proceeds of the sale of our common stock by a Non-United States holder effected
outside the United States by a foreign office of a broker, as defined in
applicable Treasury Regulations, unless such broker:
o is a United States person;
o is a foreign person that derives 50% or more of its gross income for
specified periods from the conduct of a trade or business in the United
States;
o is a controlled foreign corporation for United States federal income tax
purposes; or
o for taxable years beginning after December 31, 2000, is a partnership in
which one or more United States persons in the aggregate own more than
50% of the income or capital interests, or a partnership that is engaged
in a trade or business in the United States.
Payment of the proceeds of any such sale effected outside the United
States by a foreign office of any broker that is listed above will not be
subject to backup withholding, but will be subject to information reporting
requirements unless such broker has documentary evidence in its records that the
beneficial owner is a Non-United States holder and some other conditions are
met, or the beneficial owner otherwise establishes an exemption.
Payment of the proceeds of any such sale to or through the United States
office of a broker is subject to information reporting and backup withholding,
unless the beneficial owner certifies, under penalties of perjury, that it is a
Non-United States holder or otherwise establishes an exemption.
New Treasury Regulations regarding the information reporting and
withholding rules applicable to Non-United States holders are generally
effective for payments made after December 31, 2000, subject to some transition
rules. These new Treasury Regulations do not significantly alter the substantive
withholding and information reporting requirements but provide presumptions
under which a Non-United States holder will be subject to backup withholding and
information reporting unless the holder certifies as to its non-United States
status or otherwise establishes an exemption. In addition, the new Treasury
Regulations change some procedural requirements relating to establishing a
holder's non-United States status. Non-United States holders should consult
their tax advisors regarding the impact, if any, of these new Treasury
Regulations on their acquisition, holding, and disposition of our common stock.
24
<PAGE>
EXPERTS
Our consolidated balance sheets as of December 31, 1998 and 1997 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,
1998 incorporated by reference in this prospectus, have been incorporated by
reference in this prospectus in reliance upon the report of KPMG LLP,
independent certified public accountants, also incorporated by reference in this
prospectus, and upon the authority of KPMG LLP as experts in accounting and
auditing.
The consolidated financial statements of Newcourt, incorporated by
reference herein, as of December 31, 1998 and 1997, and each of the two years in
the period ended December 31, 1998, have been audited by Ernst & Young LLP, as
set forth in their report thereon incorporated by reference herein, and are
incorporated by reference herein in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
LEGAL OPINIONS
Schulte Roth & Zabel LLP, New York, New York, our counsel, is passing for
us on the validity of the securities to which this prospectus relates. One of
our directors, Paul N. Roth, is a partner of Schulte Roth & Zabel LLP. Certain
federal U.S. tax consequences are being passed upon for us by Schulte Roth &
Zabel LLP. Certain Canadian federal income tax consequences are being passed
upon for us by Goodman Phillips & Vineberg.
25
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth all expenses payable by the Registrant in
connection with the issuance and distribution of the securities being
registered. All the amounts shown are estimates, except for the registration
fee.
Registration fee $ 0
Fees and expenses of accountants [ ]
Fees and expenses of counsel 40,000
Printing and engraving expenses [ ]
Listing fee 91,000
Miscellaneous [ ]
-------
Total $
=======
Item 15. 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 that a present or former
director or officer of a corporation has been successful on the merits or
otherwise in 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, such person shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by such person 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.
Article X of the Bylaws of the Registrant provides, in effect, that, in
addition to any rights afforded to an officer, director or employee of the
Registrant by contract or operation of law, the Registrant may indemnify any
person who is or was a director, officer, employee, or agent of the Registrant,
or of any other corporation
II-1
<PAGE>
which he served at the request of the Registrant, 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
Registrant 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 Registrant 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 Registrant or
such other corporation, and, in connection with any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Article X further provides that any person who is or was a director,
officer, employee, or agent of the Corporation or any direct or indirect
wholly-owned subsidiary of the Registrant 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 Registrant 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 include
liabilities under the Securities Act of 1933.
Item 16. Exhibits.
a2.1 --Amended and Restated Agreement and Plan of Reorganization.
a3.1 --Amended and Restated Certificate of Incorporation of The CIT
Group, Inc.
3.2 --Bylaws of The CIT Group, Inc., dated November 12, 1997
(incorporated by reference to Exhibit 3.2 to Form 8-A filed on
October 29, 1997).
b5.1 --Opinion of Schulte Roth & Zabel LLP with respect to the
legality of the securities registered hereunder, containing the
consent of such counsel.
b8.1 --Opinion of Goodman Phillips & Vineberg with respect to the tax
matters of the securities registered hereunder, containing the
consent of such counsel.
c23.1 --Consent of KPMG LLP.
c23.2 --Consent of Ernst & Young LLP.
b23.3 --Consent of Counsel. The consent of Schulte Roth & Zabel LLP
is included in its opinion filed herewith as Exhibit 5.1 to
this Registration Statement.
b23.4 --Consent of Goodman Phillips & Vineberg.
c24.1 --Powers of Attorney.
a99.1 --Plan of Arrangement, including Exchangeable Share Provisions.
a99.2 --Form of Voting and Exchange Trust Agreement.
a99.3 --Form of the Exchangeable Share Support Agreement.
- ----------
a Incorporated by reference to the definitive Joint Management Information
Circular and Proxy Statement on Schedule 14A, filed _________, 1999.
b To be filed by pre-effective amendment.
c Filed herewith.
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) 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;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; and
II-2
<PAGE>
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement; provided, however, that the undertakings set forth in
paragraphs (1)(i) and (1)(ii) above do not apply if the information
required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to
the Commission pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") that are
incorporated by reference into the Registration Statement.
(2) 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.
(3) 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.
(b) The undersigned Registrant hereby undertakes 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 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in such Act and is, therefore, unenforceable. In the
event that such 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 Registrant 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 Registrant 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 such Act and will be governed by the
final adjudication of such issue.
II-3
<PAGE>
SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and 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 the 1st day of
September, 1999.
THE CIT GROUP, 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:
<TABLE>
<CAPTION>
Signature and Title Date
------------------- ----
<S> <C>
/s/ Albert R. Gamper, Jr. September 1, 1999
----------------------------------------
Albert R. Gamper, Jr.
President, Chief Executive Officer, and Director
(principal executive officer)
------------------------------------
Daniel P. Amos
Director
ANTHEA DISNEY*
------------------------------------
Anthea Disney
Director
TAKASUKE KANEKO*
------------------------------------
Takasuke Kaneko
Director
HISAO KOBAYASHI*
------------------------------------
Hisao Kobayashi
Director
WILLIAM M. O'GRADY* *By /s/ERNEST D. STEIN
------------------------------------ ------------------ September 1, 1999
William M. O'Grady Ernest D. Stein
Director Attorney-in-fact
------------------------------------
Joseph A. Pollicino
Director
PAUL N. ROTH*
------------------------------------
Paul N. Roth
Director
PETER J. TOBIN*
------------------------------------
Peter J. Tobin
Director
------------------------------------
Tohru Tonoike
Director
KEIJI TORII*
------------------------------------
Keiji Torii
Director
ALAN F. WHITE*
------------------------------------
Alan F. White
Director
/S/ JOSEPH M. LEONE*
------------------------------------ September 1, 1999
Joseph M. Leone
Executive Vice President and Chief Financial Officer
</TABLE>
Original powers of attorney authorizing Albert R. Gamper, Jr., Ernest D.
Stein, and James P. Shanahan and each of them to sign this Registration
Statement and amendments hereto on behalf of the directors and officers of the
Registrant indicated above are held by the Registrant and available for
examination pursuant to Item 302(b) of Regulation S-T.
II-4
Exhibit 23.1
Independent Auditors' Consent
The Board of Directors
The CIT Group, Inc.:
We consent to the use of our report dated January 28, 1999 relating to the
consolidated balance sheets of The CIT Group, Inc. and subsidiaries as of
December 31, 1998 and 1997, 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, 1998, incorporated by reference in this
Registration Statement on Form S-3 of The CIT Group, Inc., which report appears
in the December 31, 1998 Annual Report on Form 10-K of The CIT Group, Inc. and
to the reference to our firm under the heading "Experts" in the Registration
Statement.
KPMG LLP
Short Hills, New Jersey
August 27, 1999
Exhibit 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 26, 1999, with respect to the consolidated
financial statements of Newcourt Credit Group Inc. as at December 31, 1998 and
1997 and for the years then ended incorporated by reference in the Registration
Statement (Form S-3) and related Prospectus of The CIT Group, Inc. for the
registration of its common stock.
Toronto, Canada Chartered Accountants
August 30, 1999
