exv99w2
AMENDED
OFFERING MEMORANDUM, DISCLOSURE STATEMENT AND SOLICITATION OF
ACCEPTANCES OF A PREPACKAGED PLAN OF REORGANIZATION
CIT Group Inc.
&
CIT Group Funding Company of
Delaware LLC
Offers to Exchange Relating
to
Any and All of Their Respective
Outstanding Notes Listed Below
and Solicitation of Acceptances
of a Prepackaged Plan of Reorganization
EACH OF THE OCTOBER 1 OFFERS (AS DEFINED HEREIN) TO
EXCHANGE AND SOLICITATION OF ACCEPTANCES OF THE PREPACKAGED PLAN
OF REORGANIZATION WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME,
ON OCTOBER 29, 2009, UNLESS EXTENDED BY US (SUCH DATE AND
TIME, AS THE SAME MAY BE EXTENDED, THE “ORIGINAL EXPIRATION
DATE”). EACH OF THE LONG TERM CIT OFFERS (AS DEFINED
HEREIN) TO EXCHANGE AND SOLICITATION OF ACCEPTANCES OF THE
PREPACKAGED PLAN OF REORGANIZATION WILL EXPIRE AT
11:59 P.M., NEW YORK CITY TIME, ON NOVEMBER 13, 2009,
UNLESS EXTENDED BY US (SUCH DATE AND TIME, AS THE SAME MAY BE
EXTENDED, THE “LONG TERM EXPIRATION DATE”). HOLDERS
MAY TENDER CIT LONG TERM OLD NOTES BY 11:59 P.M., NEW
YORK CITY TIME, ON OR PRIOR TO OCTOBER 29, 2009, UNLESS EXTENDED
BY US (SUCH DATE AND TIME, AS THE SAME MAY BE EXTENDED, THE
“LONG TERM NOTES EARLY ACCEPTANCE DATE”), FOR EARLY
ACCEPTANCE. NO ADDITIONAL CONSIDERATION WILL BE PROVIDED TO
HOLDERS OF LONG TERM OLD NOTES WHO TENDER BY THE LONG TERM
NOTES EARLY ACCEPTANCE DATE. HOLDERS OF PUBLICLY TRADED NOTES
SHOULD REFER TO THE BALLOT ATTACHED HERETO AS APPENDIX E
FOR INSTRUCTIONS ON HOW TO TENDER AND/OR VOTE ON THE PLAN OF
REORGANIZATION.
Upon the terms and subject to the conditions set forth in this
offering memorandum, disclosure statement and solicitation of
acceptances of a prepackaged plan of reorganization, attached
hereto as Appendix C (the “Plan of
Reorganization”) (as it may be supplemented and amended
from time to time, collectively the “Offering Memorandum
and Disclosure Statement”), and the related letter of
transmittal (“Letter of Transmittal”) and/or ballot
(“Ballot”) for accepting or rejecting the Plan of
Reorganization, (i) CIT Group Inc. is offering, in exchange
for any and all of the outstanding notes of CIT Group Inc.
listed in the table “CIT Outstanding Notes” beginning
on the inside cover page, each of five series of its newly
issued Series A secured notes denominated in the stated
currency of the outstanding notes (except for outstanding notes
denominated in Swiss francs which will be exchanged for new
notes denominated in U.S. dollars) which are referred to herein
as the “Series A Notes” and/or its newly issued
preferred stock (which are referred to herein as the “New
Preferred Stock”) (the “Original CIT Offers”),
(ii) CIT Group Inc. is offering, in exchange for any and
all of the outstanding notes of CIT Group Inc. listed in the
table “CIT Outstanding Long Term Notes” beginning on
the inside cover page, each of five series of its newly issued
Series A Notes denominated in U.S. dollars and New
Preferred Stock (the “Long Term CIT Offers”) and
(iii) CIT Group Funding Company of Delaware LLC
(“Delaware Funding” also referred to herein as
“CIT Funding”) is offering, in exchange for any and
all of the outstanding notes listed in the table “Delaware
Funding Outstanding Notes” beginning on the inside cover
page, each of five series of its newly issued Series B
secured notes (which are referred to herein as the
“Series B Notes” and together with the
Series A Notes, the “New Notes”) (the
“Delaware Funding Offers” and together with the
Original CIT Offers, the “October 1 Offers”), in
each case, as applicable, as specified in the tables below. The
Original CIT Offers and the Long Term CIT Offers, are referred
to herein collectively as the “CIT Offers,” and the
CIT Offers and the Delaware Funding Offers together are referred
to herein as the “Offers.” The notes to be tendered in
the Original CIT Offers are referred to herein as the
“Original CIT Old Notes,” the notes to be tendered
into the Long Term CIT Offers are referred to herein as the
“CIT Long Term Old Notes” and the Original CIT Old
Notes and the CIT Long Term Old Notes together are referred to
herein as the “CIT Old Notes.” The notes to be
tendered in the Delaware Funding Offers are referred to herein
as the “Canadian Senior Unsecured Notes” or the
“Delaware Funding Old Notes,” and the CIT Old Notes
and the Delaware Funding Old Notes together are referred to
herein as the “Old Notes.” The New Notes will be
secured by the collateral as described herein. The Series A
Notes will be guaranteed by all of CIT Group Inc.’s current
and future domestic wholly owned subsidiaries, with the
exception of Delaware Funding, CIT Bank and other regulated
subsidiaries, special purpose entities and immaterial
subsidiaries (the “CIT Guarantees”). The
Series B Notes will be guaranteed by CIT Group Inc., on an
unsecured basis (except for the Parent Pledge (as defined
herein)), and on a secured basis by all current and future
domestic wholly owned subsidiaries of CIT Group Inc., with the
exception of Delaware Funding, CIT Bank and other regulated
subsidiaries, special purpose entities and immaterial
subsidiaries, (the “Delaware Funding Guarantees,” and
together with the CIT Guarantees, the “Guarantees”).
Consummation of the Offers is subject to a number of conditions,
including a liquidity and leverage condition that states that
the Offers cannot be consummated if an insufficient number of
Old Notes are tendered into the exchange, and/or certain other
debt instruments have not been renegotiated so that, after
giving effect to the Offers and such renegotiations, the face
amount of CIT Group Inc.’s and its direct and indirect
subsidiaries’ total debt would not be reduced by at least
$5.7 billion (excluding any CIT Long Term Old Notes
tendered) and its remaining unsecured debt maturities (excluding
foreign vendor facilities) would exceed $500 million in
2009, $2.5 billion during the period from 2009 to 2010,
$4.5 billion during the period from 2009 to 2011 and
$6.0 billion during the period from 2009 to 2012, in each
case on a cumulative basis (the “Liquidity and Leverage
Condition”). In addition, consummation of each of the
Delaware Funding Offers and the Long Term CIT Offers is subject
to the consummation of the Original CIT Offers. The Liquidity
and Leverage Condition cannot be waived. In the event that the
conditions to the Offers are not satisfied or waived, to the
extent waivable, or if we for any reason determine that it would
be more advantageous or expeditious, and there is sufficient
support for the Plan of Reorganization, CIT Group Inc. and
Delaware Funding may seek to file a case under Chapter 11
of title 11 of the United States Code (the “Bankruptcy
Code”) to consummate the restructuring described in this
Offering Memorandum and Disclosure Statement although no
decision has been made to pursue a bankruptcy filing. Through
the Plan of Reorganization, all holders of Old Notes would
receive New Notes and new common stock, as further set forth in
the section entitled “The Plan of Reorganization,”
provided that sufficient holders of Old Notes
(i.e., holders representing at least
662/3%
in amount and more than 50% in number of those impaired
creditors entitled to vote in certain classes who actually vote)
vote to accept the Plan of Reorganization and the other
conditions to consummation of the Plan of Reorganization are
satisfied. Only those parties who actually vote are counted for
these purposes and therefore it is important that you provide
the appropriate instruction to your broker, dealer, commercial
bank, trust company, or other nominee (each, a
“Nominee”) to cast the appropriate vote on your
behalf. Your election to tender your Old Notes into the Offers
will also constitute a vote to accept the Plan of
Reorganization, and you may only change that vote by
withdrawing, to the extent permitted, the Old Notes you have
tendered. If you choose not to tender your Old Notes into the
Offers, or if you withdraw Old Notes previously tendered, you
may vote separately to accept or reject the Plan of
Reorganization by providing the appropriate instruction to your
Nominee. By providing an instruction to your Nominee to
participate in the Offers or vote to accept or reject the Plan
of Reorganization, you are making certain certifications, as
contained in the Ballot, and agreeing to certain provisions
contained in the Plan of Reorganization including exculpation,
injunction and release provisions. The class in which your Old
Notes will be classified is set forth in the tables beginning on
the inside cover page.
THIS SOLICITATION OF ACCEPTANCES OF THE PLAN OF
REORGANIZATION IS BEING CONDUCTED TO OBTAIN SUFFICIENT
ACCEPTANCES OF THE PLAN OF REORGANIZATION PRIOR TO THE FILING OF
A VOLUNTARY CASE UNDER CHAPTER 11 OF THE BANKRUPTCY CODE.
BECAUSE NO CHAPTER 11 CASE HAS YET BEEN COMMENCED, THIS
OFFERING MEMORANDUM AND DISCLOSURE STATEMENT HAS NOT BEEN
APPROVED BY ANY COURT AS CONTAINING ADEQUATE INFORMATION WITHIN
THE MEANING OF SECTION 1125(A) OF THE BANKRUPTCY CODE. WE
HAVE NOT AT THIS TIME TAKEN ANY ACTION APPROVING A BANKRUPTCY
FILING AND, IF THE OFFERS ARE CONSUMMATED, NEITHER CIT GROUP
INC. NOR DELAWARE FUNDING WILL COMMENCE A BANKRUPTCY FILING TO
CONSUMMATE THE PLAN OF REORGANIZATION ANNEXED HERETO.
October 16, 2009
(continued on next
page)
(continued from previous page)
Subject to applicable securities laws and the terms set forth
in this Offering Memorandum and Disclosure Statement, we reserve
the right to waive, to the extent waivable, any and all
conditions to the Offers, to extend or terminate the Offers and
voting deadlines with respect to the Plan of Reorganization in
our sole and absolute discretion, which may be for any or no
reason, and otherwise to amend the Offers or Plan of
Reorganization in any respect.
You should consider the risk factors beginning on
page 36 of this Offering Memorandum and Disclosure
Statement before you decide whether to participate in the Offers
or vote on the Plan of Reorganization.
Prior to tendering the Old Notes or voting on the Plan of
Reorganization, holders of Old Notes are encouraged to read and
consider carefully this entire Offering Memorandum and
Disclosure Statement, including the Plan of Reorganization
annexed hereto as Appendix C and the matters described in
this Offering Memorandum and Disclosure Statement, the Letter of
Transmittal and/or the Ballot.
In making a decision in connection with the Offers or the
Plan of Reorganization, holders of Old Notes must rely on their
own examination of the Company and the terms of the Offers, the
restructuring transactions, and the Plan of Reorganization,
including the merits and risks involved. Holders of Old Notes
should not construe the contents of this Offering Memorandum and
Disclosure Statement as providing any legal, business, financial
or tax advice. Each holder of Old Notes should consult with its
own legal, business, financial and tax advisors with respect to
any such matters concerning this Offering Memorandum and
Disclosure Statement, the Offers, the Plan of Reorganization and
the restructuring transactions contemplated thereby.
The Offers are exempt from the registration requirements of
the Securities Act of 1933, as amended (the “Securities
Act”) with respect to the exchange of the Old Notes and the
New Preferred Stock by virtue of the exemption from such
registration contained in Section 3(a)(9) of the Securities
Act. The Offers and the solicitation of acceptances of the Plan
of Reorganization are exempt from state securities law
requirements by virtue of Section 18(b)(4)(C) of the
Securities Act.
All of the Old Notes are freely tradeable securities and not
subject to restriction on transfer, and, therefore upon
consummation of the Offers, holders of the Old Notes who tender
Old Notes will receive New Notes and/or New Preferred Stock that
are also freely tradeable securities and not subject to
restriction on transfer by virtue of our reliance on the
exemption from registration contained in Section 3(a)(9) of
the Securities Act.
The following three tables set forth the series of Old Notes
subject to the Offers and indicate the consideration to be
received by holders of Old Notes in the Offers. Holders of Old
Notes accepted for exchange in the Offers will receive New Notes
denominated in the stated currency of the Old Notes (except for
Old Notes denominated in Swiss Franc and Japanese Yen which will
be exchanged for New Notes denominated in U.S. dollars) and also
receive a cash payment (paid in the stated currency of such Old
Notes) equal to the accrued and unpaid interest in respect of
such Old Notes from the most recent interest payment date to,
but not including, the Settlement Date (as defined herein).
Interest on each New Note will accrue from the Settlement Date.
The principal amount of Series A Notes and Series B Notes
offered in exchange for CIT Old Notes and Delaware Funding Old
Notes, respectively, as reflected in the tables below will
consist of 10% of New Notes due in 2013, 15% of New Notes
due 2014, 15% of New Notes due 2015, 25% of New Notes due 2016
and 35% of New Notes due 2017. Approximately $30.2 billion
in outstanding principal amount of Old Notes are subject to
Offers and approximately $22.2 billion of aggregate
principal amount of New Notes and approximately
68.3 million shares of New Preferred Stock will be issued
in the event that there is 100% participation in the Offers.
If the Offers are not consummated, the Old Notes will be subject
to the Plan of Reorganization, to the extent it is approved and
implemented, and placed in the class identified in the following
tables. For a complete description of the persons and securities
subject to the Plan of Reorganization and their potential
treatment thereunder, see “The Plan of Reorganization”
and the Plan of Reorganization annexed hereto as Appendix C.
The CIT Old Notes tendered pursuant to the CIT Offers will be
exchanged for Series A Notes and New Preferred Stock in the
exchange, and the three series of Delaware Funding Old Notes
tendered pursuant to the Delaware Funding Offers will be
exchanged for Series B Notes in the exchange.
CIT
Outstanding Notes
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Consideration per
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Principal Amount of
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Old Notes Tendered
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per 1,000
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USD
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per 1,000
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Equivalent
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Notional
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Number of
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Principal
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Shares of
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Amount
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New Preferred
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Plan of
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Outstanding Principal
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of New Notes
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Stock
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Reorganization
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Title of Old Notes to be Tendered
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Amount
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CUSIP/ISIN
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to be Issued
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to be Issued(1)
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Class
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6.875% Notes due November 1, 2009
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USD 300,000,000
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12560PCL3
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USD 900
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0.35108
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Class 9
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4.125% Notes due November 3, 2009
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USD 500,000,000
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125581AM0
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USD 900
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0.35108
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Class 9
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3.85% Notes due November 15, 2009
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USD 1,959,000
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12557WJP7
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USD 900
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0.35108
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Class 9
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4.63% Notes due November 15, 2009
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USD 1,349,000
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12557WLV1
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USD 900
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0.35108
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Class 9
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5.05% Notes due November 15, 2009
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USD 2,800,000
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12557WPC9
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USD 900
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0.35108
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Class 9
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5.00% Notes due November 15, 2009
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USD 4,217,000
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12557WB26
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USD 900
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0.35108
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Class 9
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5.00% Notes due November 15, 2009
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USD 5,083,000
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12557WB59
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USD 900
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0.35108
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Class 9
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5.00% Notes due November 15, 2009
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USD 6,146,000
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12557WB83
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USD 900
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0.35108
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Class 9
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3.95% Notes due December 15, 2009
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USD 3,314,000
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12557WJV4
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USD 900
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0.35108
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Class 9
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4.80% Notes due December 15, 2009
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USD 2,073,000
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12557WMB4
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USD 900
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0.35108
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Class 9
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4.70% Notes due December 15, 2009
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USD 285,000
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12557WPL9
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USD 900
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0.35108
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Class 9
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Consideration per
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Principal Amount of
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Old Notes Tendered
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per 1,000
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USD
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per 1,000
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Equivalent
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Notional
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Number of
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Principal
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Shares of
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Amount
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New Preferred
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Plan of
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Outstanding Principal
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of New Notes
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Stock
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Reorganization
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Title of Old Notes to be Tendered
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Amount
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CUSIP/ISIN
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to be Issued
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to be Issued(1)
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Class
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4.85% Notes due December 15, 2009
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USD 582,000
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12557WPU9
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USD 900
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0.35108
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Class 9
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6.25% Notes due December 15, 2009
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USD 63,703,000
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12557WSJ1
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USD 900
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0.35108
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Class 9
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6.50% Notes due December 15, 2009
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USD 40,994,000
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12557WSM4
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USD 900
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0.35108
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Class 9
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Floating Rate Notes due December 21, 2009
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USD 113,000,000
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12560PDL2
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USD 900
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0.35108
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Class 9
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4.25% Notes due
February 1, 2010
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USD 750,000,000
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125581AQ1
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USD 850
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1.05323
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Class 9
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4.05% Notes due February 15, 2010
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USD 4,172,000
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12557WKE0
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USD 850
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1.05323
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Class 9
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5.15% Notes due February 15, 2010
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USD 1,918,000
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12557WQC8
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USD 850
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1.05323
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Class 9
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5.05% Notes due February 15, 2010
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USD 1,497,000
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12557WQL8
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USD 850
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1.05323
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Class 9
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6.50% Notes due February 15, 2010
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USD 58,219,000
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12557WSX0
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USD 850
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1.05323
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Class 9
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6.25% Notes due February 15, 2010
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USD 44,138,000
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12557WTE1
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USD 850
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1.05323
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Class 9
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Floating Rate Notes due March 1, 2010
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CHF 100,000,000
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CH0029382659
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CHF 850
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(7)
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1.05323
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Class 9
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2.75% Notes due March 1, 2010
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CHF 50,000,000
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CH0029407191
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CHF 850
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(7)
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1.05323
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Class 9
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Floating Rate Notes due March 12, 2010
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USD 1,000,000,000
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125581CX4
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USD 850
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1.05323
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Class 9
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4.30% Notes due March 15, 2010
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USD 1,822,000
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12557WKL4
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USD 850
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1.05323
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Class 9
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5.05% Notes due March 15, 2010
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USD 4,241,000
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12557WMH1
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USD 850
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1.05323
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Class 9
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5.15% Notes due March 15, 2010
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USD 6,375,000
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12557WMP3
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USD 850
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1.05323
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Class 9
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4.90% Notes due March 15, 2010
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USD 297,000
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12557WQU8
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USD 850
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1.05323
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Class 9
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4.85% Notes due March 15, 2010
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USD 784,000
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12557WRC7
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USD 850
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1.05323
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Class 9
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6.50% Notes due March 15, 2010
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USD 33,677,000
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12557WTL5
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USD 850
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1.05323
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Class 9
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Floating Rate Notes due March 22, 2010
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USD 150,000,000
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12560PFN6
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USD 850
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1.05323
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Class 9
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4.45% Notes due May 15, 2010
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USD 3,980,000
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12557WKS9
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USD 850
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1.05323
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Class 9
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5.25% Notes due May 15, 2010
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USD 2,414,000
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12557WMV0
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USD 850
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1.05323
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Class 9
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5.38% Notes due June 15, 2017(2)
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GBP 300,000,000
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XS0276327342
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GBP 850
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1.05323
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Class 9
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Consideration per
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Principal Amount of
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Old Notes Tendered
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per 1,000
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USD
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|
|
|
per 1,000
|
|
Equivalent
|
|
|
|
|
|
|
|
|
Notional
|
|
Number of
|
|
|
|
|
|
|
|
|
Principal
|
|
Shares of
|
|
|
|
|
|
|
|
|
Amount
|
|
New Preferred
|
|
Plan of
|
|
|
Outstanding Principal
|
|
|
|
of New Notes
|
|
Stock
|
|
Reorganization
|
Title of Old Notes to be Tendered
|
|
Amount
|
|
CUSIP/ISIN
|
|
to be Issued
|
|
to be Issued(1)
|
|
Class
|
|
4.30% Notes due June 15, 2010
|
|
USD 1,013,000
|
|
12557WKX8
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
4.35% Notes due June 15, 2010
|
|
USD 1,419,000
|
|
12557WLE9
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
5.30% Notes due June 15, 2010
|
|
USD 2,622,000
|
|
12557WNB3
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
4.60% Notes due August 15, 2010
|
|
USD 1,131,000
|
|
12557WLL3
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
5.45% Notes due
August 15, 2010
|
|
USD 11,920,000
|
|
12557WNH0
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
5.50% Notes due
August 15, 2010
|
|
USD 1,511,000
|
|
12557WA92
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
4.25% Notes due September 15, 2010
|
|
USD 295,000
|
|
12557WLS8
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
5.25% Notes due September 15, 2010
|
|
USD 11,403,000
|
|
12557WNR8
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
5.20% Notes due November 3, 2010
|
|
USD 500,000,000
|
|
125577AS5
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
Floating Rate Notes due November 3, 2010
|
|
USD 474,000,000
|
|
125577AT3
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
5.05% Notes due November 15, 2010
|
|
USD 9,054,000
|
|
12557WLY5
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
5.25% Notes due November 15, 2010
|
|
USD 6,349,000
|
|
12557WNZ0
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
5.25% Notes due November 15, 2010
|
|
USD 12,292,000
|
|
12557WC33
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
5.25% Notes due November 15, 2010
|
|
USD 1,686,000
|
|
12557WC74
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
4.75% Notes due December 15, 2010
|
|
USD 750,000,000
|
|
12560PDB4
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
5.00% Notes due December 15, 2010
|
|
USD 5,842,000
|
|
12557WME8
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
5.05% Notes due December 15, 2010
|
|
USD 5,926,000
|
|
12557WPH8
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
4.90% Notes due December 15, 2010
|
|
USD 3,188,000
|
|
12557WPR6
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
5.25% Notes due December 15, 2010
|
|
USD 807,000
|
|
12557WSE2
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
6.50% Notes due December 15, 2010
|
|
USD 12,177,000
|
|
12557WSR3
|
|
|
USD 850
|
|
|
|
1.05323
|
|
|
|
Class 9
|
|
6.50% Notes due
January 15, 2011
|
|
USD 17,752,000
|
|
12557WSV4
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
4.72% Notes due February 10, 2011
|
|
CAD 400,000,000
|
|
125581AU2
|
|
|
CAD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.15% Notes due February 15, 2011
|
|
USD 2,158,000
|
|
12557WPZ8
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration per
|
|
|
|
|
|
|
|
|
Principal Amount of
|
|
|
|
|
|
|
|
|
Old Notes Tendered
|
|
|
|
|
|
|
|
|
|
|
per 1,000
|
|
|
|
|
|
|
|
|
|
|
USD
|
|
|
|
|
|
|
|
|
per 1,000
|
|
Equivalent
|
|
|
|
|
|
|
|
|
Notional
|
|
Number of
|
|
|
|
|
|
|
|
|
Principal
|
|
Shares of
|
|
|
|
|
|
|
|
|
Amount
|
|
New Preferred
|
|
Plan of
|
|
|
Outstanding Principal
|
|
|
|
of New Notes
|
|
Stock
|
|
Reorganization
|
Title of Old Notes to be Tendered
|
|
Amount
|
|
CUSIP/ISIN
|
|
to be Issued
|
|
to be Issued(1)
|
|
Class
|
|
5.15% Notes due February 15, 2011
|
|
USD 1,458,000
|
|
12557WQH7
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
6.60% Notes due February 15, 2011
|
|
USD 25,229,000
|
|
12557WTB7
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
Floating Rate Notes due February 28, 2011(3)
|
|
GBP 70,000,000
|
|
XS0245933121
|
|
|
GBP 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.05% Notes due
March 15, 2011
|
|
USD 1,560,000
|
|
12557WML2
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.00% Notes due
March 15, 2011
|
|
USD 1,001,000
|
|
12557WQR5
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
4.90% Notes due
March 15, 2011
|
|
USD 806,000
|
|
12557WQZ7
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.00% Notes due
March 15, 2011
|
|
USD 1,589,000
|
|
12557WRH6
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
6.75% Notes due
March 15, 2011
|
|
USD 7,604,000
|
|
12557WTJ0
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
6.50% Notes due
March 15, 2011
|
|
USD 6,187,000
|
|
12557WTQ4
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.15% Notes due
April 15, 2011
|
|
USD 957,000
|
|
12557WMS7
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
Floating Rate Notes due April 27, 2011
|
|
USD 280,225,000
|
|
125581BA5
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.60% Notes due
April 27, 2011
|
|
USD 750,000,000
|
|
125581AZ1
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.40% Notes due
May 15, 2011
|
|
USD 1,283,000
|
|
12557WMY4
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.35% Notes due
June 15, 2011
|
|
USD 558,000
|
|
12557WNE7
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
Floating Rate Notes due July 28, 2011
|
|
USD 669,500,000
|
|
125581BE7
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.80% Notes due
July 28, 2011
|
|
USD 550,000,000
|
|
125581BF4
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.35% Notes due
August 15, 2011
|
|
USD 2,254,000
|
|
12557WNM9
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.20% Notes due September 15, 2011
|
|
USD 2,685,000
|
|
12557WNV9
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
Floating Rate Notes due September 21, 2011(3)
|
|
GBP 40,000,000
|
|
XS0268935698
|
|
|
GBP 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
4.25% Notes due September 22, 2011(4)
|
|
EUR 750,000,000
|
|
XS0201605192
|
|
|
EUR 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.20% Notes due November 15, 2011
|
|
USD 7,392,000
|
|
12557WPD7
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.25% Notes due November 15, 2011
|
|
USD 4,427,000
|
|
12557WB34
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.25% Notes due November 15, 2011
|
|
USD 5,175,000
|
|
12557WB67
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration per
|
|
|
|
|
|
|
|
|
Principal Amount of
|
|
|
|
|
|
|
|
|
Old Notes Tendered
|
|
|
|
|
|
|
|
|
|
|
per 1,000
|
|
|
|
|
|
|
|
|
|
|
USD
|
|
|
|
|
|
|
|
|
per 1,000
|
|
Equivalent
|
|
|
|
|
|
|
|
|
Notional
|
|
Number of
|
|
|
|
|
|
|
|
|
Principal
|
|
Shares of
|
|
|
|
|
|
|
|
|
Amount
|
|
New Preferred
|
|
Plan of
|
|
|
Outstanding Principal
|
|
|
|
of New Notes
|
|
Stock
|
|
Reorganization
|
Title of Old Notes to be Tendered
|
|
Amount
|
|
CUSIP/ISIN
|
|
to be Issued
|
|
to be Issued(1)
|
|
Class
|
|
5.25% Notes due November 15, 2011
|
|
USD 4,944,000
|
|
12557WB91
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
Floating Rate Notes due November 30, 2011(3)
|
|
EUR 500,000,000
|
|
XS0275670965
|
|
|
EUR 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
4.85% Notes due December 15, 2011
|
|
USD 482,000
|
|
12557WPM7
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.00% Notes due December 15, 2011
|
|
USD 1,685,000
|
|
12557WPV7
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.40% Notes due February 13, 2012
|
|
USD 479,996,000
|
|
125581CT3
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
Floating Rate Notes due February 13, 2012
|
|
USD 654,250,000
|
|
125581CU0
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.25% Notes due February 15, 2012
|
|
USD 2,937,000
|
|
12557WQD6
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.15% Notes due February 15, 2012
|
|
USD 1,532,000
|
|
12557WQM6
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
7.25% Notes due February 15, 2012
|
|
USD 30,577,000
|
|
12557WSY8
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
7.00% Notes due February 15, 2012
|
|
USD 17,676,000
|
|
12557WTF8
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.00% Notes due
March 15, 2012
|
|
USD 482,000
|
|
12557WQV6
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.00% Notes due
March 15, 2012
|
|
USD 1,059,000
|
|
12557WRD5
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
7.25% Notes due
March 15, 2012
|
|
USD 13,609,000
|
|
12557WTM3
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
7.75% Notes due
April 2, 2012
|
|
USD 259,646,000
|
|
125581AB4
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.75% Notes due
August 15, 2012
|
|
USD 466,000
|
|
12557WA68
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
3.80% Notes due November 14, 2012(3)
|
|
EUR 450,000,000
|
|
XS0234935434
|
|
|
EUR 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.50% Notes due November 15, 2012
|
|
USD 2,711,000
|
|
12557WC41
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.50% Notes due November 15, 2012
|
|
USD 1,381,000
|
|
12557WC82
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
7.63% Notes due November 30, 2012
|
|
USD 1,277,653,000
|
|
125577AZ9
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
5.50% Notes due December 15, 2012
|
|
USD 495,000
|
|
12557WSF9
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
7.00% Notes due December 15, 2012
|
|
USD 36,343,000
|
|
12557WSK8
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
7.25% Notes due December 15, 2012
|
|
USD 19,425,000
|
|
12557WSN2
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
7.30% Notes due December 15, 2012
|
|
USD 11,775,000
|
|
12557WSS1
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration per
|
|
|
|
|
|
|
|
|
Principal Amount of
|
|
|
|
|
|
|
|
|
Old Notes Tendered
|
|
|
|
|
|
|
|
|
|
|
per 1,000
|
|
|
|
|
|
|
|
|
|
|
USD
|
|
|
|
|
|
|
|
|
per 1,000
|
|
Equivalent
|
|
|
|
|
|
|
|
|
Notional
|
|
Number of
|
|
|
|
|
|
|
|
|
Principal
|
|
Shares of
|
|
|
|
|
|
|
|
|
Amount
|
|
New Preferred
|
|
Plan of
|
|
|
Outstanding Principal
|
|
|
|
of New Notes
|
|
Stock
|
|
Reorganization
|
Title of Old Notes to be Tendered
|
|
Amount
|
|
CUSIP/ISIN
|
|
to be Issued
|
|
to be Issued(1)
|
|
Class
|
|
Floating Rate Notes due December 21, 2012
|
|
USD 290,705,000
|
|
12560PEP2
|
|
|
USD 800
|
|
|
|
1.75539
|
|
|
|
Class 9
|
|
6.15% Notes due
January 15, 2013
|
|
USD 29,038,000
|
|
12557WAZ4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.25% Notes due
January 15, 2013
|
|
USD 62,461,000
|
|
12557WBC4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.15% Notes due
January 15, 2013
|
|
USD 52,560,000
|
|
12557WBF7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.25% Notes due
January 15, 2013
|
|
USD 53,967,000
|
|
12557WBJ9
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
7.50% Notes due
January 15, 2013
|
|
USD 27,292,000
|
|
12557WSW2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.25% Notes due February 15, 2013
|
|
USD 22,781,000
|
|
12557WBM2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.20% Notes due February 15, 2013
|
|
USD 24,387,000
|
|
12557WBQ3
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.00% Notes due February 15, 2013
|
|
USD 22,368,000
|
|
12557WBT7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
7.60% Notes due February 15, 2013
|
|
USD 23,615,000
|
|
12557WTC5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.15% Notes due February 15, 2013
|
|
USD 23,318,000
|
|
12557WBW0
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.40% Notes due
March 7, 2013
|
|
USD 483,516,000
|
|
125581AX6
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
7.75% Notes due
March 15, 2013
|
|
USD 18,242,000
|
|
12557WTK7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
7.90% Notes due
March 15, 2013
|
|
USD 17,591,000
|
|
12557WTN1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
7.25% Notes due
March 15, 2013
|
|
USD 5,350,000
|
|
12557WTR2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.00% Notes due
March 15, 2013
|
|
USD 26,178,000
|
|
12557WBZ3
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.00% Notes due
March 15, 2013
|
|
USD 27,547,000
|
|
12557WCC3
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.10% Notes due
March 15, 2013
|
|
USD 27,499,000
|
|
12557WCF6
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.25% Notes due
March 15, 2013
|
|
USD 26,121,000
|
|
12557WCJ8
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.15% Notes due
April 15, 2013
|
|
USD 24,593,000
|
|
12557WCM1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.15% Notes due
April 15, 2013
|
|
USD 28,983,000
|
|
12557WCQ2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.05% Notes due
April 15, 2013
|
|
USD 19,386,000
|
|
12557WCT6
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.05% Notes due
May 15, 2013
|
|
USD 44,494,000
|
|
12557WCW9
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration per
|
|
|
|
|
|
|
|
|
Principal Amount of
|
|
|
|
|
|
|
|
|
Old Notes Tendered
|
|
|
|
|
|
|
|
|
|
|
per 1,000
|
|
|
|
|
|
|
|
|
|
|
USD
|
|
|
|
|
|
|
|
|
per 1,000
|
|
Equivalent
|
|
|
|
|
|
|
|
|
Notional
|
|
Number of
|
|
|
|
|
|
|
|
|
Principal
|
|
Shares of
|
|
|
|
|
|
|
|
|
Amount
|
|
New Preferred
|
|
Plan of
|
|
|
Outstanding Principal
|
|
|
|
of New Notes
|
|
Stock
|
|
Reorganization
|
Title of Old Notes to be Tendered
|
|
Amount
|
|
CUSIP/ISIN
|
|
to be Issued
|
|
to be Issued(1)
|
|
Class
|
|
4.95% Notes due
May 15, 2013
|
|
USD 9,133,000
|
|
12557WCZ2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.95% Notes due
May 15, 2013
|
|
USD 11,492,000
|
|
12557WDC2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.88% Notes due
June 15, 2013
|
|
USD 6,237,000
|
|
12557WDF5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.85% Notes due
June 15, 2013
|
|
USD 7,956,000
|
|
12557WDJ7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.60% Notes due
June 15, 2013
|
|
USD 9,421,000
|
|
12557WDM0
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.45% Notes due
June 15, 2013
|
|
USD 5,051,000
|
|
12557WDQ1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
Floating Rate Notes due June 20, 2013(3)
|
|
EUR 500,000,000
|
|
XS0258343564
|
|
|
EUR 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.05% Notes due
July 15, 2013
|
|
USD 5,228,000
|
|
12557WEF4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.65% Notes due
July 15, 2013
|
|
USD 9,267,000
|
|
12557WDT5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.75% Notes due
July 15, 2013
|
|
USD 2,318,000
|
|
12557WDW8
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.00% Notes due
July 15, 2013
|
|
USD 15,182,000
|
|
12557WDZ1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.75% Notes due
July 15, 2013
|
|
USD 5,779,000
|
|
12557WEC1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.30% Notes due
August 15, 2013
|
|
USD 7,479,000
|
|
12557WEJ6
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.50% Notes due
August 15, 2013
|
|
USD 2,903,000
|
|
12557WEM9
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.50% Notes due
August 15, 2013
|
|
USD 6,810,000
|
|
12557WEQ0
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.40% Notes due September 15, 2013
|
|
USD 2,445,000
|
|
12557WET4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.50% Notes due September 15, 2013
|
|
USD 4,171,000
|
|
12557WEW7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.25% Notes due September 15, 2013
|
|
USD 4,374,000
|
|
12557WEZ0
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.20% Notes due September 15, 2013
|
|
USD 4,378,000
|
|
12557WFC0
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.20% Notes due
October 15, 2013
|
|
USD 5,497,000
|
|
12557WFF3
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.20% Notes due
October 15, 2013
|
|
USD 8,130,000
|
|
12557WFJ5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.25% Notes due
October 15, 2013
|
|
USD 3,359,000
|
|
12557WFM8
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.30% Notes due November 15, 2013
|
|
USD 3,146,000
|
|
12557WFQ9
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration per
|
|
|
|
|
|
|
|
|
Principal Amount of
|
|
|
|
|
|
|
|
|
Old Notes Tendered
|
|
|
|
|
|
|
|
|
|
|
per 1,000
|
|
|
|
|
|
|
|
|
|
|
USD
|
|
|
|
|
|
|
|
|
per 1,000
|
|
Equivalent
|
|
|
|
|
|
|
|
|
Notional
|
|
Number of
|
|
|
|
|
|
|
|
|
Principal
|
|
Shares of
|
|
|
|
|
|
|
|
|
Amount
|
|
New Preferred
|
|
Plan of
|
|
|
Outstanding Principal
|
|
|
|
of New Notes
|
|
Stock
|
|
Reorganization
|
Title of Old Notes to be Tendered
|
|
Amount
|
|
CUSIP/ISIN
|
|
to be Issued
|
|
to be Issued(1)
|
|
Class
|
|
5.10% Notes due November 15, 2013
|
|
USD 7,480,000
|
|
12557WFT3
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.40% Notes due December 15, 2013
|
|
USD 5,783,000
|
|
12557WFW6
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.20% Notes due December 15, 2013
|
|
USD 7,241,000
|
|
12557WFZ9
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.10% Notes due
January 15, 2014
|
|
USD 2,897,000
|
|
12557WGC9
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.85% Notes due
January 15, 2014
|
|
USD 1,333,000
|
|
12557WGF2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.00% Notes due February 13, 2014
|
|
USD 671,749,000
|
|
125581AH1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.00% Notes due February 15, 2014
|
|
USD 5,957,000
|
|
12557WGJ4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.90% Notes due February 15, 2014
|
|
USD 1,958,000
|
|
12557WGM7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
7.85% Notes due February 15, 2014
|
|
USD 23,034,000
|
|
12557WSZ5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
7.65% Notes due February 15, 2014
|
|
USD 10,897,000
|
|
12557WTG6
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.80% Notes due
March 15, 2014
|
|
USD 4,492,000
|
|
12557WGQ8
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.60% Notes due
March 15, 2014
|
|
USD 4,211,000
|
|
12557WGT2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
7.85% Notes due
March 15, 2014
|
|
USD 4,573,000
|
|
12557WTS0
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.80% Notes due
April 15, 2014
|
|
USD 2,177,000
|
|
12557WGW5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.10% Notes due
April 15, 2014
|
|
USD 5,735,000
|
|
12557WGZ8
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.00% Notes due
May 13, 2014(4)
|
|
EUR 463,405,000
|
|
XS0192461837
|
|
|
EUR 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.25% Notes due
May 15, 2014
|
|
USD 4,898,000
|
|
12557WHC8
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.80% Notes due
May 15, 2014
|
|
USD 11,357,000
|
|
12557WHF1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.70% Notes due
June 15, 2014
|
|
USD 8,890,000
|
|
12557WHJ3
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.75% Notes due
June 15, 2014
|
|
USD 10,815,000
|
|
12557WHM6
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.75% Notes due
June 15, 2014
|
|
USD 1,930,000
|
|
12557WRU7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.85% Notes due
June 15, 2014
|
|
USD 1,593,000
|
|
12557WRX1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.00% Notes due
June 15, 2014
|
|
USD 10,892,000
|
|
12557WSA0
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration per
|
|
|
|
|
|
|
|
|
Principal Amount of
|
|
|
|
|
|
|
|
|
Old Notes Tendered
|
|
|
|
|
|
|
|
|
|
|
per 1,000
|
|
|
|
|
|
|
|
|
|
|
USD
|
|
|
|
|
|
|
|
|
per 1,000
|
|
Equivalent
|
|
|
|
|
|
|
|
|
Notional
|
|
Number of
|
|
|
|
|
|
|
|
|
Principal
|
|
Shares of
|
|
|
|
|
|
|
|
|
Amount
|
|
New Preferred
|
|
Plan of
|
|
|
Outstanding Principal
|
|
|
|
of New Notes
|
|
Stock
|
|
Reorganization
|
Title of Old Notes to be Tendered
|
|
Amount
|
|
CUSIP/ISIN
|
|
to be Issued
|
|
to be Issued(1)
|
|
Class
|
|
5.65% Notes due
July 15, 2014
|
|
USD 8,504,000
|
|
12557WHQ7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.30% Notes due
July 15, 2014
|
|
USD 10,005,000
|
|
12557WHT1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.20% Notes due
August 15, 2014
|
|
USD 5,691,000
|
|
12557WHW4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.30% Notes due
August 15, 2014
|
|
USD 3,915,000
|
|
12557WHZ7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.00% Notes due
August 15, 2014
|
|
USD 2,555,000
|
|
12557WA27
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.00% Notes due
August 15, 2014
|
|
USD 2,389,000
|
|
12557WA76
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.25% Notes due September 15, 2014
|
|
USD 16,332,000
|
|
12557WJC6
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.05% Notes due September 15, 2014
|
|
USD 17,112,000
|
|
12557WJF9
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.125% Notes due September 30, 2014
|
|
USD 638,267,000
|
|
125581AK4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.90% Notes due
October 15, 2014
|
|
USD 5,520,000
|
|
12557WJJ1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.10% Notes due
October 15, 2014
|
|
USD 13,944,000
|
|
12557WJM4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.05% Notes due November 15, 2014
|
|
USD 7,238,000
|
|
12557WJQ5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.50% Notes due December 1, 2014(4)
|
|
GBP 480,000,000
|
|
XS0207079764
|
|
|
GBP 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.125% Notes due December 15, 2014
|
|
USD 7,632,000
|
|
12557WJT9
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.10% Notes due December 15, 2014
|
|
USD 18,101,000
|
|
12557WJW2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.05% Notes due
January 15, 2015
|
|
USD 6,302,000
|
|
12557WJZ5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.00% Notes due
February 1, 2015
|
|
USD 671,141,000
|
|
125581AR9
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.95% Notes due February 15, 2015
|
|
USD 6,678,000
|
|
12557WKC4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.90% Notes due February 15, 2015
|
|
USD 6,848,000
|
|
12557WKF7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
7.90% Notes due February 15, 2015
|
|
USD 24,329,000
|
|
12557WTD3
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.10% Notes due
March 15, 2015
|
|
USD 12,247,000
|
|
12557WKJ9
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.05% Notes due
March 15, 2015
|
|
USD 2,575,000
|
|
12557WKM2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.25% Notes due
March 17, 2015(4)
|
|
EUR 412,500,000
|
|
XS0215269670
|
|
|
EUR 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration per
|
|
|
|
|
|
|
|
|
Principal Amount of
|
|
|
|
|
|
|
|
|
Old Notes Tendered
|
|
|
|
|
|
|
|
|
|
|
per 1,000
|
|
|
|
|
|
|
|
|
|
|
USD
|
|
|
|
|
|
|
|
|
per 1,000
|
|
Equivalent
|
|
|
|
|
|
|
|
|
Notional
|
|
Number of
|
|
|
|
|
|
|
|
|
Principal
|
|
Shares of
|
|
|
|
|
|
|
|
|
Amount
|
|
New Preferred
|
|
Plan of
|
|
|
Outstanding Principal
|
|
|
|
of New Notes
|
|
Stock
|
|
Reorganization
|
Title of Old Notes to be Tendered
|
|
Amount
|
|
CUSIP/ISIN
|
|
to be Issued
|
|
to be Issued(1)
|
|
Class
|
|
5.375% Notes due
April 15, 2015
|
|
USD 6,369,000
|
|
12557WKQ3
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.25% Notes due
May 15, 2015
|
|
USD 15,954,000
|
|
12557WKT7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.30% Notes due
May 15, 2015
|
|
USD 27,090,000
|
|
12557WKW0
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.10% Notes due
June 15, 2015
|
|
USD 14,930,000
|
|
12557WKZ3
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.05% Notes due
June 15, 2015
|
|
USD 10,912,000
|
|
12557WLA7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.20% Notes due
June 15, 2015
|
|
USD 8,322,000
|
|
12557WLF6
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.30% Notes due
August 15, 2015
|
|
USD 10,741,000
|
|
12557WLJ8
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.375% Notes due
August 15, 2015
|
|
USD 15,892,000
|
|
12557WLM1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.25% Notes due September 15, 2015
|
|
USD 11,241,000
|
|
12557WLQ2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.10% Notes due September 15, 2015
|
|
USD 4,898,000
|
|
12557WLT6
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.50% Notes due November 15, 2015
|
|
USD 4,016,000
|
|
12557WLW9
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.80% Notes due November 15, 2015
|
|
USD 7,456,000
|
|
12557WLZ2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.75% Notes due December 15, 2015
|
|
USD 8,155,000
|
|
12557WMC2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.80% Notes due December 15, 2015
|
|
USD 12,621,000
|
|
12557WMF5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.40% Notes due January 30, 2016
|
|
USD 604,263,000
|
|
125581AW8
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.85% Notes due March 15, 2016
|
|
USD 14,372,000
|
|
12557WMJ7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.80% Notes due March 15, 2016
|
|
USD 11,705,000
|
|
12557WMM0
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.00% Notes due March 15, 2016
|
|
USD 69,046,000
|
|
12557WMQ1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.88% Notes due April 15, 2016
|
|
USD 4,888,000
|
|
12557WMT5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.05% Notes due May 15, 2016
|
|
USD 14,943,000
|
|
12557WMW8
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.15% Notes due May 15, 2016
|
|
USD 18,636,000
|
|
12557WMZ1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.10% Notes due June 15, 2016
|
|
USD 15,478,000
|
|
12557WNC1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.10% Notes due June 15, 2016
|
|
USD 17,660,000
|
|
12557WNF4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration per
|
|
|
|
|
|
|
|
|
Principal Amount of
|
|
|
|
|
|
|
|
|
Old Notes Tendered
|
|
|
|
|
|
|
|
|
|
|
per 1,000
|
|
|
|
|
|
|
|
|
|
|
USD
|
|
|
|
|
|
|
|
|
per 1,000
|
|
Equivalent
|
|
|
|
|
|
|
|
|
Notional
|
|
Number of
|
|
|
|
|
|
|
|
|
Principal
|
|
Shares of
|
|
|
|
|
|
|
|
|
Amount
|
|
New Preferred
|
|
Plan of
|
|
|
Outstanding Principal
|
|
|
|
of New Notes
|
|
Stock
|
|
Reorganization
|
Title of Old Notes to be Tendered
|
|
Amount
|
|
CUSIP/ISIN
|
|
to be Issued
|
|
to be Issued(1)
|
|
Class
|
|
6.20% Notes due August 15, 2016
|
|
USD 37,135,000
|
|
12557WNJ6
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.13% Notes due August 15, 2016
|
|
USD 36,401,000
|
|
12557WNN7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.85% Notes due September 15, 2016
|
|
USD 391,533,000
|
|
125581CS5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.05% Notes due September 15, 2016
|
|
USD 31,772,000
|
|
12557WNS6
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.95% Notes due September 15, 2016
|
|
USD 11,219,000
|
|
12557WNW7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
4.65% Notes due September 19, 2016
|
|
EUR 474,000,000
|
|
XS0268133799
|
|
|
EUR 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.00% Notes due November 15, 2016
|
|
USD 29,155,000
|
|
12557WPA3
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.95% Notes due November 15, 2016
|
|
USD 13,264,000
|
|
12557WPE5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
Floating Rate Notes due December 14, 2016
|
|
USD 34,452,000
|
|
12560PDK4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.80% Notes due December 15, 2016
|
|
USD 35,842,000
|
|
12557WPJ4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.65% Notes due December 15, 2016
|
|
USD 8,701,000
|
|
12557WPN5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.70% Notes due December 15, 2016
|
|
USD 9,571,000
|
|
12557WPS4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.70% Notes due December 15, 2016
|
|
USD 9,817,000
|
|
12557WPW5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.50% Notes due December 20, 2016
|
|
GBP 367,400,000
|
|
XS0278525992
|
|
|
GBP 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.65% Notes due February 13, 2017
|
|
USD 548,087,000
|
|
125577AY2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.85% Notes due February 15, 2017
|
|
USD 7,724,000
|
|
12557WQA2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.95% Notes due February 15, 2017
|
|
USD 11,074,000
|
|
12557WQE4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.85% Notes due February 15, 2017
|
|
USD 6,471,000
|
|
12557WQJ3
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.80% Notes due February 15, 2017
|
|
USD 7,792,000
|
|
12557WQN4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
Floating Rate Notes due March 15, 2017
|
|
USD 50,000,000
|
|
12560PDR9
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.75% Notes due March 15, 2017
|
|
USD 6,741,000
|
|
12557WQS3
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.75% Notes due March 15, 2017
|
|
USD 13,498,000
|
|
12557WQW4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.70% Notes due March 15, 2017
|
|
USD 9,533,000
|
|
12557WRA1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration per
|
|
|
|
|
|
|
|
|
Principal Amount of
|
|
|
|
|
|
|
|
|
Old Notes Tendered
|
|
|
|
|
|
|
|
|
|
|
per 1,000
|
|
|
|
|
|
|
|
|
|
|
USD
|
|
|
|
|
|
|
|
|
per 1,000
|
|
Equivalent
|
|
|
|
|
|
|
|
|
Notional
|
|
Number of
|
|
|
|
|
|
|
|
|
Principal
|
|
Shares of
|
|
|
|
|
|
|
|
|
Amount
|
|
New Preferred
|
|
Plan of
|
|
|
Outstanding Principal
|
|
|
|
of New Notes
|
|
Stock
|
|
Reorganization
|
Title of Old Notes to be Tendered
|
|
Amount
|
|
CUSIP/ISIN
|
|
to be Issued
|
|
to be Issued(1)
|
|
Class
|
|
5.65% Notes due March 15, 2017
|
|
USD 5,935,000
|
|
12557WRE3
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.75% Notes due March 15, 2017
|
|
USD 10,298,000
|
|
12557WRJ2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.75% Notes due May 15, 2017
|
|
USD 2,708,000
|
|
12557WRL7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.80% Notes due May 15, 2017
|
|
USD 3,779,000
|
|
12557WRN3
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.80% Notes due May 15, 2017
|
|
USD 5,038,000
|
|
12557WRQ6
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.00% Notes due June 15, 2017
|
|
USD 23,842,000
|
|
12557WRS2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.00% Notes due June 15, 2017
|
|
USD 8,205,000
|
|
12557WRV5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.10% Notes due June 15, 2017
|
|
USD 6,648,000
|
|
12557WRY9
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.25% Notes due June 15, 2017
|
|
USD 10,535,000
|
|
12557WSB8
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.25% Notes due August 15, 2017
|
|
USD 1,190,000
|
|
12557WA35
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.25% Notes due November 15, 2017
|
|
USD 8,958,000
|
|
12557WB42
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.25% Notes due November 15, 2017
|
|
USD 11,778,000
|
|
12557WB75
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.25% Notes due November 15, 2017
|
|
USD 6,339,000
|
|
12557WC25
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.40% Notes due November 15, 2017
|
|
USD 3,404,000
|
|
12557WC58
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.50% Notes due November 15, 2017
|
|
USD 2,197,000
|
|
12557WC90
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
10-Year
Forward Rate Bias Notes due December 11, 2017(5)
|
|
USD 500,000,000
|
|
N/A
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
6.50% Notes due December 15, 2017
|
|
USD 556,000
|
|
12557WSG7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
7.50% Notes due December 15, 2017
|
|
USD 24,275,000
|
|
12557WSL6
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
7.75% Notes due December 15, 2017
|
|
USD 14,936,000
|
|
12557WSP7
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
7.80% Notes due December 15, 2017
|
|
USD 8,731,000
|
|
12557WST9
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
5.80% Senior Notes due October 1, 2036(6)
|
|
USD 316,015,000
|
|
12560PFP1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 9
|
|
12.00% Subordinated Notes due December 18, 2018
|
|
USD 1,117,448,000
|
|
125581FS2
|
|
|
USD 0
|
|
|
|
7.54816
|
|
|
|
Class 12
|
|
12.00% Subordinated Notes due December 18, 2018
|
|
USD 31,559,000
|
|
U17186AF1
|
|
|
USD 0
|
|
|
|
7.54816
|
|
|
|
Class 12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration per
|
|
|
|
|
|
|
|
|
Principal Amount of
|
|
|
|
|
|
|
|
|
Old Notes Tendered
|
|
|
|
|
|
|
|
|
|
|
per 1,000
|
|
|
|
|
|
|
|
|
|
|
USD
|
|
|
|
|
|
|
|
|
per 1,000
|
|
Equivalent
|
|
|
|
|
|
|
|
|
Notional
|
|
Number of
|
|
|
|
|
|
|
|
|
Principal
|
|
Shares of
|
|
|
|
|
|
|
|
|
Amount
|
|
New Preferred
|
|
Plan of
|
|
|
Outstanding Principal
|
|
|
|
of New Notes
|
|
Stock
|
|
Reorganization
|
Title of Old Notes to be Tendered
|
|
Amount
|
|
CUSIP/ISIN
|
|
to be Issued
|
|
to be Issued(1)
|
|
Class
|
|
6.10% Junior Subordinated Notes due March 15, 2067
|
|
USD 750,000,000
|
|
125577AX4
|
|
|
USD 0
|
|
|
|
1.75539
|
|
|
|
Class 13
|
|
|
|
|
(1) |
|
The New Preferred Stock will have a liquidation preference per
share of $1,400 and be entitled to 58.6 votes per share on
all matters presented to our stockholders for a vote. See
“Description of the New Preferred Stock.” Assuming the
exchange of 100% of the Old Notes for the New Notes
and/or the
New Preferred Stock in the Offers, the New Preferred Stock
issued will consist of approximately 68.3 million shares
having an aggregate liquidation preference of approximately
$95.6 billion and representing approximately 91.1% of the
aggregate voting power of our capital stock generally entitled
to vote on matters presented to our stockholders. If we receive
the minimum level of participation in the Offers required to
satisfy the Liquidity and Leverage Condition, the New Preferred
Stock issued will consist of approximately 45.0 million
shares having an aggregate liquidation preference of
approximately $63.0 billion and representing approximately
87.1% of the aggregate voting power of our capital stock
generally entitled to vote on matters presented to our
stockholders. |
|
(2) |
|
Holders of the 5.38% Notes due June 15, 2017 have a put
right on June 15, 2010. |
|
(3) |
|
Listed on the London Stock Exchange. Following consummation of
the Offers, we intend to delist the Old Notes from the London
Stock Exchange’s Gilt Edged and Fixed Interest Market. |
|
(4) |
|
Listed on the Luxembourg Stock Exchange. Following consummation
of the Offers, we intend to delist the Old Notes from the
Luxembourg Stock Exchange. |
|
(5) |
|
These securities are not listed with The Depository Trust
Company (“DTC”). |
|
(6) |
|
Holders of the 5.80% Senior Notes due October 1, 2036 have
a put right on October 1, 2018. |
|
(7) |
|
Holders will receive the U.S. dollar value of the stated
amount. |
CIT
Outstanding Long Term Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration per
|
|
|
|
|
|
|
|
|
|
|
Principal Amount of
|
|
|
|
|
|
|
|
|
|
|
Long Term Notes Tendered
|
|
|
|
|
|
|
|
|
|
|
|
|
|
per 1,000
|
|
|
|
|
|
|
|
|
|
|
per 1,000
|
|
|
USD
|
|
|
|
|
|
|
|
|
|
|
Notional
|
|
|
Equivalent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
Shares of
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
New Preferred
|
|
|
Plan of
|
|
|
|
Outstanding Principal
|
|
|
|
of New Notes
|
|
|
Stock
|
|
|
Reorganization
|
|
Title of Long Term Notes to be Tendered
|
|
Amount
|
|
CUSIP/ISIN
|
|
to be Issued
|
|
|
to be Issued(1)
|
|
|
Class
|
|
|
6.25% Notes due
August 15, 2021
|
|
USD 43,204,000
|
|
12557WNP2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.35% Notes due
August 15, 2021
|
|
USD 19,139,000
|
|
12557WNK3
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.15% Notes due
September 15, 2021
|
|
USD 27,174,000
|
|
12557WNX5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.25% Notes due
September 15, 2021
|
|
USD 38,817,000
|
|
12557WNT4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.10% Notes due
November 15, 2021
|
|
USD 63,647,000
|
|
12557WPF2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.25% Notes due
November 15, 2021
|
|
USD 35,172,000
|
|
12557WPB1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration per
|
|
|
|
|
|
|
|
|
|
|
Principal Amount of
|
|
|
|
|
|
|
|
|
|
|
Long Term Notes Tendered
|
|
|
|
|
|
|
|
|
|
|
|
|
|
per 1,000
|
|
|
|
|
|
|
|
|
|
|
per 1,000
|
|
|
USD
|
|
|
|
|
|
|
|
|
|
|
Notional
|
|
|
Equivalent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
Shares of
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
New Preferred
|
|
|
Plan of
|
|
|
|
Outstanding Principal
|
|
|
|
of New Notes
|
|
|
Stock
|
|
|
Reorganization
|
|
Title of Long Term Notes to be Tendered
|
|
Amount
|
|
CUSIP/ISIN
|
|
to be Issued
|
|
|
to be Issued(1)
|
|
|
Class
|
|
|
5.85% Notes due
December 15, 2021
|
|
USD 14,529,000
|
|
12557WPP0
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
5.875% Notes due
December 15, 2021
|
|
USD 18,181,000
|
|
12557WPT2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
5.90% Notes due
December 15, 2021
|
|
USD 18,463,000
|
|
12557WPX3
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.00% Notes due
December 15, 2021
|
|
USD 58,477,000
|
|
12557WPK1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
5.95% Notes due
February 15, 2022
|
|
USD 12,325,000
|
|
12557WQP9
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.00% Notes due
February 15, 2022
|
|
USD 47,741,000
|
|
12557WQB0
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.00% Notes due
February 15, 2022
|
|
USD 36,570,000
|
|
12557WQK0
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.05% Notes due
February 15, 2022
|
|
USD 24,258,000
|
|
12557WQF1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
5.85% Notes due
March 15, 2022
|
|
USD 12,016,000
|
|
12557WQX2
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
5.85% Notes due
March 15, 2022
|
|
USD 15,025,000
|
|
12557WRB9
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
5.85% Notes due
March 15, 2022
|
|
USD 19,227,000
|
|
12557WRF0
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
5.90% Notes due
March 15, 2022
|
|
USD 8,296,000
|
|
12557WQT1
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
5.95% Notes due
March 15, 2022
|
|
USD 27,181,000
|
|
12557WRK9
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.00% Notes due
May 15, 2022
|
|
USD 13,726,000
|
|
12557WRM5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.00% Notes due
May 15, 2022
|
|
USD 18,355,000
|
|
12557WRP8
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.00% Notes due
May 15, 2022
|
|
USD 11,441,000
|
|
12557WRR4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.15% Notes due
June 15, 2022
|
|
USD 30,302,000
|
|
12557WRT0
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.20% Notes due
June 15, 2022
|
|
USD 6,819,000
|
|
12557WRW3
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.25% Notes due
June 15, 2022
|
|
USD 4,611,000
|
|
12557WRZ6
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.50% Notes due
June 15, 2022
|
|
USD 15,028,000
|
|
12557WSC6
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.50% Notes due
August 15, 2022
|
|
USD 1,457,000
|
|
12557WA43
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.50% Notes due
August 15, 2022
|
|
USD 397,000
|
|
12557WA84
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.70% Notes due
November 15, 2022
|
|
USD 1,930,000
|
|
12557WC66
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration per
|
|
|
|
|
|
|
|
|
|
|
Principal Amount of
|
|
|
|
|
|
|
|
|
|
|
Long Term Notes Tendered
|
|
|
|
|
|
|
|
|
|
|
|
|
|
per 1,000
|
|
|
|
|
|
|
|
|
|
|
per 1,000
|
|
|
USD
|
|
|
|
|
|
|
|
|
|
|
Notional
|
|
|
Equivalent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
Shares of
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
New Preferred
|
|
|
Plan of
|
|
|
|
Outstanding Principal
|
|
|
|
of New Notes
|
|
|
Stock
|
|
|
Reorganization
|
|
Title of Long Term Notes to be Tendered
|
|
Amount
|
|
CUSIP/ISIN
|
|
to be Issued
|
|
|
to be Issued(1)
|
|
|
Class
|
|
|
6.75% Notes due
November 15, 2022
|
|
USD 2,609,000
|
|
12557WSD4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.75% Notes due
December 15, 2022
|
|
USD 676,000
|
|
12557WSH5
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
6.00% Notes due
April 1, 2036
|
|
USD 309,021,000
|
|
125581AY4
|
|
|
USD 700
|
|
|
|
2.80862
|
|
|
|
Class 8
|
|
2.83% Notes due
April 2, 2036(2)
|
|
JPY 20,000,000
|
|
XS0249719534
|
|
|
JPY 700
|
(3)
|
|
|
2.80862
|
|
|
|
Class 8
|
|
|
|
|
(1) |
|
The New Preferred Stock will have a liquidation preference per
share of $1,400 and be entitled to 58.6 votes per share on all
matters presented to our stockholders for a vote. See
“Description of the New Preferred Stock.” Assuming the
exchange of 100% of the Old Notes for the New Notes and/or the
New Preferred Stock in the Offers, the New Preferred Stock
issued will consist of approximately 68.3 million shares
having an aggregate liquidation preference of approximately
$95.6 billion and representing approximately 91.1% of the
aggregate voting power of our capital stock generally entitled
to vote on matters presented to our stockholders. If we receive
the minimum level of participation in the Offers required to
satisfy the Liquidity and Leverage Condition, the New Preferred
Stock issued will consist of approximately 45.0 million
shares having an aggregate liquidation preference of
approximately $63.0 billion and representing approximately
87.1% of the aggregate voting power of our capital stock
generally entitled to vote on matters presented to our
stockholders. |
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(2) |
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These securities are not listed with the Depository
Trust Company (“DTC”). |
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(3) |
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Holders will receive the U.S. dollar value of the stated amount. |
Delaware
Funding Outstanding Notes
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Principal
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Amount
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of New Notes
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to be Issued
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per
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USD 1,000 Principal
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Plan of
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Outstanding Principal
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Amount of
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Reorganization
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Title of Old Notes to be Tendered
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Amount
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CUSIP/ISIN
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Old Notes Tendered
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Class
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4.65% Notes due
July 1, 2010
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USD 1,000,000,000
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125568AA3/125568AB1
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USD 1,000
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Class 7
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5.60% Notes due
November 2, 2011
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USD 487,000,000
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125568AE5
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USD 1,000
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Class 7
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5.20% Notes due
June 1, 2015
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USD 657,408,000
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125568AC9/125568AD7
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USD 1,000
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Class 7
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The Equity Units (CUSIP 125581405) issued by CIT Group Inc.
have not been included in the Offers but are included in
solicitation of acceptances for the Plan of Reorganization.
Further, the 6.00% Fixed Rate Notes due 3 March 2011 (CUSIP
AU300CGAL010) and the 3 month BBSW plus 34bp Floating Rate
Notes due 3 March 2011 (CUSIP AU300CGAL028) issued by CIT
Group (Australia) Limited, a subsidiary of the CIT Group Inc.,
have not been included in the Offers and will be reinstated
pursuant to the Plan of Reorganization. As a result, holders of
these notes and other debt securities will not be entitled to
participate in the Offers and will be treated as indicated in
the Plan of Reorganization.
TABLE OF
CONTENTS
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E-1
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You should rely only on the information contained in this
Offering Memorandum and Disclosure Statement or to which this
Offering Memorandum and Disclosure Statement refers you. We have
not authorized anyone to provide you with different information.
We are not making an offer of the New Notes and the New
Preferred Stock in any jurisdiction where such offers are not
permitted. You should not assume that the information provided
in this Offering Memorandum and Disclosure Statement is accurate
as of any date other than the date of this Offering Memorandum
and Disclosure Statement, or that the information incorporated
by reference into this Offering Memorandum and Disclosure
Statement is accurate as of any date other than the date of such
information.
NOTICE TO
INVESTORS
NONE OF CIT OR ANY OF ITS SUBSIDIARIES, OR DELAWARE FUNDING,
THEIR RESPECTIVE BOARDS OF DIRECTORS, THE VOTING AGENT, THE
EXCHANGE AGENT, THE INFORMATION AGENT, THE SWISS
NOTE TENDER AGENT, THE FINANCIAL ADVISORS OR ANY OF THEIR
RESPECTIVE AFFILIATES MAKES ANY RECOMMENDATION AS TO WHETHER OR
NOT HOLDERS OF OLD NOTES SHOULD EXCHANGE OLD NOTES FOR
NEW NOTES AND/OR SHARES OF NEW PREFERRED STOCK, AS
APPLICABLE, IN THE OFFERS AND THE PLAN OF REORGANIZATION.
The information contained in this Offering Memorandum and
Disclosure Statement is as of the date of this Offering
Memorandum and Disclosure Statement and is subject to change,
completion or amendment without notice. Neither the delivery of
this Offering Memorandum and Disclosure Statement at any time
nor the offer, exchange or delivery of any security hereunder
shall, under any circumstances, create any implication that
there has been no change in the information set forth in this
Offering Memorandum and Disclosure Statement or in our affairs
since the date of this Offering Memorandum and Disclosure
Statement.
No person is authorized in connection with these Offers to give
any information or to make any representation not contained in
this Offering Memorandum and Disclosure Statement, and, if given
or made, such other information or representation must not be
relied upon as having been authorized by us.
Neither the Securities and Exchange Commission (the
“SEC”), any other securities commission nor any other
regulatory authority, has approved or disapproved the Offers,
Plan of Reorganization or the New Notes and New Preferred Stock
nor have any of the foregoing authorities passed upon or
endorsed the merits of these Offers or the accuracy or adequacy
of this Offering Memorandum and Disclosure Statement. Any
representation to the contrary is a criminal offense.
The Offers and solicitation of votes in respect of the Plan of
Reorganization are being made on the basis of this Offering
Memorandum and Disclosure Statement and are subject to the terms
described in this Offering Memorandum and Disclosure Statement
and the indentures relating to the New Notes. Any decision to
participate in the Offers and/or vote to accept or reject the
Plan of Reorganization must be based on the information
contained in this document. In making an investment decision,
prospective investors must rely on their own examination of us
and the terms of the Offers and Plan of Reorganization and the
New Notes and New Preferred Stock, including the merits and
risks involved. Prospective investors should not construe
anything in this Offering Memorandum and Disclosure Statement as
legal, business or tax advice. Each prospective investor should
consult its advisors as needed to make its investment decision
and to determine whether it is legally permitted to participate
in the Offers under applicable legal investment or similar laws
or regulations.
Each prospective investor must comply with all applicable laws
and regulations in force in any jurisdiction in which it
participates in the Offers and/or votes to accept or reject the
Plan of Reorganization or possesses or distributes this Offering
Memorandum and Disclosure Statement and must obtain any consent,
approval or permission required by it for participation in the
Offers under the laws and regulations in force in any
jurisdiction to which it is subject, and neither we nor any of
our representatives shall have any responsibility therefor.
We reserve the right to amend, modify or withdraw any of the
Offers and Plan of Reorganization at any time and we reserve the
right to reject any tender or vote, in whole or in part.
This Offering Memorandum and Disclosure Statement contains
summaries believed to be accurate with respect to certain
documents, but reference is made to the actual documents for
complete information. All of those summaries are qualified in
their entirety by this reference. Copies of documents referred
to herein will be made available to prospective investors upon
request to the Company.
This Offering Memorandum and Disclosure Statement, including
the documents incorporated by reference herein, the related
Letter of Transmittal and/or Ballot and the Plan of
Reorganization contain important information that should be read
before any decision is made with respect to an exchange of Old
Notes or acceptance or rejection of the Plan of
Reorganization.
The delivery of this Offering Memorandum and Disclosure
Statement shall not under any circumstances create any
implication that the information contained or incorporated by
reference herein is correct as of any time subsequent to the
date hereof or date thereof or that there has been no change in
the information
ii
set forth or incorporated herein or in any attachments hereto
or in the affairs of CIT Group Inc. or any of its subsidiaries,
including Delaware Funding, or affiliates since the date hereof
or thereof.
Austria. No prospectus has been or will be
approved
and/or
published pursuant to the Austrian Capital Markets Act
(Kapitalmarktgesetz), as amended. Neither this document
nor any other document connected therewith constitutes a
prospectus according to the Austrian Capital Markets Act, and
neither this document nor any other document connected therewith
may be distributed, passed on or disclosed to any other person
in Austria. No steps may be taken that would constitute a public
offering of New Notes and New Preferred Stock in Austria, and
the Offers may not be advertised in Austria. The New Notes and
New Preferred Stock will be offered in Austria only in
compliance with the provisions of the Austrian Capital Markets
Act and all other laws and regulations in Austria applicable to
the Offers and sale of New Notes and New Preferred Stock in
Austria.
Belgium. The Offers are exclusively conducted
in Belgium under applicable private placement exemptions and
have, therefore, not been and will not be notified to, and the
Offering Memorandum and Disclosure Statement or any other
offering material has not been and will not be approved by, the
Belgian Banking, Finance and Insurance Commission (Commission
bancaire, financière et des assurances/Commissie voor het
Bank-, Financie- en Assurantiewezen). Accordingly, the
Offers may not be advertised and the Offers will not be extended
and no memorandum, information circular, brochure or any similar
document has been or will be distributed, directly or
indirectly, to any person in Belgium other than “qualified
investors” in the sense of Article 10 of the Belgian
Law of 16 June 2006 on the public offer of placement
instruments and the admission to trading of placement
instruments on regulated markets (as amended from time to time).
This Offering Memorandum and Disclosure Statement has been
issued only for the personal use of the above qualified
investors and exclusively for the purpose of the Offers.
Accordingly, the information contained herein may not be used
for any other purpose nor disclosed to any other person in
Belgium.
Bermuda. The Offers are private and not
intended for the public. This Offering Memorandum and Disclosure
Statement has not been approved by the Bermuda Monetary
Authority or the Registrar of Companies in Bermuda. Any
representation to the contrary, express or implied, is
prohibited.
Canada. This Offering Memorandum and
Disclosure Statement constitutes an offering of the New Notes
and New Preferred Stock only in those jurisdictions of Canada
where they may be lawfully sold and therein only to
“accredited investors” (as such term is defined in
applicable Canadian securities legislation) and only by persons
permitted to sell such securities. This Offering Memorandum and
Disclosure Statement is not, and under no circumstances is to be
construed as, a prospectus, an advertisement or a public
offering of the New Notes or New Preferred Stock in Canada. No
Canadian securities regulatory authority has expressed an
opinion about New Notes or New Preferred Stock and it is an
offence to claim otherwise. This Offering Memorandum and
Disclosure Statement is for the confidential use of only those
persons to whom it is transmitted in connection with the Offers.
By their acceptance of this Offering Memorandum and Disclosure
Statement, investors agree that they will not transmit,
reproduce or make available to any person, other than their
professional advisers, this Offering Memorandum and Disclosure
Statement or any of the information contained herein. No person
has been authorized to give any information or to make any
representations about CIT Group Inc. or Delaware Funding not
contained in this Offering Memorandum and Disclosure Statement.
Any such information or representation which is given or
received must not be relied upon by any investor.
Cayman Islands. No invitation whether directly
or indirectly may be made to the public in the Cayman Islands to
subscribe for the New Notes and New Preferred Stock as CIT and
Delaware Funding are not listed on the Cayman Islands Stock
Exchange.
Denmark. This Offering Memorandum and
Disclosure Statement has not been and will not be filed with or
approved by the Danish Financial Supervisory Authority or any
other regulatory authority in the Kingdom of Denmark. The New
Notes and New Preferred Stock have not been offered or sold and
may not be offered, sold or delivered directly or indirectly in
Denmark, unless in compliance with Chapters 6 or 12 of the
Danish Act on Trading in Securities and executive orders issued
pursuant thereto as amended from time to time. Accordingly, this
Offering Memorandum and Disclosure Statement may not be made
available nor may the
iii
New Notes and New Preferred Stock otherwise be marketed and
offered for sale in Denmark other than in circumstances which
are deemed not to be a marketing or an offer to the public in
Denmark.
European Economic Area. This Offering
Memorandum and Disclosure Statement shall not be distributed to,
and no New Notes and New Preferred Stock may be offered or sold
to persons in a Member State of the European Economic Area which
has implemented Directive 2003/71/EC (the “Prospectus
Directive”) (each, a “Relevant Member State”)
other than to persons who are qualified investors within the
meaning of the law in that Relevant Member State implementing
Article 2(1)(e) of the Prospectus Directive (each, a
“Qualified Investor”).
France. No prospectus or Offering Memorandum
and Disclosure Statement (including any amendment or supplement
thereto or replacement thereof) has been prepared in connection
with the Offers that have been submitted for clearance to or
approved by the Autorité des marchés financiers; no
New Notes or New Preferred Stock have been offered or sold nor
will any New Notes or New Preferred Stock be offered or sold,
directly or indirectly, to the public in France; neither a
prospectus, the Offering Memorandum and Disclosure Statement nor
any other offering material relating to the New Notes or New
Preferred Stock has been distributed or caused to be
distributed, and a prospectus, the Offering Memorandum and
Disclosure Statement and any other offering material relating to
the New Notes and New Preferred Stock will not be distributed or
caused to be distributed to the public in France; such offer,
sales and distributions have been and shall only be made in
France to (i) persons providing investment services
relating to portfolio management for the account of third
parties (personnes fournissant le service
d’investissement de gestion de portfeuille pour compte de
tiers)
and/or
(ii) qualified investors (investisseurs
qualifiés) acting for their own account, all as defined
in, and in accordance with,
Articles L.411-1,
L.411-2 and D.411-1 to D.411-3 of the Code monétaire et
financier.
Germany. Any offer or solicitation of
securities within Germany must be in full compliance with the
German Securities Prospectus Act (Wertpapierprospektgesetz
(the “WpPG”)), which implements the Prospectus
Directive in Germany, and any other applicable laws in the
Federal Republic of Germany. The offer and solicitation of
securities to the public in Germany requires the prior
publication (with specific requirements for a publication being
set out in the WpPG) of a prospectus drawn up in accordance with
the Prospectus Directive and the WpPG (a “PD-compliant
Prospectus”) approved by the German Federal Financial
Services Supervisory Authority (Bundesanstalt fur
Finanzdienstleistungsaufsicht (the “BaFin”)) or
the notification of a PD-compliant Prospectus approved by
another competent authority in the EEA in accordance with Art.
17 and Art. 18 of the Prospectus Directive. This Offering
Memorandum and Disclosure Statement does not constitute a
PD-compliant Prospectus and has not been and will not be
submitted for approval to the BaFin. It may not be supplied to
the public in Germany or used in connection with any offer for
subscription of New Notes and New Preferred Stock to the public,
any public marketing of New Notes and New Preferred Stock or any
public solicitation for offer to subscribe for or otherwise
acquire New Notes and New Preferred Stock in Germany. This
Offering Memorandum and Disclosure Statement is personally
addressed only to a limited number of persons in Germany who are
qualified investors, as defined in the WpPG, is strictly
confidential and may not be distributed to any person or entity
other than the designated recipients hereof.
Greece. No prospectus subject to the approval
of the Hellenic Capital Markets Commission or another EU
equivalent authority has been prepared in connection with the
Offers. The New Notes and New Preferred Stock may not be offered
or sold, directly or indirectly, to the public in Greece and
neither this Offering Memorandum and Disclosure Statement nor
any other offering material or information contained herein
relating to the New Notes and New Preferred Stock may be
released, issued or distributed to the public in Greece or used
in connection with any offering in respect of the New Notes and
New Preferred Stock to the public in Greece. The New Notes and
New Preferred Stock may exclusively be offered to qualified
investors acting for their own account as defined under
article 2(1)(στ) of Greek Law 3401/2005 and the
Prospectus Directive
and/or under
circumstances where the Offers of the New Notes and New
Preferred Stock is allowed without prior publication of a
prospectus
and/or where
the Offers of the New Notes and New Preferred Stock is exempted
from the publication of a prospectus according to Greek Law
3401/005
and/or the
Prospectus Directive. The offer does not constitute a
solicitation by anyone not authorised to so act and this
Offering Memorandum and Disclosure Statement may not be used for
or in connection with the Offers to solicit anyone to whom it is
unlawful under Greek laws to make such offer in the context of
article 10 of Greek law
876/1979.
iv
Hong Kong. The New Notes and New Preferred
Stock may not be offered or sold in Hong Kong, by means of this
Offering Memorandum and Disclosure Statement or any document
other than to persons whose ordinary business is to buy or sell
shares or debentures, whether as principal or agent, or in
circumstances which do not constitute an offer to the public
within the meaning of the Companies Ordinance (Cap. 32) of
Hong Kong. No advertisement, invitation or document relating to
New Notes and New Preferred Stock, whether in Hong Kong or
elsewhere, which is directed at, or the contents of which are
likely to be accessed or read by, the public in Hong Kong
(except if permitted to do so under the securities laws of Hong
Kong) will be issued other than with respect to the New Notes
and New Preferred Stock which is or is intended to be disposed
of only to persons outside Hong Kong or only to
“professional investors” within the meaning of the
Securities and Futures Ordinance (Cap. 571) of Hong Kong
and any rules made thereunder.
Ireland. The Offers are not being made,
directly or indirectly, to the public in Ireland and no offers
or sales of any notes or securities under or in connection with
such Offers may be effected except in conformity with the
provisions of Irish law including the Irish Companies Acts 1963
to 2006, the Prospectus (Directive 2003/71/EC) Regulations 2005
of Ireland, the European Communities (Markets in Financial
Instruments) Regulations 2007 of Ireland and the Market Abuse
(Directive 2003/6/EU) Regulations 2005 of Ireland.
Israel. In the State of Israel this Offering
Memorandum and Disclosure Statement shall not be regarded as an
offer to the public to purchase the New Notes and New Preferred
Stock under the Israeli Securities Law 5728 — 1968
(the “ISL”), which requires a prospectus to be
published and authorised by the Israel Securities Authority, if
it complies with certain provisions of Section 15 of the
ISL, including, among others, if: (i) the Offers are made,
distributed or directed to not more than 35 investors, subject
to certain conditions (the “Addressed Investors”); or
(ii) if the Offers are made, distributed or directed to
certain qualified investors defined in the First Addendum of the
ISL, subject to certain conditions (the “Qualified
Investors”). The Qualified Investors shall not be taken
into account in respect of counting the Addressed Investors.
Qualified Investors may have to submit written evidence that
they meet the definitions set out in the First Addendum to the
ISL. Addressed Investors may have to submit written evidence in
respect to their identities. CIT has not and will not take any
action that would require it to publish a prospectus in
accordance with and subject to the ISL. CIT has not and will not
distribute this Offering Memorandum and Disclosure Statement or
make, distribute or direct an offer to subscribe for the New
Notes and New Preferred Stock to any person within the State of
Israel, other than to Qualified Investors and Addressed
Investors.
Italy. The Offers are not being made in the
Republic of Italy and the Offering Memorandum and Disclosure
Statement has not been submitted to the clearance procedure of
the COMMISSIONE NAZIONALE PER LE SOCIETA E LA BORSA (CONSOB)
and/or the
Bank of Italy pursuant to Italian laws and regulations.
Accordingly, holders of Old Notes are hereby notified that, to
the extent such holders are Italian residents or persons located
in the Republic of Italy, the Offers are not available to them
and they may not submit for exchange the Old Notes in the Offers
nor may the New Notes and New Preferred Stock be offered, sold
or delivered in the Republic of Italy and, as such, any
acceptances received from such persons shall be ineffective and
void, and neither the NOTE D’INFORMATION nor any other
offering material relating to the Offers, the Old Notes or the
New Notes and New Preferred Stock may be distributed or made
available in the Republic of Italy.
Japan. The New Notes and New Preferred Stock
have not been registered under the Securities and Exchange Law
of Japan. The New Notes and New Preferred Stock have not been
offered or sold and will not be offered or sold, directly or
indirectly, in Japan or to or for the account of any resident of
Japan, except (i) pursuant to an exemption from the
registration requirements of the Securities and Exchange Law and
(ii) in compliance with any other applicable requirements
of Japanese law.
Korea. The New Notes and New Preferred Stock
have not been registered under the Securities and Exchange Law
and none of the New Notes or New Preferred Stock has been or
will be offered, sold or delivered, directly or indirectly, or
offered or sold to any person for re-offering or resale,
directly or indirectly, in Korea or to any resident of Korea
except pursuant to the Securities and Exchange Law, the Foreign
Exchange Transaction Law and any other applicable laws,
regulations and ministerial guidelines in Korea. Without
prejudice to the foregoing, where the New Notes and New
Preferred Stock are sold or re-sold to Korean residents, the New
Notes and New Preferred Stock may only be sold or re-sold to
those Korean
v
residents that are qualified to purchase them under the relevant
laws and regulations without having first to obtain prior
governmental approvals under the relevant Korean
laws/regulations, including the Foreign Exchange Transaction Law
(or that have obtained the required prior governmental approvals
to do so).
Kuwait. No New Notes and New Preferred Stock
have been offered or sold or will be offered or sold and no
documents will be distributed, no materials will be offered, or
no invitation or advertisement will be issued in the State of
Kuwait relating thereto, save in strict compliance with the
provisions of Law No. 31/1990 and the various Ministerial
Orders and Resolutions issued thereunder. No mass-media means of
contact are being used to market the New Notes and New Preferred
Stock. The New Notes and New Preferred Stock are being offered
for sale only to qualified institutional investors. Neither the
New Notes or New Preferred Stock nor the private offering have
been licensed by the Ministry of Commerce or any other relevant
Kuwaiti Government Agency. No party involved in this offering is
licensed in the state of Kuwait.
Luxembourg. No New Notes and New Preferred
Stock may be offered or sold in the Grand Duchy of Luxembourg,
directly or indirectly, and neither this Offering Memorandum and
Disclosure Statement nor any other offering circular,
prospectus, form of advertisement, form of communication or
other material may be distributed, or otherwise made available
in form, or published in, the Grand Duchy of Luxembourg except
in circumstances which do not constitute an offer of the New
Notes and New Preferred Stock to the public.
Malaysia. No Offering Memorandum and
Disclosure Statement or other offering documents has been or
will be registered with the Securities Commission under the
Securities Commission Act 1993 in respect of the New Notes and
New Preferred Stock. The New Notes and New Preferred Stock will
only be offered for sale to non-residents of Malaysia (being
persons who are not citizens or permanent residents of Malaysia
and who do not engage in a trade or business in Malaysia and
includes any offshore company incorporated under the OCA 1990
and any foreign offshore company registered under the OCA
1990) and that this Offering Memorandum and Disclosure
Statement or any other offering document or material relating to
the New Notes and New Preferred Stock will not be distributed or
circulated, whether directly or indirectly, to residents of
Malaysia.
The Netherlands. No New Notes or New Preferred
Stock have been, directly or indirectly, offered or sold and
will not be, directly or indirectly, offered or sold in the
Netherlands other than to persons who are qualifying investors
(gekwalificeerde beleggers) within the meaning of
article 1:1 of the 2006 Act on Financial Supervision
(Wet op het financieel toezicht) as amended from time to
time unless one of the other exemptions or exceptions to the
prohibition contained in Article 5:2 of the 2006 Act on
Financial Supervision (Wet op het financieel toezicht) is
applicable and the conditions attached to such exemption or
exception are complied with.
People’s Republic of China. This Offering
Memorandum and Disclosure Statement has not been and will not be
circulated or distributed in the People’s Republic of China
(PRC) and no New Notes and New Preferred Stock have been offered
or sold, nor will be offered or sold to any person for
re-offering or resale, directly or indirectly, to any resident
of the PRC except pursuant to applicable laws and regulations of
the PRC. For the purpose of this paragraph, PRC does not include
Hong Kong, Macau and Taiwan. Neither this Offering Memorandum
and Disclosure Statement nor any advertisement or other offering
material may be distributed or published and no offer or sale of
any New Notes and New Preferred Stock may be made in the PRC,
except under circumstances that will result in compliance with
applicable laws and regulations.
Portugal. This Offering Memorandum and
Disclosure Statement has not been nor will it be subject to the
approval of the Portuguese Securities Market Commission (the
“CMVM”). No approval action has been or will be
requested from the CMVM that would permit a public offering of
any of the New Notes and New Preferred Stock referred to in this
Offering Memorandum and Disclosure Statement; therefore the same
cannot be offered to the public in Portugal. Accordingly, no New
Notes and New Preferred Stock may be offered, sold or delivered
except in circumstances that will result in compliance with any
applicable laws and regulations. In particular, this Offering
Memorandum and Disclosure Statement and the Offers of New Notes
and New Preferred Stock are only intended for qualified
investors within the meaning of Article 30 of the
Portuguese Securities Code (Código dos Valores
Mobiliários).
Singapore. The offer of New Notes and New
Preferred Stock is made only to and directed at, and the New
Notes and New Preferred Stock are only available to, persons in
Singapore who are existing holders of
vi
the Old Notes previously issued by CIT Group Inc. or Delaware
Funding. This Offering Memorandum and Disclosure Statement has
not been registered as a prospectus with the Monetary Authority
of Singapore. Accordingly, this Offering Memorandum and
Disclosure Statement and any other document or material in
connection with the Offers or sale, or invitation for
subscription or purchase, of the New Notes and New Preferred
Stock may not be circulated or distributed, nor may the New
Notes and New Preferred Stock be offered or sold, or be made the
subject of an invitation for subscription or purchase, whether
directly or indirectly, to persons in Singapore other than
(i) existing holders of Old Notes or (ii) pursuant to,
and in accordance with, the conditions of an exemption under any
provision of Subdivision (4) of Division 1 of
Part XIII of the Securities and Futures Act,
Chapter 289 of Singapore.
Spain. The New Notes and New Preferred Stock
will not be offered, sold or distributed in Spain, except in
circumstances which do not constitute a public offer of
securities in Spain within the meaning of the Spanish Securities
Market Law (Ley 24/1988, de 28 de Julio, del Mercado de
Valores), as amended and restated, or without complying with all
legal and regulatory requirements under Spanish securities laws.
The New Notes, New Preferred Stock and the Offering Memorandum
and Disclosure Statement have not been registered with the
Spanish Securities Market Commission (Comision Nacional del
Mercado de Valores) and therefore the Offering Memorandum
and Disclosure Statement are not intended for any public offer
of the New Notes or Preferred Stock in Spain.
Switzerland. The New Notes and New Preferred
Stock may not be publicly offered, sold or advertised, directly
or indirectly, in or from Switzerland. Neither this Offering
Memorandum and Disclosure Statement nor any other offering or
marketing material relating to CIT or the New Notes or New
Preferred Stock constitutes a prospectus as that term is
understood pursuant to article 652a or 1156 of the Swiss
Federal Code of Obligations (Schweizerisches
Obligationenrecht), and neither this document nor any other
offering material relating to CIT or the New Notes or New
Preferred Stock may be publicly distributed or otherwise made
publicly available in Switzerland.
United Kingdom. This communication is not
being made and has not been approved by an authorized person for
the purpose of section 21 of the Financial Services and
Markets Act 2000 (the “Act”). Accordingly, this
communication is not being distributed to, and must not be
passed onto, the general public in the United Kingdom save in
circumstances where section 21(1) of the Act does not
apply. This communication is only directed at persons who
(i) are outside the United Kingdom or (ii) are
investment professionals within the meaning of
Article 19(5) of the Financial Services and Markets Act
2000 (Financial Promotion) Order 2005 (the “Financial
Promotion Order”) or (iii) are high net worth entities
or other persons to whom it may lawfully be communicated falling
within Article 49(2)(a) to (e) of the Financial
Promotion Order or (iv) fall within Article 43 of the
Financial Promotion Order (all such persons together being
referred to as “relevant persons”). This communication
must not be acted on or relied on by persons who are not
relevant persons. Any investment or investment activity to which
this communication relates is available only to relevant persons
and will be engaged in only with relevant persons.
NOTICE TO
NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN
APPLICATION FOR A LICENSE HAS BEEN FILED UNDER
CHAPTER 421-B
OF THE NEW HAMPSHIRE UNIFORM SECURITIES ACT, 1955, AS AMENDED,
WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF
NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF
NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER
RSA 421-B
IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR
THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A
SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS
PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR
RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR
TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY
PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION
INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
vii
The New Notes and New Preferred Stock will initially be
available in book-entry form only. We expect that each series of
New Notes will be issued in the form of one or more registered
global notes. The global notes will be deposited with, or on
behalf of, DTC and registered in its name or in the name of
Cede & Co., its nominee. Beneficial interests in the
global notes will be shown on, and transfers of beneficial
interests in the global notes will be effected only through,
records maintained by DTC and its participants. After the
initial issuance of the global notes, certificated notes will be
issued in exchange for global notes only in the limited
circumstances set forth in the applicable indenture governing
the New Notes. See “Book-Entry, Delivery and Form.”
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Offering Memorandum and
Disclosure Statement are “forward-looking statements”
within the meaning of applicable federal securities laws. All
statements contained herein that are not clearly historical in
nature are forward-looking and the words “anticipate,”
“believe,” “could,” “expect,”
“estimate,” “forecast,” “intend,”
“plan,” “potential,” “project,”
“target” and similar expressions are generally
intended to identify forward-looking statements. All statements
contained in this Offering Memorandum and Disclosure Statement,
other than statements of historical fact, including without
limitation, statements about our plans, strategies, prospects
and expectations regarding future events and our financial
performance, are forward-looking statements that involve certain
risks and uncertainties. While these statements represent our
current judgment on what the future may hold, and we believe
these judgments are reasonable in the circumstances, these
statements are not guarantees of any events or financial
results, and our actual results may differ materially. You are
urged to consider these factors carefully in evaluating the
forward-looking statements and are cautioned not to place undue
reliance on these forward-looking statements. The
forward-looking statements included in this Offering Memorandum
and Disclosure Statement, including the Projections of Certain
Financial Data Following Consummation of Plan of Reorganization
and the Liquidation Analysis, are made only as of the date of
this Offering Memorandum and Disclosure Statement. All
subsequent written and oral forward-looking statements
attributable to us or any person acting on our behalf are
expressly qualified in their entirety by the cautionary
statements contained or referred to in this section. We
undertake no obligation to update publicly these forward-looking
statements to reflect new information, future events or
otherwise, except as required by law. You should, however,
review the factors and risks we describe in the reports we file
from time to time with the SEC. All forward-looking statements
involve risks and uncertainties, many of which are beyond our
control, which may cause actual results, performance or
achievements to differ materially from anticipated results,
performance or achievements. We cannot assure you that projected
results or events will be achieved. Factors that could cause our
actual results to be materially different from our expectations
include those factors described herein under the caption
“Risk Factors” and “Risk Related to the
Chapter 11 Case and the Plan of Reorganization” and in
documents incorporated herein by reference, including, among
others, the following:
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capital markets liquidity;
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risks of a continuation or worsening of the economic recession;
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industry cycles and trends;
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uncertainties associated with risk management, including credit,
prepayment, asset/liability, interest rate and currency risks;
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adequacy of reserves for credit losses;
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risks inherent in changes in market interest rates and quality
spreads;
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funding opportunities, deposit taking capabilities and borrowing
costs;
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risks that the Senior Credit Facility (as defined below) with
Barclays Bank and certain lenders will not provide the liquidity
the Company is seeking due to material increases in customer
drawdowns on outstanding commitments;
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risks that the Company will be unsuccessful in its efforts to
effectuate a comprehensive restructuring of its capital
structure;
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risks that the Company will be unsuccessful in its efforts to
consummate the proposed recapitalization transaction following
consummation of the Offers;
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risks if the Company seeks protection under the Bankruptcy Code;
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risks that the Company will be unable to comply with the terms
of the Written Agreement with the Federal Reserve Bank of New
York or the Orders of the Federal Deposit Insurance Corporation
and Utah Department of Financial Institutions;
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risks that banking regulators will not provide approval for the
Company to originate certain types of business or products
through CIT Bank;
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risks that the Company will be required to divest CIT Bank if
the Company files for bankruptcy or for other reasons;
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conditions
and/or
changes in funding markets, including commercial paper, term
debt and the asset-backed securitization markets;
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risks associated with the value and recoverability of leased
equipment and lease residual values;
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application of fair value accounting in volatile markets;
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application of goodwill accounting in a recessionary economy;
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changes in laws or regulations governing our business and
operations;
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risks that a bankruptcy filing will harm our customer
relationships and cause us to lose revenues;
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changes in competitive factors;
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inability to retain management or hire employees through the
restructuring, including because of regulatory limits on our
ability to pay retention bonuses;
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demographic trends;
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future acquisitions or dispositions of businesses or asset
portfolios; and
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regulatory changes
and/or
developments.
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INDUSTRY
AND MARKET DATA
In this Offering Memorandum and Disclosure Statement, we rely on
and refer to information and statistics regarding our industry.
We obtained this market data from independent industry
publications or other publicly available information. Although
we believe that these sources are reliable, we have not
independently verified and do not guarantee the accuracy and
completeness of this information.
INCORPORATION
BY REFERENCE; ADDITIONAL INFORMATION
CIT is “incorporating by reference” the information it
files with the SEC into this Offering Memorandum and Disclosure
Statement, which means that CIT is disclosing important
information to you by referring you to those documents.
Information that is incorporated by reference is an important
part of this Offering Memorandum and Disclosure Statement.
Certain information that CIT files after the date of this
Offering Memorandum and Disclosure Statement with the SEC will
automatically update and supersede the information included or
incorporated by reference herein. CIT incorporates by reference
into this Offering Memorandum
ix
and Disclosure Statement the documents listed below, which were
filed with the SEC, and such documents form an integral part of
this Offering Memorandum and Disclosure Statement:
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Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 (the audited
consolidated financial statements as of December 31, 2008
and 2007, and for each of the three years in the period ended
December 31, 2008, and the audit report from the
independent registered public accounting firm, have been updated
with the documents included in Exhibit 99.1 to the
Company’s Current Report on
Form 8-K
filed on October 1, 2009);
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Definitive Proxy Statement filed with the SEC on April 1,
2009;
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Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2009;
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Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2009;
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Current Reports on
Form 8-K
filed on January 5, 2009, January 7, 2009,
January 22, 2009, February 24, 2009, April 23,
2009, April 30, 2009, May 7, 2009, May 18, 2009,
May 22, 2009, June 18, 2009, July 21, 2009,
July 30, 2009, August 7, 2009, August 13, 2009,
August 17, 2009 (Item 5.03 only), September 1,
2009, September 4, 2009, October 7, 2009 and
October 13, 2009; and
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Current Report on
Form 8-K/A
filed on September 11, 2009.
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CIT is also incorporating by reference any future filings CIT
makes with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), after the date of this Offering
Memorandum and Disclosure Statement and prior to the expiration
or termination of the Offers, except that, unless otherwise
indicated, CIT is not incorporating any information furnished
under Item 2.02 or Item 7.01 of any Current Report on
Form 8-K.
Any statement contained in this Offering Memorandum and
Disclosure Statement or in a document (or part thereof)
incorporated or considered to be incorporated by reference in
this Offering Memorandum and Disclosure Statement shall be
considered to be modified or superseded for purposes of this
Offering Memorandum and Disclosure Statement to the extent that
a statement contained in this Offering Memorandum and Disclosure
Statement or in any other subsequently filed document (or part
thereof) which is or is considered to be incorporated by
reference in this Offering Memorandum and Disclosure Statement
modifies or supersedes that statement. The modifying or
superseding statement need not state that it has modified or
superseded a prior statement or include any other information
set forth in the document that it modifies or supersedes. Any
statement so modified or superseded shall not be considered,
except as so modified or superseded, to constitute part of this
Offering Memorandum and Disclosure Statement.
Copies of each of the documents incorporated by reference into
this Offering Memorandum and Disclosure Statement (other than an
exhibit to a filing unless that exhibit is specifically
incorporated by reference into that filing) may be obtained at
no cost, by contacting the information agent at its telephone
number set forth on the back cover of this Offering Memorandum
and Disclosure Statement.
CIT is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports and information
statements and other information with the SEC. You may read and
copy any document CIT files with the SEC at the SEC’s
public reference room at 100 F Street, N.E.,
Washington, DC 20549. You may also obtain copies of the same
documents from the public reference room of the SEC in
Washington by paying a fee. Please call the SEC at
1-800-SEC-0330
for further information on the public reference rooms.
CIT’s filings are also electronically available from the
SEC’s Electronic Document Gathering, Analysis and Retrieval
System, which is commonly known by the acronym
“EDGAR,” and which may be accessed at www.sec.gov, as
well as from commercial document retrieval services.
Anyone who receives this Offering Memorandum and Disclosure
Statement may obtain a copy of the indenture for the New Notes
without charge by writing to the Company at Investor Relations
Department, CIT Group Inc., 505 Fifth Avenue, New York, New
York 10017.
x
SUMMARY
This summary highlights some basic information contained, or
incorporated by reference, in this Offering Memorandum and
Disclosure Statement to help you understand our business, the
Offers and the Plan of Reorganization. It does not contain all
of the information that is important to you. You should
carefully read this Offering Memorandum and Disclosure Statement
to understand fully the terms of the Offers and the Plan of
Reorganization, as well as the information incorporated by
reference herein. You should pay special attention to the
information in the section entitled “Risk Factors”
beginning on page 36 and the section entitled
“Cautionary Statement Regarding Forward-Looking
Statements.”
Unless stated otherwise, the discussion in this Offering
Memorandum and Disclosure Statement of our business includes the
business of CIT Group Inc. and its direct and indirect
consolidated subsidiaries. Unless otherwise indicated or the
context otherwise requires, (i) when discussing the CIT
Offers, the CIT Old Notes and the Series A Notes,
“CIT,” “the Company,” “we,”
“us” and “our” refer to CIT Group Inc. and
its direct and indirect subsidiaries on a consolidated basis;
(ii) when discussing the Delaware Funding Offers, the
Delaware Funding Old Notes and the Series B Notes,
“the Company,” “we,” “us” and
“our” refer to Delaware Funding; and (iii) when
discussing the Offers, the Old Notes and the New Notes,
“the Company,” “we,” “us” and
“our” refer to CIT Group Inc. and its direct and
indirect subsidiaries on a consolidated basis, including
Delaware Funding.
Overview
Through the consummation of the Offers or Plan of
Reorganization, the Company intends to restructure its capital
structure, improve its liquidity position, enhance its capital
levels, and accelerate its return to profitability, while
providing adequate time to execute its business restructuring
strategy. Upon the terms and subject to the conditions set forth
in this Offering Memorandum and Disclosure Statement and the
accompanying Letter of Transmittal and/or Ballot, we are
offering to exchange the Old Notes for the New Notes
and/or New
Preferred Stock in the Offers and soliciting acceptances of the
Plan of Reorganization.
In connection with the transactions contemplated by the
Offers and the Plan of Reorganization, you may elect to
(i) tender your Old Notes in the Offers which will also
constitute a vote to accept the Plan of Reorganization,
(ii) vote to accept the Plan of Reorganization without
tendering your Old Notes, (iii) vote to reject the Plan of
Reorganization without tendering your Old Notes or
(iv) take no action with respect to the Offers and the Plan
of Reorganization. In the event that you choose to take no
action with respect to the Offers and the Plan of
Reorganization, you will have rejected the Offers and will have
no bearing on the approval of the Plan of Reorganization.
If the Company consummates the Offers, tendering holders of Old
Notes will receive the consideration described in this Offering
Memorandum and Disclosure Statement.
If the Company does not consummate the Offers and elects to
proceed with a restructuring under the Plan of Reorganization,
all holders of Old Notes will receive the treatment provided in
the Plan of Reorganization upon consummation of the Plan of
Reorganization (if approved).
If the Offers are not consummated and the Plan of Reorganization
is not accepted, the Company expects that it will likely be
necessary to file for bankruptcy protection without the benefit
of an agreed plan of reorganization, which may require
significant and accelerated asset liquidations. No decision has
been made by the Company’s board of directors to file
petitions for relief under the Bankruptcy Code.
Our
Business
CIT Group Inc. is a bank holding company providing commercial
financing and leasing products and management advisory services
to clients in a wide variety of industries. The Company operates
primarily in North America, with locations in Europe, Latin
America, Australia and the Asia-Pacific region. CIT Group
Inc.’s primary regulator is the Federal Reserve Bank of New
York and CIT Bank’s primary regulators are the Federal
Deposit Insurance Corporation (“FDIC”) and the Utah
Department of Financial Institution (“UDFI”). CIT
Group Inc. is a holding company and the ultimate parent of all
of CIT’s corporate entities. C.I.T. Leasing
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Corporation (“CIT Leasing”) is the direct parent of
Delaware Funding, and in turn The CIT Group/Equipment Financing
Inc. (“CIT Equipment Financing”) is the direct parent
of CIT Leasing. CIT Group Inc. is the direct parent of CIT
Equipment Financing. Neither CIT Leasing nor CIT Equipment
Financing are participants in the Offers or the Plan of
Reorganization.
Delaware Funding is an indirect, wholly owned subsidiary of CIT
Group Inc. Delaware Funding was formed for the purpose of acting
as CIT’s finance subsidiary in Canada and for issuing debt
to fund certain of CIT’s operations, including those in
Canada and parts of Europe. All indebtedness of Delaware Funding
is guaranteed by CIT, its ultimate parent company.
The Company provides financing and leasing capital to its
clients and their customers in over 30 industries and 50
countries. The Company’s businesses focus on commercial
clients with a particular emphasis on middle market companies.
Through its corporate finance, transportation finance, trade
finance and vendor finance segments, the Company serves clients
in a wide variety of industries including aerospace and rail,
manufacturing, wholesaling, retailing, healthcare,
communications, media and entertainment and various
service-related industries. The Company is also a leader in
small business lending with an emphasis on originating
U.S. Small Business Administration (“SBA”) loans.
We previously offered student loans through our consumer
segment, but we discontinued originations of student loans in
2008 and are running off the remaining portfolio.
The Company has both bank and non-bank subsidiaries. CIT Bank,
which amended its charter in December 2008 from an industrial
bank to a state-chartered bank in Utah, is the Company’s
primary bank subsidiary. CIT Bank, which had historically funded
consumer loans, shifted its focus to commercial lending in late
2007/early 2008. In addition, the Company has regulated
subsidiaries in a number of other jurisdictions, including but
not limited to the United Kingdom, France, Germany, Sweden, and
Brazil. The Company’s non-bank subsidiaries, both in the
U.S. and abroad, currently house the majority of the
Company’s assets and operations. As a bank holding company,
CIT Group Inc. is prohibited from engaging in certain business
activities including certain of its insurance services and its
equity investment activities, and may have to exit these
activities within a specified time period.
Background
The global financial market crisis and negative economic
conditions materially and adversely affected the Company’s
liquidity position and operating results over the past
30 months. Accordingly, there is substantial doubt about
the Company’s ability to continue as a going concern.
The Company’s business historically relied upon access to
both the secured and unsecured debt capital markets for
cost-efficient funding. The disruptions in the credit markets
coupled with the global economic deterioration that began in
2007, and downgrades in the Company’s credit ratings to
well below investment grade in 2008 and 2009, materially
worsened the Company’s liquidity situation and left it
without access to the unsecured debt market and impaired its
access to cost efficient secured financing. Since January 2008,
the Company obtained interim financing through secured
financings and reduced financing needs through balance sheet
contraction.
As part of its overall plan to transition to a bank-centric
business model, the Company (i) applied to participate in
the FDIC’s Temporary Liquidity Guarantee Program
(“TLGP”), which would have enabled the Company to
issue government guaranteed debt and (ii) applied for
exemptions under Section 23A of the Federal Reserve Act
(“Section 23A”) to transfer a significant portion
of its U.S. assets to CIT Bank, which would have enabled
the Company to generate liquidity by leveraging the
deposit-taking capabilities of CIT Bank. In April 2009, the
Federal Reserve granted the Company a partial Section 23A
waiver to transfer $5.7 billion of government-guaranteed
student loans to CIT Bank. In connection with this transaction,
CIT Bank assumed $3.5 billion in debt and paid
$1.6 billion in cash to CIT Group Inc.
On July 15, 2009, the Company was advised that there was no
appreciable likelihood of additional government support being
provided in the near term, through either participation in the
FDIC’s TLGP or further approvals of asset transfers under
its pending Section 23A exemption request. Following the
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announcement of these developments, the Company experienced
higher draws on financing commitments which accelerated the
degradation of its liquidity position. This liquidity situation,
continued portfolio deterioration and the weak economic and
credit environment, all weighed heavily on the Company’s
recent financial performance.
In order to meet its near-term liquidity needs, the Company
entered into a senior secured term loan facility on
July 20, 2009, as amended and restated on July 29,
2009 and as further amended on August 3, 2009,
August 31, 2009 and October 1, 2009, for up to
$3 billion provided by a syndicate initially comprised of
certain holders of the Company’s Old Notes (the
“Senior Credit Facility”). As of August 4, 2009,
the Company had drawn the entire $3 billion in financing
under the Senior Credit Facility. The Company and certain of its
subsidiaries are borrowers under the Senior Credit Facility
(collectively, the “Borrowers”). The Company and all
of its current and future domestic wholly owned subsidiaries,
with the exception of CIT Bank and other regulated subsidiaries,
special purpose entities, and immaterial subsidiaries, are
guarantors of the Senior Credit Facility (the “Credit
Facility Guarantors”).
The Senior Credit Facility is secured by a perfected first
priority lien on substantially all unencumbered assets of the
Borrowers and Credit Facility Guarantors (other than CIT Group
Inc.), and with limited exceptions, has priority over all other
liens, and also includes 65% of the voting and 100% of the
non-voting stock of other first-tier foreign subsidiaries (other
than direct subsidiaries of CIT Group Inc.), in each case owned
by a Credit Facility Guarantor, 65% of the voting shares and
100% of the nonvoting shares in CIT Financial Ltd., all of the
shares in CIT Aerospace International (except one nominee
share), 65% of the shares in CIT Vendor Finance (UK) Limited
(not to exceed 65% of the voting shares) and 49% of the shares
in CIT Group Finance (Ireland).
The Senior Credit Facility requires the Company to adopt and
comply with a restructuring plan acceptable to a majority in
number of a committee comprised of certain lenders under the
Senior Credit Facility (the “Steering Committee”) by
October 1, 2009. This requirement is subject to the
fiduciary duty of the Company’s board of directors to act
in the best interests of the Company and its stakeholders. On
October 1, 2009, the Company commenced the Offers and the
solicitation of votes to accept or reject the Plan of
Reorganization that are described in this Offering Memorandum
and Disclosure Statement and which were developed in
consultation with the Steering Committee.
Business
Restructuring Strategy
The Company and its board of directors, in consultation with its
advisors, continue to develop and execute the Company’s
business restructuring strategy, which has the following
objectives:
Financial
Strength
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targeting a capital structure with significantly less leverage
and establishing capital ratios well in excess of our regulatory
standards and in line with the most financially sound of our
peers;
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achieving sufficient liquidity and restructuring our debt
maturity schedule to reduce reliance on the capital
markets; and
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positioning the Company for a return to profitability and
investment grade ratings.
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Business
Model
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optimizing our portfolio of businesses and organizational
structure, which may include identifying businesses or
portfolios to be liquidated or sold over time;
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identifying the core businesses that, subject to regulatory
approvals, would operate in CIT Bank, including certain core
small and middle market financing businesses; and
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aligning the funding model to reflect the changes in our
business model and diversifying CIT Bank’s funding to
include commercial deposits, retail deposits, asset-backed
financings and a reduced proportion of brokered deposits.
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By successfully implementing its business restructuring
strategy, the Company’s goal is to transition to a smaller
company focused on serving small- and mid-sized commercial
businesses. The Company’s goal is to create a sustainable
and profitable business model by reducing balance sheet exposure
through completion of targeted asset sales and net portfolio
run-off and through facilitating a return to the capital markets
by achieving investment grade ratings. In addition, the Company
is seeking to reduce its leverage and carry a manageable
interest burden going forward. The Company aims to position
itself to execute a transition to a bank-centric business model
by seeking to obtain regulatory support for our business
restructuring strategy and emerging from the restructuring with
our bank holding company status as a source of strength for the
Company, including CIT Bank.
The Company commenced execution of its business restructuring
strategy by entering into the Senior Credit Facility and
consummating the cash tender offer described below for the
outstanding August 17 Notes (as defined below) and continues its
restructuring efforts with the transactions contemplated by the
Offers and the Plan of Reorganization (together, the
“Restructuring Plan”). We believe that the successful
implementation of our business restructuring strategy, including
the Restructuring Plan, will be viewed favorably by our
regulators and will position us to request approval to transfer
certain business platforms into CIT Bank.
Restructuring
Plan
The Company’s principal objective in restructuring its
capital structure through the Restructuring Plan is to ensure
that maximum franchise value is recognized for its stakeholders.
The Restructuring Plan satisfies the applicable requirements of
the Senior Credit Facility, and the Company believes the
Restructuring Plan, whether implemented through the Offers or
through the Plan of Reorganization:
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significantly reduces leverage by lowering the Company’s
aggregate debt balance;
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increases the total capital ratio to in excess of 15%, which
exceeds regulatory requirements and mitigates the risk of future
loss to creditors;
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provides a sufficient period of time (approximately three years)
to implement a revised funding plan before the Company faces
significant debt maturities;
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minimizes business disruptions and potential customer defections
by limiting uncertainty as to the viability of the Company as a
going concern and the period of time during which the Company is
subject to such uncertainty;
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positions the Company for a return to investment grade ratings;
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provides the Company with sufficient operating flexibility to
execute the balance of the Company’s business restructuring
strategy;
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positions the Company to seek approval from regulators for
future transfers of business platforms to CIT Bank;
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offers consideration based on position in the existing capital
structure; and
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preserves significantly higher value for the Company than a
liquidation of CIT or a bankruptcy filing without an approved
plan of reorganization.
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The principal elements of the Restructuring Plan include:
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conducting the Offers and soliciting acceptances of the Plan of
Reorganization so that we may determine based on the
participation rate in the Offers and other circumstances at the
time, whether it is in the best interests of the Company and its
stakeholders to consummate the Offers or to file for bankruptcy
and seek confirmation of the Plan of Reorganization;
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negotiating a new or amended secured credit facility to provide
additional liquidity;
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continuing negotiations with certain other noteholders and
lenders to obtain amendments or waivers that would result in an
improvement to our liquidity and capital position, including
negotiating the restructuring of our revolving bank credit
agreements and two other term loan agreements pursuant to which
each accepting lender would receive, in satisfaction of all
amounts owed to such lender, obligations under a Junior Credit
Facility (as defined herein) providing economically equivalent
terms to the New Notes (the “Junior Credit Facility”)
and New Preferred Stock (see “Description of Material
Indebtedness — Junior Credit Facilities); and
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•
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if the Offers are consummated, taking the steps necessary to
effectuate the Recapitalization described below.
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Upon successful implementation of the Restructuring
Plan — whether through the Offers or the Plan of
Reorganization — the Company believes it will be
better-positioned to pursue the remainder of its business
restructuring strategy including potential significant business
line restructurings
and/or
dispositions.
Recapitalization
If the Company consummates the Offers, tendering holders of CIT
Old Notes will receive the consideration described in this
Offering Memorandum and Disclosure Statement, including shares
of New Preferred Stock. As soon as practicable following the
Settlement Date, subject to the affirmative vote of CIT Group
Inc.’s stockholders, the Company intends to seek to
effectuate certain recapitalization transactions (the
“Recapitalization”), including to increase CIT Group
Inc.’s authorized common shares and reclassify its
outstanding preferred stock, including the New Preferred Stock,
into common stock. On a pro forma basis following the
Recapitalization, assuming 100% participation in the Offers,
holders of the New Preferred Stock will hold approximately 91.1%
of the equity and voting power of the Company, the United States
Department of the Treasury, as holder of our Fixed Rate
Cumulative Perpetual Preferred Stock, Series D (the
“Series D Preferred Stock”), will hold 5.4% of
the equity and voting power of the Company, holders of the
Company’s other series of currently outstanding preferred
stock will hold approximately 1.0% of the equity and voting
power of the Company, and holders of the Company’s
currently outstanding common stock will hold 2.5% of the equity
and voting power of the Company. If the Company receives the
minimum level of participation in the Offers required to satisfy
the Liquidity and Leverage Condition, on a pro forma basis
following the Recapitalization, holders of the New Preferred
Stock will hold approximately 90.6% of the equity and voting
power of the Company, the United States Department of the
Treasury, as holder of our Series D Preferred Stock, will
hold 5.4% of the equity and voting power of the Company, holders
of the Company’s other series of currently outstanding
preferred stock will hold approximately 1.5% of the equity and
voting power of the Company and holders of currently outstanding
common stock will hold 2.5% of the equity and voting power of
the Company. For more information, see “Recapitalization
After the Offers” and “Risk Factors — Risks
Related to Consummation of the Offers.”
5
Summary
Comparison of Treatment in the Offers and the Plan of
Reorganization
The table below summarizes the treatment of holders of Old Notes
and the other noteholders, claimants and interest holders under
the Offers and the Plan of Reorganization. Under the Plan of
Reorganization, the holders of CIT Old Notes will receive the
New Notes as well as shares of newly issued common stock (the
“New Common Interests”) and, in certain instances,
Contingent Value Rights. Each entry under the “Treatment
Under” columns represents the principal amount of New Notes
per $1 of existing securities. This summary does not reflect the
potential effect of the Recapitalization described above, which
we intend to pursue if the Offers are consummated.
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Treatment Under
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Security
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The Offers
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The Plan of Reorganization
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Senior Unsecured Debt Maturing 2009
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90 cents of New Notes, plus New Preferred Stock
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70 cents of New Notes, plus New Common Interests
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Senior Unsecured Debt Maturing
2010(1)
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85 cents of New Notes, plus New Preferred Stock
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70 cents of New Notes, plus New Common Interests
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Senior Unsecured Debt Maturing
2011 — 2012
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80 cents of New Notes, plus New Preferred Stock
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70 cents of New Notes, plus New Common Interests
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Senior Unsecured Debt Maturing
2013 or later
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70 cents of New Notes, plus New Preferred Stock
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70 cents of New Notes, plus New Common Interests
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Structurally Senior Unsecured
Debt(2)
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100 cents of New Notes
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100 cents of New Notes
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Subordinated Debt
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New Preferred Stock
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New Common Interests and Contingent Value Rights
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Junior Subordinated Debt
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New Preferred Stock
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New Common Interests and Contingent Value Rights
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Preferred Stock, Series A, B, C and D
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Not Solicited in the
Offers(3)
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Contingent Value Rights
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Common Stock
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Not Solicited in the
Offers(3)
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No Recovery
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(1)
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Includes 5.38% Notes due
June 15, 2017, which notes have a put right on
June 15, 2010.
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(2)
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The structurally senior unsecured
debt includes the Delaware Funding Old Notes and the treatment
of the Delaware Funding Old Notes under the Plan of
Reorganization presented in the table assumes a vote of the
class to accept the Plan of Reorganization. Certain other debt
securities of our subsidiaries which are structurally senior
unsecured debt are not included in the Offers and not affected
by the Plan of Reorganization, including notes issued by CIT
Group (Australia) Limited.
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(3)
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The currently outstanding series of
preferred stock and currently outstanding common stock have not
been included in the Offers or the solicitation of acceptances
for the Plan of Reorganization. If the Offers are consummated,
the issuance of the New Preferred and the proposed
Recapitalization will result in substantial dilution to the
Company’s existing equity holders, leaving such holders
with little economic or voting interest in the Company.
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The
Offers
Consummation of the Restructuring Plan through the Offers
provides several benefits, including:
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an immediate solution to the Company’s near term liquidity
issues;
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different, and in some instances, more desirable, consideration
for holders of the Old Notes; and
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•
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ability to effectuate the restructuring in a short period of
time.
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Consummating the Offers also avoids the potential need to seek
bankruptcy protection and the related costs and disruptions.
Unless the Company’s mitigation efforts are successful,
these costs could be material and may include:
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direct costs of bankruptcy, including fees paid to a trustee and
to attorneys and other professionals;
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•
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costs of terminations of defaulted borrowing facilities; and
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•
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costs of unwinding derivative transactions used to hedge
interest rate and currency risks.
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Additionally, a bankruptcy filing could have other effects on
the Company’s business that are more difficult to measure,
including indirect costs, such as an adverse impact on:
6
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new business originations through referral sources and other
intermediaries that are concerned about the Company’s
ability to perform;
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new business originations directly with customers that are
concerned about the Company’s ability to perform and its
long-term viability;
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the Company’s existing portfolio of customers seeking new
funding sources to replace their existing relationship with the
Company, including refinancing revolving credit facilities and
developing new factoring relationships; and
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the Company’s brand equity due to the negative connotations
surrounding a bankruptcy filing.
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Other considerations related to the Offers include:
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the possibility that not all holders of Old Notes may tender
their Old Notes into the Offers, resulting in less debt being
extinguished;
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the obligation to make principal payments on Old Notes that are
not exchanged on a less desirable maturity schedule; and
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the need to effectuate the Recapitalization if we consummate the
Offers in order to streamline our capital structure.
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The
Plan of Reorganization
Consummation of the Restructuring Plan through the Plan of
Reorganization provides several benefits, including:
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providing for the same treatment of all holders of claims in the
same class whether or not they vote to accept the Plan of
Reorganization; and
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eliminating the need to effectuate the Recapitalization
following consummation of the Offers in order to streamline the
Company’s capital structure and provide holders of Old
Notes with shares of the Company’s common stock.
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Other considerations with respect to the Plan of Reorganization
include:
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direct and incremental financing costs to the Company related to
the termination of defaulted borrowing facilities, unwinding
derivative transactions and the payment of additional fees and
expenses;
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disruptions to the Company’s business, employees and
customers and a reduction in the Company’s ability to
consummate a restructuring on an expedited basis;
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incremental borrowings to satisfy cash outflows triggered by a
bankruptcy filing by CIT Group Inc.; and
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reputational damage resulting from the filing of a bankruptcy
case.
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Effects
of Bankruptcy Filing without an Approved Plan of
Reorganization
It is the Company’s intention to pursue its Restructuring
Plan through the Offers or the Plan of Reorganization. If,
however, the Offers are not consummated and the Plan of
Reorganization is not accepted, the Company expects that it will
likely be necessary to file for bankruptcy protection, without
the benefit of an agreed plan of reorganization, or liquidate
CIT. In the event of a bankruptcy filing without an agreed plan
of reorganization, the Company would likely be subject to a
lengthy and costly bankruptcy process and such a filing would
cause substantial damage to the Company’s business and
reputation. Such a bankruptcy filing would present obstacles to
conducting the Company’s business, including the inability
to insulate the Company’s operating units from the
proceedings, additional uncertainty and constraints with respect
to the Company’s liquidity and increased risk of seizure of
CIT Bank by its regulators. In addition, such a filing would
substantially erode our customers’ confidence in our
business. Employees could be distracted or more easily attracted
to other career opportunities, and it may be more difficult to
attract or replace key employees. Furthermore, lenders and other
partners could seek to terminate their relationships with us,
require financial
7
assurances or enhanced returns, or refuse to provide credit or
other services on the same terms as prior to filing. See
“Risk Factors — Risks Related to Failure to
Consummate the Restructuring Plan.”
Conditions
to the Consummation of the Offers and Plan of
Reorganization
Consummation of the Offers is subject to a number of conditions,
including a Liquidity and Leverage Condition that states that
the Offers cannot be consummated unless a sufficient number of
Old Notes are tendered into the exchange,
and/or
certain other debt instruments have been renegotiated so that,
after giving effect to the Offers and such renegotiations, the
face amount of the Company’s total debt would be reduced by
at least $5.7 billion (excluding any CIT Long Term Old
Notes tendered) and its remaining unsecured debt maturities
(excluding foreign vendor facilities) would not exceed
$500 million in 2009, $2.5 billion during the period
from 2009 to 2010, $4.5 billion during the period from 2009
to 2011 and $6.0 billion for the period from 2009 to 2012,
in each case on a cumulative basis. In addition, the
consummation of each of the Delaware Funding Offers and the Long
Term CIT Offers is subject to the consummation of the Original
CIT Offers. The Liquidity and Leverage Condition cannot be
waived. Whether or not the conditions to the Offers are
satisfied, the Company may file for bankruptcy and seek to
confirm the Plan of Reorganization if the Company concludes that
it would be more advantageous or expeditious for it to do so.
Under the Plan of Reorganization a class is deemed to accept
their treatment under a plan if
662/3%
in amount and more than 50% in number of the claims voting on
the Plan of Reorganization vote to accept it. The Plan of
Reorganization contemplates only CIT Group Inc. and Delaware
Funding being plan proponents and commencing bankruptcy cases.
It would be the Company’s intention to seek Bankruptcy
Court (as defined below) approval to continue to operate the
business of all of its non-debtor operating subsidiaries in the
ordinary course of business.
Certain
Securities Not Addressed in the Offers or Plan of
Reorganization
The Equity Units (CUSIP 125581405) issued by CIT Group Inc.
have not been included in the Offers but are included in
solicitation of acceptances for the Plan of Reorganization.
Holders of Equity Units will receive the same treatment under
the Plan of Reorganization as holders of Old Notes. Such holders
will only be able to select option 2 (vote to accept the
Plan of Reorganization) or option 3 (vote to reject the
Plan of Reorganization) on the Ballot. Further, the 6.00% Fixed
Rate Notes due 3 March 2011 (CUSIP AU300CGAL010) and the
3 month BBSW plus 34bp Floating Rate Notes due 3 March
2011 (CUSIP AU300CGAL028), each issued by CIT Group (Australia)
Limited, a subsidiary of CIT Group Inc., have not been included
in the Offers and will be reinstated pursuant to the Plan of
Reorganization. As a result, holders of these notes and certain
other debt securities will not be entitled to participate in the
Offers and will be treated as indicated in the Plan of
Reorganization.
Board of
Directors
CIT Group Inc.’s board of directors (which as of the date
of this Offering Memorandum and Disclosure Statement has ten
members) has determined that the appropriate size of the board
of directors on and after the consummation of the Offers or the
Plan of Reorganization would be 13 directors. At the
request of and in cooperation with the Steering Committee, CIT
Group Inc. has engaged Spencer Stuart, an internationally
recognized director search firm, to assist the Nominating and
Governance Committee of the board of directors (the
“N&GC”) in identifying, interviewing and
selecting candidates for the expanded board of directors
and/or
replacing members of the present board who may decide to step
down from the board of directors. Spencer Stuart will identify
candidates who are independent of CIT Group Inc., not affiliated
with, or representatives of, any of the members of the Steering
Committee, and who possess the qualifications, skills and
experience specified by the N&GC. The Steering Committee
will recommend to the N&GC candidates for the board of
directors from among the qualified individuals identified by
Spencer Stuart. The candidates recommended by the Steering
Committee that are approved by the N&GC will be reviewed
with the Federal Reserve Bank of New York and, to the extent
approved by the Federal Reserve Bank of New York, will be
submitted to the full board of directors for consideration and
appointment to the board of directors. Following consummation of
the Offers or the Plan of Reorganization, the board of directors
will include five directors that were recommended
8
to the N&GC by the Steering Committee. The board of
directors will nominate a slate of at least 13 directors for
election at the 2010 annual meeting of stockholders which slate
will not include more than five of the directors serving as of
the date hereof.
Certain
Corporate Governance Matters
If the Offers or Plan of Reorganization are consummated, CIT
will use its commercially reasonable efforts to hold its next
annual meeting no later than May 31, 2010. CIT does not
have a staggered or classified board and, accordingly, all
directors of CIT will be elected at the annual meeting.
In addition, if requisite holders of Old Notes accept the Plan
of Reorganization and CIT files a petition under Chapter 11
to consummate the Plan of Reorganization:
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CIT will not implement a stockholders’ rights plan during
its Chapter 11 proceeding, other than CIT’s
August 12, 2009 tax benefits preservation plan or other
actions the Company considers appropriate to preserve the
benefit of net operating losses;
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CIT will not amend its certificate of incorporation during the
Chapter 11 proceeding to create a staggered or classified
board; and
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the amended certificate of incorporation of CIT, to be effective
upon consummation of the Plan of Reorganization, will provide
that the chairman of the board or secretary of CIT shall call a
special meeting of its stockholders at the request in writing of
stockholders holding at least 25% of the voting power of the
issued and outstanding common stock of CIT entitled to vote
generally for the election of directors.
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Our
Business Post-Restructuring Plan
Following the consummation of the Offers or the Plan of
Reorganization, the Company will continue to pursue its broader
business restructuring strategy. The Restructuring
Plan — whether implemented through the Offers or the
Plan of Reorganization — will significantly enhance
CIT’s capital structure and liquidity position.
Management’s expectations are that CIT’s capital ratio
would be in excess of 15%; however, the ultimate capital ratio
will be dependent on market conditions, valuations and other
factors. The Company’s financing needs would be
significantly reduced over the next three years. Moreover, the
resolution of the short term liquidity threat facing CIT will
reduce uncertainty surrounding the Company and should allow it
to reinforce its leadership position in its core small business
and middle-market financing franchises.
A strong capital position and liquidity profile should afford
CIT the time and resources required to execute on its broad
business restructuring strategy, including refinement of its
business model, liquidation or sale of select businesses or
portfolios, efficiency enhancements and long term bank-centric
funding strategy. CIT will continue to focus on providing
financing solutions to small and medium size enterprises, a
market segment that remains relatively underserved by both large
national banks and smaller regional and local banks. We believe
that the opportunities in this segment will be even more
compelling in the future as many independent financing companies
have not been able to survive the current economic downturn and
few banks have the focused sales, underwriting and operational
know-how required to serve this niche market.
The Company continues to have regular discussions with its
regulators and expects to emerge from the restructuring with the
bank holding company as a source of strength for CIT Bank. Our
favored, and we believe most likely, scenario is to transfer our
most bank-like business lending operations, or platforms, to CIT
Bank and to have substantially all future originations occur in
the bank. Corporate finance, trade finance, vendor finance and
small business lending are the business platforms most suitable
to operate in CIT Bank. If these platforms are transferred, the
legacy portfolios will remain at their current non-bank
subsidiaries and will be managed to maximize returns and we
intend to use cash generated from interest and principal to
reduce holding company indebtedness. Non-transferred businesses
will be evaluated with a view to maximizing long term value.
Business originations at non-bank subsidiaries will likely
remain curtailed. In the long term, the Company plans to
diversify its funding base at CIT Bank by adding commercial and
retail deposits through organic growth and potential strategic
transactions.
9
If the Company is unsuccessful in obtaining approval to transfer
business platforms into CIT Bank, we would plan to continue to
constrain new business volumes and pursue alternative paths to
maximize franchise value, including the potential sale or joint
venture of businesses and possibly the bank itself and/or
portfolio liquidations. These actions would likely be
accompanied by a further reduction in business overhead in order
to maintain profitability.
At the completion of the restructuring efforts, the Company
believes it will be a more streamlined commercial lender focused
on serving small and medium-sized enterprises. Subject to
regulatory approvals, most of its core platforms would be
integrated into CIT Bank, providing an opportunity to access
cost-efficient funding through deposits in the short term and
expanded deposits (both commercial and retail) and capital
markets in the long term. CIT’s streamlined business model
combined with stable and competitive funding would position it
to seek a return to profitability. Finally, CIT expects the
value of the CIT brand to grow again as it continues to provide
a unique combination of financial, intellectual and relationship
capital to markets it has served for more than 100 years.
Certain
Regulatory Considerations
The Company’s Written Agreement (as defined below) with the
Federal Reserve Bank of New York requires the prior written
approval of the Federal Reserve Bank of New York for the
incurrence of debt by the Company other than in the ordinary
course of business. The Company has obtained such approval in
connection with the issuance of the New Notes contemplated by
this Offering Memorandum and Disclosure Statement. In addition,
during the implementation of its business restructuring
strategy, the Company expects to continue to comply with the
cease and desist orders issued to CIT Bank by each of the FDIC
and the UDFI on July 16, 2009 in connection with the
diminished liquidity of CIT. Further, the Company has met with
the United States Department of the Treasury and the Federal
Reserve Bank of New York to describe the restructuring
transactions contemplated by this Offering Memorandum and
Disclosure Statement.
Other
Recent Developments
Current
Liquidity
The Company’s corporate cash portfolio (cash readily
available to cover operating demands from across our business
operations and maturing obligations) increased to approximately
$2.3 billion at August 31, 2009, from
$1.2 billion at June 30, 2009, driven by the
$3 billion Senior Credit Facility that closed in July 2009.
In total, the Company had approximately $6.8 billion of
cash and cash equivalents at August 31, 2009 up from
$4.5 billion at June 30, 2009, as proceeds from the
Senior Credit Facility and portfolio collections more than
offset the paydowns of approximately $1.1 billion of
unsecured debt during the two-month period ended August 31,
2009. The August 31, 2009 cash position is comprised
of $2.3 billion of corporate cash available to CIT and its
non-bank operating subsidiaries, and approximately
$4.5 billion of restricted cash, comprised of
$2.6 billion of cash and short-term investments at CIT Bank
and $1.9 billion of cash balances, related to
securitizations and other miscellaneous cash.
The Company has significant maturities of unsecured debt in both
the near term and future years. Estimated unsecured debt funding
needs for the twelve months ending August 31, 2010 total
approximately $7.6 billion. In the four months ended
December 31, 2009, the Company has unsecured debt
maturities of approximately $1.6 billion, including
$0.8 billion of notes maturing in the first week of
November. If these debt maturities were paid, the Company’s
liquidity is expected to fall below $1 billion, which, in
the Company’s experience, is inadequate to conduct normal
operations.
Estimated secured facilities maturities (which are generally
repaid in tandem with underlying receivables maturities) are
$5.3 billion for the twelve months ending August 31,
2010. There were two facilities with approximately
$1.6 billion of availability at June 30, 2009 that
were subject to renewal during the remainder of 2009. If the
facilities are not renewed, the assets already held will remain
outstanding and the obligations will be repaid out of the cash
flows from the assets. During August, one of the facilities with
approximately $1.2 billion of availability expired without
being renewed. A replacement facility is currently being
negotiated.
10
In order to satisfy the Company’s funding needs, the
Company will need to seek to extend debt maturities or sell
assets to generate sufficient cash to retire the debt.
Goldman
TRS Facility
On June 6, 2008, a wholly owned subsidiary of CIT executed
a long-term, committed financing facility with Goldman Sachs
International (“GSI”) that is structured and
documented as a total return swap (“TRS”). The TRS is
secured and is guaranteed by the Company and CIT Financial
(Barbados) Srl. The maximum notional amount of the facility is
$3 billion during the first ten years of the contract, and
thereafter the maximum notional amount declines by
$300 million per year for ten years. The arrangement
obligates the CIT subsidiary to pay GSI an annual facility fee
equal to 2.85% of the maximum notional amount for that year. The
CIT subsidiary has the right to terminate the facility before
maturity; however, if it did so, or if the facility was
terminated by GSI due to a CIT default, including a bankruptcy
of CIT, the governing documents state that the CIT subsidiary
would be required to pay GSI a make whole amount equal to the
discounted present value of the annual facility fee for its
remaining term. The Company and GSI are currently in
negotiations concerning an amendment to this facility but no
amendment has been agreed to.
Tender
Offer for Floating Rate Senior Notes due August 17,
2009
On July 20, 2009 the Company commenced a cash tender offer
for its outstanding Floating Rate Senior Notes due
August 17, 2009 (the “August 17 Notes”) upon the
terms and conditions set forth in its offer dated July 20,
2009. The transaction was completed on August 17, 2009 in
accordance with the terms and conditions of the offer.
Federal
Reserve Bank of New York Written Agreement
On August 12, 2009, the Company entered into a written
agreement (the “Written Agreement”) with the Federal
Reserve Bank of New York. The Written Agreement requires regular
reporting to the Federal Reserve Bank of New York, the
submission of plans related to corporate governance, credit risk
management, capital, liquidity and funds management, the
Company’s business plan for the remainder of 2009 and for
2010, and the review and revision, as appropriate, of the
Company’s consolidated allowances for loan and lease losses
methodology. Prior written approval by the Federal Reserve Bank
of New York is required for payment of dividends and
distributions, incurrence of debt, other than in the ordinary
course of business, and the purchase or redemption of stock. The
Written Agreement requires notifying the Federal Reserve Bank of
New York prior to the appointment of new directors or senior
executive officers, and restrictions on indemnifications and
severance payments.
Pursuant to the Written Agreement, the board of directors of the
Company appointed a special compliance committee to monitor and
coordinate the Company’s compliance with the Written
Agreement. The Company submitted a capital plan and a liquidity
plan, as well as a draft of the recapitalization plan, on
August 27, 2009, and its credit risk management plan on
October 8, 2009 as required by the Written Agreement.
Further, the Company is preparing its corporate governance plan
and its business plan for submission to the Federal Reserve Bank
of New York by October 26, 2009. The Company is continuing
to provide periodic reports to the Federal Reserve Bank of New
York as required by the Written Agreement. The Written Agreement
will not be affected by the consummation of the Offers or of the
Plan of Reorganization.
Deferral
of Junior Subordinated Debt Interest
On August 31, 2009, the Company provided a Notice of
Continuance of Trigger Period (the “Notice”) to the
holders of the Company’s 6.10% Junior Subordinated Notes
due March 15, 2067 (the “Junior Subordinated
Notes”) with respect to the continuance of a Trigger Period
(as defined in the indenture for the Junior Subordinated Notes).
As set forth in the Notice, a Trigger Event (as defined in the
indenture for the Junior Subordinated Notes) occurred requiring
the Company to use commercially reasonable efforts to execute
the Alternative Payment Mechanism (as defined in the indenture
for the Junior Subordinated Notes, the “APM”) to
satisfy the September 15, 2009 interest payment. The
Company was not able to execute the APM and therefore the
Company was required to mandatorily defer interest on the Junior
Subordinated Notes.
11
Accordingly, the Company provided notice of deferral for the
September 15, 2009 interest payment to the holders of the
Junior Subordinated Notes. Subject to the terms of the indenture
for the Junior Subordinated Notes, deferred interest will
continue to accrue and compound, as applicable, until payment is
made.
Business
Operations and Financial Performance
The liquidity constraints that CIT has been operating under,
including events discussed earlier in this Summary, in addition
to a weak economic and credit environment, continue to weigh
heavily on the Company’s financial performance.
Nevertheless, the Company believes that there still exists
significant value in the Company’s commercial franchises.
Despite the recent turmoil, CIT continues to hold market leading
positions in its business segments including being the largest
provider of factoring services, a top 3 aircraft and railcar
lessor and one of a select few global vendor finance companies.
In the third quarter of 2009, the Company anticipates the trade
finance and transportation finance segments to both be
profitable on a stand-alone basis, offset by losses in the
corporate finance segment, and to a lesser extent the vendor
finance unit. The Company will report its complete results for
the quarter ended September 30, 2009 when it files its
Quarterly Report on
Form 10-Q.
Indenture
Amendments
On October 1, 2009, CIT Group Inc. and Delaware Funding
amended each of the eight indentures under which certain of
their respective Original CIT Old Notes and Delaware Funding Old
Notes were issued to provide a guarantee of the principal,
premium, if any, and interest on the Original CIT Old Notes and
Delaware Funding Old Notes issued under each indenture, and
other monetary obligations under the indentures, by all of CIT
Group Inc.’s current domestic wholly owned subsidiaries,
with the exception of Delaware Funding, CIT Bank and other
regulated subsidiaries, special purpose entities and immaterial
subsidiaries. The guarantee of each indenture relates to all
Original CIT Old Notes and Delaware Funding Old Notes issued
under that indenture. The maximum aggregate liability of each
guarantor under each of these guarantees is limited to an
aggregate of $50,000. This guarantee is subordinate to senior
indebtedness as defined in the amended indentures.
On October 16, 2009, CIT Group Inc. amended the indenture
under which the CIT Long Term Old Notes were issued to provide a
guarantee of the principal, premium, if any, and interest on the
CIT Long Term Old Notes issued under this indenture, and other
monetary obligations under the indenture, by all of CIT Group
Inc.’s current domestic wholly owned subsidiaries, with the
exception of Delaware Funding, CIT Bank and other regulated
subsidiaries, special purpose entities and immaterial
subsidiaries. The guarantee of this indenture relates to all of
CIT Long Term Old Notes issued under that indenture. The maximum
aggregate liability of each guarantor under each of these
guarantees is limited to an aggregate of $50,000. This guarantee
is subordinate to senior indebtedness as defined in the amended
indenture.
The maximum aggregate liability under all of the guarantees
described above is $25 million.
Recent
Litigation
On September 23, 2009, holders of unsecured notes issued by
Delaware Funding, a guarantor under the Senior Credit Facility,
filed an action in the United States District Court for the
Southern District of New York on behalf of themselves and other
noteholders, against Delaware Funding, Barclays Bank PLC, as
administrative agent and collateral agent, Barclays Capital,
Inc., as sole lead arranger, sole bookrunner and syndication
agent, and the lenders under the Senior Credit Facility. The
lawsuit alleges, among other things, that Delaware Funding was
insolvent at the time that the secured guarantee was incurred in
connection with the Senior Credit Facility, or was rendered
insolvent thereby, and seeks to annul as a fraudulent conveyance
the secured guarantee. In addition, on September 23, 2009,
a number of holders of unsecured notes issued by Delaware
Funding filed a derivative action in the Court of Chancery of
the State of Delaware, on behalf of Delaware Funding, against
members of the board of managers of Delaware Funding, and naming
Delaware Funding as a nominal defendant. The lawsuit alleges
that members of the board of managers of Delaware Funding
breached
12
their fiduciary duty by approving the secured guarantee incurred
in connection with the Senior Credit Facility and seeks to
recover damages.
NYSE
Approval
On October 14, 2009, the New York Stock Exchange (the
“NYSE”) accepted our application of the financial
viability exception to the NYSE’s shareholder approval
policy in connection with the issuance of the New Preferred
Stock should the Offers be consummated. While the rules of the
NYSE would ordinarily require stockholder approval prior to the
issuance of the New Preferred Stock, the NYSE’s shareholder
approval policy provides an exception in cases where the delay
involved in securing stockholder approval would seriously
jeopardize the financial viability of the enterprise. In
accordance with the NYSE rule providing that exception, on
October 13, 2009, the audit committee of CIT Group
Inc.’s board of directors expressly approved our reliance
on that exception.
Resignation
of Chief Executive Officer
On October 9, 2009, Jeffrey M. Peek, chairman and chief
executive officer of CIT Group Inc., advised the board of
directors that he intends to resign as chairman and chief
executive officer, and as a director, effective
December 31, 2009. The board of directors has retained Egon
Zehnder to lead a search process and is forming a search
committee to oversee the recruitment process and ensure a smooth
leadership transition at the Company.
Treatment
of Series D Preferred Stock in the
Recapitalization
On October 15, 2009, the Company and the United States
Department of the Treasury, as holder of the Series D
Preferred Stock, reached an agreement with respect to the
treatment of the Company’s outstanding Series D
Preferred Stock in the reclassification following the
consummation of the Offers and under the Plan of Reorganization.
Under the terms of the agreement, if the Company consummates the
Offers on the terms described herein and the Company proposes
the Recapitalization thereafter, the United States Department of
the Treasury has agreed to vote to approve the reclassification
of the Series D Preferred Stock into common stock. After
giving effect to the Recapitalization transactions, the United
States Department of the Treasury would hold 5.4% of the equity
and voting power of the Company, regardless of the level of
participation in the Offers. The United States Department of the
Treasury, along with all holders of our outstanding preferred
stock, would receive contingent value rights if the Company
elects to proceed with a restructuring under the Plan of
Reorganization. The United States Department of the Treasury
reserves its rights to object to the terms of any plan of
reorganization, including the Plan of Reorganization.
13
Summary
of the Offers
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Offers |
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On the terms described in this Offering Memorandum and
Disclosure Statement (i) CIT Group Inc. is offering, in
exchange for any and all of the outstanding notes of CIT Group
Inc. listed in the table “CIT Outstanding Notes”
beginning on the inside cover page, each of five series of its
newly issued Series A Notes denominated in the stated
currency of the outstanding notes (except for outstanding notes
denominated in Swiss Francs which will be exchanged for New
Notes denominated in U.S. dollars) and/or New Preferred
Stock, (ii) CIT Group Inc. is offering, in exchange for any
and all of the outstanding notes of CIT Group Inc. listed in the
table “CIT Outstanding Long Term Notes” beginning on
the inside cover page, each of five series of its newly issued
Series A Notes denominated in U.S. dollars and New
Preferred Stock and (iii) Delaware Funding is offering, in
exchange for any and all of the outstanding notes listed in the
table “Delaware Funding Outstanding Notes” beginning
on the inside cover page, each of five series of its newly
issued Series B Notes. Assuming the exchange of 100% of the
Old Notes for the New Notes
and/or the
New Preferred Stock, the New Preferred Stock issued will consist
of approximately 68.3 million shares having an
aggregate liquidation preference of approximately $95.6 billion
and representing approximately 91.1% of the aggregate voting
power of our capital stock generally entitled to vote on matters
presented to our stockholders. If we receive the minimum level
of participation in the Offers required to satisfy the Liquidity
and Leverage Condition, the New Preferred Stock issued will
consist of approximately 45.0 million shares having an
aggregate liquidation preference of approximately
$63.0 billion and representing approximately 87.1% of the
aggregate voting power of our capital stock generally entitled
to vote on matters presented to our stockholders. |
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For purposes of determining the principal amount of New Notes to
be received in exchange for the Swiss Franc and Japanese Yen
denominated Old Notes, an equivalent U.S. dollar principal
amount of each tender of such series of Old Notes will be
determined by multiplying the principal amount of such tender by
the weekly average of the applicable currency exchange rate in
the most recent Federal Reserve Statistical Release H.10
which has become available prior to the Original Expiration
Date, Long Term Notes Early Acceptance Date or Long Term
Expiration Date, as applicable. Such equivalent U.S. dollar
principal amount will be used in all cases when determining the
consideration to be received pursuant to the Offers per 1,000
notional principal amount of Old Notes tendered. |
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Your election to tender your Old Notes into the Offers will
constitute a vote to accept the Plan of Reorganization. If you
choose not to tender your Old Notes into the Offers, or if you
withdraw Old Notes previously tendered, you may vote separately
to accept or reject the Plan of Reorganization on the Ballot (as
defined below). |
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None of CIT or any of its subsidiaries or Delaware Funding,
their respective boards of directors, the voting agent, the
exchange agent, the information agent, the Swiss tender agent,
the financial advisors or any of their respective affiliates
makes any recommendation as to whether holders of Old Notes
should exchange Old Notes for New Notes
and/or
New Preferred Stock in the Offers and the Plan of
Reorganization. |
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Consideration |
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If you tender your Old Notes and we consummate the Offers, you
will receive the consideration set forth in the table beginning
on the inside cover page of this Offering Memorandum and
Disclosure Statement. The principal amount of New Notes offered
in exchange for Old Notes as reflected in the table on the
inside cover page of this Offering Memorandum and Disclosure
Statement will consist of 10% of New Notes due in 2013, 15% of
New Notes due 2014, 15% of New Notes due 2015, 25% of New Notes
due 2016 and 35% of New Notes due 2017. Upon consummation of the
Offers, tendering holders of senior unsecured CIT Old Notes
maturing: in 2009 will receive Series A Notes in an
aggregate principal amount equal to 90% of the outstanding
principal amount of CIT Old Notes and 0.35108 shares of New
Preferred Stock; in 2010 will receive Series A Notes in an
aggregate principal amount equal to 85% of the outstanding
principal amount of CIT Old Notes and 1.05323 shares of New
Preferred Stock; in 2011 and 2012 will receive Series A
Notes in an aggregate principal amount equal to 80% of the
outstanding principal amount of CIT Old Notes and
1.75539 shares of New Preferred Stock; after 2012 will
receive Series A Notes in an aggregate principal amount
equal to 70% of the outstanding principal amount of CIT Old
Notes and 2.80862 shares of New Preferred Stock. Upon
consummation of the Offers, tendering holders of subordinated
CIT Old Notes maturing in 2018 will receive 7.54816 shares of
New Preferred Stock; and in 2067 will receive
1.75539 shares of New Preferred Stock. In addition, upon
consummation of the Offers, tendering holders of Delaware
Funding Old Notes will receive $1,000 of Series B Notes for
each $1,000 principal amount of Delaware Funding Old Notes
tendered and no shares of New Preferred Stock. |
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Accrued and Unpaid Interest on Old Notes Accepted in
the Offers |
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Holders whose Old Notes are accepted in the Offers will receive
a cash payment (paid in the currency of such Old Notes) equal to
the accrued and unpaid interest in respect of such Old Notes
from the most recent interest payment date to, but not
including, the Settlement Date. Holders who do not exchange will
continue to be paid interest according to the terms of their
securities. |
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Original Expiration Date |
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The October 1 Offers will expire at 11:59 p.m., New
York City time, on October 29, 2009, unless extended by us
with respect to any or all series of Original CIT Old Notes and
Delaware Funding Old Notes. We, in our absolute discretion, may
extend the Original Expiration Date for the October 1
Offers for any purpose, including in order to permit the
satisfaction or waiver, to the extent waivable, of any or all
conditions to the October 1 Offers. |
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Long Term Expiration Date |
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The Long Term CIT Offers will expire at 11:59 p.m., New
York City time, on November 13, 2009, unless extended by us
with respect to any or all series of CIT Long Term Old Notes.
We, in our absolute discretion, may extend the Long Term
Expiration Date for the Long Term CIT Offers for any purpose,
including in order to permit the satisfaction or waiver, to the
extent waivable, of any or all conditions to the Long Term
Offers. |
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Long Term Notes Early Acceptance Date |
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Holder may tender CIT Long Term Old Notes on or prior to
11:59 p.m., New York City time on October 29, 2009,
for early acceptance. No additional consideration will be
provided to holders of CIT Long Term Old Notes who tender by the
Long Term Notes Early Acceptance Date. |
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Settlement Date |
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The “Settlement Date” (i) of the October 1
Offers will be as soon as practicable following the Original
Expiration Date and (ii) of the Long Term CIT Offers will
be as soon as practicable following either the Long Term Notes
Early Acceptance Date or the Long Term Expiration Date, as
applicable. |
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Withdrawal of Tenders |
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You may withdraw the tender of your Old Notes at any time prior
to the Expiration Date by submitting a notice of withdrawal to
the voting and exchange agent using The Depository Trust
Company’s (“DTC”) ATOP (as defined below)
procedures and/or upon compliance with the other procedures
described herein. Your election to tender your Old Notes into
the Offers will also constitute a vote to accept the Plan of
Reorganization, and you may only change that vote by
withdrawing, to the extent permitted, the Old Notes you have
tendered. |
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Conditions to the Offers |
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Consummation of the Offers is subject to a number of conditions,
including the satisfaction of the Liquidity and Leverage
Condition, which requires that a sufficient number of Old Notes
are tendered into the exchange and certain other debt
instruments have been successfully renegotiated so that, after
giving effect to the Offers and such renegotiations, the face
amount of the Company’s total debt would be reduced by at
least $5.7 billion (excluding any CIT Long Term Old Notes
tendered) and its remaining unsecured debt maturities (excluding
foreign vendor facilities) would not exceed $500 million in
2009, $2.5 billion during the period from 2009 to 2010,
$4.5 billion during the period from 2009 to 2011 and
$6.0 billion during the period from 2009 to 2012, in each
case on a cumulative basis. In addition, consummation of each of
the Delaware Funding Offers and the Long Term CIT Offers is
subject to the consummation of the Original CIT Offers. The
Liquidity and Leverage Condition cannot be waived. Consummation
of the Offers is subject to certain other conditions described
under “Description of the Offers — Conditions to
the Offers.” |
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Procedures for Tendering |
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If you wish to participate in the Offers and your Old Notes are
held by a custodial entity, such as a bank, broker, dealer,
trust company or other nominee, you must instruct that custodial
entity to tender your Old Notes on your behalf pursuant to the
procedures of that custodial entity. If your Old Notes are
registered in your name, you |
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must complete, sign and date the accompanying Letter of
Transmittal, or a facsimile of the Letter of Transmittal,
according to the instructions contained in this Offering
Memorandum and Disclosure Statement and the Letter of
Transmittal. See “Description of the Offers —
Procedures for Tendering Old Notes.” |
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Consequences of Failure to Tender |
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Claims with respect to any Old Notes not tendered in the Offers
will be effectively subordinated to claims with respect to any
New Notes (to the extent of the value of the collateral securing
the New Notes). For a description of the consequences of failing
to exchange your Old Notes in this case, see “Risk
Factors — Risks to Holders of Non-Tendered Old
Notes.” |
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If the conditions to the Offers, including the Liquidity and
Leverage Condition, are not satisfied or waived, to the extent
waivable, by the Original Expiration Date or the Long Term
Expiration Date, the Company may pursue the prepackaged Plan of
Reorganization if approved by holders of claims. Even if such
conditions to the Offers are satisfied, the Company may seek to
pursue the prepackaged Plan of Reorganization. Although the
Company would seek authority from the Bankruptcy Court on the
petition date to allow CIT to continue operating in the ordinary
course of business there can be no assurance that the bankruptcy
case would not disrupt operations or cause the Company to lose
revenue. No decision has been made by the board of directors to
file petitions for relief under Chapter 11 of the
Bankruptcy Code. |
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Taxation |
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For a summary of the material U.S. federal income tax
consequences of the Offers, see “Certain U.S. Federal
Income Tax Considerations.” |
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Exchange Agent and Voting Agent |
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Financial Balloting Group LLC (“FBG”) is the exchange
agent for the Offers and the voting agent (the “Voting
Agent”) for the Plan of Reorganization. The addresses and
telephone numbers of FBG are listed on the back cover page of
this Offering Memorandum and Disclosure Statement. |
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Information Agent |
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D.F. King & Co., Inc. is the information agent for retail
investors for the Offers and the Plan of Reorganization. The
address and telephone numbers of the information agent are
listed on the back cover page of this Offering Memorandum and
Disclosure Statement. |
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Swiss Note Tender Agent |
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UBS AG is the Swiss note tender agent (the “Swiss Note
Tender Agent”). |
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London Stock Exchange’s Gilt Edged and Fixed
Interest Market |
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Following consummation of the Offers, we intend to delist the
Old Notes listed on the London Stock Exchange’s Gilt Edged
and Fixed Interest Market. |
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Summary
of the Plan of Reorganization
If we for any reason determine that it would be more
advantageous or expeditious, we may seek to effectuate the
restructuring transactions by filing a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code, along with
Delaware Funding, in the United States Bankruptcy Court for the
Southern District of New York (the “Bankruptcy Court”)
and seek Bankruptcy Court approval of the restructuring
transactions through confirmation of the Plan of Reorganization.
To facilitate court approval of the in-court alternative, we are
soliciting acceptances of the Plan of Reorganization, a copy of
which is attached hereto as Appendix C. In the event a
Chapter 11 case is commenced and we determine that it is
appropriate, we would use the acceptances of the Plan of
Reorganization secured through the solicitation of acceptances
to obtain Bankruptcy Court approval of the Plan of
Reorganization and effectuate the restructuring transactions.
The Plan of Reorganization, if approved, would result in
noteholders and other claimants and interest holders receiving
the treatment set forth below and in the Plan of Reorganization,
which treatment differs in certain material respects from the
consideration provided by the Offers. For purposes of this
Summary of the Plan of Reorganization, all capitalized terms
have the meaning described in the Plan of Reorganization which
is Appendix C to this Offering Memorandum and Disclosure
Statement.
WE HAVE NOT MADE ANY DECISION AT THIS TIME TO COMMENCE ANY
CHAPTER 11 CASES AND RESERVE ALL OF OUR RIGHTS TO PURSUE
ANY AND ALL OF OUR STRATEGIC ALTERNATIVES IN THE EVENT THE
OUT-OF-COURT
ALTERNATIVE IS NOT CONSUMMATED.
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Overview |
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The Plan of Reorganization provides for, among other things, the
Exchanges, pursuant to which Each Electing Long-Dated Senior
Unsecured Note Claims Holder (which Long-Dated Senior Unsecured
Notes are equivalent to the CIT Long Term Old Notes), holders of
Senior Unsecured Note Claims, including holders of most of the
Old Notes, holders of Senior Unsecured Term Loan Claims and
holders of Senior Unsecured Credit Agreement Claims would
receive their pro rata share of
(i) Series A Notes (or indebtedness under credit
facilities, as applicable) in the amount of 70% of such
holders’ Allowed Claims and (ii) 30% of such Allowed
Claims allocated to New Common Interests. If the Class of
Canadian Senior Unsecured Notes votes to accept the Plan of
Reorganization, holders of Canadian Senior Unsecured Note Claims
would receive their pro rata share of
Series B Notes in the amount of 100% of the principal
amount of such holders’ Allowed Canadian Senior Unsecured
Note Claims. If the Class of Canadian Senior Unsecured Notes
does not vote to accept the Plan, holders of Canadian Senior
Unsecured Notes would receive their pro rata share
of (i) Series A Notes in the amount of 70% of such
holders’ Allowed Canadian Senior Unsecured Note Claims and
(ii) New Common Interests allocated to 30% of such Allowed
Canadian Senior Unsecured Note Claims, each on account of
CIT’s guarantee of the Canadian Senior Unsecured Notes.
Holders of Senior Subordinated Note Claims and Junior
Subordinated Note Claims would receive specified percentages of
New Common Interests, provided that such Classes
vote to accept the Plan of Reorganization and Contingent Value
Rights in full satisfaction and settlement of such Claims and
debt facilities. The Old Preferred Interests, the Old Common
Interests and the Other Equity Interests (if any) would be
cancelled, however if all senior Impaired Classes have voted to
accept the Plan of Reorganization, each holder of Old Preferred
Interests that has not objected to the Plan shall receive
Contingent Value Rights. If sufficient |
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holders of Canadian Senior Unsecured Note Claims vote to accept
the Plan of Reorganization, Old Delaware Funding Interests will
be Reinstated. |
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Through the Plan of Reorganization, all Claims against and
Interests in CIT and Delaware Funding that would exist on the
date when we would file our voluntary petitions for
reorganization relief under Chapter 11 of the Bankruptcy
Code would be divided into classes, exclusive of certain claims,
including DIP Facility Claims (if any), Administrative Claims,
and Priority Tax Claims, which would not be required to be
classified. |
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Please note the estimated recoveries for Class 7, 8, 9, 10
and 11 Claims do not necessarily reflect the market value of the
Series A Notes and Series B Notes. |
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Unimpaired Classes of Claims Not Entitled to Vote on the Plan
of Reorganization |
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Class 1 Other Priority Claims, Class 2 Other Secured
Claims, Class 3 Other Unsecured Debt Claims and Guarantee
Claims, Class 4 Intercompany Claims, Class 5 General
Unsecured Claims and Class 17 Old Delaware Funding
Interests would be Unimpaired by the Plan of Reorganization.
Holders of these Claims would be deemed to accept the Plan of
Reorganization, would not be entitled to vote on the Plan of
Reorganization and all of their legal, equitable and contractual
rights would be fully reinstated and retained under the Plan of
Reorganization; provided, however, that
Class 17 Old Delaware Funding Interest will be reinstated
only if Class 7 votes to accept the Plan of Reorganization. |
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Class 6 (JPM L/C Facility Claims)
Estimated Amount: approximately $261 million |
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Impaired — If Class 6 votes to accept the
Plan of Reorganization, (i) on, or as soon as reasonably
practicable after, the Effective Date, Reorganized CIT shall
provide JPM with cash collateral on account of all outstanding
undrawn letters of credit issued under the JPM L/C Facility in
the percentages specified in the JPM L/C Facility Agreement
generally and no less than 103% of the face amount of such
outstanding undrawn letters of credit and JPM may apply such
cash collateral to any subsequently arising reimbursement
obligations under the JPM L/C Facility Agreement (the “Cash
Collateralization”) and (ii) in exchange for the Cash
Collateralization, JPM shall not pursue any subsidiary or
affiliate of CIT Group Inc. or any other entity that JPM
contends may be co-liable with CIT Group Inc. under the JPM L/C
Facility Agreement for any remedies, claims or causes of action
arising out of or relating to the JPM L/C Facility or the JPM
L/C Facility Agreement. Upon the Effective Date, each non-Debtor
subsidiary and affiliate of CIT Group Inc. that was or is a
co-applicant or account party on a letter of credit issued under
the JPM L/C Facility shall execute a release and waiver of any
and all claims against JPM
and/or any
other lenders under the JPM L/C Facility in respect of the JPM
L/C Facility
and/or the
JPM L/C Facility Agreement arising prior to the Effective Date. |
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If Class 6 does not vote to accept the Plan of
Reorganization and the Plan of Reorganization is nonetheless
confirmed, (i) Reorganized CIT shall satisfy any Claims for
reimbursement under the JPM L/C Facility that arose during the
Chapter 11 Cases in full on, or as soon as reasonably
practicable after, the Effective Date and (ii) following
the Effective Date, Reorganized CIT shall pay all such Claims
for reimbursement under the JPM L/C Facility in the ordinary
course of business and upon the terms set forth in the JPM L/C
Facility Agreement. In exchange for Reorganized CIT maintaining
the reimbursement obligations in the immediately preceding
(i) and (ii), JPM shall not pursue any subsidiary or
affiliate of CIT Group Inc. or any other entity that JPM
contends may be co-liable with CIT Group Inc. under the JPM L/C
Facility Agreement for any remedies, claims or causes of action
arising out of or relating to the JPM L/C Facility or the JPM
L/C Facility Agreement. |
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Estimated Recovery: 100% |
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Class 7 (Canadian Senior Unsecured Note Claims)
Estimated Amount: $2,188 million |
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Impaired — Class 7 would be impaired by
the Plan of Reorganization. Each holder of an allowed
Class 7 Canadian Senior Unsecured Note Claim would be
entitled to vote on the Plan of Reorganization. |
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If Class 7 votes to accept the Plan of Reorganization, on,
or as soon as reasonably practicable after, the Effective Date,
each holder of an Allowed Canadian Senior Unsecured Note Claim
shall receive its pro rata share of Series B Notes
equal to a distribution in the amount of one hundred percent
(100%) of the principal amount such holder’s Allowed
Canadian Senior Unsecured Note Claim. |
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If Class 7 does not vote to accept the Plan of
Reorganization and the Plan of Reorganization is nonetheless
confirmed, on, or as soon as reasonably practicable after, the
Effective Date, each holder of an Allowed Canadian Senior
Unsecured Note Claim shall receive its pro rata
share of (i) Series A Notes, equal to a distribution
in the amount of 70% of such holder’s Allowed Canadian
Senior Unsecured Note Claim (which Allowed Claim constitutes
principal plus accrued but unpaid prepetition interest) and
(ii) (a) 6.2% of New Common Interests if Class 12 and
Class 13 vote to accept the Plan, (b) 6.3% of New
Common Interests if Class 12 votes to accept the Plan and
Class 13 does not vote to accept the Plan, (c) 6.8% of
New Common Interests if Class 12 does not vote to accept
the Plan and if Class 13 votes to accept the Plan, and
(d) 6.8% of New Common Interests if neither Class 12
nor Class 13 vote to accept the Plan, allocated to 30% of
such holder’s Allowed Canadian Senior Unsecured Note Claim
(which Allowed Claim constitute principal plus accrued but
unpaid prepetition interest), each on account of the Canadian
Senior Unsecured Notes Guarantee Claim against CIT Group Inc. |
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If Class 7 Canadian Senior Unsecured Note Claims do not
vote to accept the Plan of Reorganization and the Plan of
Reorganization is nonetheless confirmed, the holders of Allowed
Canadian Senior |
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Unsecured Note Claims shall retain their Canadian Senior
Unsecured Notes and Allowed Canadian Senior Unsecured Note
Claims against Delaware Funding, provided, however that:
(i) such holders may not, in the aggregate, recover more
than the Allowed amount of their Canadian Senior Unsecured Note
Claim on account of the combined claims against CIT Group Inc.
and Delaware Funding; and (ii) the Debtors reserve the
right to, among other things, (w) not amend the Senior
Credit Facility to remove Delaware Funding as a guarantor of the
Senior Credit Facility, (x) estimate the holders’
claims against Delaware Funding after receiving the distribution
of Series A Notes and New Common Interests, (y) extend
the maturity of those certain Intercompany Notes in accordance
with the terms thereof or (z) merge Delaware Funding into
CIT Group Inc. in accordance with the terms of the Canadian
Senior Unsecured Notes Indentures. |
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Estimated Recovery: 100% |
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Class 8 (Long-Dated Senior Unsecured Note Claims)
Estimated Amount: $1,189 million |
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Impaired/Unimpaired — The legal, equitable, and
contractual rights of holders of Long-Dated Senior Unsecured
Note Claims are Impaired by the Plan of Reorganization;
provided that such holder(s) votes to accept the
Plan of Reorganization. The legal, equitable, and contractual
rights of holders of Long-Dated Senior Unsecured Note Claims are
Unimpaired by the Plan of Reorganization; provided
that such holder(s) do not vote to accept the Plan of
Reorganization. |
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Each Electing Long-Dated Senior Unsecured Note Claims Holder
shall be included in Class 8A and, on, or as soon as reasonably
practicable after, the Effective Date, such holder of an Allowed
Long-Dated Senior Unsecured Note Claim shall receive its
pro rata share of (i) Series A Notes,
equal to a distribution in the amount of 70% of such
holder’s Allowed Long-Dated Senior Unsecured Note Claim
(which Allowed Claim constitutes principal plus accrued but
unpaid prepetition interest) and (ii) New Common Interests
allocated to 30% of such holder’s Allowed Long-Dated Senior
Unsecured Note Claim (which Allowed Claim constitutes principal
plus accrued but unpaid prepetition interest) as follows:
(A) if Class 7 Canadian Senior Unsecured Note Claims
votes to accept the Plan and (1) if Class 12 and
Class 13 vote to accept the Plan, 3.6% of New Common
Interests, (2) if Class 12 votes to accept the Plan
and Class 13 does not vote to accept the Plan, 3.6% of New
Common Interests, (3) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
3.9% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 3.9% of
New Common Interests or (B) if Class 7 Canadian Senior
Unsecured Note Claims does not vote to accept the Plan and
(1) if Class 12 and Class 13 vote to accept the
Plan, 3.4% of New Common Interests, (2) if Class 12
votes to accept the Plan and Class 13 does not vote to
accept the Plan, 3.4% of New Common Interests, (3) if
Class 12 does not vote to accept the Plan and if
Class 13 votes to accept the Plan, 3.7% of New Common
Interests, or (4) if |
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neither Class 12 nor Class 13 vote to accept the Plan,
3.7% of New Common Interests. |
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Each Non Electing Long-Dated Senior Unsecured Note Claim Holder
shall be included in Class 8B and the legal, equitable and
contractual rights of the holders of the Non Electing Long-Dated
Senior Unsecured Note Claims are Unimpaired by the Plan of
Reorganization and such holders shall have their Claims
Reinstated. |
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Only the votes of Early Electing Long-Dated Senior Unsecured
Note Claims Holders shall be counted with respect to acceptance
or rejection of the Plan of Reorganization. |
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Only the votes of Electing Long-Dated Senior Unsecured Note
Claims Holders shall receive the treatment specified in
Article III.G.8.b.A of the Plan of Reorganization. |
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Estimated Recovery: 94.4%, assuming (i) acceptance of the
Plan of Reorganization by Class 7 Canadian Senior Unsecured
Note Claims, Class 12 Senior Subordinated Note Claims and
Class 13 Junior Subordinated Note Claims and (ii) New
Common Interests valued at mid-point of Common Equity Value (as
defined herein) range. |
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Class 9 (Senior Unsecured Note Claims) Estimated
Amount: $25,504 million |
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Impaired — Class 9 would be impaired by
the Plan of Reorganization. Each holder of an allowed
Class 9 Senior Unsecured Note Claim (which Class of Claims
includes Claims on account of the 2015 Hybrid Convertible/Equity
Notes) would be entitled to vote on the Plan of Reorganization. |
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On, or as soon as reasonably practicable after, the Effective
Date, each holder of an Allowed Senior Unsecured Note Claim
shall receive its pro rata share of
(i) Series A Notes, equal to a distribution in the
amount of 70% of such holder’s Allowed Senior Unsecured
Note Claim and (ii) (A) if Class 7 Canadian Senior Unsecured
Note Claims votes to accept the Plan and (1) if Class 12 and
Class 13 vote to accept the Plan, 77.7% of New Common Interests,
(2) if Class 12 votes to accept the Plan and Class 13 does not
vote to accept the Plan, 78.3% of New Common Interests, (3) if
Class 12 does not vote to accept the Plan and if Class 13 votes
to accept the Plan, 84.7% of New Common Interests, or (4) if
neither Class 12 nor Class 13 vote to accept the Plan, 84.7% of
New Common Interests or (B) if Class 7 Canadian Senior Unsecured
Note Claims does not vote to accept the Plan and (1) if Class 12
and Class 13 vote to accept the Plan, 72.5% of New Common
Interests, (2) if Class 12 votes to accept the Plan and Class 13
does not vote to accept the Plan, 73.0% of New Common Interests,
(3) if Class 12 does not vote to accept the Plan and if Class 13
votes to accept the Plan, 79.0% of New Common Interests, or (4)
if neither Class 12 nor Class 13 vote to accept the Plan, 79.0%
of New Common Interests. |
|
|
|
Estimated Recovery: 94.4%, assuming (i) acceptance of the
Plan of Reorganization by Class 7 Canadian Senior Unsecured Note
Claims, Class 12 Senior Subordinated Note Claims and
Class 13 |
22
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Junior Subordinated Note Claims and (ii) New Common
Interests valued at mid-point of Common Equity Value (as defined
herein) range. |
|
Class 10 (Senior Unsecured Term Loan Claims)
Estimated Amount: $321 million |
|
Impaired — Class 10 would be impaired by
the Plan of Reorganization. Each holder of an allowed
Class 10 Senior Unsecured Term Loan Claim would be entitled
to vote on the Plan of Reorganization. Claims in Classes 10
and 11 are pari passu and shall be combined for
voting purposes. The Filing Entities reserve the right to seek
Bankruptcy Court approval of a merger of Class 10 and
Class 11. |
|
|
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If Class 10 votes to accept the Plan of Reorganization, on,
or as soon as reasonably practicable after, the Effective Date,
each holder of an Allowed Senior Unsecured Term Loan Claim shall
receive its pro rata share of
(i) indebtedness under credit facilities of Reorganized CIT
on substantially the same terms as the Series A Notes, in lieu
of a distribution of the Series A Notes, equal to a
distribution in the amount of 70% of such holder’s Allowed
Senior Unsecured Term Loan Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest) and (ii) New Common Interests allocated to 30% of
such holder’s Allowed Senior Unsecured Term Loan Claim
(which Allowed Claim constitutes principal plus accrued but
unpaid prepetition interest) as follows: (A) if
Class 7 Canadian Senior Unsecured Note Claims votes to
accept the Plan and (1) if Class 12 and Class 13
vote to accept the Plan, 1.0% of New Common Interests,
(2) if Class 12 votes to accept the Plan and
Class 13 does not vote to accept the Plan, 1.0% of New
Common Interests, (3) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
1.1% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 1.1% of
New Common Interests or (B) if Class 7 Canadian Senior
Unsecured Note Claims does not vote to accept the Plan and
(1) if Class 12 and Class 13 vote to accept the
Plan, 0.9% of New Common Interests, (2) if Class 12 votes
to accept the Plan and Class 13 does not vote to accept the
Plan, 0.9% of New Common Interests, (3) if Class 12
does not vote to accept the Plan and if Class 13 votes to
accept the Plan, 1.0% of New Common Interests, or (4) if
neither Class 12 nor Class 13 vote to accept the Plan,
1.0% of New Common Interests. |
|
|
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If Class 10 does not vote to accept the Plan of
Reorganization and the Plan of Reorganization is nonetheless
confirmed, on, or as soon as reasonably practicable after, the
Effective Date, each holder of an Allowed Senior Unsecured Term
Loan Claim shall receive its pro rata share of
(i) Series A Notes, equal to a distribution in the
amount of 70% of such holder’s Allowed Senior Unsecured
Term Loan Claim and (ii) New Common Interests allocated to
30% of such holder’s Allowed Senior Unsecured Term Loan
Claim (which Allowed Claim constitutes principal plus accrued
but unpaid prepetition interest) as follows: (A) if
Class 7 Canadian Senior Unsecured Note Claims votes to
accept the Plan and (1) if Class 12 and Class 13
vote to accept the Plan, 1.0% of New Common Interests, |
23
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(2) if Class 12 votes to accept the Plan and
Class 13 does not vote to accept the Plan, 1.0% of New
Common Interests, (3) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
1.1% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 1.1% of
New Common Interests or (B) if Class 7 Canadian Senior
Unsecured Note Claims does not vote to accept the Plan and
(1) if Class 12 and Class 13 vote to accept the
Plan, 0.9% of New Common Interests, (2) if Class 12
votes to accept the Plan and Class 13 does not vote to
accept the Plan, 0.9% of New Common Interests, (3) if
Class 12 does not vote to accept the Plan and if
Class 13 votes to accept the Plan, 1.0% of New Common
Interests, or (4) if neither Class 12 nor
Class 13 vote to accept the Plan, 1.0% of New Common
Interests. |
|
|
|
Estimated Recovery: 94.4%, assuming (i) acceptance of the
Plan of Reorganization by Class 7 Canadian Senior Unsecured
Note Claims, Class 12 Senior Subordinated Note Claims and
Class 13 Junior Subordinated Note Claims and (ii) New
Common Interests valued at mid-point of Common Equity Value (as
defined herein) range. |
|
Class 11 (Senior Unsecured Credit Agreement Claims)
Estimated Amount: $3,101 million |
|
Impaired — Class 11 would be impaired by
the Plan of Reorganization. Each holder of an allowed
Class 11 Senior Unsecured Credit Agreement Claim would be
entitled to vote on the Plan of Reorganization. Claims in
Classes 10 and 11 are pari passu and shall be
combined for voting purposes. The Filing Entities reserve the
right to seek Bankruptcy Court approval of a merger of
Class 10 and Class 11. |
|
|
|
If Class 11 votes to accept the Plan of Reorganization, on,
or as soon as reasonably practicable after, the Effective Date,
each holder of an Allowed Senior Unsecured Credit Agreement
Claim shall receive its pro rata share of
(a) indebtedness under credit facilities of Reorganized CIT
on substantially the same terms as the Series A Notes, in
lieu of a distribution of the Series A Notes equal to a
distribution in the amount of 70% of such holder’s Allowed
Senior Unsecured Credit Agreement Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest) and (b) New Common Interests allocated to 30% of
such holder’s Allowed Senior Unsecured Credit Agreement
Claim (which Allowed Claim constitutes principal plus accrued
but unpaid prepetition interest) as follows: (A) if
Class 7 Canadian Senior Unsecured Note Claims votes to
accept the Plan and (1) if Class 12 and Class 13
vote to accept the Plan, 9.4% of New Common Interests,
(2) if Class 12 votes to accept the Plan and
Class 13 does not vote to accept the Plan, 9.5% of New
Common Interests, (3) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
10.3% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 10.3%
of New Common Interests or (B) if Class 7 Canadian
Senior Unsecured Note Claims does not vote to accept the Plan
and (1) if Class 12 and Class 13 vote to accept
the Plan, 8.8% of New Common Interests, (2) if
Class 12 votes to accept the Plan and Class 13 does
not vote to accept the |
24
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|
Plan, 8.9% of New Common Interests, (3) if Class 12
does not vote to accept the Plan and if Class 13 votes to
accept the Plan, 9.6% of New Common Interests, or (4) if
neither Class 12 nor Class 13 vote to accept the Plan,
9.6% of New Common Interests. |
|
|
|
If Class 11 does not vote to accept the Plan of
Reorganization and the Plan of Reorganization is nonetheless
confirmed, on, or as soon as reasonably practicable after, the
Effective Date, each holder of an Allowed Senior Unsecured
Credit Agreement Claim shall receive its pro rata
share of (i) Series A Notes, equal to a distribution
in the amount of 70% of such holder’s Allowed Senior
Unsecured Credit Agreement Claim and (ii) New Common
Interests allocated to 30% of such holder’s Allowed Senior
Unsecured Credit Agreement Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest) as follows: (A) if Class 7 Canadian Senior
Unsecured Note Claims votes to accept the Plan and (1) if
Class 12 and Class 13 vote to accept the Plan, 9.4% of
New Common Interests, (2) if Class 12 votes to accept
the Plan and Class 13 does not vote to accept the Plan,
9.5% of New Common Interests, (3) if Class 12 does not
vote to accept the Plan and if Class 13 votes to accept the
Plan, 10.3% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 10.3%
of New Common Interests or (B) if Class 7 Canadian
Senior Unsecured Note Claims does not vote to accept the Plan
and (1) if Class 12 and Class 13 vote to accept
the Plan, 8.8% of New Common Interests, (2) if
Class 12 votes to accept the Plan and Class 13 does
not vote to accept the Plan, 8.9% of New Common Interests,
(3) if Class 12 does not vote to accept the Plan and
if Class 13 votes to accept the Plan, 9.6% of New Common
Interests, or (4) if neither Class 12 nor
Class 13 vote to accept the Plan, 9.6% of New Common
Interests. |
|
|
|
Estimated Recovery: 94.4%, assuming (i) acceptance of the
Plan of Reorganization by Class 7 Canadian Senior Unsecured
Note Claims, Class 12 Senior Subordinated Note Claims and
Class 13 Junior Subordinated Note Claims and (ii) New
Common Interests valued at mid-point of Common Equity Value (as
defined herein) range. |
|
Class 12 (Senior Subordinated Note Claims)
Estimated Amount: $1,200 million |
|
Impaired — Class 12 would be impaired by
the Plan of Reorganization. Each holder of an allowed
Class 12 Senior Subordinated Note Claim would be entitled
to vote on the Plan of Reorganization. |
|
|
|
On, or as soon as reasonably practicable after, the Effective
Date, each holder of an Allowed Senior Subordinated Note Claim
shall receive its pro rata share of (i)
(A) 7.5% of New Common Interests if Class 7 and
Class 13 vote to accept the Plan of Reorganization,
(B) 7.6% of New Common Interests if Class 7 votes to
accept the Plan of Reorganization and Class 13 does not
vote to accept the Plan of Reorganization, (C) 7.5% of New
Common Interests of Class 7 does not vote to accept the
Plan of Reorganization and Class 13 votes to accept the
Plan of Reorganization, and (D) 7.6% of New Common
Interests if Class 7 and Class 13 do not vote to |
25
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|
accept the Plan of Reorganization; provided that
Class 12 votes to accept the Plan of Reorganization;
provided further however that in the event
that Class 12 does not vote to accept the Plan of
Reorganization but the Plan of Reorganization is nonetheless
confirmed, no holder of an Allowed Senior Subordinated Note
Claim shall receive any shares of New Common Interests, and
(ii) Contingent Value Rights. The foregoing Class 12
treatment shall not be adjusted in the event Class 13
receives the treatment described in Article III.G.13.c of
the Plan of Reorganization. |
|
|
|
Estimated Recovery: 50%, assuming (i) acceptance of the
Plan of Reorganization by Class 7 Canadian Senior Unsecured
Note Claims, Class 12 Senior Subordinated Note Claims and
Class 13 Junior Subordinated Note Claims and (ii) New
Common Interests valued at mid-point of Common Equity Value (as
defined herein) range. |
|
Class 13 (Junior Subordinated Note Claims)
Estimated Amount: $779 million |
|
Impaired — Class 13 would be impaired by
the Plan of Reorganization. Each holder of an allowed
Class 13 Junior Subordinated Note Claim would be entitled
to vote on the Plan of Reorganization. |
|
|
|
On, or as soon as reasonably practicable after, the Effective
Date, each holder of an Allowed Junior Subordinated Note Claim
shall receive its pro rata share of (a) 0.8%
of New Common Interests if Class 7 and Class 12 vote
to accept the Plan of Reorganization or (b) 0.7% of New
Common Interests if Class 7 does not vote to accept the
Plan of Reorganization and Class 12 votes to accept the
Plan of Reorganization; provided that
Class 12 and 13 vote to accept the Plan of Reorganization;
provided further however that if
Class 12 and Class 13 do not vote to accept the Plan
of Reorganization but the Plan of Reorganization is nonetheless
confirmed, no holder of an Allowed Junior Subordinated Note
Claim shall receive any shares of New Common Interests and
(b) Contingent Value Rights. |
|
|
|
|
|
|
Estimated Recovery: 8.1% assuming (i) acceptance of the
Plan of Reorganization by Class 7 Canadian Senior Unsecured Note
Claims, Class 12 Senior Subordinated Notes Claims and
Class 13 Junior Subordinated Note Claims and (ii) New
Common Interests valued at mid-point of Common Equity Value (as
defined herein) range. |
|
|
|
The Company is in discussions with certain holders of Junior
Subordinated Note Claims, whereby such holders would agree to
execute an agreement to vote their Junior Subordinated Notes in
favor of the Plan of Reorganization in exchange for modifying
Class 13 treatment to increase to 1.5% the percentage of
New Common Interests distributable pro rata to holders of Junior
Subordinated Note Claims (which percentage shall be subject to
adjustment in accordance with the terms of the Plan of
Reorganization) in the event Class 12 and Class 13
accept the Plan of Reorganization. In the event the Company
reaches agreement with such holders, the percentage of New
Common Interests distributable to other holders |
26
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under the Plan of Reorganization will be ratably reduced,
thereby reflecting the increased distribution to holders of
Junior Subordinated Note Claims. The Company anticipates
providing supplemental disclosure prior to the Voting Deadline
setting forth such adjustments to treatment for classes
receiving New Common Interests. |
|
Impaired Classes of Claims Not Entitled to Vote on the Plan
of Reorganization |
|
Each of Class 14 (Subordinated 510(b) Claims),
Class 15 (Old Preferred Interests), Class 16 (Old
Common Interests) and Class 18 (Other Equity Interests (if
any)) would be impaired by the Plan of Reorganization. No holder
of a Class 14, 16 or 18 Claim or Interest will retain any
property or interest in the Debtors under the Plan of
Reorganization. Holders of Class 15 Old Preferred Interests
shall receive Contingent Value Rights. Each holder of a
Class 14, 15, 16 or 18 Claim or Interest would be deemed to
reject the Plan of Reorganization and would not be entitled to
vote on the Plan of Reorganization. |
|
Unimpaired Class of Interests Not Entitled to Vote on the
Plan of Reorganization |
|
Class 17 Old Delaware Funding Interests would be unimpaired
by the Plan of Reorganization. In the event that (i) the
holders of at least two-thirds in amount of the Allowed Canadian
Senior Note Claims actually voting in Class 7 have voted to
accept the Plan of Reorganization and (ii) the holders of
more than one-half in number of the Allowed Canadian Senior Note
Claims actually voting in Class 7 have voted to accept the
Plan of Reorganization, in each case not counting the vote of
any holder designated under section 1126(e) of the
Bankruptcy Code, the Old Delaware Funding Interests shall be
Reinstated. Each holder of a Class 17 Interest would be deemed
to accept the Plan of Reorganization and would not be entitled
to vote on the Plan of Reorganization. |
|
|
|
For a more detailed discussion of treatment under the Plan of
Reorganization, see the section of this Offering Memorandum and
Disclosure Statement entitled “The Plan of
Reorganization— Certain Matters Regarding
Classification and Treatment of Claims and Interests.” |
|
Voting on the Plan of Reorganization |
|
The “Voting Record Date” for purposes of determining
noteholders, claimholders and interest holders that are eligible
to vote on the Plan of Reorganization is the Expiration
Date/Voting Deadline with respect to the Old Notes. To be
counted, an appropriate instruction must be provided to the
Nominee prior to the Voting Deadline (in the case of the Old
Notes). |
|
|
|
Any beneficial holder whose Old Notes are registered or held of
record in the name of his broker, dealer, commercial bank, trust
company or other Nominee and who wishes to vote on the Plan of
Reorganization should provide the appropriate instruction to
such Nominee, as instructed by such nominee. Nominees in turn
must complete Master Ballots and must return all such Master
Ballots to the Voting Agent. |
27
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Any beneficial holders whose Old Notes are certificated must
complete a Ballot and Letter of Transmittal and return such
Ballot and Letter of Transmittal to the Exchange Agent. |
|
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The “Voting Deadline” is 11:59 p.m., New York
City time, on October 29, 2009, unless extended. All Master
Ballots tendered by the Voting Deadline may be utilized by us in
connection with determining acceptances and rejections of the
Plan of Reorganization at any time. Thus, all votes represented
by such Master Ballots shall be deemed continuously effective
until such time. Nominees shall have until 8:00 p.m. (New
York City time) on October 30, 2009 to transmit their Master
Ballots to the Voting Agent provided they provide the contents
of their Master Ballots in an electronic format acceptable to
the Voting Agent. |
|
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Under the Bankruptcy Code, for purposes of determining whether
the requisite acceptances of the Plan of Reorganization have
been received, only holders who vote will be counted. Creditors
who do not follow the instructions provided herein for
indicating a vote on the Plan of Reorganization will not be
counted for purposes of determining whether the Plan of
Reorganization has been accepted by the requisite number and
amount of votes. |
28
Summary
of New Notes
|
|
|
Issuers |
|
CIT Group Inc., as issuer of the Series A Notes.
CIT Group Funding Company of Delaware LLC, as issuer of the
Series B Notes. |
|
Series A Guarantors |
|
All current and future domestic wholly owned subsidiaries of CIT
Group Inc., with the exception of Delaware Funding, CIT Bank and
other regulated subsidiaries, special purpose entities and
immaterial subsidiaries (the “Series A
Guarantors”). See “Collateral —
Series A Guarantors, Series B Guarantors and Foreign
Grantors.” |
|
Series B Guarantors |
|
CIT Group Inc., on an unsecured basis except for the Parent
Pledge, and all of its current and future domestic wholly owned
subsidiaries of CIT Group Inc., with the exception of Delaware
Funding, CIT Bank and other regulated subsidiaries, special
purpose entities and immaterial subsidiaries, on a secured basis
(the “Series B Guarantors”). See
“Collateral — Series A Guarantors,
Series B Guarantors and Foreign Grantors.” |
|
Indenture Trustee |
|
The Bank of New York Mellon, in its capacity as Indenture
Trustee under the Series A indenture (in such capacity, the
“Series A Indenture Trustee”) for the
Series A indenture and as Indenture Trustee under the
Series B indenture (in such capacity, the
“Series B Indenture Trustee”) The Series A
indenture and the Series B indenture are referred to herein
collectively as the “New Notes Indentures.” |
|
Series A Collateral Agent |
|
The Bank of New York Mellon, in its capacity as collateral agent
(the “Series A Collateral Agent”) for the
Series A Indenture Trustee and each of the administrative
agents under each of the Junior Credit Facilities (the
“Junior Administrative Agents”). The Series A
Collateral Agent will be appointed pursuant to the Series A
Collateral Agency Agreement. See “Description of Material
Indebtedness — Junior Credit Facilities.” |
|
Series B Collateral Agent |
|
The Bank of New York Mellon in its capacity as collateral agent
(the “Series B Collateral Agent”) for the Series
B Indenture Trustee. |
|
Issuance and Aggregate Principal Amount |
|
The maximum aggregate principal amount of New Notes that may be
issued in the Offers and the Plan of Reorganization is set forth
below. The aggregate principal amounts shown below include
non-U.S. dollar
denominated New Notes on a U.S. dollar basis. |
|
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|
|
|
|
|
|
|
Offers
|
|
|
Plan of Reorganization (1)
|
|
New Notes
|
|
(in millions)
|
|
|
(in millions)
|
|
|
7.0% Series A Secured Notes due 2013
|
|
$
|
2,002
|
|
|
$
|
1,868
|
|
7.0% Series A Secured Notes due 2014
|
|
|
3,003
|
|
|
|
2,803
|
|
7.0% Series A Secured Notes due 2015
|
|
|
3,003
|
|
|
|
2,803
|
|
7.0% Series A Secured Notes due 2016
|
|
|
5,005
|
|
|
|
4,671
|
|
7.0% Series A Secured Notes due 2017
|
|
|
7,007
|
|
|
|
6,539
|
|
9.0% Series B Secured Notes due 2013
|
|
|
214
|
|
|
|
219
|
|
9.0% Series B Secured Notes due 2014
|
|
|
322
|
|
|
|
328
|
|
9.0% Series B Secured Notes due 2015
|
|
|
322
|
|
|
|
328
|
|
9.0% Series B Secured Notes due 2016
|
|
|
536
|
|
|
|
547
|
|
9.0% Series B Secured Notes due 2017
|
|
|
751
|
|
|
|
766
|
|
|
|
|
|
(1)
|
Includes accrued postpetition interest assuming a filing under
the Bankruptcy Code on November 1, 2009.
|
29
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|
|
|
|
Any of the three series of Delaware Funding Outstanding Notes
tendered pursuant to the Offers will be exchanged for
Series B Notes and the CIT Old Notes tendered pursuant to
the Offers will be exchanged for Series A Notes and New
Preferred Stock. |
|
Maturity |
|
The New Notes will mature as set forth below, unless redeemed
earlier by us as described under the heading “Description
of New Notes — Optional Redemption.” |
|
|
|
7.0% Series A Secured Notes due 2013 mature on May 1,
2013 |
|
|
|
7.0% Series A Secured Notes due 2014 mature on May 1,
2014 |
|
|
|
7.0% Series A Secured Notes due 2015 mature on May 1,
2015 |
|
|
|
7.0% Series A Secured Notes due 2016 mature on May 1,
2016 |
|
|
|
7.0% Series A Secured Notes due 2017 mature on May 1,
2017 |
|
|
|
9.0% Series B Secured Notes due 2013 mature on May 1,
2013 |
|
|
|
9.0% Series B Secured Notes due 2014 mature on May 1,
2014 |
|
|
|
9.0% Series B Secured Notes due 2015 mature on May 1,
2015 |
|
|
|
9.0% Series B Secured Notes due 2016 mature on May 1,
2016 |
|
|
|
9.0% Series B Secured Notes due 2017 mature on May 1,
2017 |
|
Interest |
|
|
|
|
Interest on the notes will be payable quarterly in cash on each: |
|
|
|
• January 10, April 10, July 10, and
October 10, commencing January 10, 2010 with respect
to the 2013 Notes and 2014 Notes;
|
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|
|
• February 10, May 10, August 10, and
November 10, commencing February 10, 2010 with respect
to the 2015 Notes and 2016 Notes; and
|
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|
|
• March 10, June 10, September 10, and
December 10, commencing March 10, 2010 with respect to
with respect to the 2017 Notes.
|
|
Parent Pledge |
|
CIT may grant a lien on substantially all its personal property
(excluding its interest in CIT Bank, certain equity interests in
its foreign subsidiaries and certain other regulated
subsidiaries) to secure the Old Notes, the Series A
Obligations, the Series B Obligations and the Senior
Obligations (each as defined in the Description of New Notes)
(the ‘‘Parent Pledge”). If the Parent Pledge is
effected, the holders of the Old Notes will, by such pledge, be
equally and ratably secured with the holders of the
Series A Obligations, the Series B Obligations, and
the Senior Obligations to the extent of the assets subject to
such pledge. There can be no assurance that the Parent Pledge
will be available. |
|
Series A Collateral |
|
The Series A Guarantors will grant a lien on substantially
all of their personal property and certain foreign subsidiaries
will pledge certain equity interests in their foreign
subsidiaries to secure the Series A Obligations (together
with the Parent Pledge, if granted, the “Series A
Collateral”). The Series A Collateral is substantially
similar to the collateral securing the Senior Credit Facility
but the lien of the Series A Collateral Agent is
subordinated to the lien of the Senior Collateral Agent under
the Senior Credit Facility. The lien of the Series A
Collateral Agent is pari passu with the lien of the
Series B Collateral Agent securing the Series B
Obligations. |
30
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|
|
|
|
See “Collateral — Assets Securing Senior
Obligations, Series A Obligations and Series B
Obligations.” |
|
Series B Collateral |
|
The Series B Guarantors, other than CIT Group Inc. unless
the Parent Pledge is granted, will grant a lien on substantially
all of their personal property and certain foreign subsidiaries
will pledge certain equity interests in their foreign
subsidiaries to secure the Series B Obligations (together
with the Parent Pledge, if granted, the “Series B
Collateral”). The Series B Collateral is substantially
similar to the collateral securing the Senior Credit Facility
but the lien of the Series B Collateral Agent is
subordinated to the lien of the Senior Collateral Agent under
the Senior Credit Facility. The lien of the Series B
Collateral Agent is pari passu with the lien of the
Series A Collateral Agent securing the Series A
Obligations. See “Collateral — Assets
Securing Senior Obligations, Series A Obligations and
Series B Obligations.” |
|
Optional Redemption |
|
We may redeem any of the New Notes beginning on January 1,
2010 at a redemption price of 103.5% of their principal amount,
plus accrued interest, beginning on January 1, 2011 at a
redemption price of 102.0% of their principal amount, plus
accrued interest, and beginning on January 1, 2012 at par.
See “Description of New Notes — Optional
Redemption.” |
|
Guarantees |
|
The Series A Guarantors will guarantee the payment of
principal, interest and premium, if any, on the Series A
Notes and the Series B Guarantors will guarantee the
payment of principal, interest and premium, if any, on the
Series B Notes, as described under the heading
“Description of New Notes — Note Guarantees.” |
|
Ranking |
|
|
|
|
The Series A Notes will be: |
|
|
|
• equal in right of payment with all of our and the
Guarantors’ (as defined in the Description of the New
Notes) existing and future obligations (other than our and the
Guarantors’ respective obligations under the Senior Credit
Facility) that are not expressly subordinated to the
Series A Notes and the Series A Guarantees;
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|
• effectively subordinated to any permitted liens on
assets that are not Series A Collateral and any of our and
the Guarantors’ existing and future indebtedness that is
secured by a lien on any of our or the Guarantors’ assets
under the Senior Credit Facility and certain other obligations
that are secured by liens on Series A Collateral that are
permitted by the New Notes Indentures to be senior, in each case
to the extent of the value of the assets securing such permitted
lien, indebtedness or other obligations;
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• effectively subordinated to the Series B Notes
to the extent of the value of notes receivable from CIT
Financial Ltd. to Delaware Funding issued by Delaware Funding;
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• subordinated in right of payment to any existing and
future indebtedness under the Senior Credit Facility;
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• senior in right of payment to all of our and the
Guarantors’ existing and future indebtedness that is
expressly subordinated to the Series A Notes and
Series A Guarantees; and
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• effectively subordinated to all liabilities of our
subsidiaries that are not Guarantors.
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The Series B Notes will be: |
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• equal in right of payment with all of Delaware
Funding’s, our and the Guarantors’ existing and future
obligations (other than Delaware Funding’s, our and the
Guarantors’ respective obligations under the Credit
Agreement) that are not expressly subordinated to the
Series B Notes and the Series B Guarantees;
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• effectively subordinated to certain permitted liens
on assets that are not Series B Collateral and any of
Delaware Funding’s, our and the Guarantors’ existing
and future indebtedness that is secured by a Lien on any of our
or the Guarantors’ assets under the Credit Agreement and
certain other obligations that are secured by liens that are
permitted by the New Notes Indentures to be senior, in each case
to the extent of the value of the assets securing such permitted
lien, indebtedness or other obligations;
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• subordinated in right of payment to any existing and
future indebtedness under the Senior Credit Facility;
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• senior in right of payment to all of Delaware
Funding’s, our and the Guarantors’ existing and future
indebtedness that is expressly subordinated to the Series B
Notes and Series B Guarantees; and
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• effectively subordinated to all liabilities of our
subsidiaries that are not Guarantors.
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Covenants |
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The New Notes Indentures contain covenants that limit, among
other things, our ability and the ability of our subsidiaries
(other than unrestricted subsidiaries) to: |
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• incur additional indebtedness;
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• pay dividends on our capital stock or repurchase our
capital stock or subordinated debt;
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• make investments;
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• create liens or use assets as security in other
transactions;
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• merge, consolidate or transfer or dispose of
substantially all of our assets;
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• engage in transactions with affiliates; and
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• sell certain assets or merge with or into other
companies.
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The covenants also require us to apply amounts on deposit in
Sweep Accounts, subject to certain exceptions, to repay amounts
outstanding under the Senior Credit Facility, to repurchase,
repay or redeem New Notes and to repay amounts outstanding under
the Junior Credit Facilities. |
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These covenants are subject to a number of important exceptions.
See “Description of New Notes — Certain
Covenants.” |
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Intercreditor Arrangements |
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The Senior Collateral Agent, the Series A Collateral Agent
and the Series B Collateral Agent will enter into a
senior-junior intercreditor agreement (the “Senior-Junior
Intercreditor Agreement”) that will govern the relative
rights of the holders of Senior Obligations and the holders of
Series A Obligations and Series B Obligations
(collectively, the “Junior Obligations”) in respect of
the collateral securing all such obligations and will include
provisions relating to lien subordination, turnover obligations
with respect to proceeds of collateral, restrictions on exercise
of remedies, releases of |
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collateral, restrictions on amendments to junior lien
documentation, bankruptcy related provisions, and other
intercreditor matters. |
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The Series A Collateral Agent and the Series B
Collateral Agent will enter into a junior intercreditor
agreement (the “Junior Intercreditor Agreement”) that
will govern the relative rights among the holders of the Junior
Obligations in respect of the collateral securing the Junior
Obligations and will include provisions relating to equal and
ratable liens, the ratable sharing of the proceeds of
collateral, exercise of remedies, releases of collateral and
other intercreditor matters. |
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In addition, the Series A Trustee, each of the Junior
Administrative Agents and the Series A Collateral Agent
will enter into a collateral agency agreement (the
“Series A Collateral Agency Agreement”) that will
govern the relative rights of the holders of Series A
Obligations, including provisions whereby the benefits of the
collateral securing the Series A Obligations will be shared
among the Series A Trustee and each of the Junior
Administrative Agents, and provisions with respect to voting
rights and other intercreditor matters. |
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Form and Denomination |
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The New Notes will be represented by one or more global notes,
deposited with a trustee as a custodian for DTC and registered
in the name of Cede & Co., DTC’s nominee.
Beneficial interests in the global notes will be shown on, and
any transfers will be effective only through, records maintained
by DTC and its participants. Interests in the global notes will
be issued in minimum denominations of $1 and integral multiples
of $1 for U.S. dollar denominated New Notes. Non-U.S. dollar
denominated New Notes may be issued in higher denominations with
higher multiples as required by the applicable clearing system. |
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Use of Proceeds |
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We will not receive any proceeds from the Offers or the issuance
of New Notes. |
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Governing Law |
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The indentures for the Old Notes are, and the New Notes
Indentures and the New Notes will be, governed by New York law. |
For a description of certain considerations that should be taken
into account in connection with the Offers and in connection
with an investment in the New Notes, see “Risk
Factors” beginning on page 36.
33
Summary
of New Preferred Stock
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Issuer |
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CIT Group Inc. |
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Securities Offered |
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68,257,435 shares of Series F preferred stock,
$0.01 par value per share, with a liquidation preference of
$1,400 per share (the “New Preferred Stock”). |
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CIT Preferred Stock Outstanding After the Offers |
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97,587,435 shares, assuming 100% participation in the
Offers. |
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Dividends |
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The New Preferred Stock will have no stated dividend. In
addition, we do not intend to declare or pay dividends on the
New Preferred Stock. |
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Redemption |
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The New Preferred Stock will be redeemable at our option, in
whole or in part, at a redemption price equal to the liquidation
preference per share. Holders of the New Preferred Stock will
have no right to require the redemption or repurchase of the New
Preferred Stock and the New Preferred Stock will not be subject
to any sinking fund. |
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Ranking |
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The New Preferred Stock: |
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• Will rank senior to our junior stock with respect to
distributions of assets upon liquidation, dissolution or winding
up of CIT Group Inc. “Junior stock” means any class or
series of our stock that ranks junior to the New Preferred Stock
as to the distribution of our assets upon any liquidation,
dissolution or winding up of CIT Group Inc. Junior stock
includes our common stock.
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• Will rank at least equally with any other series of
parity stock that is currently outstanding or that we may from
time to time issue with respect to distributions of assets upon
liquidation, dissolution or winding up of CIT Group Inc.
“Parity stock” means any other class or series of our
preferred stock that ranks equally with the New Preferred Stock
in the distribution of our assets on any liquidation,
dissolution or winding up of CIT Group Inc. and includes,
without limitation, our Series A Preferred Stock, our
Series B Preferred Stock, our Series C Preferred Stock
and our Series D Preferred Stock.
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Liquidation Rights |
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Upon any voluntary or involuntary liquidation, dissolution or
winding up of CIT Group Inc., holders of the New Preferred Stock
and any parity stock are entitled to receive out of the assets
of CIT Group Inc., available for distribution to stockholders,
before any distribution is made to holders of common stock or
any other junior stock, a liquidating distribution in the amount
of $1,400 per share of New Preferred Stock. Holders of the New
Preferred Stock will not be entitled to any other amounts from
us after they have received their full liquidation preference. |
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In any such distribution, if our assets are not sufficient to
pay the liquidation preferences in full to all holders of the
New Preferred Stock and all holders of any parity stock, the
amounts paid to the holders of New Preferred Stock and to the
holders of any parity stock will be paid pro rata
in accordance with the respective aggregate liquidation
preferences of those holders. See “Description of the New
Preferred Stock — Liquidation Rights.” |
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Voting Rights |
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Holders of the New Preferred Stock will have class voting rights
together with holders of parity stock having like voting rights
with respect to certain fundamental changes in the terms of the
New Preferred Stock. In addition to the foregoing, holders of
the New Preferred Stock will be entitled to vote upon all
matters upon which holders of common stock have the right to
vote, and, in connection with such matters, will be entitled to
58.6 votes per share, such votes to be counted together
with all other shares of capital stock having general voting
powers and not separately as a class. See “Description of
the New Preferred Stock — Voting Rights.” |
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Maturity |
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The New Preferred Stock does not have any maturity date, and we
are not required to redeem the New Preferred Stock. |
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Preemptive Rights |
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Holders of the New Preferred Stock will have no preemptive
rights. |
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Listing |
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We do not intend to list the New Preferred Stock on any exchange. |
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Use of Proceeds |
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We will not receive any proceeds from the Offers or the issuance
of shares of New Preferred Stock. |
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Transfer Agent and Registrar |
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BNY Mellon Shareowner Services |
For a description of certain considerations that should be taken
into account in connection with the Offers and in connection
with an investment in the New Preferred Stock, see “Risk
Factors” beginning on page 36.
35
RISK
FACTORS
The restructuring transactions (whether effectuated under the
Offers or the Plan of Reorganization) involve a high degree of
risk and uncertainty. You should carefully consider the risks
and uncertainties described below as well as the other
information appearing elsewhere in this Offering Memorandum and
Disclosure Statement before making a decision whether to
participate in the Offers
and/or vote
to accept the Plan of Reorganization.
Risks
Related to Failure to Consummate the Restructuring
Plan
The
Offers may not be consummated and our restructuring efforts may
not be successful.
If the conditions to the Offers, including the Liquidity and
Leverage Condition, are not satisfied or, to the extent
waivable, waived, we will not be obligated to accept any Old
Notes tendered in the Offers. These conditions are for our
benefit and may be asserted by us or may be, to the extent
waivable, waived by us at any time and from time to time, in our
sole discretion. See “Description of the Offers —
Conditions to the Offers.”
The Offers are being made as part of a larger group of
restructuring transactions designed to improve the
Company’s consolidated balance sheet and capital structure
over time by decreasing the Company’s outstanding
consolidated debt and significantly reducing its annual interest
expense. See “Summary — Business Restructuring
Strategy.” However, these efforts may not be successful.
Accordingly, we cannot assure you that we will be able to
achieve our objectives with respect to the business
restructuring strategy, regardless of whether the Offers are
consummated.
If the
Offers are not consummated, but we receive sufficient votes to
accept the Plan of Reorganization, holders of Old Notes that did
not vote to accept the Plan of Reorganization may nevertheless
receive New Notes and Common Interests in exchange for their Old
Notes.
If we choose to effectuate the restructuring in bankruptcy court
through the Plan of Reorganization, all holders of Old Notes
will receive the same treatment and will be bound by the terms
of the Plan of Reorganization whether or not they vote to accept
the Plan of Reorganization. Under the Plan of Reorganization,
holders of Old Notes will receive the New Notes as well as
shares of newly issued common stock
and/or
contingent value rights. If the Plan of Reorganization is
approved, holders of Old Notes that did not vote to accept the
Plan of Reorganization will nevertheless receive New Notes, new
common stock
and/or
contingent value rights in exchange for their Old Notes.
If the
Offers are not consummated and the Plan of Reorganization is not
approved, we and Delaware Funding will likely need to seek
relief under the Bankruptcy Code without the benefit of a plan
of reorganization approved by the claimants, unless we are able
to obtain alternative financing. If we seek bankruptcy relief
under such circumstances, holders of Old Notes may receive
consideration that is substantially less than what is being
offered in the Offers or the Plan of Reorganization. If we
obtain alternative financing, that financing will likely be on a
secured basis, and the lenders will have priority over holders
of Old Notes in any ensuing bankruptcy.
We believe that restructuring through the Offers or the Plan of
Reorganization is critical to our continuing viability. If we do
not consummate the Offers or obtain approval of the Plan of
Reorganization, we will likely need to seek relief under the
Bankruptcy Code without the benefit of a plan of reorganization
approved by claimants.
We believe that seeking relief under the Bankruptcy Code other
than in connection with the prepackaged Plan of Reorganization
could materially adversely affect the relationships between us
and our existing and potential customers, employees, partners
and other stakeholders. For example:
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it is likely that such a filing would substantially erode our
customers’ confidence in our ability to provide commercial
financing and leasing capital and that as a result there would
be a significant and precipitous decline in our global revenues,
profitability and cash flow;
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employees could be distracted from performance of their duties,
or more easily attracted to other career opportunities;
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it may be more difficult to attract or replace key employees;
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lenders and other partners could seek to terminate their
relationships with us, require financial assurances or enhanced
returns, or refuse to provide credit on the same terms as prior
to the reorganization case under Chapter 11 of the
Bankruptcy Code;
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lenders to subsidiaries that are not subject to the bankruptcy
proceedings could, in certain cases, terminate financing
agreements, accelerate amounts due thereunder or otherwise claim
an event of default has occurred thereunder;
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if the Plan of Reorganization is not approved, we could be
forced to operate in bankruptcy for an extended period of time
while we tried to develop a reorganization plan that could be
confirmed;
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certain of our
non-U.S. subsidiaries
may be required to seek bankruptcy or similar relief under
proceedings outside the United States, which would adversely
affect their businesses;
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we may not be able to obtain
debtor-in-possession
financing to sustain us during the reorganization case under
Chapter 11 of the Bankruptcy Code which may lead us to
liquidate under Chapter 7 of the Bankruptcy Code;
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if we were not able to confirm and implement a plan of
reorganization we may be forced to liquidate under
Chapter 7 of the Bankruptcy Code;
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we may be forced to divest our bank subsidiaries, including CIT
Bank, or the FDIC or other applicable regulators could place our
regulated entities into either receivership or conservatorship
and, in either case, the assets of those subsidiaries would not
be available to creditors of the Company or other subsidiaries;
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any distributions to you that you may receive in respect of your
Old Notes under a liquidation or under a protracted
reorganization case or cases under Chapter 11 of the
Bankruptcy Code would likely be substantially delayed and the
value of any potential recovery likely would be adversely
impacted by such delay; and
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if the Offers are not consummated, we believe that alternative
financing would only be available on a secured basis. Any
lenders providing such alternative financing would likely
require that they be granted a first or second lien on
substantially all of the assets of the Company, which would give
such lenders priority over the holders of Old Notes in any
bankruptcy, liquidation, or insolvency proceeding.
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Risks to
Holders of Non-Tendered Old Notes
The following risks specifically apply to the extent a holder
of Old Notes elects not to participate in the Offers. There are
additional risks attendant to being an investor in our
securities that you should review, whether or not you elect to
tender your Old Notes. These risks are described elsewhere in
this “Risk Factors” section under the headings
“— Risks to Holders of New Notes Issued in the
Offers” and “— Risks Related to Our
Business.”
If we
consummate the Offers, claims with respect to the Old Notes will
be effectively and structurally subordinated to claims with
respect to the New Notes to the extent of the value of the
Collateral securing the Series A Notes and the
Series B Notes.
The structural subordination and unsecured nature of the claims
of the non-tendered Old Notes could materially and adversely
affect the value of a holder’s non-tendered Old Notes and,
in the event of a bankruptcy, liquidation or insolvency of the
Company, the extent of such holder’s recovery. The New
Notes will be secured on a second lien basis by substantially
all unencumbered personal property of the Guarantors, but the
Old Notes will remain unsecured. See
“Collateral — Assets Securing Senior Obligations,
Series A Obligations and Series B Obligations.”
As a result, the Old Notes will be subordinated to the New Notes
to
37
the extent of the value of the assets securing the New Notes. In
the event of a bankruptcy, liquidation or insolvency of CIT, it
is possible that there would be little or no assets remaining to
satisfy the claims of the Old Notes.
The Series A Notes will be guaranteed by all current and
future domestic wholly owned subsidiaries of the Company, with
the exception of Delaware Funding, CIT Bank and other regulated
subsidiaries, special purpose entities and immaterial
subsidiaries. The Series B Notes will be guaranteed by CIT
Group Inc., on an unsecured basis unless the Parent Pledge is
granted, and by all current and future domestic wholly owned
subsidiaries of CIT Group Inc., with the exception of Delaware
Funding, CIT Bank and other regulated subsidiaries, special
purpose entities and immaterial subsidiaries, on a secured
basis. We are a holding company and conduct all of our
operations and hold substantially all of our assets through such
subsidiaries. Holders of the Series A Notes will have
claims secured by certain of the assets of the subsidiary
guarantors. Holders of Series B Notes will have claims
guaranteed by CIT Group Inc. and secured by certain of the
assets of CIT Group Inc.’s subsidiaries. As a result, in
the event of a bankruptcy, liquidation or insolvency of the
Company, the New Notes will be entitled to seek recourse against
the subsidiary guarantors before any funds are available to the
Company for payment of the obligations under the Old Notes.
Liquidity
of the market for unexchanged Old Notes likely will be lessened,
and the market prices for non-tendered Old Notes may therefore
be reduced.
If the Offers are consummated, the aggregate principal amount of
outstanding Old Notes will be reduced, which would likely
adversely affect the liquidity of non-tendered Old Notes. An
issue of securities with a small outstanding principal amount
available for trading, or float, generally commands a lower
price than does a comparable issue of securities with a greater
float. Therefore, the market price for Old Notes that are not
tendered in the Offers may be adversely affected. The reduced
float also may tend to make the trading prices of Old Notes that
are not exchanged more volatile. The market prices for
unexchanged Old Notes may also be negatively affected by their
structural subordination to New Notes.
We
cannot assure non-tendering holders of Old Notes that, if we
consummate the Offers, existing ratings for the Old Notes will
be maintained.
We cannot assure you that, as a result of the Offers, the rating
agencies, including Standard & Poor’s Ratings
Service, Moody’s Investors Service and Fitch Ratings, will
not downgrade or negatively comment upon the ratings for
unexchanged Old Notes. If this were to occur, the market price
for the Old Notes may be adversely affected.
Risks to
Holders of New Notes Issued in the Offers
The following risks specifically apply only to holders of New
Notes issued in the Offers and should be considered, along with
the other risk factors, by eligible holders. There are
additional risks attendant to being an investor in our debt
securities that you should review, whether or not you elect to
tender your Old Notes. These risks are described elsewhere in
this “Risk Factors” section under the headings
“— Risks Related to Our Business.”
To the
extent that a holder of Old Notes is exchanging Old Notes for
New Notes with a later maturity, such holder may ultimately find
that we are able to repay the non-tendered Old Notes when they
mature, but are unable to repay or refinance the New Notes when
they mature.
If you are a holder of Old Notes, you may be offered New Notes
with a later maturity than the Old Notes that you presently own.
It is possible that tendering holders of such Old Notes will be
adversely affected by the extension of maturity. Following the
maturity date of a given issue of Old Notes, but prior to the
maturity date of the corresponding issue of New Notes, we may
become subject to a bankruptcy or similar proceeding. If so,
holders of that issue of Old Notes who opted not to participate
in the Offers may have been paid in full, and there is a risk
that the holders of the issue who did opt to participate in the
Offers will not be paid in full. If you decide to tender Old
Notes, you will be exposed to the risk of nonpayment for a
longer period of time.
38
A
court could deem the issuance of the New Notes or the guarantees
thereof, as applicable, a fraudulent conveyance and void all or
a portion of the obligations represented by the New Notes or the
guarantees.
In a bankruptcy proceeding, a trustee, debtor in possession, or
someone else acting on behalf of the bankruptcy estate may seek
to recover transfers made or void obligations incurred prior to
the bankruptcy proceeding on the basis that such transfers and
obligations constituted fraudulent conveyances. Fraudulent
conveyances are generally defined to include transfers made or
obligations incurred for inadequate consideration when the
debtor was insolvent, inadequately capitalized or in similar
financial distress, or transfers made or obligations incurred
with the intent of hindering, delaying or defrauding current or
future creditors. A trustee or such other parties may recover
such transfers and avoid such obligations made within two years
prior to the commencement of a bankruptcy proceeding.
Furthermore, under certain circumstances, creditors may recover
transfers or void obligations under state fraudulent conveyance
laws, within the applicable limitation period, which may be
longer than two years, even if the debtor is not in bankruptcy.
In bankruptcy, a representative of the estate may also assert
such state law claims. If a court were to find that CIT Group
Inc. issued the New Notes or a Guarantor issued its guarantee
under circumstances constituting a fraudulent conveyance, the
court could void all or a portion of the obligations under the
New Notes or the guarantees, or the pledge of collateral granted
in connection therewith. In addition, under such circumstances,
the value of any consideration holders received with respect to
the New Notes, including upon foreclosure of the collateral,
could also be subject to recovery from such holders and possibly
from subsequent transferees, or holders might be returned to the
same position they held as holders of the Old Notes. If the
pledge of collateral were voided and the issuance of New Notes
and/or
guarantees were not voided, holders of New Notes would be
unsecured creditors with claims that ranked pari
passu with all other unsubordinated creditors of the
applicable obligor, including trade creditors, except that the
claims under the New Notes would be for a lower principal amount
than the prior claim under the Old Notes.
A note or guarantee could be voided, or claims in respect of a
note or guarantee could be subordinated to all other debts of
CIT Group Inc. or the applicable Guarantor, if CIT Group Inc. or
the applicable Guarantor at the time it incurred the
indebtedness evidenced by the New Notes or its guarantee:
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received less than reasonably equivalent value or fair
consideration for the issuance of the notes or the incurrence of
the guarantee and was insolvent or rendered insolvent by reason
of such issuance or incurrence;
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was engaged in a business or transaction for which CIT Group
Inc.’s or the applicable Guarantor’s remaining assets
constituted unreasonably small capital; or
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intended to incur, or believed that it would incur, debts beyond
its ability to pay those debts as they mature.
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The measures of insolvency for purposes of these fraudulent
transfer laws will vary depending upon the law applied in any
proceeding to determine whether a fraudulent transfer has
occurred. Generally, however, a debtor would be considered
insolvent if:
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the sum of its debts, including contingent liabilities, was
greater than the fair saleable value of all of its assets;
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the present fair saleable value of its assets was less than the
amount that would be required to pay its probable liability on
its existing debts, including contingent liabilities, as they
become absolute and mature; or
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it could not pay its debts as they become due.
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We cannot assure you as to what standard a court would apply in
determining whether CIT Group Inc. or a Guarantor would be
considered to be insolvent. If a court determined that CIT Group
Inc. or a Guarantor was insolvent after giving effect to the
issuance of the New Notes or the applicable guarantee, it could
void the notes or the applicable guarantees of the notes and
require you to return any payments received from CIT Group Inc.
or such subsidiaries.
39
We may
purchase or repay any Old Notes not tendered in the Offers on
terms that could be more favorable to holders of such Old Notes
than the terms of the Offers.
Subject to applicable law and the terms of our outstanding
indebtedness, after the Expiration Date, we may purchase Old
Notes in the open market, in privately negotiated transactions,
through subsequent tender or exchange offers or otherwise. Any
other purchases may be made on the same terms or on terms which
are more or less favorable to holders of such Old Notes than the
terms of the Offers. We also reserve the right to repay any Old
Notes not tendered in accordance with their terms. If we decide
to repurchase or repay Old Notes that are not tendered in the
Offers, those holders who decided not to participate in the
Offers could be better off than those who participated in the
Offers.
The
New Notes are new issues of securities and the trading market
for such New Notes may be limited. Even if the New Notes are
traded, they may trade at a discount.
The New Notes will be new securities for which there is
generally no established trading market. We do not intend to
apply for listing of the New Notes on any securities exchange or
for quotation in any automated dealer quotation system and we
cannot assure you that any liquid market will develop for any
series of New Notes. If any of the New Notes are traded after
their initial issuance, they may trade at a discount from their
initial issue price or principal amount, depending upon many
factors, including prevailing interest rates, the market for
similar securities and other factors, including general economic
conditions and our financial condition, performance and
prospects. Any decline in trading prices, regardless of the
cause, may adversely affect the liquidity and trading markets,
if any, for the New Notes.
Risks
Related to Collateral Securing the New Notes
Except
for the Parent Pledge, if granted, CIT Group Inc. and Delaware
Funding are not granting any liens on any of their assets or
pledging the equity of their direct subsidiaries under the New
Notes.
Unless the Parent Pledge is granted, CIT Group Inc. is not
itself granting liens on any of its assets. In addition,
Delaware Funding is not granting a lien on any of its assets.
The New Notes will be secured by liens granted by the
Guarantors. See “Collateral — Series A
Guarantors, Series B Guarantors and Foreign Grantors.”
This may make it more difficult or costly for the Senior
Collateral Agent, the Series A Collateral Agent or the
Series B Collateral Agent to exercise remedies under their
respective liens in the event that there is a default and
foreclosure. Likewise, in the event that a third party obtains a
lien on the assets of CIT Group Inc., such third party may
obtain control or ownership of a Guarantor or Foreign Grantor
(as defined herein).
The
liens in favor of the Series A Collateral Agent or the
Series B Collateral Agent will rank junior in priority to
the liens in favor of the Senior Collateral Agent and holders of
certain liens permitted under the Series A indenture or the
Series B indenture may also obtain interests in the
collateral equal or prior to the interest of the Series A
Collateral Agent or the Series B Collateral
Agent.
The liens securing each of the Series A Notes and the
Series B Notes will rank junior in priority to the liens
securing the Senior Credit Facility. In the event there is a
default and foreclosure on the collateral securing the New
Notes, the proceeds from the sale of such collateral may not be
sufficient to satisfy the obligations under the New Notes.
Proceeds from the sale of any collateral securing the
Series A Obligations or Series B Obligations would be
distributed first to satisfy in full the outstanding obligations
under the Senior Credit Facility, as well as obligations secured
by certain liens permitted pursuant to the Series A
indenture and the Series B indenture before any remaining
proceeds would be available for any distribution to either the
Series A Collateral Agent or the Series B Collateral
Agent. See “Description of New Notes — Certain
Definitions — Permitted Liens.”
The Senior Collateral Agent may exercise remedies against the
Senior Collateral in any order or in any manner it determines to
be commercially reasonable and need not exercise its rights in a
manner or in an order designed to maximize the proceeds
ultimately available to either the Series A Collateral
Agent or the Series B Collateral Agent. Accordingly when
exercising its remedies, the Senior Collateral Agent may choose
to apply more liquid collateral to its outstanding obligations,
leaving less liquid collateral for the junior
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secured parties. See “Collateral — Assets
Securing Senior Obligations, Series A Obligations and Series B
Obligations.”
The
lien on the collateral securing the Series A Obligations
will secure not only the obligations under the Series A
Notes but also the obligations under the Junior Credit
Facilities.
The lien on the collateral securing the Series A
Obligations will secure the obligations under both the
Series A Notes and the Junior Credit Facilities equally and
ratably and such lien will be granted in favor of a single
Series A Collateral Agent. The holders of the Series A
Notes and the lenders under the Junior Credit Facilities will
enter into a Series A Collateral Agency Agreement
appointing the Series A Collateral Agent. The Series A
Collateral Agency Agreement will contain provisions governing
the distribution of the proceeds received from the sale of any
collateral securing the Series A Obligations and the
ability of holders of the Series A Notes and the lenders
under the Junior Credit Facilities to direct the Series A
Collateral Agent and other provisions governing the exercise of
remedies and the foreclosure on the collateral securing the
Series A Obligations by the Series A Collateral Agent.
The Series A Collateral Agent will act only upon the
direction of the Series A Trustee or Junior Administrative
Agents collectively representing the requisite holders or
secured parties under one or more series of Series A Notes
or Junior Credit Facilities that, individually or in the
aggregate, constitutes more than 50% of the aggregate
outstanding principal amount of the then outstanding
Series A Notes and Junior Credit Facilities. The ability of
the holders of the Series A Notes to influence the exercise
of rights or remedies will therefore be limited to such
holders’ proportionate share of the aggregate amount of
Series A Obligations. Accordingly, the exercise of rights
and remedies may not be within the control of the Series A
Trustee if the Series A Notes are in default.
The Series A Collateral Agency Agreement will specify that
proceeds to which the holders of Series A Notes and Junior
Credit Facilities are entitled will be applied on a pro
rata basis to the holders of Series A Notes and
Junior Credit Facilities, subject to the terms of the Junior
Intercreditor Agreement and the Senior-Junior Intercreditor
Agreement.
The
Series A Obligations and the Series B Obligations will
be equally and ratably secured by liens on the collateral on a
junior lien basis.
The lien on the collateral securing the Series A
Obligations will be equal and ratable to the lien on the
collateral securing the Series B Obligations. The
Series A Collateral Agent and the Series B Collateral
Agent will enter into a Junior Intercreditor Agreement which
will contain provisions governing the equal and ratable
treatment of the liens of the Series A Collateral Agent and
the Series B Collateral Agent, the distribution of proceeds
received from the sale of any collateral, and other provisions
governing the exercise of remedies and the foreclosure on the
collateral by the Series A Collateral Agent and the
Series B Collateral Agent.
Future
restructuring may reduce the value or the amount of the
collateral securing the Series A Notes and the
Series B Notes.
The Company’s restructuring plan may involve the incurrence
of additional debt (including secured debt) by CIT Group Inc.
and its affiliates. See “Summary — Business
Restructuring Strategy.” Although each of the Guarantors
has granted liens on substantially all of its own assets, in
many cases valuable assets are owned by entities in our
corporate structure which are not, and are not contemplated to
be, Guarantors and are not required to grant liens on their
assets. With regard to the collateral securing the Series A
Notes and the Series B Notes, our restructuring plans may
include the sale of substantial portions of such collateral or
the businesses that generate such collateral. See
“Collateral — Release or Subordination of
Collateral.” In addition, although the lien granted by the
Guarantors extends to property subsequently to be acquired by
the Guarantors, there can be no assurances that new property
will be acquired in the future.
The terms of the Series A indenture and Series B
indenture will also permit us to incur significant additional
debt at non-guarantor subsidiaries and to grant additional
senior liens on certain collateral to secure
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other debt without equally and ratably securing the
Series A Notes and the Series B Notes. See
“Description of New Notes — Certain
Covenants.”
The Senior Credit Facility may be refinanced and the terms and
conditions of such refinanced Senior Credit Facility may differ
from those of the Senior Credit Facility as of the date hereof.
Following any such refinancing, the lien in favor of the
Series A Collateral Agent securing the Series A Notes
and the Junior Credit Facilities and the lien in favor of the
Series B Collateral Agent securing the Series B Notes
will continue to be subordinated to any lien securing the
refinanced Senior Credit Facility.
As a
result of the Senior-Junior Intercreditor Agreement, the rights
that would otherwise be available to the holders of
Series A Obligations and Series B Obligations as
creditors will be substantially limited.
The Senior-Junior Intercreditor Agreement between the Senior
Collateral Agent, the Series A Collateral Agent and the
Series B Collateral Agent could affect your rights as a
creditor in ways that they would not be affected if the
Series A Obligations and Series B Obligations were not
secured and there was no Senior-Junior Intercreditor Agreement
between the holders of the Senior Obligations and the holders of
the Junior Obligations. For instance, the new Senior-Junior
Intercreditor Agreement will provide, among other things, that:
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none of the Series A Collateral Agent, the Series B
Collateral Agent, any holder of Series A Notes or
Series B Notes nor any secured party under the Junior
Credit Facilities may challenge the validity or priority of the
liens securing the Senior Obligations or the validity or amount
of Senior Obligations;
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if the Series A Collateral Agent, the Series B
Collateral Agent, any holder of Series A Notes or
Series B Notes and the secured parties under the Junior
Credit Facilities receives any payment on account of the
Series A Collateral Agent’s or the Series B
Collateral Agent’s lien (as applicable) on the collateral
prior to the obligations under the Senior Credit Facility being
repaid in full in cash, then such agent, holder or secured party
will be required to turn over such amount to the Senior
Collateral Agent regardless of whether any such Senior
Obligations or any lien on the collateral securing such
obligations is otherwise found to be unenforceable or
subordinated to any other claim or lien or is otherwise
recharacterized under applicable law;
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if for any reason it is determined that any or all of the liens
securing the Senior Credit Facility are void or otherwise not
entitled to proceeds of the collateral, the aggregate amount of
proceeds available to satisfy the liens of the Series A
Collateral Agent, the Series B Collateral Agent and the
Senior Collateral Agent will be reduced. In such circumstances,
each of the Series A Collateral Agent and the Series B
Collateral Agent, as applicable, and each other Junior Lien
Secured Party receiving such proceeds will be required to turn
over all such proceeds to the Senior Collateral Agent and will
not realize any benefit from its security interest on the
collateral;
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the Series A Collateral Agent, the Series B Collateral
Agent, any holder of Series A Notes or Series B Notes
and the secured parties under the Junior Credit Facilities will
be prohibited from enforcing the Series A Collateral
Agent’s or the Series B Collateral Agent’s (as
applicable) liens on the collateral or objecting to any
commercially reasonable exercise of remedies by the Senior
Collateral Agent on behalf of the holders of the Senior
Obligations, provided that the Series A Collateral Agent or
the Series B Collateral Agent may exercise its rights and
remedies with respect to the collateral after a period of
180 days if the Senior Collateral Agent is not diligently
pursuing its rights and remedies with respect to the collateral
if an amendment to the Senior Credit Facility to permit such
exercise of rights and remedies after 180 days is obtained;
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even though commercially reasonable, decisions made by the
Senior Collateral Agent could nonetheless reduce or delay
amounts available for distribution to the Series A
Collateral Agent, the Series B Collateral Agent, any holder
of Series A Notes or Series B Notes and the secured
parties under the Junior Credit Facilities;
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the Series A Collateral Agent, the Series B Collateral
Agent, any holder of Series A Notes or Series B Notes
and the secured parties under the Junior Credit Facilities may
be prohibited from, or limited in,
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taking certain significant actions in connection with any
bankruptcy or insolvency proceeding including:
(i) objecting to the use of cash collateral or to certain
“debtor-in-possession”
financings secured by liens on the collateral,
(ii) objecting to any request for “adequate
protection” by the Senior Collateral Agent or the holders
of the Senior Obligations and (iii) supporting any plan of
reorganization that does not provide for satisfaction of all
Senior Obligations before distributions are available for the
Series A Obligations and the Series B
Obligations; and
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the liens on the collateral securing the Series A
Obligations and the Series B Obligations will be
automatically released, and the liens in favor of the
Series A Collateral Agent and the Series B Collateral
Agent will be automatically subordinated, upon the release of
such collateral or the subordination of such liens in favor of
the Senior Collateral Agent in connection with certain releases
of collateral and subordination of liens under the Senior Credit
Facility. See “Collateral — Release or
Subordination of Collateral.”
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As a result of these provisions and the other terms of the
Senior Intercreditor Agreement, the holders of the Series A
Notes and the Series B Notes will be prohibited from or
limited in taking certain actions and it is possible that the
holders of the Series A Notes and the Series B Notes
could receive proportionately less in a bankruptcy or
liquidation proceeding than our unsecured creditors. See
“Collateral — Senior-Junior Intercreditor
Agreement among the Senior Collateral Agent, the Series A
Collateral Agent and the Series B Collateral Agent.”
The
value of the collateral securing the Series A Obligations
and the Series B Obligations is highly
uncertain.
We have not prepared any appraisals of the collateral securing
the Series A Obligations and the Series B Obligations
in connection with the issuance of the Series A Notes and
the Series B Notes or our entering into of the Junior
Credit Facilities. By its nature, some or all of the collateral
may be illiquid and may have no readily ascertainable value, and
the value of the collateral in the event of a liquidation will
depend in part on market conditions and other factors beyond our
control, including the availability of suitable buyers for the
collateral. Although we have provided the carrying value of
certain of the collateral securing the Series A Obligations
and the Series B Obligations for purposes of this Offering
Memorandum and Disclosure Statement, the carrying value of an
asset does not necessarily represent its current market value.
Carrying value is the amount shown on our accounting records for
assets net of reductions for loan premium discounts, allowances
for bad debts and accounting pronouncements. Furthermore,
carrying value could be reduced in the event “fresh
start” accounting principles were to be applied in the
future. Recent attempts to sell certain assets on the open
market have resulted in offers below the carrying value.
A portion of the collateral consists of assets located outside
of the U.S. or governed by laws other than state or U.S.
federal laws. Certain of our borrowers, lessees and account
debtors are located outside the U.S. The collateral
securing the Series A Obligations and the Series B
Obligations includes liens on equity interests in certain
affiliates located in Canada, Ireland and England. The ability
of the Series A Collateral Agent or the Series B
Collateral Agent to exercise remedies may be governed by these
foreign laws and there can be no assurance that the exercise of
remedies governed by such foreign law will not result in delay
or additional risk or cost.
In addition, to the extent any item of collateral securing the
Series A Obligations and the Series B Obligations
consists of a right of payment from a third party, the amount of
any such payment may be reduced if such party exercises a right
of set-off. Due to our extensive relationships with many third
parties through servicing arrangements and various accounts
receivable, rights of set-off may, at any given time, arise as a
result of significant amounts that we owe in connection with our
relationships. We do not expect to seek and have not obtained
waivers of any rights of set-off from third parties which
adversely affecting the value of the collateral securing the
Series A Obligations and the Series B Obligations.
A significant portion of our business involves the creation,
purchase and sale of receivables. There is considerable
uncertainty concerning the continuing viability of this
business. Our ability to continue to generate after-acquired
receivables is dependent on our reputation in the market, our
ability to collect upon the receivables, typical default rates
and general business conditions which are beyond our ability to
control. If we
43
are unable to generate sufficient after-acquired receivables,
our ability to repay the Series A Notes and Series B
Notes may be negatively impacted.
Although the Series A Guarantors and Series B Guarantors have
liens on substantially all after-acquired personal property
assets available to be pledged, there might not be any
significant value associated with such after-acquired assets
other than the primary collateral described herein. See
“Collateral — Release or Subordination of
Collateral.”
The
benefit of the liens of the Series A Collateral Agent and
the Series B Collateral Agent on proceeds of collateral
securing the Series A Obligations and the Series B
Obligations (including collections or receivables and income)
may be lost or negatively impacted by our cash management
procedures.
Proceeds of collateral securing the Series A Obligations
and the Series B Obligations are expected to be credited to
deposit accounts over which neither the Series A Collateral
Agent nor the Series B Collateral Agent may have a
perfected lien. Although we maintain a substantial number of
collection accounts into which payments on collateral securing
the Series A Obligations and the Series B Obligations
may be made, the funds in these accounts are promptly
transferred to concentration accounts maintained by the CIT
Group Inc. and, except for the Parent Pledge, if granted, such
concentration accounts will not be subject to the liens of each
of the Series A Collateral Agent and the Series B
Collateral Agent. There are limited requirements that cash
collateral be segregated for either of the Series A
Collateral Agent or the Series B Collateral Agent. There
can be no assurance that either of the Series A Collateral
Agent or the Series B Collateral Agent will be able to
trace the proceeds of the collateral securing the Series A
Obligations and the Series B Obligations, nor can there be
any assurance that proceeds of such collateral will be
identifiable in our current cash management procedures.
We have no present plans to alter any cash management systems to
facilitate the identification of property owned by the Series A
Guarantors, Series B Guarantors or Foreign Grantors or property
consisting of proceeds of collateral securing the Series A
Obligations and the Series B Obligations. Neither do we
have any obligation or plans to segregate cash collateral for
the benefit of either of the Series A Collateral Agent or
the Series B Collateral Agent.
Furthermore, the Company has limited obligations to use proceeds
of collateral to satisfy Senior Obligations, Series A
Obligations, or Series B Obligations. Likewise there are
limited instances in which the Company must apply proceeds of
asset sales to satisfy Senior Obligations, Series A
Obligations or Series B Obligations. See “Description
of New Notes.”
Other
than the filing of UCC financing statements in appropriate
jurisdictions, the Series A Collateral Agent and the
Series B Collateral Agent will take only limited additional
actions to preserve or protect the liens.
Except for the additional actions with respect to Rail
Collateral, Aircraft Collateral, the Pledged Foreign Equity
Collateral (as defined herein), certain items of intellectual
property and certain deposit accounts and securities accounts,
the only action to be taken to perfect the liens securing each
of the Series A Notes and the Series B Notes will be
the filing of UCC financing statements in appropriate
jurisdictions, although it is anticipated that the Series A
Collateral Agent and Series B Collateral Agent will take
all actions (or action will be taken on their behalf) that the
Senior Collateral Agent has taken to perfect liens in collateral
that cannot be perfected by filing UCC financing statements.
In the case of the Foreign Pledged Equity Collateral, certain
filings will be made pursuant to the laws of Canada, Ireland and
Barbados, as applicable, with respect to the Foreign Pledged
Equity Collateral. Each of the Series A Collateral Agent
and the Series B Collateral Agent may have a limited
benefit, or no benefit, from such filings. The pledge by CIT
Group Holdings (UK) Limited of 100% of the non-voting shares and
65% of the voting shares in CIT Vendor Finance (UK) Limited will
only be perfected by filing UCC financing statements, but will
not be pledged or perfected under the laws of England and Wales
and may not be enforceable under the laws of England and Wales.
The pledge by CIT Holdings Canada ULC of all of the shares in
CIT Aerospace International, except one share which is owned by
CIT Financial Ltd. as a nominee, will be perfected pursuant to
Irish and Canadian law. The pledge by CIT Holdings No. 2
(Ireland) of 49% of
44
the shares in CIT Group Finance (Ireland) will be perfected
pursuant to Irish law. The pledge by CIT Financial (Barbados)
Srl of 65% of the voting shares and 100% of the non-voting
shares in CIT Financial Ltd. will be perfected by filing
pursuant to Canadian law and registered in Barbados.
In the case of the Aircraft Collateral, each of the
Series A Collateral Agent and the Series B Collateral
Agent may have a limited benefit, or no benefit, from Aircraft
Collateral that is registered outside of the United States or
Canada. There can be no assurance that the liens of the
Series A Collateral Agent or the Series B Collateral
Agent on Aircraft Collateral will be perfected under the laws of
any jurisdiction outside of the United States or Canada,
notwithstanding registrations of international interests and
assignments of international interests under the Convention on
International Interests in Mobile Equipment (Cape Town, 2001)
(the “Cape Town Convention”) and The Protocol to the
Convention on International Interests in Mobile Equipment on
Matters Specific to Aircraft Equipment 2001 (collectively, the
“Cape Town Filings”). No Surface Transportation Board
filings, Federal Aviation Administration (“FAA”)
filings, Cape Town Filings, foreign filings or mortgages will be
made with respect to any rail or aircraft assets other than the
Rail Collateral and the Aircraft Collateral. Therefore there can
be no assurance that the Series A Collateral Agent or Series B
Collateral Agent will obtain any benefit from such other rail or
aircraft assets.
To the extent that the liens of each of the Series A
Collateral Agent and the Series B Collateral Agent are not
perfected in any item of collateral, such property may not be
available to satisfy obligations to the Series A Notes
holders and the Series B Note holders in the event of a
bankruptcy (or other insolvency proceeding) or the exercise of
remedies by a third party creditor whose interest in the asset
is perfected. The Series A Collateral Agent and
Series B Collateral Agent intend to take all actions (or
action will be taken on their behalf) that the Senior Collateral
Agent has taken to perfect liens in collateral that cannot be
perfected by filing UCC financing statements.
Other
creditors in addition to the Senior Collateral Agent may have or
obtain liens prior to the liens of the Series A Collateral
Agent and the Series B Collateral Agent.
The lien of each of the Series A Collateral Agent and the
Series B Collateral Agent may be subordinated not only to
the lien of the Senior Collateral Agent but to other liens as
well. The security interest of each of the Series A
Collateral Agent and the Series B Collateral Agent may be
junior or subordinated to liens arising by operation of law
(such as landlord liens, warehouse liens, mechanics liens,
custom and revenue liens, tax liens); liens and deposits in
connection with workers’ compensation; surety and appeal
bonds; deposits with derivatives counterparties and purchase
money liens. See “Description of New Notes —
Certain Covenants — Liens”. In particular, the
lien of the each of the Series A Collateral Agent and the
Series B Collateral Agent may be subordinated in connection
with certain ordinary course of business activities of the
Company. Furthermore, certain liens that arise by operation of
law (e.g., certain tax and ERISA liens, mechanics liens and
other liens perfected by possession or control) may be senior to
the lien of each of the Series A Collateral Agent and the Series
B Collateral Agent. The lien of each of the Series A Collateral
Agent and the Series B Collateral Agent will be perfected only
by the filing of UCC financing statements (with the exception of
certain limited actions taken with respect to Rail Collateral,
Aircraft Collateral and Pledged Foreign Equity Collateral).
Lessees of leased assets, including Aircraft Collateral and Rail
Collateral, have the right to quiet enjoyment under their lease
agreements. The liens of each of the Series A Collateral
Agent and the Series B Collateral Agent on the Rail
Collateral, Aircraft Collateral and other assets leased to
lessees are subject to the rights of the lessees under such
lease agreements.
Collateral
securing the Series A Obligations and the Series B
Obligations will be released or subordinated in connection with
transactions permitted under the Series A indenture and the
Series B indenture, including ordinary course business
activities.
Very few of the assets securing the Series A Obligations
and the Series B Obligations consist of fixed assets over
which either of the Series A Collateral Agent or
Series B Collateral Agent is expected to have a lien until
the maturity of the Series A Notes or Series B Notes.
It is anticipated that assets such as receivables and leases
will themselves mature and necessarily decrease in value as
payments by lessees and account debtors are made on the
receivables. Notwithstanding that each of the Series A
Collateral Agent and the
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Series B Collateral Agent has a security interest in
after-acquired property, there can be no assurances that
collateral that is released or subordinated will be replaced
with collateral of the same type or the same value. In addition,
collateral will be released from the liens of each of the
Series A Collateral Agent and the Series B Collateral
Agent, including in connection with ordinary course of business
transactions. See “Collateral — Release or
Subordination of Collateral.”
The liens of each of the Series A Collateral Agent and the
Series B Collateral Agent on Aircraft Collateral and Rail
Collateral must be released when there is a sale or other
disposition permitted under the terms of the Series A
indenture and Series B indenture or an aircraft mortgage,
including upon sales and transfers of the Aircraft Collateral
and Rail Collateral in the ordinary course of business or upon a
casualty. In addition, if any Aircraft Collateral is
re-registered in another jurisdiction, the liens of each of the
Series A Collateral Agent and the Series B Collateral
Agent must be released in order to permit such re-registration.
If the re-registration is into the United States, new FAA
filings will be required with respect to that aircraft.
Similarly, if the re-registration is into a country that is a
party to the Cape Town Convention, Cape Town Filings will be
made with respect to the liens of each of the Series A
Collateral Agent and the Series B Collateral Agent on such
aircraft. The Company expects to require releases of the lien on
certain Aircraft Collateral and certain Rail Collateral on a
frequent and routine basis.
The
ability of each of the Series A Collateral Agent and the
Series B Collateral Agent to exercise remedies against the
collateral securing the Series A Obligations and the
Series B Obligations may be limited by terms of agreements
to which we are a party.
We do not expect to notify third parties of the liens of each of
the Series A Collateral Agent and the Series B
Collateral Agent or to obtain consents from such third parties
to pledge their obligations under any agreements constituting
collateral. However, some agreements restrict us from
transferring our right to receive payments without the consent
of such third parties. In these cases, the Series A Notes
and Series B Notes will only be secured by such payment
rights to the extent that
Sections 9-406
or 9-408 of the UCC render such restrictions unenforceable or
ineffective.
Sections 9-406
and 9-408 of the UCC generally provide that provisions in
agreements purporting to restrict or prohibit the right to
pledge accounts receivable, promissory notes and payment
intangibles are not enforceable. These sections are relatively
new provisions and a meaningful body of case law has not yet
developed to interpret them. UCC
Section 9-408,
if applicable, could prevent each of the Series A
Collateral Agent and the Series B Collateral Agent from
exercising certain rights with respect to these pledged accounts
receivable, notes and payment intangibles. If the Series A
Collateral Agent or Series B Collateral Agent is unable to
exercise these rights under the UCC or obtain consents, the
value of the collateral securing the Series A Obligations
and the Series B Obligations as well as the ability each of
the Series A Collateral Agent and the Series B
Collateral Agent to realize or foreclose on such collateral in a
timely manner will be adversely affected.
The right of each of the Series A Collateral Agent and the
Series B Collateral Agent to repossess and dispose of the
leased assets (including Rail Collateral and Aircraft
Collateral) upon acceleration is subject to the lessees’
rights under the lease agreements. This limitation may adversely
affect the value of the collateral securing the Series A
Obligations and the Series B Obligations.
Rights
in the collateral securing the Series A Obligations and the
Series B Obligations may be adversely affected by
bankruptcy proceedings.
The right of each of the Series A Collateral Agent and the
Series B Collateral Agent to repossess and dispose of the
collateral securing the Series A Obligations and the
Series B Obligations upon acceleration is likely to be
significantly impaired by federal bankruptcy law if bankruptcy
proceedings are commenced by or against us. This could be true
even if bankruptcy proceedings are commenced after the
Series A Collateral Agent or Series B Collateral Agent
has repossessed and disposed of the collateral securing the
Series A Obligations and the Series B Obligations.
Under bankruptcy law, a secured creditor such as the
Series A Collateral Agent or Series B Collateral Agent
is prohibited from repossessing its security from a debtor in a
bankruptcy case, or from disposing of security repossessed from
a debtor, without bankruptcy court approval. Moreover,
bankruptcy law permits the debtor to continue to retain and to
use collateral, and the proceeds,
46
products, rents, or profits of the collateral, even though the
debtor is in default under the applicable debt instruments,
provided that the secured creditor is given
“adequate protection.”
The meaning of the term “adequate protection” varies
according to circumstance, but in general the doctrine of
“adequate protection” requires a troubled debtor to
protect the value of a secured creditor’s interest in the
collateral, through cash payments, the granting of an additional
security interest or otherwise, if and at such time as the court
in its discretion may determine during the pendency of the
bankruptcy case. In view of the broad discretionary powers of a
bankruptcy court, it is impossible to predict how long payments
under the Series A Notes and the Series B Notes could
be delayed following commencement of a bankruptcy case, whether
or when the trustee would repossess or dispose of the
collateral, or whether or to what extent holders of the
Series A Notes or Series B Notes would be compensated
for any delay in payment or loss of value of the collateral
through the requirements of “adequate protection.”
Furthermore, in the event the Bankruptcy Court determines that
the value of the collateral is not sufficient to repay all
amounts due on the Series A Notes and the Series B
Notes, the holders of the Series A Notes and the
Series B Notes would have unsecured “deficiency
claims” as to the difference. Federal bankruptcy laws do
not generally permit the payment or accrual of interest, costs,
or attorneys’ fees for unsecured claims during the
debtor’s bankruptcy case.
Risks
Related to Consummation of the Offers
The
exchange ratios for the Offers do not reflect any independent
valuation of the Old Notes, the New Notes or the New Preferred
Stock.
We have not obtained or requested a fairness opinion from any
banking or other firm as to the fairness of the exchange ratios
or the relative values of Old Notes, the New Notes or the New
Preferred Stock. If you tender your Old Notes, you may or may
not receive as much value than if you choose to keep them.
No
trading market for the New Preferred Stock exists, and none is
likely to develop.
The shares of New Preferred Stock issued in the Offers have not
been listed on the NYSE or any other national or regional
securities exchange, and we are not likely to list the shares of
New Preferred Stock in the future. As a result, no trading
market for the New Preferred Stock will exist upon consummation
of the Offers, and none is likely to develop. In addition, the
high liquidation preference per share of the New Preferred Stock
and the complexity of the Company’s capital structure
following consummation of the Offers, which could exist
indefinitely if we fail to consummate the Recapitalization, may
further limit the liquidity of the New Preferred Stock.
Consummation
of the Recapitalization is subject to a number of contingencies,
including the affirmative vote of our stockholders. There can be
no assurance that the Recapitalization will be
consummated.
In the event that the conditions to the Offers are satisfied and
the Offers are consummated, following the Settlement Date we
intend to effect the Recapitalization, including to increase our
authorized common shares and reclassify our outstanding
preferred stock, including the New Preferred Stock, into common
stock. Assuming 100% participation in the Offers, on a pro forma
basis following the Recapitalization, holders of the New
Preferred Stock will hold approximately 91.1% of our equity and
voting power, the United States Department of the Treasury, as
holder of our Series D Preferred Stock, will hold 5.4% of
our equity and voting power, holders of our other series of
currently outstanding preferred stock will hold approximately
1.0% of our equity and voting power, and holders of our
currently outstanding common stock will hold 2.5% of our equity
and voting power. If we receive the minimum level of
participation in the Offers required to satisfy the Liquidity
and Leverage Condition, on a pro forma basis following the
Recapitalization, holders of the New Preferred Stock will hold
approximately 90.6% of our equity and voting power, the United
States Department of the Treasury, as holder of our
Series D Preferred Stock, will hold 5.4% of our equity and
voting power, holders of our other series of currently
outstanding preferred stock will hold approximately 1.5% of our
equity and voting power, and holders of our currently
outstanding Common Stock will hold 2.5% of our equity and voting
power.
47
In order to effectuate the reclassification of our preferred
stock into common stock, we will file a proxy statement with the
SEC and solicit votes from our stockholders to amend our
certificate of incorporation to increase our authorized common
shares and reclassify our preferred stock into common stock.
These actions will be subject to the approval by the holders of
a majority of our outstanding voting stock (common stock and New
Preferred Stock voting together as a single class) and, with
respect to the reclassification of our preferred stock into
common stock only, by holders of at least two-thirds of the
aggregate liquidation preference of our Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred
Stock and the New Preferred Stock, voting together as a single
class. In addition, the reclassification into common stock of
the Series D Preferred Stock is subject to the approval of
the United States Department of the Treasury, which approval we
received on October 15, 2009, as described above under
“Summary — Other Recent Developments”.
Even though holders of the New Preferred Stock will hold,
collectively, sufficient voting power to approve the increase in
authorized common shares and the reclassification of our
preferred stock into common stock (other than the
reclassification of the Series D Preferred Stock into
common stock which requires the approval of the United States
Department of the Treasury, which approval we have received as
noted above), there can be no assurance that, if the Offers are
consummated, our stockholders will vote to approve these
actions. In addition, we may seek relief under Chapter 11
of the Bankruptcy Code before the Recapitalization is complete,
one or more stakeholders may file an action to prevent us from
consummating the Recapitalization, or a stakeholder or third
party may otherwise intervene in a manner that prevents us from
consummating the Recapitalization.
If the
Offers are consummated, existing holders of our preferred stock
and our common stock will be subject to substantial dilution of
their voting power and ownership interests.
Consummation of the Offers will result in substantial dilution
to our existing equity holders, leaving such holders with little
economic or voting interest in the Company. Currently, our
preferred stock consists of approximately $3.4 billion
liquidation preference in the aggregate, and our common stock
represents 100% of our voting power and 100% of the equity value
of the Company after the preferred stock liquidation preference
is paid in full. The aggregate liquidation preference of the New
Preferred Stock will be substantially higher than the aggregate
combined liquidation preference of our outstanding series of
preferred stock and, assuming 100% participation in the Offers,
will represent approximately 91.1% of our voting power.
Our
Common Stock may be delisted if we are unable to consummate the
Recapitalization transactions within a reasonable period of
time.
The NYSE’s continued listing requirements provide, among
other requirements, that the minimum trading price of our common
stock not fall below $1.00 per share over a consecutive
30 day trading period. Upon receipt from the NYSE of notice
of non-compliance, we would have a period of 180 days to
regain compliance with this requirement. Upon consummation of
the Offers, the price per share of our common stock may fall
below the $1.00 per share minimum trading price. However, if we
are able to complete the Recapitalization within a reasonable
period of time, including, if required, the Reverse Stock Split
(as defined below), we may be able to regain compliance with the
NYSE’s continued listing requirements and thus maintain our
listing. There can be no assurance that we will be successful in
completing the Recapitalization within the requisite time period
following consummation of the Offers, or at all. See
“Recapitalization After the Offers.”
Delisting of our common stock would have an adverse effect on
the market liquidity of our common stock and, as a result, the
market price for our common stock could become more volatile.
Further, delisting also could make it more difficult for us to
raise additional capital.
Risks
Related to the Chapter 11 Case and the Plan of
Reorganization
The commencement of a Chapter 11 case for the purpose of
implementing the Plan of Reorganization may result in a number
of adverse consequences.
48
The
Chapter 11 environment may adversely affect our business
model.
We are principally engaged in borrowing and lending activities
through our operating subsidiaries. While in Chapter 11 we
may not be able to access credit at interest rates lower than
the rates at which we extend credit. Although we intend to
continue to provide loan commitments, lines of credit,
factoring, receivable and collection management products and
secured financing to our customers in the normal course, there
can be no assurances that counterparties will continue to
conduct business with us while we are in Chapter 11. The
failure to engage in lending activities will result in material
losses.
If we
file for bankruptcy under Chapter 11 of the Bankruptcy
Code, our derivative contracts may be subject to early
termination resulting in significant losses in value and
additional unsecured claims and interest rate and currency risk
to us.
In a substantial portion of our business, we use derivative
contracts that may fall within the “safe harbor”
protections set forth in sections 556 and 560 as well as
other sections of the Bankruptcy Code. The safe harbor
provisions permit non-debtor parties to, among other things,
exercise certain contractual rights and remedies notwithstanding
the commencement of a Chapter 11 case. Although case law
surrounding the scope of the safe harbor provisions under the
Bankruptcy Code remains unsettled, we believe that a substantial
number of our contracts would qualify for safe harbor
protection, resulting in early termination of these contracts by
the counterparties. Upon early termination, settlement payments
are determined by the non-defaulting counterparty using
mark-to-market
valuation methodologies. Given the inherent uncertainties in
mark-to-market
valuation, we may not be able to realize the net current value
of any existing derivative trading contracts subject to early
termination. Although we cannot accurately predict whether a
substantial number of counterparties will exercise early
termination rights, early termination by a substantial number of
counterparties may result in a significant loss of value.
In addition, many of our counterparties owing settlement
payments upon termination may refuse to make such payments
absent litigation, further reducing the value of our existing
trading positions. Furthermore, early termination will result in
an acceleration of settlement payments required to be paid by us
in full upon emergence from Chapter 11, absent consent of
the counterparty or to the extent not fully secured by cash or
letters of credit. Although we cannot accurately predict the
number of counterparties that may exercise early termination
rights, in the event that a substantial number of parties
exercise early termination rights, we anticipate additional
unsecured claims in the form of accelerated termination
payments. In addition, as a result of termination of these
agreements we may be exposed to interest rate and currency risk.
If we
file for bankruptcy under Chapter 11 of the Bankruptcy
Code, agreements of subsidiaries, including financing
transactions, may be subject to termination.
A substantial number of our subsidiaries are parties to
contracts that we guaranteed. Accordingly, a Chapter 11
filing by CIT Group Inc. may result in defaults in the
underlying obligations. Such defaults may permit counterparties
to terminate the underlying contract, repossess collateral
and/or terminate servicing rights.
If we
file for bankruptcy under Chapter 11 of the Bankruptcy
Code, the letters of credit we use to secure the obligations of
our subsidiaries may be drawn, increasing our
liabilities.
A substantial portion of the obligations of CIT Group
Inc.’s subsidiaries are secured with cash or letters of
credit issued by CIT Group Inc. Upon a Chapter 11 filing by
CIT Group Inc. or other event of default, including a
Chapter 11 filing by CIT Group Inc. as credit support
provider, CIT Group Inc.’s funded debt exposure would
increase if approximately $250 million of letters of credit
currently outstanding as of August 31, 2009 (excluding cash
collateralized letters of credit) were to be drawn. In the event
that such letters of credit are drawn, we will be required to
include the satisfaction of such incremental liability in our
Plan of Reorganization, including increased interest costs, and
replace the extinguished letter of credit capacity. There can be
no assurances that we will be able to satisfy such requirements.
49
There
can be no assurances that we will have sufficient excess
liquidity within our Plan of Reorganization to satisfy
obligations owing under a debtor in possession financing
facility upon our emergence from bankruptcy.
If we commence a bankruptcy case, we may need to obtain a debtor
in possession financing facility in order to meet liquidity
needs, including any need arising out of existing letters of
credit being drawn or otherwise terminated by their terms while
we are in Chapter 11 to meet future letter of credit
demands and other working capital needs. There can be no
assurances that we will have sufficient excess liquidity within
our Plan of Reorganization to satisfy obligations owing under
the debtor in possession financing facility upon our emergence
from bankruptcy.
If the
Company files for bankruptcy under Chapter 11 of the
Bankruptcy Code and the Plan of Reorganization is confirmed, the
Company’s existing common stock and preferred stock will no
longer have any value.
If the Company files the prepackaged bankruptcy case and the
Plan of Reorganization is confirmed, then holders of CIT Group
Inc.’s outstanding common and/or preferred stock will have
no stake in the reorganized Company. Moreover, holders of equity
interests in Delaware Funding will only retain such equity
interests if holders of Canadian Senior Note Claims vote to
accept the Plan of Reorganization. There can be no assurance
that holders of our equity securities would retain a stake in
the Company or receive any value as a result of a bankruptcy
case.
The
automatic stay under Bankruptcy Code section 362 may not
prevent creditors from exercising their remedies against
non-debtor affiliates.
The “automatic stay” under Bankruptcy Code
section 362 prevents creditors from taking or continuing
any debt collection enforcement actions against entities that
seek bankruptcy court protection. These protections typically
extend only to the Chapter 11 debtor and its property and
do not typically extend to the property of non-debtor affiliates
or related parties. Accordingly, the rights of creditors against
non-debtors are not typically impacted by the bankruptcy filing
of affiliated entities.
Numerous non-debtor affiliates of CIT are co-obligors with the
debtors on certain debt or have guaranteed the debt of CIT. In
other instances, CIT has guaranteed the debt of certain of its
anticipated non-debtor affiliates. Certain of CIT’s
non-debtor affiliates may have also granted their own creditors
or the creditors of CIT a security interest in some or all of
their property as a form of credit enhancement. In nearly all
instances, a bankruptcy filing by CIT will result in an event of
default of CIT’s debt or a non-debtor affiliate’s debt
if such debt is guaranteed by CIT.
Upon such an event of default, the Company’s lenders would
be free to pursue their remedies against their non-debtor
affiliates and their property, including foreclosing on property
pledged to the Company’s creditors. The Company hopes to
negotiate waivers or standstill agreements with their lenders in
advance of commencing their bankruptcy cases to avoid or
minimize collection efforts against their non-debtor affiliates.
There can be no guarantee that the Company will be successful in
such efforts. If the Company is not successful in all instances
in negotiating waivers of events of default, its non-debtor
affiliates and their property may become the subject of
collection and debt recovery actions by their creditors.
Risks
Relating to Solicitation
If the
Bankruptcy Court determines that our solicitation or vote did
not comply with the requirements of the Bankruptcy Code, we may
need to resolicit acceptances which would delay confirmation of
the Plan of Reorganization.
Section 1126(b) of the Bankruptcy Code provides that the
holder of a claim against, or interest in, a debtor who accepts
or rejects a plan before the commencement of a Chapter 11
case is deemed to have accepted or rejected such plan under the
Bankruptcy Code so long as the solicitation of such acceptance
was made in accordance with applicable nonbankruptcy law
governing the adequacy of disclosure in connection
50
with such solicitations, or, if such laws do not exist, such
acceptance was solicited after disclosure of “adequate
information,” as defined in section 1125 of the
Bankruptcy Code.
In addition, Bankruptcy Rule 3018(b) provides that a holder
of a claim or interest who has accepted or rejected a plan
before the commencement of the case under the Bankruptcy Code
will not be deemed to have accepted or rejected the plan if the
court finds after notice and a hearing that the plan was not
transmitted in accordance with reasonable solicitation
procedures. Section 1126(b) of the Bankruptcy Code provides
that a holder of a claim or interest that has accepted or
rejected a plan before the commencement of a case under the
Bankruptcy Code is deemed to have accepted or rejected the plan
if (i) the solicitation of such acceptance or rejection was
in compliance with applicable nonbankruptcy law, rule or
regulation governing the adequacy of disclosure in connection
with such solicitation or (ii) there is no such law, rule,
or regulation, and such acceptance or rejection was solicited
after disclosure to such holder of adequate information (as
defined by section 1125(a) of the Bankruptcy Code).
The Company believes that its solicitation of votes to accept or
reject the Plan of Reorganization from Holders of Claims in
Class 6, Class 7, Class 8, Class 9,
Class 10, Class 11, Class 12 and Class 13 is
proper under applicable nonbankruptcy law, rules, and
regulations, and contains adequate information as defined by
section 1125(a) of the Bankruptcy Code. The Company also
believes that it is not required to solicit any other class
under the Bankruptcy Code or applicable nonbankruptcy law,
rules, or regulations. The Company cannot be certain, however,
that its solicitation of acceptances or rejections will be
approved by the Bankruptcy Court. There is also a risk that
confirmation of the Plan of Reorganization could be denied by
the Bankruptcy Court.
The Company believes that the use of the Offering Memorandum and
Disclosure Statement, Ballots, and Master Ballots for the
purpose of obtaining acceptances of the Plan of Reorganization
and the solicitation complies with the Bankruptcy Code. The
Bankruptcy Court may decide, however, that the solicitation
failed to meet the requirements of section 1126(b) of the
Bankruptcy Code. If the Bankruptcy Court determines that the
solicitation did not comply with the requirements of
section 1126(b) of the Bankruptcy Code, the Company may
seek to resolicit acceptances, and, in that event, confirmation
of the Plan of Reorganization could be delayed and possibly
jeopardized.
Risks
Related to Our Business
Our business activities involve various elements of risk. The
risks described below and incorporated herein by reference are
not the only ones facing us. Additional risks that are presently
unknown to us or that we currently deem immaterial may also
impact our business. We consider the following issues to be the
most critical risks to the success of our business:
We
have determined there is substantial doubt about the
Company’s ability to continue as a going
concern.
On October 1, 2009, we updated our consolidated financial
statements originally filed in our Annual Report on
Form 10-K
for the year ended December 31, 2008 to summarize
significant subsequent events including certain matters
regarding the Company that raise substantial doubt as to our
ability to continue as a going concern. We filed the updated
consolidated financial statements on a Current Report on
Form 8-K
on October 1, 2009. Our consolidated financial statements
do not include any adjustments that might be necessary if we are
unable to continue as a going concern. If we are unable to
consummate a restructuring transaction such as the transactions
contemplated by this Offering Memorandum and Disclosure
Statement, we may need to seek bankruptcy protection. We cannot
guarantee that we can generate net income, increase revenues or
successfully expand our operation in the future, and if we
cannot do so, we may not be able to continue as a going concern.
Our
debt agreements will contain restrictions that will limit our
flexibility in operating our business.
The New Notes Indentures will contain, and the credit agreement
governing our Senior Credit Facility contains, various covenants
that limit our ability to engage in specified types of
transactions. These covenants limit our and our
subsidiaries’ ability to, among other things:
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incur additional indebtedness;
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pay dividends on, repurchase or make distributions in respect of
our capital stock or make other restricted payments;
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make certain investments;
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sell, transfer or otherwise convey certain assets;
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create liens;
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designate our subsidiaries as unrestricted subsidiaries;
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consolidate, merge, sell or otherwise dispose of all or
substantially all of our assets;
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enter into a new or different line of business; and
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enter into certain transactions with our affiliates.
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A breach of any of these covenants could result in a default
under the New Notes Indentures or our Senior Credit Facility. In
addition, any debt agreements we enter into in the future may
further limit our ability to enter into certain types of
transactions.
Risks
Related to Liquidity and Capital
If
consummation of the transactions contemplated by the
Restructuring Plan does not result in sufficient capital to
satisfy the Federal Reserve Bank of New York, the FDIC and the
UDFI, the Federal Reserve Bank of New York or the FDIC could
require the Company to divest CIT Bank or otherwise further
limit the ability of CIT Bank to conduct business and/or limit
access to CIT Bank by the Company or its
creditors.
The Written Agreement requires that, among other things, the
Company prepare (i) an acceptable capital plan to maintain
sufficient capital at the Company on a consolidated basis and at
CIT Bank on a stand-alone basis and (ii) an acceptable
liquidity plan with respect to the Company’s liquidity
position and funds management practices (see
“— Risks Related to Regulatory Actions”). In
addition, on July 16, 2009, the FDIC and the UDFI each
issued an order to cease and desist (together, the “Cease
and Desist Orders”) to CIT Bank in connection with the
diminished liquidity of CIT Group Inc. The Cease and Desist
Orders restrict CIT Bank from increasing its level of brokered
deposits and restricts the ability of CIT Bank to originate new
business (see “— Risks Related to Regulatory
Actions”). Consummating the transactions contemplated by
the Restructuring Plan will be a key component for developing a
capital plan and a liquidity plan acceptable to the Federal
Reserve Bank of New York and developing sufficient liquidity at
the Company to satisfy the FDIC and the UDFI. If the
restructuring plan is not acceptable to the Federal Reserve Bank
of New York and the FDIC, or if the restructuring plan does not
lead to a capital plan and a liquidity plan acceptable to the
Federal Reserve Bank of New York or result in adequate liquidity
to the satisfaction of the FDIC and UDFI, the Federal Reserve
Bank of New York or the FDIC could take action to require the
Company to divest its interest in CIT Bank or otherwise limit
access to CIT Bank by the Company and its creditors.
Even
if we successfully consummate the Offers, inadequate liquidity
could materially adversely affect our future business
operations.
Even if the Offers are consummated successfully, we will require
significant additional funding during the remainder of 2009 and
through 2010 and beyond to manage and operate our businesses.
Given the current business environment, our liquidity needs
could be significantly higher than we currently anticipate. Our
ability to maintain adequate liquidity through 2010 and beyond
will depend on entering into a new credit facility, successfully
consummating the Offers, successfully operating our business,
continuing to curtail operating expenses and capital spending,
and, potentially, completing various asset sales. Our forecasted
liquidity needs are highly sensitive to changes in each of these
and other factors.
Even if we successfully consummate the Offers, implement our
business restructuring strategy, obtain sufficient financing
from third party sources to continue operations, and
successfully operate our business, we may be required to execute
asset sales or other capital generating actions over and above
our normal finance activities
52
and cut back or eliminate other programs that are important to
the future success of our business. In addition, our customers
and counterparties might respond to further weakening of our
liquidity position by requesting quicker payment, requiring
additional collateral and increasing draws on our outstanding
commitments. If this were to happen, our need for cash would be
intensified and we likely would be unable to operate our
business successfully.
Even
if we successfully consummate the Offers, our indebtedness and
other obligations will continue to be significant. If the
current economic environment does not improve, we may not be
able to generate sufficient cash flow from operations to satisfy
our obligations as they come due, and as a result we would need
additional funding, which may be difficult to
obtain.
Even if we successfully consummate the Offers, and complete the
other steps of our business restructuring strategy with respect
to our capital structure and our businesses, we will continue to
have a significant amount of indebtedness and other obligations,
including potential new securities issued at increased interest
rates/cost of capital, which are likely to have several
important consequences to our business. For example, the amount
of indebtedness and other obligations could:
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require us to dedicate a significant portion of our cash flow
from operations to the payment of principal and interest on our
indebtedness and other obligations, which will reduce the funds
available for other purposes necessary to run our business;
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make it more difficult for us to satisfy our obligations;
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limit our ability to withstand competitive pressures;
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limit our ability to fund working capital, capital expenditures
and other general corporate purposes;
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make us more vulnerable to any continuing downturn in general
economic conditions and adverse developments in our industry and
business; and
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reduce our flexibility in responding to changing business and
economic conditions.
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If we are unable to return to profitability as a result of our
restructuring,
and/or if
current economic conditions do not improve in the foreseeable
future, we will not be able to generate sufficient cash flow
from operations in the future to allow us to service our debt,
pay our other obligations as required and make necessary capital
expenditures, in which case we likely would need to dispose of
additional assets
and/or
minimize capital expenditures
and/or try
to raise additional financing. There is no assurance that any of
these alternatives would be available to us, if at all, on
satisfactory terms.
Our
business will be adversely affected if we do not successfully
expand our deposit-taking capabilities at CIT Bank, which is
currently restricted from increasing its level of broker
deposits pursuant to the Cease and Desist Orders.
The Company currently does not have ready access to the debt
capital markets and likely will not be able to obtain such
access in the foreseeable future, which will make the Company
reliant upon bank deposits to fund its business. CIT Bank
currently does not have a retail branch network and obtains all
of its deposits through broker accounts. The FDIC and the UDFI,
pursuant to the Cease and Desist Orders, have restricted the
level of broker accounts that CIT Bank may hold, without the
prior written consent of both the FDIC and UDFI. In order to
diversify its deposit-taking capabilities beyond broker
accounts, the Company may need to establish de novo or acquire a
retail branch network, an internet banking operation, or a cash
management operation for the existing customers of CIT Bank. Any
such alternatives will require significant time and effort to
implement and will be subject to regulatory approval, which may
not be obtained, particularly if the financial condition of the
Company does not improve. In addition, we are likely to face
strong competition for deposits from other bank holding
companies many of whom are in a stronger financial position than
the Company and are similarly seeking larger and more stable
pools of funding. If CIT Bank is unable to expand its
deposit-taking capability on a timely basis, because of lack of
regulatory approval or otherwise, it would have a material
adverse effect on our business, results of operations, and
financial position.
53
Even
if the Offers are consummated, our liquidity and/or ability to
issue unsecured debt in the capital markets may be limited by
our capital structure and by the performance of our business,
market conditions, credit ratings, or regulatory or contractual
restrictions.
Our traditional business model depended upon access to the debt
capital markets to provide sources of liquidity and efficient
funding for asset growth. These markets have exhibited
heightened volatility and dramatically reduced liquidity.
Liquidity in the debt capital markets has become significantly
more constrained. The unsecured debt markets generally have been
unavailable to us since the fourth quarter of 2007, and will
likely remain unavailable to us for the foreseeable future, in
part because we have not earned a profit since the first quarter
of 2007. In addition, while secured borrowing has been available
to us, it is more costly and interest rates available to us have
increased significantly relative to benchmark rates, such as
U.S. treasury securities and LIBOR. Downgrades in our
short- and long-term credit ratings in March 2008, April 2009
and June 2009 to below investment grade have worsened these
general conditions and had the practical effect of leaving us
without current access to the commercial paper market and other
unsecured term debt markets, which were historically significant
sources of liquidity for us, and necessitated our action to draw
down on our bank credit facilities in March 2008.
As a result of these developments, the Company has been forced
to reduce its funding sources almost exclusively to secured
borrowings, where available. This has resulted in significant
additional costs to the Company due to the higher interest rates
and restrictions on the types of assets and advance rates as
compared to unsecured funding. Further, when the Company entered
into the Senior Credit Facility, it granted liens on almost all
of its remaining unencumbered assets, and the Company’s
ability to continue to access the secured debt markets will be
limited by the outstanding secured financings. The
Company’s ability to execute asset sales or other capital
generating actions and to access other debt markets in the
future, including the unsecured debt markets, is likely to be
adversely affected by the Company’s outstanding secured
financings, which in the aggregate encumber substantially all of
the Company’s assets. Also, if the perception of the market
is that the existing security holders are adversely affected by
the Restructuring Plan, it may adversely affect the
Company’s ability to issue new debt in unsecured debt
markets in the future. There can be no assurance that we will be
able to regain access to the commercial paper and unsecured term
debt markets, or more than limited access to the secured debt
markets, and if we are unable to do so, it would adversely
affect our business, operating results and financial condition
unless the Company is able to obtain alternative sources of
liquidity.
Our ability to satisfy our cash needs also is constrained by
regulatory or contractual restrictions on the manner in which we
may use portions of our cash on hand. The cash at CIT Bank is
available solely for the Bank’s own funding and investment
requirements. The restricted cash related to securitization
transactions is available solely for payments to certificate
holders. The cash of CIT Bank and the restricted cash related to
securitization transactions cannot be transferred to or used for
the benefit of any other affiliate of ours. In addition, as part
of our business we extend lines of credit, some of which can be
drawn by the borrowers at any time. During the second quarter of
2009 and July 2009, we experienced a significant increase in the
draws on such commitments, which significantly degraded our
liquidity position. If the borrowers on these lines of credit
continue to access these lines or increase their rate of
borrowing either as a result of their business needs or due to a
perception that we may be unable to fund these lines of credit
in the future, this could further substantially degrade our
liquidity position which could have a material adverse effect on
our business unless the Company is able to obtain alternative
sources of liquidity.
If we
do not maintain sufficient capital to satisfy regulatory capital
requirements in the future, there could be an adverse effect on
the manner in which we do business, or we could become subject
to various enforcement or regulatory actions and will likely
need to seek relief under the Bankruptcy Code.
Under regulatory capital adequacy guidelines, the Company and
its principal banking subsidiary, CIT Bank, are required to meet
requirements that involve both qualitative and quantitative
measures of assets, liabilities and certain off-balance sheet
items. When we became a bank holding company, we agreed with the
Federal Reserve Bank of New York to maintain total capital of
13% for the Company and our regulatory capital exceeded the
agreed upon levels. Further, we agreed with the FDIC to maintain
a leverage capital ratio
54
of 15% for CIT Bank and CIT Bank’s regulatory capital
exceeded the agreed upon levels. Although CIT Bank continues to
maintain regulatory capital on a stand-alone basis at or above
the levels agreed to with regulators, losses during the first
and second quarter of 2009 have reduced the Company’s level
of total capital below the 13% threshold that the Company agreed
to maintain when it became a bank holding company, and a
projected loss in the third quarter of 2009 and continued losses
in future quarters may further reduce the Company’s total
capital. If either the Offers or the Plan of Reorganization are
not successful, we have no assurances that we will be able to
raise our regulatory capital to satisfactory levels based on the
current level of performance of our businesses. Failure to meet
and maintain the appropriate capital levels would adversely
affect the Company’s status as a bank holding company, have
a material adverse effect on the Company’s financial
condition and results of operations, and subject the Company to
a variety of enforcement actions, as well as certain
restrictions on its business. In addition to the requirement to
be well-capitalized, CIT Group Inc. and CIT Bank are subject to
regulatory guidelines that involve qualitative judgments by
regulators about the entities’ status as well-managed and
the entities’ compliance with Community Reinvestment Act
obligations, and failure to meet those standards may have a
material adverse effect on our business.
If we do not maintain sufficient regulatory capital, the Federal
Reserve Bank of New York and the FDIC could take action to
require the Company to divest its interest in CIT Bank or
otherwise limit access to CIT Bank by the Company and its
creditors. The FDIC, in the case of CIT Bank, and the Federal
Reserve Bank of New York, in the case of the Company, placed
restrictions on the ability of CIT Bank and the Company to take
certain actions without the prior approval of the applicable
regulators. If we are unable to consummate the Offers, finalize
and complete our business restructuring strategy and access the
credit markets to meet our capital and liquidity needs in the
future, or if we otherwise suffer continued adverse effects on
our liquidity, and operating results, we may be subject to
formal and informal enforcement actions by the Federal Reserve
Bank of New York, we may be forced to divest CIT Bank
and/or CIT
Bank may be placed in FDIC conservatorship or receivership or
suffer other consequences. Such actions would impair our ability
to successfully execute any restructuring plan and have a
material adverse effect on our business, results of operations,
and financial position.
Risks
Related to Regulatory Actions
We are
currently subject to the Written Agreement, which may adversely
affect our business.
Under the terms of the Written Agreement, the Company must
provide the Federal Reserve Bank of New York with
(i) a corporate governance plan, focusing on strengthening
internal audit, risk management, and other control functions,
(ii) a credit risk management plan, (iii) a written
program to review and revise, as appropriate, its program for
determining, documenting and recording the allowance for loan
and lease losses, (iv) a capital plan for the Company and
CIT Bank, (v) a liquidity plan, including meeting short
term funding needs and longer term funding, without relying on
government programs or Section 23A waivers, and (vi) a
business plan for the remainder of 2009 and 2010. The Written
Agreement also prohibits the Company, without the prior approval
of the Federal Reserve Bank of New York, from paying dividends,
paying interest on subordinated debt, incurring or guaranteeing
debt outside of the ordinary course of business, or purchasing
or redeeming the Company’s stock. Under the Written
Agreement, the Company must comply with certain procedures and
restrictions on appointing or changing the responsibilities of
any senior officer or director, restricting the provision of
indemnification to officers and directors, and restricting the
payment of severance to employees.
We are
currently subject to the Cease and Desist Orders, which may
adversely affect our business.
CIT Bank relies principally on brokered deposits to fund its
ongoing business which may require payment of slightly higher
yields and may be subject to inherent limits on the aggregate
amount available, depending on market conditions. The UDFI and
the FDIC have issued, and CIT Bank has consented to (without
admitting or denying the allegations), the Cease and Desist
Orders. Under the terms of the Cease and Desist Orders, the FDIC
and the UDFI have imposed, among other matters, additional
restrictions on CIT Bank’s ability to enter into
transactions with affiliates and to make dividend payments.
Under the Cease and Desist Orders, CIT Bank submitted a
contingency plan providing for and ensuring the continuous and
satisfactory servicing of all loans held by CIT Bank, which was
accepted as satisfactory by the FDIC, and must obtain prior
regulatory approval
55
in order to increase the current level of brokered deposits held
by CIT Bank. CIT Bank must notify the FDIC in writing at least
30 days prior to any management changes, and must obtain
prior approval before entering into any “golden
parachute” arrangements or any agreement to make any excess
nondiscriminatory severance plan payments. In addition, the FDIC
is requiring CIT Bank to submit a liquidity plan for funding any
maturing debt and an outline of plans or scenarios for the
future operation of CIT Bank.
Many
of our regulated subsidiaries could be affected by the Offers or
a bankruptcy filing.
In addition to CIT Bank, we have a number of other regulated
subsidiaries that may be affected by the Offers or the Plan of
Reorganization or a general bankruptcy filing by CIT Group Inc.
In particular, the regulators of our banking subsidiaries in the
UK, Germany, Sweden, France and Brazil as well as our SBA and
insurance subsidiaries, may take action against such entities
including seizing such entities and/or prohibiting transactions
with CIT Group Inc.
Risks
Related to Bank Holding Company Status
Our
business, financial condition and results of operations could be
adversely affected by regulations which we are subject to as a
result of becoming a bank holding company, by new regulations or
by changes in other regulations or the application
thereof.
On December 22, 2008, the Board of Governors of the Federal
Reserve System approved our application to become a bank holding
company and the Department of Financial Institutions of the
State of Utah approved our application to convert our Utah
industrial bank to a Utah state bank.
Most of the activities in which we currently engage are
permissible activities for a bank holding company. However,
since we are not a financial holding company, certain of our
existing businesses are not permissible under regulations
applicable to a bank holding company, including certain of our
insurance services and our equity investment activities, and we
could be required to divest those activities within two years
from December 22, 2008. In addition, we are subject to the
comprehensive, consolidated supervision of the Federal Reserve,
including risk-based and leverage capital requirements and
information reporting requirements. We are subject to the Cease
and Desist Orders and the Written Agreement (see
“ — Risks Related to Regulatory Actions”).
This regulatory oversight is established to protect depositors,
federal deposit insurance funds and the banking system as a
whole, and is not intended to protect security holders. In
addition, pursuant to the Written Agreement with the Federal
Reserve Bank of New York, we are required to review the adequacy
of resources for corporate governance functions, including
whether the staffing levels and resources for audit, risk
management, and other control functions are adequate, and
providing additional resources in those areas will increase our
expenses for the foreseeable future. In addition, if the FDIC
and UDFI require CIT Bank to separate all of its operations from
the Company, which will eliminate the cost advantages of the
scale of operations of the Company, it will increase the
expenses of CIT Bank for the foreseeable future.
The financial services industry, in general, is heavily
regulated. Proposals for legislation further regulating the
financial services industry are continually being introduced in
the United States Congress and in state legislatures. The
agencies regulating the financial services industry also
periodically adopt changes to their regulations. In light of
current conditions in the U.S. financial markets and
economy, regulators have increased the level and scope of their
supervision and their regulation of the financial services
industry. In addition, in October 2008, Congress passed the
Emergency Economic Stabilization Act of 2008 (“EESA”),
TARP and the Capital Purchase Program. Under EESA, Congress also
established the Special Inspector General for TARP, who is
charged with monitoring, investigating and reporting on how the
recipients of funds under TARP utilize such funds. Similarly,
there is a substantial prospect that Congress will restructure
the regulation and supervision of financial institutions in the
foreseeable future. We are unable to predict how this increased
supervision and regulation will be fully implemented or in what
form, or whether any additional or similar changes to statutes
or regulations, including the interpretation or implementation
thereof, will occur in the future. Any such action, particularly
in view of our financial condition, could affect us in
substantial and unpredictable ways and could have an adverse
effect on our business, financial condition and results of
operations.
56
The financial services industry is also heavily regulated in
many jurisdictions outside of the United States. We have
subsidiaries in various countries that are licensed as banks,
banking corporations, broker-dealers, and insurance companies,
all of which are subject to regulation and examination by
banking, securities, and insurance regulators in their home
jurisdiction. In addition, in several jurisdictions, including
the United Kingdom and Germany, the local banking regulators
have requested the local regulated entity to develop contingency
plans to operate on a stand-alone basis if the Company seeks
protection under the Bankruptcy Code. Given the evolving nature
of regulations in many of these jurisdictions, it may be
difficult for us to meet all of the regulatory requirements even
after we establish operations and receive approvals. Our
inability to remain in compliance with regulatory requirements
in a particular jurisdiction could have a material adverse
effect on our operations in that market, on our ability to
permanently reinvest our earnings, and on our reputation
generally.
We are also affected by the economic and other policies adopted
by various governmental authorities and bodies in the United
States and other jurisdictions. For example, the actions of the
Federal Reserve and international central banking authorities
directly impact our cost of funds for lending, capital raising
and investment activities and may impact the value of financial
instruments we hold. In addition, such changes in monetary
policy may affect the credit quality of our customers. Changes
in domestic and international monetary policy are beyond our
control and difficult to predict.
Our
business may be adversely affected if we do not successfully
implement our project to transform our compliance, risk
management, finance, treasury, operations, and other areas of
our business to meet the standards of a bank holding
company.
When we became a bank holding company and converted our Utah
industrial bank to a Utah state bank, we analyzed our business
to identify areas that require improved policies and procedures
to meet the regulatory requirements and standards for banks and
bank holding companies, including but not limited to compliance,
risk management, finance, treasury, and operations. We developed
and we are implementing project plans to improve policies,
procedures, and systems in the areas identified. Our new
business model is based on the assumption that we will be able
to make this transition in a reasonable amount of time. We are
currently subject to the Written Agreement, which, among other
things, requires the development of plans to enhance corporate
governance, including increasing resources in audit, risk
management and control functions, correct weaknesses in credit
risk management, review and revise, as appropriate, the
consolidated allowance for loan and lease losses methodology,
and develop capital and liquidity plans (see “ —
Risks Related to Regulatory Actions”). If we have not
identified all of the required improvements, particularly in our
control functions, or if we are unsuccessful in implementing the
policies, procedures, and systems that have been identified, or
if we do not implement the policies, procedures, and systems
quickly enough, we could be subject to a variety of formal and
informal enforcement actions that could result in the imposition
of certain restrictions on our business, or preclude us from
making acquisitions, and such actions could impair our ability
to execute our business plan and have a material adverse effect
on our business, results of operations, or financial position.
Risks
Related to Operation of Our Businesses
The
Restructuring Plan, which contemplates transactions that will
modify our capital structure and the structure and operation of
our businesses, is based in large part upon assumptions and
analyses developed by us. If these assumptions and analyses
prove to be incorrect, our plan may be unsuccessful in its
execution and we may be unable to continue as a going
concern.
The Restructuring Plan, which contemplates transactions that
will affect both our capital structure and the structure and
operation of our businesses, and is based upon assumptions and
analyses based on our experience and perception of historical
trends, current conditions and expected future developments, as
well as other factors that we consider appropriate under the
circumstances. Whether actual future results and developments
will be consistent with our expectations and assumptions depends
on a number of factors, including but not limited to
(i) our ability to obtain adequate liquidity and financing
sources and establish an appropriate level of debt, including
our ability to consummate the Offers and implement the
Restructuring Plan; (ii) our ability
57
to restore customers’ confidence in our viability as a
continuing entity and to attract and retain sufficient
customers; (iii) our ability to retain key employees in
those businesses that we intend to continue to emphasize, and
(iv) the overall strength and stability of general economic
conditions of the financial industry, both in the United States
and in global markets. The failure of any of these factors could
materially adversely affect the successful execution of the
restructuring of our businesses.
In addition, the Restructuring Plan relies upon financial
forecasts, including with respect to revenue growth, improved
earnings before interest, taxes, depreciation and amortization,
improved interest margins, and growth in cash flow. Financial
forecasts are necessarily speculative, and it is likely that one
or more of the assumptions and estimates that are the basis of
these financial forecasts will not be accurate. In our case, the
forecasts are even more speculative than normal, because they
involve fundamental changes in the nature of our business.
Accordingly, we expect that our actual financial condition and
results of operations will differ, perhaps materially, from what
we have anticipated. Consequently, there can be no assurance
that the results or developments contemplated by the
Restructuring Plan will occur or, even if they do occur, that
they will have the anticipated effects on us and our
subsidiaries or our businesses or operations. The failure of any
such results or developments to materialize as anticipated could
materially adversely affect the successful execution of the
transactions contemplated by the Restructuring Plan. In
addition, the accounting treatment required for a restructuring
through the Offers will result in a different presentation of
our financial information than would be required if we
restructured in bankruptcy. These differences may have an impact
on our results going forward.
We may
be additionally negatively affected by credit risk exposures and
our reserves for credit losses may prove
inadequate.
Our business depends on the creditworthiness of our customers
and their ability to fulfill their obligations to us. We
maintain a consolidated reserve for credit losses on finance
receivables that reflects management’s judgment of losses
inherent in the portfolio. We periodically review our
consolidated reserve for adequacy considering economic
conditions and trends, collateral values and credit quality
indicators, including past charge-off experience and levels of
past due loans, past due loan migration trends, and
non-performing assets. During the first and second quarters of
2009, losses were significantly more severe than in 2008, and
more severe than in prior economic downturns, due to an increase
in the proportion of unsecured or undersecured cash flow loans
versus asset backed loans in our corporate finance segment, the
limited ability of borrowers to restructure their liabilities or
their business, and reduced values of the collateral for loans.
Our consolidated reserve for credit losses may prove inadequate
and we cannot assure that it will be adequate over time to cover
credit losses in our portfolio because of adverse changes in the
economy or events adversely affecting specific customers,
industries or markets. The current economic environment is
dynamic and the credit-worthiness of our customers and the value
of collateral underlying our receivables has declined
significantly and may continue to decline significantly over the
near future. Our reserves may not keep pace with changes in the
credit-worthiness of our customers or collateral values. If the
credit quality of our customer base continues to materially
decline, if the risk profile of a market, industry, or group of
customers changes significantly, or if the markets for accounts
receivable, equipment, real estate, or other collateral
deteriorates significantly, any or all of which would adversely
affect the adequacy of our reserves for credit losses, it could
have a material adverse effect on our business, results of
operations, and financial position.
In addition to customer credit risk associated with loans and
leases, we are also exposed to other forms of credit risk,
including counterparties to our derivative transactions, loan
sales, syndications and equipment purchases. These
counterparties include other financial institutions,
manufacturers and our customers. If our credit underwriting
processes or credit risk judgments fail to adequately identify
or assess such risks, or if the credit quality of our derivative
counterparties, customers, manufacturers, or other parties with
which we conduct business materially deteriorates, we may be
exposed to credit risk related losses that may negatively impact
our financial condition, results of operations or cash flows.
58
Uncertainties
related to our business may result in the loss of or decreased
business with customers.
Our business depends upon our customers believing that we will
be able to provide a wide range of quality products on a timely
basis to our customers. Our ability to provide our products on a
reliable and timely basis affects our ability to attract new
customers. Many of our customers rely upon our products to
provide them with the working capital necessary to operate their
business or to fund capital improvements that allow them to
maintain or expand their business. In many instances, these
funding requirements are time sensitive. If our customers are
uncertain as to our ability to continue to provide them with
funding on a timely basis or to provide the same breadth and
quality of products, we may be unable to attract new customers
and we may experience lower business with or a loss of customers.
We may
not be able to achieve adequate consideration for the
disposition of assets or businesses.
As part of our business restructuring strategy, we are reviewing
a number of measures designed to manage our liquidity position,
including potential asset sales. There can be no assurance that
we will be successful in completing all or any of these
transactions, because there may not be a sufficient number of
buyers willing to enter into a transaction, we may not receive
sufficient consideration for such assets, the process of selling
assets may take too long to be a significant component of a
restructuring, or the Steering Committee under the Senior Credit
Facility may not approve a sale of assets. These transactions,
if completed, may reduce the size of our business and it is not
currently part of our long-term strategy to replace the volume
associated with these businesses. From time to time, we also
receive inquiries from third parties regarding our potential
interest in disposing of other types of assets, such as student
lending and other commercial finance or vendor finance assets,
which we may or may not choose to pursue.
Prices for assets were depressed due to market conditions
starting in the second half of 2007 and continuing to today. In
addition, potential purchasers may be unwilling to pay an amount
equal to the face value of a loan or lease if the purchaser is
concerned about the quality of the Company’s credit
underwriting. Further, some potential purchasers will
intentionally submit bids with purchase prices below the face
value of a loan or lease if the purchaser suspects that the
seller is distressed and cannot afford to negotiate the price.
There is no assurance that we will receive adequate
consideration for any asset or business dispositions. Certain
dispositions in 2008 and 2009 resulted in the Company
recognizing significant losses. As a result, our future
disposition of businesses or asset portfolios could have a
material adverse effect on our business, financial condition and
results of operations and could result in the Company seeking
relief under the Bankruptcy Code.
We are
prohibited from paying dividends on our common or preferred
stock or interest on our subordinated debt.
Under the terms of the Written Agreement, we are prohibited from
declaring dividends on our preferred stock and from paying
interest on our subordinated notes and our junior subordinated
notes without prior written approval of the Federal Reserve Bank
of New York. In addition, under the terms of certain outstanding
securities, we are also prohibited from declaring dividends on
our preferred stock and from paying interest on our junior
subordinated notes if we do not meet certain financial tests,
provided that the limitation does not apply if we
pay such dividends and interest out of net proceeds that we have
received from the sale of common stock. We have suspended the
payment of dividends on our common stock and we have suspended
the declaration of dividends on our preferred stock and the
declaration of interest on our junior subordinated notes. We
cannot determine when, if ever, we will be able to pay dividends
on our common or preferred stock or interest on our junior
subordinated notes in the future.
Uncertainties
related to our business may create a distraction for or cause a
loss of employees and may otherwise materially adversely affect
our ability to attract new employees.
Our future results of operations will depend in part upon our
ability to retain existing highly skilled and qualified
employees and to attract new employees. Failure to continue to
attract and retain such individuals could materially adversely
affect our ability to compete. Uncertainties about the future
prospects and viability
59
of our business and the possibility of seeking relief under the
Bankruptcy Code is impacting and is likely to continue to impact
our ability to attract and retain key management, technical and
other personnel, and is creating a distraction for existing
employees. If we are significantly limited or unable to attract
and retain key personnel, or if we lose a significant number of
key employees, or if employees continue to be distracted due to
the uncertainties about the future prospects and viability of
our business, it could have a material adverse effect on our
ability to successfully operate our business or to meet our
operations, risk management, compliance, regulatory, and
financial reporting requirements.
Executive
compensation restrictions on TARP recipients could materially
affect our ability to retain
and/or
recruit employees.
On February 17, 2009, the American Recovery and
Reinvestment Act of 2009 (the “Act”) was signed into
law. The Act includes an amendment and restatement of
Section 111 of the EESA that significantly expands and
strengthens executive compensation restrictions applicable to
entities, including CIT, that participate in TARP. The Act also
includes a number of other requirements, including but not
limited to implementing a
say-on-pay
policy that allows for an annual non-binding shareholder vote on
executive compensation and a policy related to the approval of
excessive or luxury expenditures, as identified by the United
States Department of the Treasury, including corporate aircraft,
office and facility renovations, entertainment and holiday
parties and other activities or events that are not reasonable
expenditures for staff development, performance incentives or
similar measures in the ordinary course of business. The
Act’s executive compensation restrictions generally will
continue for so long as any obligation arising from TARP
financial assistance remains outstanding, other than
government-held warrants, and will likely apply to the Company
for the foreseeable future. The provisions of the Act and
especially the United States Department of the Treasury
regulations that will implement the Act could have a material
adverse effect on our ability to recruit and retain individuals
with the experience and skill necessary to manage successfully
our business through its current difficulties and during the
long term.
We may
not be able to realize our entire investment in the equipment we
lease.
The realization of equipment values (residual values) during the
life and at the end of the term of a lease is an important
element in the leasing business. At the inception of each lease,
we record a residual value for the leased equipment based on our
estimate of the future value of the equipment at the expected
disposition date. Internal equipment management specialists, as
well as external consultants, determine residual values.
A decrease in the market value of leased equipment at a rate
greater than the rate we projected, whether due to rapid
technological or economic obsolescence, unusual wear and tear on
the equipment, excessive use of the equipment, recession or
other adverse economic conditions, or other factors, would
adversely affect the current or the residual values of such
equipment. Further, certain equipment residual values, including
commercial aerospace residuals, are dependent on the
manufacturer’s or vendor’s warranties, reputation and
other factors, including market liquidity. In addition, we may
not realize the full market value of equipment if we are
required to sell it to meet liquidity needs or for other reasons
outside of the ordinary course of business. Consequently, there
can be no assurance that we will realize our estimated residual
values for equipment. Also, in our current financial condition,
many potential purchasers will further discount their offering
price to account for the risk that a transaction may be unwound
if we seek relief under the Bankruptcy Code.
The degree of residual realization risk varies by transaction
type. Capital leases bear the least risk because contractual
payments cover approximately 90% of the equipment’s cost at
the inception of the lease. Operating leases have a higher
degree of risk because a smaller percentage of the
equipment’s value is covered by contractual cash flows at
lease inception. Leveraged leases bear the highest level of risk
as third parties have a priority claim on equipment cash flows.
A significant portion of our leasing portfolios are comprised of
operating leases, and a portion is comprised of leveraged
leases, both of which increases our residual realization risk.
60
Even
if we successfully consummate the Offers, we and our
subsidiaries are party to various financing arrangements,
commercial contracts and other arrangements that under certain
circumstances give, or in some cases may give, the counterparty
the ability to exercise rights and remedies under such
arrangements which, if exercised, may have material adverse
consequences.
We and our subsidiaries are party to various financing
arrangements, commercial contracts and other arrangements that
give, or in some cases may give, the counterparty the ability to
exercise rights and remedies upon the occurrence of a material
adverse effect or material adverse change (or similar event),
certain insolvency events, a default under certain specified
other obligations or a failure to comply with certain financial
covenants. Recent deteriorations in our business and that of
certain of our subsidiaries may make it more likely that
counterparties will seek to exercise rights and remedies under
these arrangements. The counterparty could have the ability,
depending on the arrangement, to, among other things, require
early repayment of amounts owed by us or our subsidiaries and in
some cases payment of penalty amounts. In these cases, we intend
to enter into discussions with the counterparties where
appropriate to seek a waiver under, or amendment of, the
arrangements to avoid or minimize any potential adverse
consequences. We cannot assure you that we will be successful in
avoiding or minimizing the adverse consequences which may,
individually or collectively, have a material adverse effect on
our ability to successfully implement our Restructuring Plan and
on our consolidated financial position and results of
operations. If we are unsuccessful in avoiding or minimizing the
adverse consequences discussed above, such consequences could
have a material adverse effect on our business, results of
operations, and financial position and will likely result in the
Company seeking relief under the Bankruptcy Code.
The
exchange of Old Notes for New Notes, New Preferred Stock, New
Common Interests, or Contingent Value Rights pursuant to the
Offers or the Plan of Reorganization will result in cancellation
of indebtedness income to us.
We expect to realize a significant amount of cancellation of
indebtedness (“COD”) income as a result of the Offers
or the Plan of Reorganization, equal to the excess of the amount
of indebtedness discharged over the sum of the issue price of
the New Notes and value of the New Preferred Stock, New Common
Interests, or Contingent Value Rights issued in satisfaction of
the Old Notes. The exact amount of any COD income that will be
realized by us will not be determinable until the consummation
of the Offers or the Plan of Reorganization, as applicable.
If the Offers are consummated, to the extent we are considered
solvent for U.S. federal income tax purposes immediately
prior to the consummation of the Offers, the resulting COD
income recognized by us may generally be offset by our available
net operating losses (“NOL”) and certain other tax
attributes. It is possible that the COD income that will be
recognized by us pursuant to the Offers will be in excess of our
NOLs and other tax attributes available to offset such income
and, therefore, we could incur a current tax liability. The
American Recovery and Reinvestment Act of 2009 permits us to
elect to defer the inclusion of any portion of the COD income
resulting from the Offers, with the amount of COD income so
deferred becoming includible in our income ratably over a
five-taxable year period beginning in 2014, at which time such
income may generally be offset by any existing tax attributes to
the extent of applicable limitations.
To the extent we are considered insolvent for U.S. federal
income tax purposes immediately prior to the consummation of the
Offers, or, if the Offers are not completed and we instead
consummate the Plan of Reorganization pursuant to a confirmed
Chapter 11 bankruptcy case, we will not be required to
include COD in income.
If and to the extent any amount attributable to the COD is
excluded from income pursuant to the insolvency or the
bankruptcy exceptions, we will generally be required to reduce
our tax attributes, including, but not limited to, our NOLs and
tax basis in certain assets. If our COD income exceeds our
available NOLs and other tax attributes, such excess is
permanently excluded from income.
As a result, whether or not COD income is included in income or
excluded from income by reason of the insolvency or bankruptcy
exceptions, we expect that the Offers or the Plan of
Reorganization will result in the possible elimination of our
NOLs and a significant reduction in our other tax attributes.
61
Our
ability to utilize our NOLs and other tax attributes to offset
COD income recognized as a result of the Offers may be limited
if we undergo an “ownership change” prior to the
consummation of the Offers.
Our ability to utilize our NOLs and other tax attributes to
offset COD income recognized as a result of the Offers could be
limited if we undergo an “ownership change” within the
meaning of Section 382 of the Internal Revenue Code of
1986, as amended (the “Tax Code”) prior to the
consummation of the Offers. An ownership change is generally
defined as a greater than 50 percentage point increase in
equity ownership by five-percent shareholders in any three-year
period. On August 12, 2009, we adopted a tax benefits
preservation plan (the “Tax Benefits Preservation
Plan”) in order to protect our ability to utilize our NOLs
and other tax attributes to offset future income. The Tax
Benefits Preservation Plan is designed to reduce the likelihood
of an ownership change by, among other things, discouraging any
person or group from becoming a five-percent shareholder and
dissuading existing five-percent shareholders from acquiring
additional shares of our stock. There is no guarantee, however,
that the Tax Benefits Preservation Plan will prevent us from
experiencing an ownership change.
We
will undergo an “ownership change” as a result of the
Offers or the Plan of Reorganization, which is likely to limit
the benefit of any remaining NOLs and other tax attributes after
consummation of the Offers or the Plan of Reorganization to
offset our expected future taxable income.
We have consolidated NOL carryforwards for U.S. federal
income tax purposes of approximately $3.6 billion as of the
end of 2008. In addition, as of September 30, 2009, we
estimate that we have incurred additional net operating losses
of approximately $2.4 billion and expect to incur
additional losses for the current taxable year ending
December 31, 2009. The amount of any such losses remains
subject to audit and adjustment by the IRS. We believe that all
or substantially all of our NOLs and certain other tax
attributes could be utilized as a result of COD income realized
as a result of the Offers or the Plan of Reorganization. The
exact amount of any remaining NOLs and other tax attributes will
not be determinable until the consummation of the Offers or the
Plan of Reorganization, as applicable. The future benefits to
the Company of any such remaining NOLS or other tax attributes
is likely to be limited as a result of our undergoing an
ownership change within the meaning of Section 382 of the
Tax Code. For a more detailed discussion of limitations on or
loss of our NOLs and other tax attributes, see “Certain
U.S. Federal Income Tax Considerations —
U.S. Federal Income Tax Consequences to the
Company — Net Operating Losses-Section 382.”
Holders
of New Notes may incur tax liabilities prior to receiving
interest payments.
We anticipate that the New Notes will be issued with original
issue discount (“OID”) for U.S. federal income
tax purposes, and accordingly, U.S. Holders will be subject
to special rules relating to the accrual of such OID and its
inclusion in income. U.S. Holders generally must include
OID in income for U.S. federal income tax purposes
regardless of such holder’s regular accounting method. As a
result, U.S. Holders will be required to include OID in
income in advance of the receipt of cash attributable to such
income. See “Certain U.S. Federal Income Tax
Considerations — U.S. Federal Income Tax
Consequences to U.S. Holders — Ownership and
Disposition of New Notes — Original Issue
Discount.”
Adverse
or volatile market conditions could continue to negatively
impact fees and other income.
In 2005, we began pursuing strategies to leverage our expanded
asset generation capability and diversify our revenue base in
order to generate higher levels of syndication and participation
income, advisory fees, servicing fees and other types of fee
income to increase other income as a percentage of total
revenue. These revenue streams are dependent on market
conditions and, therefore, have been more volatile than interest
on loans and rentals on leased equipment. Current market
conditions, including lower liquidity levels in the syndication
market and our strategy to manage our growth due to our own
funding constraints, have significantly reduced our syndication
activity, and have resulted in significantly lower fee income.
In addition, if other lenders become concerned about our ability
to meet our obligations on a syndicated transaction, it may
become more difficult for us to syndicate transactions that we
originate or to participate in syndicated transactions
originated by others. If we are unable to sell or syndicate a
transaction after it is originated, we
62
will end up holding a larger portion of the transaction and
assuming greater underwriting risk than we originally intended,
which could increase our capital and liquidity requirements to
support our business or expose us to the risk of valuation
allowances for assets held for sale. In addition, we also
generate significant fee income from our factoring business. If
our clients become concerned about our liquidity position and
our ability to provide these services going forward and reduce
their amount of business with us, this could further negatively
impact our fee income and have a material adverse effect on our
business. Continued disruption to the capital markets or the
failure of our initiatives to result in increased asset and
revenue levels could adversely affect our financial position and
results of operations.
Investment
in and revenues from our foreign operations are subject to
various risks and requirements associated with transacting
business in foreign countries.
An economic recession or downturn, increased competition, or
business disruption associated with the political or regulatory
environments in the international markets in which we operate
could adversely affect us.
In addition, while we generally hedge our translation and
transaction exposures, foreign currency exchange rate
fluctuations, or the inability to hedge effectively in the
future, could have a material adverse effect on our investment
in international operations and the level of international
revenues that we generate from international financing and
leasing transactions. Reported results from our operations in
foreign countries may fluctuate from period to period due to
exchange rate movements in relation to the U.S. dollar,
particularly exchange rate movements in the Canadian dollar,
which is our largest
non-U.S. exposure.
Recent weakness in the U.S. dollar has negatively impacted
the U.S. dollar value of our revenues that are paid in
other currencies. A further weakening of the U.S. dollar
will further negatively impact the U.S. dollar value of our
international operations.
U.S. generally accepted accounting principles
(“GAAP”) require that income earned from foreign
subsidiaries should be treated as being taxed as if they were
distributed to the parent company, unless those funds are
permanently reinvested outside the United States. To meet this
permanent reinvestment standard, we must demonstrate that there
is no foreseeable need for the funds by the parent company and
that there is a specific plan for reinvestment of the
undistributed earnings of the funds by the subsidiary. As of
December 31, 2008, Federal income taxes have not been
provided on approximately $1.5 billion of cumulative
earnings of foreign subsidiaries that we have determined to be
permanently reinvested. If we sell a foreign business or
significant foreign assets, which has become more likely in view
of our current financial condition and restructuring plan, we
may not be able to redeploy some or all of the funds generated
from a sale outside the United States and would be required to
treat the funds as repatriated currently for purposes of GAAP.
While it is not practicable to estimate the amount of tax that
we would have to provide for under GAAP in such an event, the
impact on us may be material.
Foreign countries have various compliance requirements for
financial statement audits and tax filings, which are required
to obtain and maintain licenses to transact business. If we are
unable to properly complete and file our statutory audit reports
or tax filings, regulators or tax authorities in the applicable
jurisdiction may restrict our ability to do business.
We may
be adversely affected by significant changes in interest
rates.
Although we generally employ a matched funding approach to
managing our interest rate risk, including matching the
repricing characteristics of our assets with our liabilities,
significant increases in market interest rates or widening of
our credit spreads, or the perception that an increase may
occur, could adversely affect both our ability to originate new
finance receivables and our profitability. During the second
half of 2007 and all of 2008 and 2009, credit spreads for almost
all financial institutions, and particularly our credit spreads,
widened dramatically and made it highly uneconomical for us to
borrow in the unsecured debt markets to fund loans to our
customers. Conversely, a decrease in interest rates could result
in accelerated prepayments of owned and securitized finance
receivables. In addition, the widening of our credit spreads
relative to the credit spreads of many of our competitors has
placed us at a competitive disadvantage and made it more
difficult to maintain our interest margins. If we are unable to
obtain funding, either in the capital markets or through bank
63
deposits, at an economical rate that is competitive with other
banks and lenders, we will be operating at a competitive
disadvantage and it may have a material adverse effect on our
business, financial condition, and results of operations.
We may
be adversely affected by further deterioration in economic
conditions that is general or specific to industries, products
or geographic areas.
A further deepening of the current recession, prolonged economic
weakness, or other adverse economic or financial developments in
the U.S. or global economies or affecting specific
industries, geographic locations
and/or
products, would likely further impact credit quality as
borrowers may fail to meet their debt payment obligations,
particularly customers with highly leveraged loans. Adverse
economic conditions have and could further result in declines in
collateral values, which also decreases our ability to fund
against collateral. Accordingly, higher credit and collateral
related losses could impact our financial position or operating
results.
Our business has already been materially weakened by the current
credit crisis (See “— Risks Related to Liquidity
and Capital — Even if the Offers are consummated, our
liquidity
and/or
ability to issue unsecured debt in the capital markets may be
limited by our capital structure and by the performance of our
business, market conditions, credit ratings, or regulatory or
contractual restrictions”). A continued and prolonged
recession also would likely exacerbate our current difficulties
in originating new business, given the resultant reduced demand
for credit. In addition, a continued downturn in certain
industries may result in a reduced demand for the products that
we finance in that industry or negatively impact collection and
asset recovery efforts. For example, decreased demand for the
products of various manufacturing customers due to the current
recession may adversely affect their ability to repay their
loans and leases with us. Similarly, a decrease in the level of
airline passenger traffic due to the current recession or fears
of a swine flu epidemic, or a decline in railroad shipping
volumes due to a recession in particular industries may
adversely affect our aerospace or rail businesses, the value of
our aircraft and rail assets and the ability of our lessees to
make their lease payments.
Competition
from both traditional competitors and new market entrants may
adversely affect our returns, volume and credit
quality.
Our markets are highly competitive and are characterized by
competitive factors that vary based upon product and geographic
region. We have a wide variety of competitors that include
captive and independent finance companies, commercial banks and
thrift institutions, industrial banks, community banks, leasing
companies, hedge funds, insurance companies, mortgage companies,
manufacturers and vendors.
We compete primarily on the basis of pricing, terms and
structure. As a result of our current financial condition or
further deterioration thereof, we could lose market share.
Should we match competitors’ terms, it is possible that we
could experience margin compression
and/or
increased losses. We also may be unable to match
competitors’ terms as a result of our current or future
financial condition.
64
USE OF
PROCEEDS
We will not receive any proceeds from the Offers. In
consideration for issuing New Notes
and/or
shares of New Preferred Stock, as applicable, we will receive in
exchange the Old Notes. The Old Notes surrendered in exchange
for New Notes will be retired and canceled and cannot be
reissued.
RATIO OF
EARNINGS TO FIXED CHARGES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
Year Ended
|
|
|
June 30,
|
|
December 31,
|
|
|
2009
|
|
2008
|
|
2008
|
|
Actual(1)
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
(3
|
)
|
Pro Forma
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For purposes of determining the ratio of earnings to fixed
charges, earnings consist of income before income taxes and
fixed charges. Fixed charges consist of interest on
indebtedness, minority interest in subsidiary trust holding
solely debentures of CIT and one-third of rent expense, which is
deemed representative of an interest factor. |
|
(2) |
|
Earnings were insufficient to cover fixed charges by
$2,061.9 million and $936.1 million for the six months
ended June 30, 2009 and June 30, 2008, respectively. |
|
(3) |
|
Earnings were insufficient to cover fixed charges by
$1,142.2 million for the year ended December 31, 2008. |
|
(4) |
|
Due to the significant losses for the six months ended
June 30, 2009, earnings would continue to be insufficient
after the exchange to cover fixed charges. |
65
CAPITALIZATION
The first table on the following page sets forth as of
June 30, 2009 on a consolidated basis:
|
|
|
|
•
|
our actual capitalization; and
|
|
|
•
|
our As Adjusted capitalization to reflect the consummation of
the exchange of 100%, which is not an expected result, of the
Old Notes for New Notes and shares of New Preferred Stock. The
New Series A Notes will be issued in an initial aggregate
principal amount of approximately $20.0 billion. However,
the estimated fair value of approximately $16.0 billion in
the As Adjusted capitalization reflects the recording of the New
Series A Notes at fair value (a discount of 20% of the
aggregate principal amount), based on management’s estimate
of fair value. The New Series B Notes will be issued in an
initial aggregate principal amount of approximately
$2.1 billion. However, the estimated fair value of
approximately $1.9 billion in the As Adjusted
capitalization reflects the recording of the New Series B
Notes at fair value (a discount of 11% of the aggregate
principal amount), based on management’s estimate of fair
value. The Junior Credit Facilities will be issued in an initial
aggregate principal amount of approximately $2.9 billion.
However, the estimated fair value of approximately
$2.3 billion in the As Adjusted capitalization reflects the
recording of the Junior Credit Facilities at fair value (a
discount of 20% of the aggregate principal amount). The New
Preferred Stock issued will consist of 68,257,435 shares
having an aggregate liquidation preference of approximately
$95.6 billion and representing approximately 91.1% of the
aggregate voting power of our capital stock generally entitled
to vote on matters presented to our stockholders.
|
The As Adjusted capitalization assumes that all exchanged Old
Notes meet the requirements for gain recognition. Upon
consummation of the Offers, the Company would be required to
determine whether the exchanged debt meets the accounting
requirements for the recording of debt extinguishment gain. The
current assumptions, 100% debt exchange participation and all
the debt meets the accounting requirements for gain recognition,
equate to approximately $8.5 billion of gain recognition
reflected in retained earnings. The actual debt extinguishment
gain, and the resulting impact on stockholders’ equity,
will be less if the accounting requirements for debt
extinguishment gain recognition are not met
and/or less
than 100% of the debt is exchanged. If extinguishment gains are
not recognized at the exchange date, then the exchange would be
considered a debt modification and would be reflected as
increased margins, prospectively. The Company does not expect
that all exchanged Old Notes will meet the criteria to record a
debt extinguishment gain and does not expect that all Old Notes
will be exchanged and thus the debt extinguishment gain and
stockholders’ equity will be less than is reflected in the
adjusted capitalization. The value of the Series F
preferred stock represents management’s best estimate of
the fair value of that security as of the exchange date, and
reflects approximately 96.6% of the combined equity value of
$5 billion. This equity value has not been validated by any
independent third parties.
The second table on the following pages sets forth as of
June 30, 2009 on a consolidated basis our actual
capitalization and our as adjusted capitalization to reflect the
exchange of all Old Notes in the Plan of Reorganization. The As
Adjusted capitalization assumes “fresh start
reporting,” as defined in American Institute of Certified
Public Accountants Statement of Position 90-7, Financial
Reporting by Entities in Reorganization under the Bankruptcy
Code, whereby the entity’s reorganization value is
allocated to assets and liabilities. The equity value of CIT is
assumed to be $8 billion at the emergence date, the
midpoint of a range of $5 to $11 billion of estimated
values as provided by Morgan Stanley as of September 30,
2009 in connection with its equity valuation analysis. The
estimated fair values of debt amounts are based largely on
discounted cash flow analysis developed by management. The
actual equity value and the allocation of fair value to debt
could differ materially from amounts presented in the table.
These tables have been included to provide additional
information regarding the anticipated impact of the
restructuring transactions, including the Offers, and the Plan
of Reorganization on our capitalization. These tables should be
read in conjunction with the “Selected Historical
Consolidated Financial Data” elsewhere in this Offering
Memorandum and Disclosure Statement and the historical
consolidated financial statements and related notes that are
contained in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, updated with
the documents included in Exhibit 99.1 to the
Company’s Current Report on Form 8-K filed on
October 1, 2009 and our Quarterly Reports on
Form 10-Q
for the quarters ended March 31, 2009 and June 30,
2009, each of which is incorporated by reference into this
Offering Memorandum and Disclosure Statement.
66
Pro Forma
Capitalization Under the Offers
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2009
|
|
|
|
Actual
|
|
|
As
Adjusted(A)
|
|
|
|
(In millions, except share data and per share amounts)
|
|
|
Debt:
|
|
|
|
|
|
|
|
|
Bank credit facilities
|
|
$
|
3,100.0
|
|
|
$
|
—
|
|
Secured borrowings
|
|
|
17,635.3
|
|
|
|
17,635.3
|
|
Senior unsecured
notes-variable(C)
|
|
|
7,451.7
|
|
|
|
1,159.0
|
|
Senior unsecured
notes-fixed(C)
|
|
|
23,801.7
|
|
|
|
1,511.3
|
|
Junior, subordinated notes and convertible equity units
|
|
|
2,098.9
|
|
|
|
199.9
|
|
Series A Notes
|
|
|
—
|
|
|
|
16,017.1
|
|
Series B Notes
|
|
|
—
|
|
|
|
1,908.5
|
|
Junior Credit Facilities
|
|
|
—
|
|
|
|
2,281.4
|
|
|
|
|
|
|
|
|
|
|
Total Debt
|
|
|
54,087.6
|
|
|
|
40,712.5
|
|
Deposits
|
|
|
5,378.7
|
|
|
|
5,378.7
|
|
|
|
|
|
|
|
|
|
|
Total Debt and Deposits
|
|
|
59,466.3
|
|
|
|
46,091.2
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Preferred stock: $0.01 par value, 100,000,000 authorized
|
|
|
|
|
|
|
|
|
Issued and outstanding:
|
|
|
|
|
|
|
|
|
Series A 14,000,000 with a liquidation preference of $25
per share
|
|
|
350.0
|
|
|
|
350.0
|
|
Series B 1,500,000 with a liquidation preference of $100
per share
|
|
|
150.0
|
|
|
|
150.0
|
|
Series C 11,500,000 with a liquidation preference of $50
per share
|
|
|
575.0
|
|
|
|
575.0
|
|
Series D 2,330,000 with a liquidation preference of $1,000
per share
|
|
|
2,071.7
|
|
|
|
2,071.7
|
|
Series F 68,257,435 Preferred Stock, issued hereby, with a
liquidation preference of $1,400 per share
|
|
|
—
|
|
|
|
4,828.0
|
|
Common stock: $0.01 par value, 600,000,000 authorized
|
|
|
|
|
|
|
|
|
Issued: 398,289,150 (as of June 30, 2009)
|
|
|
4.0
|
|
|
|
4.0
|
|
Outstanding: 392,067,503 (as of June 30, 2009)
|
|
|
|
|
|
|
|
|
Paid-in capital, net of deferred compensation of $31.1
|
|
|
11,269.8
|
|
|
|
11,269.8
|
|
(Accumulated deficit) retained earnings
|
|
|
(7,896.6
|
)
|
|
|
650.5
|
|
Accumulated other comprehensive loss
|
|
|
(134.7
|
)
|
|
|
(134.7
|
)
|
Less: treasury stock, 6,221,647 shares, at cost
|
|
|
(310.3
|
)
|
|
|
(310.3
|
)
|
|
|
|
|
|
|
|
|
|
Total Common Stockholders’ Equity
|
|
|
2,932.2
|
|
|
|
11,479.3
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders’ Equity
|
|
|
6,078.9
|
|
|
|
19,454.0
|
|
|
|
|
|
|
|
|
|
|
Total Capitalization
|
|
$
|
65,545.2
|
|
|
$
|
65,545.2
|
|
|
|
|
|
|
|
|
|
|
Book Value per Common
Share(B)
|
|
$
|
7.48
|
|
|
$
|
29.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
|
The As Adjusted capitalization under the offers does not reflect
certain debt-related transactions that occurred subsequent to
June 30, 2009. These primarily include the addition of the
$3 billion Senior Credit Facility, which increased the
‘Secured borrowings’, the cash tender offer completed
on August 17, 2009 for $1 billion of August 17 Notes,
which reduced ‘Senior unsecured notes-variable’ plus
other note maturities subsequent to June 30, 2009. It also
assumes 100% participation in the Offers, which is not an
expected result. |
|
(B) |
|
The “As Adjusted” book value per common share does not
reflect the impact of the expected Recapitalization. If the
Recapitalization is consummated, all preferred stock is assumed
converted to common stock, which would significantly increase
the number of common shares issued to approximately
15.7 billion (from 398.3 million shares pre
Recapitalization), reducing the book value per common share to
an estimated $1.24 per share (from $29.28 per share
pre-Recapitalization). The reclassification of the preferred
stock would increase ‘common stock’ to approximately
$157 million, with the remaining (approximately
$7.8 billion) increasing ‘paid-in-capital’. |
|
(C) |
|
The remaining unsecured notes primarily reflect certain debt at
non-U.S. subsidiaries not included in the Offers and debt which
matured and was repaid subsequent to June 30, 2009. |
67
Pro Forma
Capitalization Under the Plan of Reorganization
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2009
|
|
|
|
Actual
|
|
|
As Adjusted(A)(B)
|
|
|
|
(In millions, except share data and per share amounts)
|
|
|
Debt:
|
|
|
|
|
|
|
|
|
Bank credit facilities
|
|
$
|
3,100.0
|
|
|
$
|
—
|
|
Secured borrowings
|
|
|
17,635.3
|
|
|
|
15,601.3
|
|
Senior unsecured notes-variable(C)
|
|
|
7,451.7
|
|
|
|
1,159.0
|
|
Senior unsecured notes-fixed(C)
|
|
|
23,801.7
|
|
|
|
1,511.3
|
|
Junior subordinated notes and convertible equity units
|
|
|
2,098.9
|
|
|
|
—
|
|
Series A Notes
|
|
|
—
|
|
|
|
14,947.4
|
|
Series B Notes
|
|
|
—
|
|
|
|
1,946.9
|
|
Junior Credit Facilities
|
|
|
—
|
|
|
|
1,916.4
|
|
|
|
|
|
|
|
|
|
|
Total Debt
|
|
|
54,087.6
|
|
|
|
37,082.2
|
|
Deposits
|
|
|
5,378.7
|
|
|
|
5,378.7
|
|
|
|
|
|
|
|
|
|
|
Total Debt and Deposits
|
|
|
59,466.3
|
|
|
|
42,460.9
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Preferred stock: $0.01 par value, 100,000,000 authorized
|
|
|
|
|
|
|
|
|
Issued and outstanding:
|
|
|
|
|
|
|
|
|
Series A 14,000,000 with a liquidation preference of $25
per share
|
|
|
350.0
|
|
|
|
—
|
|
Series B 1,500,000 with a liquidation preference of $100
per share
|
|
|
150.0
|
|
|
|
—
|
|
Series C 11,500,000 with a liquidation preference of $50
per share
|
|
|
575.0
|
|
|
|
—
|
|
Series D 2,330,000 with a liquidation preference of $1,000
per share
|
|
|
2,071.7
|
|
|
|
—
|
|
Common stock: $0.01 par value, 600,000,000 authorized
Issued: 398,289,150 (as of June 30, 2009)
|
|
|
4.0
|
|
|
|
—
|
|
Outstanding: 392,067,503 (as of June 30, 2009)
|
|
|
|
|
|
|
|
|
New common stock: $0.01 par value, 800,000,000 authorized
Issued: 400,000,000
|
|
|
|
|
|
|
|
|
Outstanding: 400,000,000
|
|
|
—
|
|
|
|
4.0
|
|
Paid-in capital, net of deferred compensation of $31.1
|
|
|
11,269.8
|
|
|
|
7,996.0
|
|
Accumulated deficit
|
|
|
(7,896.6
|
)
|
|
|
—
|
|
Accumulated other comprehensive loss
|
|
|
(134.7
|
)
|
|
|
—
|
|
Less: treasury stock, 6,221,647 shares, at cost
|
|
|
(310.3
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Total Common Stockholders’ Equity
|
|
|
2,932.2
|
|
|
|
8,000.0
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders’ Equity
|
|
|
6,078.9
|
|
|
|
8,000.0
|
|
|
|
|
|
|
|
|
|
|
Total Capitalization
|
|
$
|
65,545.2
|
|
|
$
|
50,460.9
|
|
|
|
|
|
|
|
|
|
|
Book Value per Common Share
|
|
$
|
7.48
|
|
|
$
|
20.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
|
The As Adjusted capitalization under the Plan of Reorganization
does not reflect certain debt-related transactions that occurred
subsequent to June 30, 2009. These primarily include the
addition of the $3 billion Senior Credit Facility, which
increased the ‘Secured borrowings’, the cash tender
offer completed on August 17, 2009 for $1 billion of
August 17 Notes, which reduced ‘Senior unsecured
notes-variable’ plus other note maturities subsequent to
June 30, 2009. |
(B) |
|
The As Adjusted includes assumed “fresh start
reporting.” |
(C) |
|
The remaining unsecured notes primarily reflect certain debt at
non-U.S. subsidiaries not included in the Plan of Reorganization
and debt which matured and was repaid subsequent to
June 30, 2009. |
68
SELECTED
HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table sets forth selected historical financial
information for CIT on a consolidated basis derived from our
(i) audited consolidated financial statements for the years
ended December 31, 2008, 2007 and 2006 and as of
December 31, 2008 and 2007, which are incorporated into
this Offering Memorandum and Disclosure Statement by reference
to our Current Report on
Form 8-K
filed on October 1, 2009; (ii) audited consolidated
financial statements for the years ended December 31, 2005
and 2004 and as of December 31, 2006, 2005 and 2004, which
are not incorporated by reference into this Offering Memorandum
and Disclosure Statement; and (iii) unaudited consolidated
financial statements for the six months ended June 30, 2009
and 2008 and as of June 30, 2009 and 2008, which are
incorporated by reference into this Offering Memorandum and
Disclosure Statement. The historical information presented may
not be indicative of our future performance. In addition, our
results for the six months ended June 30, 2009 are not
necessarily indicative of results expected for the full fiscal
year ending December 31, 2009.
The selected historical financial information should be read in
conjunction with the audited consolidated financial statements
incorporated by reference from our Current Report on
Form 8-K
filed October 1, 2009 with “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” that is contained in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, and our
Quarterly Reports on
Form 10-Q
for the quarters ended March 31, 2009 and June 30,
2009, and our quarterly consolidated financial statements and
the corresponding notes thereto, each of which is incorporated
by reference in this Offering Memorandum and Disclosure
Statement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30,
|
|
For the Years Ended December 31,
|
|
|
2009
|
|
2008
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
|
(In millions, except percentages, share data and per share
amounts)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Results of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest revenue
|
|
$
|
(36.6
|
)
|
|
$
|
327.2
|
|
|
$
|
499.1
|
|
|
$
|
821.1
|
|
|
$
|
789.0
|
|
|
$
|
874.1
|
|
|
$
|
960.2
|
|
Provision for credit losses
|
|
|
1,123.9
|
|
|
|
398.9
|
|
|
|
1,049.2
|
|
|
|
241.8
|
|
|
|
159.8
|
|
|
|
165.3
|
|
|
|
159.5
|
|
Total other income
|
|
|
937.9
|
|
|
|
1,228.9
|
|
|
|
2,460.3
|
|
|
|
3,567.8
|
|
|
|
2,898.1
|
|
|
|
2,708.7
|
|
|
|
2,277.0
|
|
Total other expenses
|
|
|
1,717.5
|
|
|
|
1,425.2
|
|
|
|
2,986.5
|
|
|
|
3,051.1
|
|
|
|
2,319.2
|
|
|
|
1,939.4
|
|
|
|
1,889.3
|
|
(Loss) income from continuing operations, before preferred stock
dividends
|
|
|
(1,960.8
|
)
|
|
|
(192.8
|
)
|
|
|
(633.1
|
)
|
|
|
792.0
|
|
|
|
925.7
|
|
|
|
918.5
|
|
|
|
742.4
|
|
(Loss) income from discontinued operation
|
|
|
—
|
|
|
|
(2,113.8
|
)
|
|
|
(2,166.4
|
)
|
|
|
(873.0
|
)
|
|
|
120.3
|
|
|
|
30.6
|
|
|
|
11.2
|
|
Net (loss) income (attributable) available to common stockholders
|
|
|
(2,082.6
|
)
|
|
|
(2,341.6
|
)
|
|
|
(2,864.2
|
)
|
|
|
(111.0
|
)
|
|
|
1,015.8
|
|
|
|
936.4
|
|
|
|
753.6
|
|
Income (loss) per share from continuing operations —
diluted
|
|
|
(5.34
|
)
|
|
|
(1.00
|
)
|
|
|
(2.69
|
)
|
|
|
3.93
|
|
|
|
4.41
|
|
|
|
4.30
|
|
|
|
3.45
|
|
Income (loss) per share from discontinued operation —
diluted
|
|
|
—
|
|
|
|
(9.28
|
)
|
|
|
(8.37
|
)
|
|
|
(4.50
|
)
|
|
|
0.59
|
|
|
|
0.14
|
|
|
|
0.05
|
|
Cash dividends per common share, paid
|
|
|
0.02
|
|
|
|
0.35
|
|
|
|
0.55
|
|
|
|
1.00
|
|
|
|
0.80
|
|
|
|
0.61
|
|
|
|
0.52
|
|
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans including receivables pledged
|
|
$
|
48,730.3
|
|
|
$
|
53,223.7
|
|
|
$
|
53,126.6
|
|
|
$
|
53,760.9
|
|
|
$
|
45,203.6
|
|
|
$
|
35,878.5
|
|
|
$
|
29,892.1
|
|
Allowance for loan losses
|
|
|
(1,538.4
|
)
|
|
|
(780.8
|
)
|
|
|
(1,096.2
|
)
|
|
|
(574.3
|
)
|
|
|
(577.1
|
)
|
|
|
(540.2
|
)
|
|
|
(553.8
|
)
|
Operating lease equipment, net
|
|
|
13,380.1
|
|
|
|
12,342.4
|
|
|
|
12,706.4
|
|
|
|
12,610.5
|
|
|
|
11,017.9
|
|
|
|
9,635.7
|
|
|
|
8,290.9
|
|
Goodwill and intangible assets, net
|
|
|
—
|
|
|
|
1,165.6
|
|
|
|
698.6
|
|
|
|
1,152.5
|
|
|
|
1,008.4
|
|
|
|
1,011.5
|
|
|
|
596.5
|
|
Assets of discontinued operation
|
|
|
—
|
|
|
|
5,568.2
|
|
|
|
44.2
|
|
|
|
9,308.6
|
|
|
|
10,387.1
|
|
|
|
8,789.8
|
|
|
|
5,811.5
|
|
Total assets
|
|
|
71,019.2
|
|
|
|
87,819.4
|
|
|
|
80,448.9
|
|
|
|
90,613.4
|
|
|
|
77,485.7
|
|
|
|
63,386.6
|
|
|
|
45,299.8
|
|
Total debt and deposits
|
|
|
59,466.3
|
|
|
|
69,913.5
|
|
|
|
66,377.5
|
|
|
|
69,161.0
|
|
|
|
60,704.8
|
|
|
|
47,864.5
|
|
|
|
37,724.8
|
|
Total stockholders’ equity
|
|
|
6,078.9
|
|
|
|
6,154.7
|
|
|
|
8,124.3
|
|
|
|
6,960.6
|
|
|
|
7,751.1
|
|
|
|
6,962.7
|
|
|
|
6,055.1
|
|
Total owned and securitized financing and leasing assets
|
|
$
|
63,841.6
|
|
|
$
|
71,694.4
|
|
|
$
|
67,823.7
|
|
|
$
|
73,428.2
|
|
|
$
|
63,220.2
|
|
|
$
|
53,200.7
|
|
|
$
|
46,154.3
|
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30,
|
|
For the Years Ended December 31,
|
|
|
2009
|
|
2008
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
|
(In millions, except percentages, share data and per share
amounts)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Selected Data and Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profitability (continuing operations)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) before preferred dividend as a percentage of
average common stockholders’ equity
|
|
|
(84.7
|
)%
|
|
|
(6.3
|
)%
|
|
|
(11.0
|
)%
|
|
|
11.6
|
%
|
|
|
13.6
|
%
|
|
|
14.8
|
%
|
|
|
13.0
|
%
|
Net finance revenue as a percentage of average earning assets(1)
|
|
|
1.11
|
%
|
|
|
2.31
|
%
|
|
|
2.05
|
%
|
|
|
2.71
|
%
|
|
|
3.08
|
%
|
|
|
3.38
|
%
|
|
|
3.97
|
%
|
Return on average total assets
|
|
|
(5.16
|
)%
|
|
|
0.49
|
%
|
|
|
(0.85
|
)%
|
|
|
1.03
|
%
|
|
|
1.50
|
%
|
|
|
1.81
|
%
|
|
|
1.71
|
%
|
Dividend payout ratio
|
|
|
N/M(2
|
)
|
|
|
N/M(2
|
)
|
|
|
N/M(2
|
)
|
|
|
25.4
|
%
|
|
|
18.1
|
%
|
|
|
14.2
|
%
|
|
|
15.1
|
%
|
Total ending equity to total ending assets
|
|
|
8.6
|
%
|
|
|
7.5
|
%
|
|
|
10.1
|
%
|
|
|
7.7
|
%
|
|
|
10.0
|
%
|
|
|
11.0
|
%
|
|
|
13.4
|
%
|
Credit Quality
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-accrual loans as a percentage of finance receivables
|
|
|
4.78
|
%
|
|
|
1.83
|
%
|
|
|
2.66
|
%
|
|
|
0.89
|
%
|
|
|
0.69
|
%
|
|
|
0.83
|
%
|
|
|
1.08
|
%
|
Net credit losses as a percentage of average finance receivables
|
|
|
2.60
|
%
|
|
|
0.67
|
%
|
|
|
0.90
|
%
|
|
|
0.35
|
%
|
|
|
0.33
|
%
|
|
|
0.52
|
%
|
|
|
0.88
|
%
|
Reserve for credit losses as a percentage of finance receivables
|
|
|
3.16
|
%
|
|
|
1.47
|
%
|
|
|
2.06
|
%
|
|
|
1.07
|
%
|
|
|
1.28
|
%
|
|
|
1.51
|
%
|
|
|
1.85
|
%
|
Reserve for credit losses, excluding specific reserves as a
percentage of finance receivables, excluding guaranteed student
loans
|
|
|
2.28
|
%
|
|
|
1.34
|
%
|
|
|
1.48
|
%
|
|
|
1.21
|
%
|
|
|
1.44
|
%
|
|
|
1.53
|
%
|
|
|
1.71
|
%
|
Capital (period end)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital
|
|
|
8.8
|
%
|
|
|
N/A
|
(3)
|
|
|
9.4
|
%
|
|
|
N/A
|
(3)
|
|
|
N/A
|
(3)
|
|
|
N/A
|
(3)
|
|
|
N/A
|
(3)
|
Total risk-based capital
|
|
|
12.8
|
%
|
|
|
N/A
|
(3)
|
|
|
13.1
|
%
|
|
|
N/A
|
(3)
|
|
|
N/A
|
(3)
|
|
|
N/A
|
(3)
|
|
|
N/A
|
(3)
|
Tangible capital to owned and securitized assets
|
|
|
12.9
|
%
|
|
|
9.0
|
%
|
|
|
14.3
|
%
|
|
|
8.8
|
%
|
|
|
9.4
|
%
|
|
|
9.8
|
%
|
|
|
10.7
|
%
|
|
|
|
(1) |
|
Net finance revenue is the sum of net interest revenue plus
rentals on operating leases less depreciation on operating lease
equipment. |
|
(2) |
|
N/M means not meaningful given the net losses in these periods. |
|
(3) |
|
N/A means not applicable to these periods. |
70
DESCRIPTION
OF THE OFFERS
Terms of
the Offers
On the terms and subject to the conditions set forth in this
Offering Memorandum and Disclosure Statement (i) CIT Group Inc.
is offering, in exchange for any and all of the outstanding
notes of CIT Group Inc. listed in the table “CIT
Outstanding Notes” beginning on the inside cover page, each
of five series of its newly issued Series A Notes denominated in
the stated currency of the outstanding notes (except for
outstanding notes denominated in Swiss Francs which will be
exchanged for New Notes denominated in U.S. dollars) and/or
New Preferred Stock, (ii) CIT Group Inc. is offering, in
exchange for any and all of the outstanding notes of CIT Group
Inc. listed in the table “CIT Outstanding Long Term
Notes” beginning on the inside cover page, each of five
series of its newly issued Series A Notes denominated in U.S.
dollars and New Preferred Stock and (iii) Delaware Funding is
offering, in exchange for any and all of the outstanding notes
listed in the table “Delaware Funding Outstanding
Notes” beginning on the inside cover page, each of five
series of its newly issued Series B Notes. Assuming the exchange
of 100% of the Old Notes for the New Notes and/or the New
Preferred Stock in the Offers, the New Preferred Stock issued
will consist of approximately 68.3 million shares having an
aggregate liquidation preference of approximately
$95.6 billion and representing approximately 91.1% of the
aggregate voting power of our capital stock generally entitled
to vote on matters presented to our stockholders. If we receive
the minimum level of participation in the Offers required to
satisfy the Liquidity and Leverage Condition, the New Preferred
Stock issued will consist of approximately 45.0 million
shares having an aggregate liquidation preference of
approximately $63.0 billion and representing approximately
87.1% of the aggregate voting power of our capital stock
generally entitled to vote on matters presented to our
stockholders.
New Notes will be issued in minimum denominations of $1 and
integral multiples of $1. If, under the terms of the Offers, a
tendering holder is entitled to receive New Notes in a principal
amount that is not an integral multiple of $1, we will round
downward such principal amount of New Notes to the nearest
integral multiple of $1. This rounded amount will be the
principal amount of New Notes you will receive, and no
additional cash will be paid in lieu of any principal amount of
New Notes not received as a result of rounding down. No
fractional shares of New Preferred Stock will be issued or
distributed, but the number of shares of New Preferred Stock
which any holder of record is entitled to receive pursuant to
the CIT Offer will be rounded up to the next whole share.
All New Notes issued pursuant to the Offers will be denominated
in U.S. dollars except for outstanding notes denominated in
Swiss Francs or Japanese Yen which will be exchanged for New
Notes denominated in U.S. dollars. For purposes of determining
the principal amount of New Notes to be received in exchange for
the
non-U.S. dollar-denominated,
Old Notes, an equivalent
U.S.-dollar
principal amount of each tender of such series of Old Notes will
be determined by multiplying the principal amount of such tender
by the weekly average of the applicable currency exchange rate
in the most recent Federal Reserve Statistical Release H.10
which has become available prior to the Expiration Date. Such
equivalent U.S. dollar principal amount will be used in all
cases when determining the consideration to be received pursuant
to the Offers per $1,000 principal amount of Old Notes tendered.
None of CIT or any of its subsidiaries or Delaware Funding,
their respective boards of directors, the voting agent, the
exchange agent, the information agent, the Swiss tender agent,
the financial advisors or any of their respective affiliates
makes any recommendation as to whether holders of Old Notes
should exchange Old Notes for New Notes
and/or New
Preferred Stock in the Offers and the Plan of Reorganization.
Accrued
and Unpaid Interest
Holders of Old Notes accepted in the Offers will receive a cash
payment (paid in the stated currency of such Old Notes) equal to
the accrued and unpaid interest in respect of such Old Notes
from the most recent interest payment date to, but not
including, the Settlement Date. Holders who do not exchange will
be paid interest according to the terms of their securities.
71
Expiration
Date; Long Term Notes Early Acceptance Date; Extensions;
Amendments; Settlement Date; Termination
For purposes of each of the October 1 Offers, the term
‘‘Original Expiration Date” means
11:59 p.m., New York City time, on October 29, 2009,
subject to our right to extend that time and date with respect
to the October 1 Offers in our absolute discretion, in
which case the Original Expiration Date means the latest time
and date to which the October 1 Offers are extended. The
Settlement Date of the October 1 Offers will be as soon as
practicable following the Original Expiration Date.
For purposes of each of the Long Term CIT Offers, the term
“Long Term Expiration Date” means 11:59 p.m., New York
City time, on November 13, 2009, subject to our right to
extend that time and date with respect to the Long Term CIT
Offers in our absolute discretion, in which case the Long Term
Expiration Date means the latest time and date to which the Long
Term CIT Offers are extended.
For purposes of each of the Long Term CIT Offers, the term
“Long Term Notes Early Acceptance Date” means 11:59
p.m., New York City time, on October 29, 2009, subject to
our right to extend that time and date with respect to the Long
Term CIT Offers in our absolute discretion, in which case the
Long Term Notes Early Acceptance Date means the latest time and
date to which the Long Term Notes Early Acceptance Date for the
Long Term CIT Offers is extended.
During any extension of an Offer, all Old Notes previously
tendered and not accepted for exchange thereunder will remain
subject to such Offer and may, subject to the terms and
conditions of such Offer, be accepted for exchange by us.
Any waiver, amendment or modification of an Offer will apply to
all Old Notes tendered thereunder. If we make a change we
determine to be material in any terms of an Offer or, to the
extent waivable, waive a condition to an Offer we determine to
be material, we will give oral (to be confirmed in writing) or
written notice of such amendment or such waiver to the exchange
agent and will disseminate additional offer documents and extend
such Offer as we determine necessary and to the extent required
by law.
In addition, we may terminate any Offer if any condition thereto
is not satisfied on or after the Expiration Date.
Subject to the applicable regulations of the SEC, we expressly
reserve the right, in our sole discretion, at any time and from
time to time, and regardless of whether any events preventing
satisfaction of the conditions to any Offer shall have occurred
or shall have been determined by us to have occurred, to extend
the period during which such Offer is open by giving oral or
written notice of such extension to the exchange agent and by
making public disclosure by press release or other appropriate
means of such extension to the extent required by law.
There can be no assurance that we will exercise our right to
extend, terminate or amend any Offer. During any extension and
irrespective of any amendment to an Offer, all Old Notes
previously tendered and not accepted or withdrawn thereunder
will remain subject to such Offer and may be accepted thereafter
by us, subject to compliance with applicable law. In addition,
we may waive conditions, other than the Liquidity and Leverage
Condition and the Documentation Condition (as defined below),
without extending an Offer in accordance with applicable law.
Announcements
Any extension, termination or amendment of an Offer will be
followed as promptly as practicable by announcement thereof,
such announcement in the case of an extension of an offer to be
issued no later than 9:00 a.m., New York City time, on the
next business day following the previously scheduled Original
Expiration Date, Long Term Expiration Date or Long Term Notes
Early Acceptance Date, as applicable. In the event of such
announcement, we will make an equivalent announcement in
Luxembourg and the United Kingdom. Without limiting the manner
in which we may choose to make such announcement, we will not,
unless otherwise required by law, have any obligation to
publish, advertise or otherwise communicate any such
announcement other than by making a release to an appropriate
news agency or another means of announcement that we deem
appropriate.
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Acceptance
of Old Notes for Exchange and Delivery of New Notes and/or
Shares of Preferred Stock
On the Settlement Date, New Notes
and/or
shares of New Preferred Stock, as applicable, as specified in
the table beginning on the inside cover page of this Offering
Memorandum and Disclosure Statement, will be issued. Payment of
any accrued interest or other amounts on the Old Notes will be
made by deposit of funds with the applicable Clearing System (as
defined herein), which will transmit those payments to the
applicable tendering holders.
If the conditions to the Offers are satisfied, or if all of the
conditions that have not been satisfied and can be waived are
waived, we will accept at the Original Expiration Date, Long
Term Expiration Date or Long Term Notes Early Acceptance Date,
as applicable and after we receive validly completed and duly
executed letters of transmittal and consent or agent’s
messages with respect to any and all of the Old Notes tendered
for exchange, by notifying the exchange agent of our acceptance.
The notice may be oral if we promptly confirm it in writing.
We expressly reserve the right, in our sole discretion, to delay
acceptance for exchange, or exchange of, Old Notes tendered
under any offer (subject to
Rule 14e-1(c)
under the Exchange Act, which requires that we issue the offered
consideration or return the Old Notes deposited thereunder
promptly after termination or withdrawal of such offer), or to
terminate such Offer and not accept for exchange any Old Notes
not previously accepted, (1) if any of the conditions to
such offer shall not have been satisfied or, to the extent
waivable, validly waived by us, or (2) in order to comply
in whole or in part with any applicable law. In all cases, the
Offer consideration for Old Notes tendered pursuant to an offer
will be made only after timely receipt by the exchange agent of
(1) certificates representing the Old Notes, or timely
confirmation of a book-entry transfer (a “book-entry
confirmation”) of the Old Notes into the exchange
agent’s account at the applicable Clearing System,
(2) the properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) or an agent’s message
(as defined in “— Procedures for Tendering Old
Notes — Tender of U.S. Dollar-Denominated Old
Notes Through Applicable Clearing Systems” below) in lieu
thereof, and (3) any other documents required by the Letter
of Transmittal.
For purposes of each Offer, we will be deemed to have accepted
for exchange validly tendered (and not validly withdrawn) Old
Notes as provided herein when, and if, we give oral or written
notice to the exchange agent of our acceptance of the Old Notes
for exchange pursuant to such Offer. In all cases, the exchange
of Old Notes pursuant to an Offer will be made by deposit of the
New Notes
and/or
shares of New Preferred Stock, as applicable, with the exchange
agent, which will act as your agent for the purposes of
receiving New Notes from us, and delivering New Notes
and/or
shares of New Preferred Stock, as applicable, to you. On and
after the Settlement Date, the tendering holders whose Old Notes
have been accepted by us will cease to be entitled to receive
interest on such Old Notes. Such tendering holders will receive
the applicable consideration for the Old Notes accepted for
exchange. On the Settlement Date, the exchange agent will pay
the applicable consideration for the Old Notes accepted for
purchase for cash (i) by wire transfer to the applicable
Clearing System, in the case of Old Notes accepted for purchase
that were tendered by book-entry transfer as described below or
(ii) in all other cases, by check payable to the tendering
holders whose Old Notes have been accepted for purchase for cash
(unless a different payee is indicated under the Special Payment
instructions in the Letter of Transmittal). Also, as soon as
practicable after the Settlement Date, the exchange agent will
return to any holder who partially tendered a physical Old Note
a certificate for the portion of the Old Note that was not
tendered. The exchange agent will mail all such non-tendered Old
Notes and checks by first-class mail unless such Old Notes
and/or
checks represent more than $250,000, in which case they will be
mailed by registered mail and, in the case of returned Old
Notes, insured separately for their replacement value.
If, for any reason whatsoever, acceptance for exchange of any
Old Notes tendered pursuant to an offer is delayed (whether
before or after our acceptance for exchange of the Old Notes) or
we extend an offer or are unable to accept for exchange the Old
Notes tendered pursuant to such offer, then, without prejudice
to our rights set forth herein, we may instruct the exchange
agent to retain tendered Old Notes and those Old Notes may not
be withdrawn, subject to the limited circumstances described in
“— Withdrawal of Tenders” below.
Tender of Old Notes pursuant to the Offers will be accepted only
in principal amounts equal to permitted minimum denominations
and integral multiples as specified in the terms of such Old
Notes, provided that any
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holder may tender all Old Notes held by such holder, even if the
aggregate principal amount of those Old Notes is not a permitted
denomination.
We will pay or cause to be paid all transfer taxes with respect
to the acceptance of any Old Notes unless the box entitled
“Special Payment or Issuance Instructions” or the box
entitled “Special Delivery Instructions” on the Letter
of Transmittal has been completed, as described in the
instructions thereto.
Under no circumstances will any interest be payable because of
any delay in the transmission of funds to you with respect to
accepted Old Notes or otherwise.
We will pay all fees and expenses of the voting and exchange
agent, the information agent, the financial advisors and the
Swiss Note Tender Agent in connection with the Offers. See
“ Voting Agent, Exchange Agent, Information Agent, Swiss
Note Tender Agent and Financial Advisors.”
Market
and Trading Information
The Old Notes are not listed on any exchange in the United
States. Certain of the Old Notes are listed on the Official List
of the Luxembourg Stock Exchange and trade on the Luxembourg
Stock Exchange’s Euro MTF Market or are admitted to the
Official List of the U.K. Listing Authority and to the London
Stock Exchange plc and trade on the London Stock Exchange’s
Gilt Edged and Fixed Interest Market, each as identified in the
table beginning on the inside cover page of this Offering
Memorandum and Disclosure Statement. Holders of the Old Notes
are urged to contact their brokers or other advisors to obtain
the best available information as to current market prices for
the Old Notes before deciding whether to tender such Old Notes
pursuant to the applicable offer.
Procedures
for Tendering Old Notes
General
In order to participate in the Offers, you must validly tender
your Old Notes to the exchange agent as described below. It is
your responsibility to validly tender your Old Notes. We have
the right to waive any defects. However, we are not required to
waive defects and are not required to notify you of defects in
your tender. If you do not elect to participate in the Offers
but wish to vote on the Plan of Reorganization, see the
procedures in “Procedures for Voting on the Plan of
Reorganization.”
Any beneficial owner whose Old Notes are registered in the name
of a broker, dealer, commercial bank, trust company or other
nominee and who wishes to tender Old Notes should contact such
holder promptly and instruct such holder to tender Old Notes on
such beneficial owner’s behalf.
Voting on
the Plan of Reorganization by Noteholders
The “Voting Record Date” for purposes of determining
noteholders that are eligible to vote on the Plan of
Reorganization is the Original Expiration Date or Long Term
Expiration Date, as applicable (currently contemplated to be
October 29, 2009 for the Original CIT Offers and Delaware
Funding Offers and November 13, 2009 for the Long Term CIT
Offers). Any beneficial holder (a “Beneficial Holder”)
whose Old Notes are registered or held of record in the name of
his broker, dealer, commercial bank, trust company or other
nominee (each, a “Nominee”) and who wishes to vote on
the Plan of Reorganization should provide their instructions
with respect to the Offers and/or Plan of Reorganization to
their Nominee. The Nominee will need to tender the underlying
Old Notes on behalf of the Beneficial Holder, in accordance with
the Beneficial Holder’s instructions.
There are three different voting choices in connection with the
Offers and Plan of Reorganization, which are outlined in greater
detail below. The ballot (the “Ballot”) (which is
Appendix F to the Offering Memorandum) was designed to
assist Beneficial Holders of Old Notes understand the voting
process and provide the correct instruction to their Nominee.
Beneficial Holders of Old Notes should not return the Ballot to
their Nominee or the Voting Agent to cast their vote.
Instead, Beneficial Holders will need to provide their
instructions to their Nominee holding their Old Notes in
accordance with the directions provided by their
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Nominee. By providing instructions to their Nominee
holding their Old Notes, Beneficial Holders of Old Notes are
requesting that their Nominee (1) tender the underlying Old
Notes on their behalf in accordance with the instructions
provided, and (2) execute a master ballot on the Beneficial
Holder’s behalf that reflects their instructions with
respect to the Plan of Reorganization. Beneficial Holder
instructions to a Nominee will have the same effect as if such
holder had completed and returned a physical ballot to indicate
their vote with respect to the Plan, provided certain
certifications, and consented to any other conditions contained
therein, including release, injunction and exculpation
provisions.
Beneficial holders have three voting options, as follows:
OPTION 1. PARTICIPATE in the Offers; vote
to ACCEPT the Plan of Reorganization.
OPTION 2. NOT PARTICIPATE in the Offers;
vote to ACCEPT the Plan of Reorganization.
OPTION 3. NOT PARTICIPATE in the Offers;
vote to REJECT the Plan of Reorganization.
Beneficial holders may also instruct with respect to a fourth
option, which is the default option for those Beneficial Holders
that do not provide any instructions:
OPTION 4. Take no action; not participate
in Offers; not vote on the Plan of Reorganization.
Beneficial Holders that instruct their Nominee to take no
action, or fail to provide timely instructions, may nevertheless
be bound by the terms of the Plan of Reorganization and have the
relevant treatment applied to their Old Notes if the Plan of
Reorganization is consummated.
Please note that once a Beneficial Holder’s Old Notes have
been tendered, the Old Notes will not be able to be traded.
Withdrawals from the Offers and modifications to votes to accept
or reject the Plan of Reorganization will not be permitted after
the Voting Deadline. If the Offers are not successful and the
company does not commence their prepackaged bankruptcy cases,
any Old Notes tendered into Option 1, Option 2, or
Option 3 will be returned to the broker, dealer, commercial
bank, trust company or other nominee that tendered the Old Notes.
Soon after commencement of their prepackaged bankruptcy cases
(if the Potential Debtors opt to commence such prepackaged
cases), any Old Notes (except for CIT Long Term Old Notes)
tendered into Option 1, Option 2, or Option 3
will be returned to the broker, dealer, commercial bank, trust
company or other nominee that tendered the Old Notes.
Holders of Old Notes that are held in certificated form
should follow the instructions on their Letter of
Transmittal/Ballot.
If you have any questions or need help in tendering your Old
Notes, please contact the Information Agent at the telephone
number listed on the back cover page of this Offering Memorandum
and Disclosure Statement.
Tenders of Old Notes held in book-entry form will be accepted
at one of DTC, Euroclear, Clearstream, the Canadian Deposit for
Securities Limited (“CDS”) or SIS SegaInterSettle AG
(“SIS”) (each, a “Clearing System” and
collectively, the “Clearing Systems”). Tenders of
U.S. dollar-denominated Old Notes will be accepted only at
DTC. Tenders of Euro-denominated, British pound-denominated,
Swiss franc-denominated and Canadian dollar-denominated Old
Notes will be accepted only at Euroclear or Clearstream or in
case of Swiss franc-denominated or Canadian dollar-denominated
Old Notes will be accepted at SIS or CDS, respectively.
Valid
Tender
Except as set forth below with respect to Old Notes held through
a clearing system, for a holder to validly tender Old Notes
pursuant to an offer, a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof), together with
any signature guarantees and any other documents required by the
instructions to the Letter of Transmittal must be received by
the exchange agent at the address or facsimile number set forth
on the Letter of Transmittal prior to the Expiration Date,
together with certificates
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representing the Old Notes specified in such Letter of
Transmittal. If you do not elect to participate in the Offers
but wish to vote on the Plan of Reorganization, you will still
be required to complete and return a Letter of Transmittal.
Tender
of U.S. Dollar-Denominated Old Notes Through Applicable Clearing
Systems
U.S. dollar-denominated Old Notes in book-entry form must
be tendered through DTC. DTC participants must electronically
transmit their acceptance of an offer through DTC’s
Automated Tender Offers Program (“ATOP”), for which
the transaction will be eligible. In accordance with ATOP
procedures, DTC will then verify the acceptance of an offer and
send an agent’s message (as hereinafter defined) to the
exchange agent for its acceptance. An “agent’s
message” is a message transmitted by DTC, received by the
exchange agent and forming part of the book-entry confirmation,
which states that DTC has received an express acknowledgement
from you that you have received this Offering Memorandum and
Disclosure Statement and accompanying Ballot and agree to be
bound by the terms of the Ballot.
Holders whose U.S. dollar-denominated Old Notes are held
through Clearstream or Euroclear must transmit their acceptance
in accordance with the requirements of Clearstream and Euroclear
in sufficient time for such tenders to be timely made prior to
the Expiration Date and for a Master Ballot to be prepared and
transmitted to the Voting Agent.
We have not provided guaranteed delivery procedures in
conjunction with the Offers or under any of this Offering
Memorandum and Disclosure Statement or other offer materials
provided therewith. Holders must timely tender their Old Notes
in accordance with the procedures set forth in this Offering
Memorandum and Disclosure Statement and, if appropriate,
accompanying Letter of Transmittal.
Tender
of Non-U.S.
dollar-denominated Old Notes Through Applicable Clearing
Systems
Tenders of Euro-denominated, British pound-denominated, Swiss
franc-denominated and Canadian
dollar-denominated
Old Notes in book-entry form will be accepted only at Euroclear
or Clearstream or in the case of Swiss franc-denominated or
Canadian dollar-denominated Old Notes in book-entry form will be
accepted at SIS or CDS, respectively. The tender of such Old
Notes through the applicable Clearing System will be deemed to
have occurred upon receipt by the relevant Clearing System of a
valid electronic acceptance instruction in accordance with the
requirements of such Clearing System. The receipt of such
electronic acceptance instruction by the applicable Clearing
System will be acknowledged in accordance with the standard
practices of such Clearing System and will result in the
blocking of such Old Notes in that Clearing System. By blocking
such Old Notes in the relevant Clearing System, the holder
thereof will be deemed to consent to have the relevant Clearing
System provide details concerning such holder’s identity to
the exchange agent, including the account number through which
the Old Notes are held.
By participating in the offer in this manner, you will be deemed
to have acknowledged that you have received this Offering
Memorandum and Disclosure Statement and agree to be bound by the
terms of the Offers.
Holders must take the appropriate steps to block Old Notes to be
tendered in the applicable Clearing System so that no transfers
may be effected in relation to such Old Notes at any time after
such date in accordance with the requirements of the relevant
Clearing System and the deadlines required by the relevant
Clearing System.
Tender
of Old Notes Held in Physical Form
To validly tender Old Notes held in physical form pursuant to an
Offer, a holder should complete and sign the Letter of
Transmittal (or a facsimile copy thereof) in accordance with the
instructions to the Letter of Transmittal, have the signature
thereon guaranteed if required by the instructions to the Letter
of Transmittal and deliver the Letter of Transmittal, together
with certificates representing such Old Notes and any other
documents required by the instructions to the Letter of
Transmittal, to the exchange agent at its address set forth on
the back page of this Offering Memorandum and Disclosure
Statement. The Letter of Transmittal and
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any certificates evidencing Old Notes tendered pursuant to an
Offer should be sent only to the exchange agent and not to the
Swiss Note Tender Agent, CIT or Delaware Funding.
If Old Notes are to be tendered by any person other than the
person in whose name the Old Notes are registered, the Old Notes
must be endorsed or accompanied by an appropriate written
instrument or instruments of transfer executed exactly as the
name or names of the holder or holders appear on the Old Notes,
with the signature(s) on the Old Notes or instruments of
transfer guaranteed as provided below, and a Letter of
Transmittal must be executed and delivered either by the holder
or holders, or by the tendering person pursuant to a valid proxy
signed by the holder or holders (such person, an
“authorized proxy holder”), which signature must, in
either case, be guaranteed as provided below.
Effect
of Letter of Transmittal
Subject to and effective upon the acceptance for exchange of,
and exchange of, Old Notes tendered thereby, by executing and
delivering a Letter of Transmittal, you (1) irrevocably
sell, assign and transfer to or upon the order of us all right,
title and interest in and to all the Old Notes tendered thereby
and (2) irrevocably appoint the exchange agent as your true
and lawful agent and attorney-in-fact (with full knowledge that
the exchange agent also acts as our agent with respect to the
tendered Old Notes, with full power coupled with an interest) to:
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deliver certificates representing the Old Notes, or transfer
ownership of the Old Notes on the account books maintained by
the applicable Clearing System, together with all accompanying
evidences of transfer and authenticity, to or upon our order;
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present the Old Notes for transfer on the relevant security
register; and
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receive all benefits or otherwise exercise all rights of
beneficial ownership of the Old Notes (except that the exchange
agent will have no rights to or control over, our funds, except
as our agent, for an offer consideration for any tendered Old
Notes that are exchanged by us), all in accordance with the
terms of the Offers.
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Signature
Guarantees
Signatures on all letters of transmittal must be guaranteed by a
recognized participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchange Medallion Program (a
“Medallion Signature Guarantor”), unless the Old Notes
tendered thereby are tendered (i) by a holder of Old Notes
(or by a participant in DTC whose name appears on a security
position listing as the owner of such Old Notes) who has not
completed either the box entitled “Special Delivery
Instructions” or “Special Payment or Issuance
Instructions” on the Letter of Transmittal or (ii) for
the account of a member firm of a registered national securities
exchange, a member of the Financial Industry Regulatory
Authority, Inc. or a commercial bank or trust company having an
office or correspondent in the United States (each of the
foregoing being referred to as an “Eligible
Institution”). If the Old Notes are registered in the name
of a person other than the signer of the Letter of Transmittal
or if Old Notes not tendered are to be returned to a person
other than the holder, then the signatures on the letters of
transmittal accompanying the tendered Old Notes must be
guaranteed by a Medallion Signature Guarantor as described above.
Determination
of Validity
All questions as to the validity, form, eligibility (including
time of receipt) and acceptance for exchange of any tendered Old
Notes pursuant to any of the procedures described above, and the
form and validity (including time of receipt of notices of
withdrawal) of all documents will be determined by us in our
sole discretion, which determination will be final and binding.
We reserve the absolute right to reject any or all tenders of
any Old Notes determined by us not to be in proper form, or if
the acceptance of, or exchange of, such Old Notes may, in the
opinion of our counsel, be unlawful. We also reserve the right
to waive any conditions to any offer that we are legally
permitted to waive.
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Your tender will not be deemed to have been validly made until
all defects or irregularities in your tender have been cured or
waived. Neither we, the exchange agent, the voting agent, the
information agent, the Swiss Note Tender Agent nor any other
person or entity is under any duty to give notification of any
defects or irregularities in any tender or withdrawal of any Old
Notes, or will incur any liability for failure to give any such
notification. Please send all materials to the exchange agent
and not to any of: the information agent, the Swiss Note Tender
Agent, CIT or Delaware Funding.
Withdrawal
of Tenders
You may withdraw tenders of Old Notes at any time prior to the
Original Expiration Date or Long Term Expiration Date, as
applicable. Should CIT determine that it is unable to consummate
the Offers, you may withdraw previously tendered Old Notes three
business days after CIT makes such an announcement.
A holder who validly withdraws previously tendered Old Notes and
does not validly re-tender Old Notes prior to the Original
Expiration Date or Long Term Expiration Date, as applicable,
will not receive the applicable offer consideration. A holder
who validly withdraws previously tendered Old Notes and validly
re-tenders Old Notes prior to the Original Expiration Date or
Long Term Expiration Date, as applicable will receive the
applicable offer consideration.
Subject to applicable regulations of the SEC, if, for any reason
whatsoever, acceptance for exchange of, or exchange of, any Old
Notes tendered pursuant to an offer is delayed (whether before
or after our acceptance for exchange of Old Notes) or we extend
an offer or are unable to accept for exchange, or exchange, the
Old Notes tendered pursuant to an offer, we may instruct the
exchange agent to retain tendered Old Notes, and those Old Notes
may not be withdrawn, except to the extent that you are entitled
to the withdrawal rights set forth herein.
If you have tendered Old Notes that are in certificated form,
you may withdraw those Old Notes prior to the Expiration Date by
delivering a written notice of withdrawal subject to the
limitations described herein. To be effective, a written or
facsimile transmission notice of withdrawal of a tender must:
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be received by the exchange agent at one of the addresses
specified on the back cover of this Offering Memorandum and
Disclosure Statement prior to the Original Expiration Date or
Long Term Expiration Date, as applicable;
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specify the name of the holder of the Old Notes to be withdrawn;
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contain the description of the Old Notes to be withdrawn, the
certificate numbers shown on the particular certificates
representing such Old Notes (or, in the case of Old Notes
tendered by book-entry transfer), the number of the account at
the applicable Clearing System from which the Old Notes were
tendered and the aggregate principal amount represented by such
Old Notes; and
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be signed by the holder of the Old Notes in the same manner as
the original signature on the Letter of Transmittal or be
accompanied by documents of transfer sufficient to have the
trustee for the applicable Old Notes register the transfer of
the Old Notes into the name of the person withdrawing the Old
Notes.
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If the Old Notes to be withdrawn have been delivered or
otherwise identified to the exchange agent, a signed notice of
withdrawal is effective immediately upon receipt by the exchange
agent of written or facsimile transmission of the notice of
withdrawal (or receipt of a request via the applicable Clearing
System) even if physical release is not yet effected. A
withdrawal of Old Notes can only be accomplished in accordance
with the foregoing procedures. A withdrawal of Old Notes is also
a withdrawal of acceptance of the Plan of Reorganization.
We will have the right, which may be waived, to reject the
defective tender of Old Notes as invalid and ineffective. If we
waive our rights to reject a defective tender of Old Notes,
subject to the other terms and conditions set forth in this
Offering Memorandum and Disclosure Statement, you will be
entitled to the applicable offer consideration.
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If you withdraw Old Notes, you will have the right to re-tender
them prior to the Original Expiration Date or Long Term
Expiration Date, as applicable, in accordance with the
procedures described above for tendering outstanding Old Notes.
A holder who validly withdraws previously tendered CIT Long Term
Old Notes and validly re-tenders CIT Long Term Old Notes prior
to the Long Term Expiration Date but after the Long Term Notes
Early Acceptance Date will not be eligible for early acceptance.
If we amend or modify the terms of an Offer or the information
concerning an Offer in a manner determined by us to constitute a
material change to the holders, we will disseminate additional
offer materials and extend the period of such Offers, including
any withdrawal rights, to the extent required by law and as we
determine necessary. An extension of the Original Expiration
Date or Long Term Expiration Date, as applicable will not affect
a holder’s withdrawal rights, unless otherwise provided or
as required by applicable law.
Conditions
to the Offers
Notwithstanding any other provisions of the Offers, we will not
be required to accept for exchange, or to exchange, Old Notes
validly tendered (and not validly withdrawn) pursuant to any
Offer, and may terminate, amend or extend any Offer or delay or
refrain from accepting for exchange, or exchanging, the Old
Notes or transferring any offer consideration, if any of the
following shall occur:
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there shall not have been a sufficient number of Old Notes
tendered into the exchange and certain other debt instruments
have been renegotiated so that, after giving effect to the
Offers and such renegotiations, the face amount of the
Company’s total debt would be reduced by at least
$5.7 billion (excluding any CIT Long Term Old Notes
tendered) and its remaining unsecured debt maturities (excluding
foreign vendor facilities) would not exceed $500 million in
2009, $2.5 billion during the period from 2009 to 2010,
$4.5 billion during the period from 2009 to 2011 and
$6.0 billion during the period from 2009 to 2012, in each
case on a cumulative basis (which we refer to as the
“Liquidity and Leverage Condition”);
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each of the Delaware Funding Offers and the Long Term CIT Offers
are subject to the consummation of the Original CIT Offers;
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the Steering Committee shall not have consented (such consent
not to be unreasonably withheld) to the form and substance of
the documentation (including, without limitation, any material
refinancings, modifications or amendments to any subsidiary
level financing, conduits or securitizations) necessary to
effectuate the Restructuring Plan (the “Documentation
Condition”);
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there shall have been instituted, threatened or be pending any
action, proceeding or investigation (whether formal or informal)
(or there shall have been any material adverse development to
any action or proceeding currently instituted, threatened or
pending) before or by any court, governmental, regulatory or
administrative agency or instrumentality, or by any other
person, in connection with the Offers that, in our sole
judgment, either (a) is, or is reasonably likely to be,
materially adverse to our or our affiliates’ business,
operations, properties, condition (financial or otherwise),
income, assets, liabilities or prospects, (b) would or
might, directly or indirectly, prohibit, prevent, restrict or
delay consummation of any Offer or otherwise adversely affect
any Offer in any material manner, or (c) would materially
impair the contemplated benefits of any Offer to the Company or
be material to holders in deciding whether to accept an Offer;
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an order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction shall have been proposed,
enacted, entered, issued, promulgated, enforced or deemed
applicable by any court or governmental, regulatory or
administrative agency or instrumentality that, in our sole
judgment, either (a) would or might prohibit, prevent,
restrict or delay consummation of any Offer or (b) is, or
is reasonably likely to be, materially adverse to our or our
affiliates’ business, operations, properties, condition
(financial or otherwise), assets, liabilities or prospects;
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there shall have occurred or be likely to occur any event or
condition affecting our or our affiliates’ business or
financial affairs and our subsidiaries that, in our sole
judgment, would or might result in any of the consequences
referred to in the preceding bullet;
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the applicable trustee shall have objected in any respect to or
taken action that could, in our sole judgment, adversely affect
the consummation of any Offer or shall have taken any action
that challenges the validity or effectiveness of the procedures
used by the Company in the making of any Offer or the acceptance
of, or payment for, some or all of the applicable series of Old
Notes pursuant to any Offer;
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there has occurred at any time (a) any general suspension
of, or limitation on prices for, trading in securities in the
United States or foreign securities or financial markets,
including, without limitation, the over-the counter market,
(b) any significant adverse change in the price of the Old
Notes in the United States or other major securities or
financial markets, (c) a material impairment in the trading
market for debt or equity securities in the United States or
abroad, (d) a declaration of a banking moratorium or any
suspension of payments in respect to banks in the United States
or abroad, (e) any limitation (whether or not mandatory) by
any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, or other event that,
in the reasonable judgment of the Company, might affect the
extension of credit by banks or other lending institutions,
(f) a commencement or declaration of a war, armed
hostilities, terrorist acts or other national or international
calamity directly or indirectly involving the United States or
any country in which either the Company or any of its
subsidiaries conducts its business, (g) a material change
in United States currency exchange rates or a suspension of, or
limitation on, the markets for U.S. dollars, (h) any
decline in either the Dow Jones Industrial Average or the
Standard & Poor’s Index of 500 Industrial
Companies by an amount in excess of 15% measured from the close
of business on the date of this Offering Memorandum and
Disclosure Statement, (i) a significant adverse change in
the securities, credit or financial markets in the United States
or abroad, (j) any significant adverse change in the United
States securities, credit or financial markets generally or
(k) in the case of any of the foregoing existing on the
date hereof, a material acceleration or worsening
thereof; or
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the occurrence of an event or events or the likely occurrence of
an event or events that would or might prohibit, restrict or
delay the consummation of any offer or materially impair the
contemplated benefits of any Offer.
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These conditions are for our benefit and may be asserted by or
waived by us, including any action or inaction by us giving rise
to any condition, or may be waived by us, in whole or in part,
at any time and from time to time, in our sole discretion. The
Liquidity and Leverage Condition and Documentation Condition
cannot be waived. We may additionally terminate any Offer if any
condition, other than the Liquidity and Leverage Condition or
Documentation Condition, is not satisfied. We may not proceed
with the Offers if either the Liquidity and Leverage Condition
or the Documentation Condition is not satisfied. We may also
choose to proceed with the prepackaged Plan of Reorganization in
the event that all conditions to consummation of the Offers have
been satisfied or, to the extent waivable, waived. Under each
Offer, if any of these events occur, subject to the termination
rights described above, we may (i) return Old Notes
tendered thereunder to you by either crediting returned Old
Notes to the account maintained at the applicable Clearing
System from which such Old Notes were delivered, unless other
instructions were given by the holder to the book-entry transfer
facility, or deliver a certificate representing such returned
Old Notes to the holder of record, (ii) extend such Offer
and retain all Old Notes tendered thereunder until the
expiration of such extended Offer, or (iii) amend such
Offer in any respect by giving oral or written notice of such
amendment to the exchange agent and making public disclosure of
such amendment to the extent required by law.
We have not made a decision as to what circumstances would lead
us to waive any such condition, and any such waiver would depend
on circumstances prevailing at the time of such waiver. Although
we have no present plans or arrangements to do so, we reserve
the right to amend, at any time, the terms of any Offer. We will
give holders notice of such amendments as may be required by
applicable law.
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Additional
Terms of the Offer
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None of CIT, Delaware Funding, the exchange agent, the
information agent or the Swiss Note Tender Agent shall accept
any responsibility for failure of delivery of a notice,
communication or electronic acceptance instruction.
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Any rights or claims which a holder may have against the Company
in respect of any tendered Old Notes or any offer shall be
extinguished or otherwise released upon the payment to such
holder of the consideration for the tendered Old Notes and any
accrued interest, as determined pursuant to the terms of any
offer, for such Old Notes.
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DESCRIPTION
OF NEW NOTES
You can find the definitions of certain terms used in this
description under the subheading “— Certain
Definitions.” In this description, the word “CIT”
refers only to CIT Group Inc. and not to any of its Subsidiaries.
CIT will issue the 7.0% Series A Second-Priority Secured
Notes due 2013 (the “2013 Series A Notes”), the
7.0% Series A Second-Priority Secured Notes due 2014 (the
“2014 Series A Notes”), the 7.0% Series A
Second-Priority Secured Notes due 2015 (the “2015
Series A Notes”), the 7.0% Series A
Second-Priority Secured Notes due 2016 (the “2016
Series A Notes”) and the 7.0% Series A
Second-Priority Secured Notes due 2017 (the “2017
Series A Notes”) under an indenture (the
“Series A indenture”) among itself, the
Guarantors and The Bank of New York Mellon, as trustee (the
“Series A notes trustee”).
CIT Funding will issue the 9.0% Series B Second-Priority
Secured Notes due 2013 (the “2013 Series B Notes”
and, together with the 2013 Series A Notes, the “2013
Notes”), the 9.0% Series B Second-Priority Secured
Notes due 2014 (the “2014 Series B Notes” and,
together with the 2014 Series A Notes, the “2014
Notes”), the 9.0% Series B Second-Priority Secured
Notes due 2015 (the “2015 Series B Notes” and,
together with the 2015 Series A Notes, the “2015
Notes”), the 9.0% Series B Second-Priority Secured
Notes due 2016 (the “2016 Series B Notes” and,
together with the 2016 Series A Notes, the “2016
Notes”) and the 9.0% Series B Second-Priority Secured
Notes due 2017 (the “2017 Series B Notes” and,
together with the 2017 Series A Notes, the “2017
Notes”) under an indenture (the “Series B
indenture” and, together with the Series A indenture,
the “indentures”) among itself, CIT, the Guarantors
and The Bank of New York Mellon, as trustee (the
“Series B notes trustee” and, together with the
Series A notes trustee, the “trustee”). The 2013
Series A Notes, the 2014 Series A Notes, the 2015
Series A Notes, the 2016 Series A Notes and the 2017
Series A Notes are referred to collectively in this
description of notes as the “Series A notes,” the
2013 Series B Notes, the 2014 Series B Notes, the 2015
Series B Notes, the 2016 Series B Notes and the 2017
Series B Notes are referred to collectively in this
description of notes as the “Series B notes” and
the Series A notes and the Series B notes are referred
to collectively in this description of notes as the
“notes.”
The terms of the notes will include those stated in the
indentures and those made part of the indentures by reference to
the Trust Indenture Act of 1939, as amended (the
“Trust Indenture Act”). Except as otherwise indicated,
each of the 2013 Series A Notes, the 2014 Series A
Notes, the 2015 Series A Notes, the 2016 Series A
Notes and the 2017 Series A Notes is a separate series of
notes under the Series A indenture for purposes of, among
other things, payments of principal and interest, waiver of
certain Events of Default and consenting to certain amendments
to the Series A indenture and the Series A notes.
Except as otherwise indicated, each of the 2013 Series B
Notes, the 2014 Series B Notes, the 2015 Series B
Notes, the 2016 Series B Notes and the 2017 Series B
Notes is a separate series of notes under the Series B
indenture for purposes of, among other things, payments of
principal and interest, waiver of certain Events of Default and
consenting to certain amendments to the Series B indenture
and the Series B notes.
The following description is a summary of the material
provisions of the indentures. It does not restate those
agreements in their entirety. CIT and CIT Funding urge you to
read the indentures because they, and not this description,
define your rights as holders of the notes. Copies of the
indentures are available as set forth under the caption
“Incorporation By Reference; Additional Information.”
Certain defined terms used in this description but not defined
below under “— Certain Definitions” have the
meanings assigned to them in the indentures.
CIT Bank and CIT’s other domestic and foreign bank,
insurance, broker dealer and other regulated Subsidiaries, which
CIT refers to as its Regulated Subsidiaries, as well as
CIT’s other Unrestricted Subsidiaries, are not subject to
the restrictive covenants in the indentures which place
limitations on CIT’s, CIT Funding’s, the
Guarantors’ and the Restricted Subsidiaries’ actions,
and where they are subject to covenants, there are numerous
exceptions and limitations. As of June 30, 2009, Regulated
Subsidiaries represented 24% of CIT’s total assets and for
the twelve months ended June 30, 2009 represented 29% and
7% of CIT’s total net revenues and net income, respectively.
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Brief
Description of the Notes and the Note Guarantees
The Series A notes and the Series A Guarantees will be
secured by a second-priority Lien on the Series A
Collateral and the Series B notes and the Series B
Guarantees will be secured by a second-priority Lien on the
Series B Collateral. See “Collateral” and
“— Security for the Notes” for a description
of the Collateral.
The Series A notes will be:
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equal in right of payment with all of CIT’s and the
Guarantors’ existing and future Obligations (other than
CIT’s and the Guarantors’ respective Obligations under
the Credit Agreement) that are not expressly subordinated to the
Series A notes and the Note Guarantees;
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effectively subordinated to Permitted Liens on assets that are
not Series A Collateral and any of CIT’s and the
Guarantors’ existing and future Indebtedness that is
secured by a Lien on any of CIT’s or the Guarantors’
assets under the Credit Agreement and certain other Obligations
secured by Liens on Series A Collateral that are permitted
to be senior, in each case, to the extent of the value of the
assets securing such Permitted Liens, Indebtedness or other
Obligations;
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subordinated in right of payment to CIT’s and the
Guarantor’s existing and future Obligations under the
Credit Agreement;
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senior in right of payment to all of CIT’s and the
Guarantors’ existing and future Indebtedness that is
expressly subordinated to the Series A notes and Note
Guarantees; and
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effectively subordinated to all liabilities of CIT’s
Subsidiaries that are not Guarantors, including CIT Funding.
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The Series B notes will be:
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equal in right of payment with all of CIT Funding’s,
CIT’s and the Guarantors’ existing and future
Obligations (other than CIT Funding’s, CIT’s and the
Guarantors’ respective Obligations under the Credit
Agreement) that are not expressly subordinated to the
Series B notes and the Note Guarantees;
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effectively subordinated to Permitted Liens on assets that are
not Series B Collateral and any of CIT’s and the
Guarantors’ existing and future Indebtedness under the
Credit Agreement and certain other Obligations secured by Liens
on Series B Collateral that are permitted to be senior, in
each case, to the extent of the value of the assets securing
such Permitted Liens, Indebtedness or other Obligations;
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subordinated in right of payment to CIT’s and the
Guarantor’s existing and future Obligations under the
Credit Agreement;
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senior in right of payment to all of CIT Funding’s,
CIT’s and the Guarantors’ existing and future
Indebtedness that is expressly subordinated to the Series B
notes and Note Guarantees; and
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effectively subordinated to all liabilities of CIT’s
Subsidiaries (other than CIT Funding) that are not Guarantors.
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With respect to the Collateral for the notes and Note
Guarantees, the notes and Note Guarantees will rank:
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in the case of each series of notes, effectively senior to all
of CIT’s and the Guarantors’ Indebtedness that is not
secured by a Lien on the Series A Collateral or
Series B Collateral, as applicable, to the extent of the
value of such Series A Collateral or Series B
Collateral, as applicable; and
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in the case of each series of notes, effectively junior to all
of CIT’s and the Guarantors’ Obligations under its
Credit Agreement, to the extent of the value of such
Series A Collateral or Series B Collateral, as
applicable.
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Because CIT is a holding company, the rights of its creditors,
including holders of the notes, in respect of claims on the
assets of each of its Subsidiaries that do not provide a Note
Guarantee (and, in the case of
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Series B Notes, that are not CIT Funding), including its
Regulated Subsidiaries, upon any liquidation or administration,
are structurally subordinated to, and therefore will be subject
to the prior claims of, each such Subsidiary’s creditors
(including trade creditors of and holders of Indebtedness issued
by such Subsidiary). Not all of CIT’s Subsidiaries will
Guarantee the notes. In the event of a bankruptcy, liquidation,
reorganization or similar insolvency proceeding of any of these
non-guarantor Subsidiaries, the non-guarantor Subsidiaries will
pay the holders of their debt and their trade creditors before
they will be able to distribute any of their assets to CIT. The
non-guarantor Subsidiaries generated 19% of CIT’s
consolidated revenues in the twelve-month period ended
June 30, 2009 and held 47% of its consolidated assets as of
June 30, 2009.
CIT’s ability to pay interest on the Series A notes
will be dependent upon its receipt of dividends and other
distributions from, or repayment of intercompany Indebtedness
by, its direct and indirect Subsidiaries. CIT Funding’s
ability to pay interest on the Series B notes will be
dependent upon its receipt of dividends and other distributions
from, or repayment of intercompany Indebtedness by, its direct
and indirect Subsidiaries. The availability of distributions
(including repayment of intercompany Indebtedness) from
Subsidiaries of CIT may be subject to the satisfaction of any
covenants and conditions contained in the applicable
Subsidiaries’ financing documents, if any. The indentures
will limit CIT’s and CIT Funding’s ability and the
ability of the Restricted Subsidiaries to enter into agreements
that contain any provisions limiting the ability of their
Restricted Subsidiaries to make distributions to CIT or CIT
Funding, as applicable. See “— Certain
Covenants — Dividend and Other Restrictions Affecting
Restricted Subsidiaries.”
As of the Issue Date, all of CIT’s Subsidiaries (including
CIT Funding with respect to Series A notes), except its
Regulated Subsidiaries, Special Purpose Entities, Joint Ventures
and Immaterial Subsidiaries will be “Restricted
Subsidiaries.” Under the circumstances described below
under the caption “— Certain
Covenants — Designation of Restricted and Unrestricted
Subsidiaries,” CIT will be permitted to designate
additional Subsidiaries as “Unrestricted
Subsidiaries.” CIT’s Unrestricted Subsidiaries will
not be subject to many of the restrictive covenants in the
indentures. CIT’s Unrestricted Subsidiaries will not
Guarantee the notes.
Absence
of FDIC Insurance and Guarantees
The notes are not savings accounts or deposits with CIT Bank or
any other Subsidiary of CIT nor are they insured by the FDIC or
by the United States or any agency or fund of the United States.
In addition, the notes are not Obligations of, or Guaranteed by,
any of CIT’s Regulated Subsidiaries or its other
Unrestricted Subsidiaries.
Principal,
Maturity and Interest
Unless earlier redeemed:
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the 2013 Notes mature on May 1, 2013;
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the 2014 Notes mature on May 1, 2014;
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the 2015 Notes mature on May 1, 2015;
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the 2016 Notes mature on May 1, 2016; and
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the 2017 Notes mature on May 1, 2017.
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Interest on the notes will be payable in the applicable currency
of such note at:
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7.0% per annum with respect to the Series A notes; and
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9.0% per annum with respect to the Series B notes.
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Interest on the notes will be payable quarterly in cash on each:
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January 10, April 10, July 10 and
October 10, commencing January 10, 2010 with respect
to the 2013 Notes and 2014 Notes;
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February 10, May 10, August 10 and
November 10, commencing February 10, 2010 with respect
to the 2015 Notes and 2016 Notes; and
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March 10, June 10, September 10 and
December 10, commencing March 10, 2010 with respect to
the 2017 Notes.
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CIT and CIT Funding, as applicable, will make interest payments
to the persons who are registered holders at the close of
business on the fifteenth day immediately preceding the
applicable interest payment date. Interest on the notes will
accrue from the most recent date on which interest on the notes
was paid or, if no interest has been paid, from and including
the date on which the notes were originally issued. Interest
will be computed on the basis of a
360-day year
of twelve
30-day
months.
Methods
of Receiving Payments on the Notes
If a holder of notes has given wire transfer instructions to CIT
or CIT Funding, as applicable, CIT or CIT Funding, as
applicable, will pay all principal, interest and premium, if
any, on that holder’s notes in accordance with those
instructions. All other payments on the notes will be made at
the office or agency of the paying agent and registrar within
the City and State of New York unless CIT or CIT Funding, as
applicable, elects to make interest payments by check mailed to
the holders of the notes at their address set forth in the
register of holders.
Paying
Agent and Registrar for the Notes
The trustee will initially act as paying agent and registrar.
CIT or CIT Funding, as applicable, may change the paying agent
or registrar without prior notice to the holders of the notes,
and CIT or any of its Subsidiaries may act as paying agent or
registrar.
Transfer
and Exchange
A holder may transfer or exchange notes in accordance with the
provisions of the applicable indenture. The registrar and the
trustee may require a holder, among other things, to furnish
appropriate endorsements and transfer documents in connection
with a transfer of notes. Holders will be required to pay all
taxes due on transfer. Neither CIT nor CIT Funding will be
required to transfer or exchange any note selected for
redemption. Also, neither CIT nor CIT Funding will be required
to transfer or exchange any note for a period of 15 days
before a selection of notes to be redeemed.
The registered holder of a note will be treated as the owner of
it for all purposes. Only registered holders will have rights
under the applicable indenture.
Note
Guarantees
The Series A notes will be Guaranteed by each of CIT’s
current and future Wholly Owned Domestic Subsidiaries, other
than CIT Funding, Regulated Subsidiaries, Special Purpose
Entities, Joint Ventures and Immaterial Subsidiaries. The
Series B notes will be issued by CIT Funding and will be
Guaranteed by CIT and by each of CIT’s other current and
future Wholly Owned Domestic Subsidiaries, other than Regulated
Subsidiaries, Special Purpose Entities and Immaterial
Subsidiaries. The Note Guarantees will be joint and several
Obligations of the Guarantors. The Obligations of each Guarantor
under its Note Guarantee will be limited as necessary to prevent
that Note Guarantee from constituting a fraudulent conveyance
under applicable law. See “Risk Factors — Risks
to Holders of New Notes Issued in the Offers — A court
could deem the issuance of the New Notes or the guarantees
thereof, as applicable, a fraudulent conveyance and void all or
a portion of the obligations represented by the New Notes or the
guarantees.”
A Guarantor may not sell or otherwise dispose of all or
substantially all of its assets to, or consolidate with or merge
with or into (whether or not such Guarantor is the surviving
Person), another Person, other than another Guarantor, unless:
(1) immediately after giving effect to that transaction, no
Default or Event of Default exists;
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(2) either:
(a) the Person acquiring the property in any such sale or
disposition or the Person formed by or surviving any such
consolidation or merger assumes by contract or operation of law
all the Obligations of that Guarantor under the indentures and
its Note Guarantees pursuant to supplemental indentures
satisfactory to the trustee; or
(b) the Net Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of the
indentures; and
(3) at the time of the transaction such Guarantor or the
surviving Person will have delivered, or caused to be delivered,
to the trustee, in form and substance reasonably satisfactory to
the trustee, an officers’ certificate and an opinion of
counsel, each to the effect that such consolidation, merger,
transfer, sale, assignment, conveyance, lease or other
transaction and the supplemental indenture in respect thereof
comply with the applicable indenture and that all conditions
precedent therein provided for relating to such transaction have
been complied with; provided, however, that
this paragraph shall not apply to any Guarantor whose Guarantee
of the notes is unconditionally released and discharged in
accordance with the applicable indenture.
The Note Guarantee of a Guarantor will be released:
(1) in connection with any sale or other disposition of all
or substantially all of the assets of that Guarantor (including
by way of merger or consolidation) to a Person that is not
(either before or after giving effect to such transaction) CIT,
CIT Funding or a Restricted Subsidiary of CIT, if the sale or
other disposition does not violate the applicable indenture;
(2) in connection with any sale or other disposition of all
of the Capital Stock of that Guarantor to a Person that is not
(either before or after giving effect to such transaction) CIT,
CIT Funding or a Restricted Subsidiary of CIT, if the sale or
other disposition does not violate the applicable indenture;
(3) if CIT designates any Restricted Subsidiary that is a
Guarantor to be an Unrestricted Subsidiary in accordance with
the applicable provisions of the applicable indenture;
(4) upon legal defeasance or satisfaction and discharge of
the applicable indenture as provided below under the captions
“— Legal Defeasance and Covenant Defeasance”
and “— Satisfaction and Discharge;” or
(5) if that Guarantor is released from its guarantee of the
Credit Agreement and all other Pari Passu Debt of CIT.
See “— Repurchase at the Option of
Holders — Asset Sales.”
Notwithstanding anything to the contrary herein, CIT Funding
will not, and CIT will not permit CIT Funding to, consolidate or
merge with or into any other Person.
Security
for the Notes
The Series A notes and the Series A Guarantees will be
secured by second-priority security interests (subject to
Permitted Liens) in the Series A Collateral, and
Series A notes will share in the benefit of such security
interest, together with the holders of Series B notes and
the Junior Credit Facilities, based on the respective amounts of
the Obligations thereunder. The “Series A
Collateral” will consist of substantially the same assets
securing the Credit Agreement, which includes a pledge by CIT
(if the Parent Pledge is granted) and each Guarantor of
substantially all their personal property (but, with respect to
Voting Stock held in their respective direct foreign
Subsidiaries, limited to 65% of the total Voting Stock of such
Subsidiaries) and a pledge of certain rights of the Foreign
Grantors (as defined under “Collateral”) in and to the
following: 65% of the voting shares and 100% of the nonvoting
shares in CIT Financial Ltd. and CIT Vendor Finance (UK)
Limited, all of the shares of Aerospace (except one nominee
share) and 49% of the shares of CIT Group Finance (Ireland).
The Series B notes and the Series B Guarantees will be
secured by second-priority security interests (subject to
Permitted Liens) in the Series B Collateral, and
Series B notes will share in the benefit of such
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security interest, together with the holders of Series A
notes and the Junior Credit Facilities, based on the respective
amounts of the Obligations thereunder. The “Series B
Collateral” will consist of substantially the same assets
securing the Credit Agreement, which includes a pledge by each
Guarantor (with the exception of CIT unless the Parent Pledge is
granted) of substantially all their personal property (but, with
respect to Voting Stock held in their respective direct foreign
Subsidiaries, limited to 65% of the total Voting Stock of such
Subsidiaries) and a pledge of certain rights of the Foreign
Grantors in and to the following: 65% of the voting shares and
100% of the nonvoting shares in CIT Financial Ltd. and CIT
Vendor Finance (UK) Limited, all of the shares of Aerospace
(except one nominee share) and 49% of the shares of CIT Group
Finance (Ireland).
Parent
Pledge by CIT
CIT may grant a Lien on substantially all of its personal
property (excluding its interest in CIT Bank, certain equity
interests in its foreign Subsidiaries and certain other
Regulated Subsidiaries) to secure the Old Notes, the Series A
Obligations, the Series B Obligations, the Senior Obligations
and the Junior Credit Facilities (the “Parent
Pledge”). If the Parent Pledge is granted, the holders of
the Old Notes will by such pledge be equally and ratably secured
with the holders of the Series A Obligations, the
Series B Obligations and the Senior Obligations to the
extent of the assets subject to such pledges. There can be no
assurance that the Parent Pledge will be available for the
benefit of the notes.
The Liens on the Collateral will be released:
(1) in whole with respect to any series, upon repayment of
all outstanding notes of such series or a legal defeasance or
covenant defeasance of the applicable indenture with respect to
such series as set forth below under “— Legal
Defeasance and Covenant Defeasance” and
“— Satisfaction and Discharge;”
(2) in part, as to any property that is sold, transferred
or otherwise disposed of by any Guarantor or Foreign Grantor in
a transaction not prohibited by the applicable indenture at the
time of such transfer or disposition; and
(3) in whole or in part, to the extent permitted by
“— Amendment, Supplement and Waiver” below.
For a description of the Collateral, the Security Documents and
Intercreditor Arrangements, see “Collateral.”
Compliance
with Trust Indenture Act
The indentures will provide that CIT or CIT Funding, as
applicable, will comply with the provisions of Trust Indenture
Act Section 314 to the extent applicable. To the extent
applicable, CIT or CIT Funding, as applicable, will cause Trust
Indenture Act Section 313(b), relating to reports, and
Trust Indenture Act Section 314(d), relating to the release
of property or securities subject to the Lien of the Security
Documents, to be complied with. Any certificate or opinion
required by Trust Indenture Act Section 314(d) will be made
by an officer or legal counsel, as applicable, of CIT or CIT
Funding, as applicable, except in cases where Trust Indenture
Act Section 314(d) requires that such certificate or
opinion be made by an independent Person, which Person will be
an independent engineer, appraiser or other expert selected by
or reasonably satisfactory to the trustee. Notwithstanding
anything to the contrary in this paragraph, CIT or CIT Funding,
as applicable, will not be required to comply with all or any
portion of Trust Indenture Act Section 314(d) if it
reasonably determines that under the terms of Trust Indenture
Act Section 314(d) or any interpretation or guidance as to
the meaning thereof of the SEC and its staff, including “no
action” letters or exemptive orders, all or any portion of
Trust Indenture Act Section 314(d) is inapplicable to any
release or series of releases of Collateral.
Without limiting the generality of the foregoing, certain no
action letters issued by the SEC have permitted an indenture
qualified under the Trust Indenture Act to contain provisions
permitting the release of Collateral from Liens under such
indenture in the ordinary course of the issuer’s business
without requiring the issuer to provide certificates and other
documents under Trust Indenture Act Section 314(d).
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Subordination
The payment of principal, interest and premium, if any, on the
notes will be subordinated to the prior payment in full of all
Obligations of CIT under the Credit Agreement, including
Obligations incurred after the Issue Date (“Senior
Debt”).
The holders of Senior Debt will be entitled to receive payment
in full in cash of all Obligations due in respect of Senior Debt
(including interest after the commencement of any bankruptcy
proceeding at the rate specified in the applicable Senior Debt,
whether or not such interest is an allowable claim) before the
holders of notes will be entitled to receive any payment with
respect to the notes (except that holders of notes may receive
and retain payments made from either of the trusts described
under “— Legal Defeasance and Covenant Defeasance
and “— Satisfaction and Discharge” so long
as the trust was created in accordance with all relevant
conditions specified in the applicable indenture at the time it
was created), in the event of any distribution to creditors of
CIT and CIT Funding:
(1) in a liquidation or dissolution of CIT or CIT Funding;
(2) in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to CIT, CIT Funding
or their respective property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshaling of CIT’s or CIT Funding’s
assets and liabilities.
CIT and CIT Funding also may not make any payment in respect of
the notes (except from the trusts described under
“— Legal Defeasance and Covenant Defeasance”
so long as the trust was created in accordance with all relevant
conditions specified in the applicable indenture at the time it
was created) if:
(1) a payment default on Senior Debt occurs (whether at
maturity, due to acceleration, or otherwise) and is
continuing; or
(2) any other default occurs and is continuing on Senior
Debt that permits holders of the Senior Debt to accelerate its
maturity and the trustee receives a notice of such default from
CIT or CIT Funding or the administrative agent under the Credit
Agreement.
Payments on the notes may and will be resumed in the case of a
payment default upon the date on which such default is cured or
waived.
As a result of the subordination provisions described above, in
the event of a bankruptcy, liquidation or reorganization of CIT
or CIT Funding, holders of notes may recover less ratably than
creditors of CIT or CIT Funding who are holders of Senior Debt.
As a result of the obligation to deliver amounts received in
trust to holders of Senior Debt, holders of notes may recover
less ratably than trade creditors of CIT or CIT Funding.
Optional
Redemption
CIT or CIT Funding, as applicable, may on any one or more
occasions redeem all or a part of any series of the notes, upon
not less than 30 nor more than 60 days’ notice, at the
redemption prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest, if any, on
the notes redeemed, to the applicable date of redemption, if
redeemed during the twelve month period beginning on
January 1 of the years indicated below, subject to the
rights of holders of notes on the relevant regular record date
to receive interest due on the relevant interest payment date
that is on or prior to the applicable date of redemption:
|
|
|
|
|
Year
|
|
Percentage
|
|
|
2010
|
|
|
103.500
|
%
|
2011
|
|
|
102.000
|
%
|
2012 and thereafter
|
|
|
100.000
|
%
|
88
In addition to CIT’s or CIT Funding’s, as applicable,
right to redeem notes as set forth above, CIT or CIT Funding, as
applicable, may at any time and from time to time purchase notes
in open-market transactions, tender offers or otherwise.
Mandatory
Redemption
Neither CIT nor CIT Funding is required to make mandatory
redemption or sinking fund payments with respect to the notes.
Cash
Sweep and Required Cash Sweep Payments
Beginning with the first full month following the Issue Date,
each Restricted Subsidiary shall deposit or cause to be
deposited no less frequently than monthly cash or cash
equivalents in an amount equal to the Sweep Cash Amount in one
or more Deposit Accounts or Securities Accounts owned by CIT
(subject to certain restrictions to be agreed) or one or more
Guarantors, each of which will be subject at all times to a
control agreement in favor of the Notes Collateral Agent (or,
prior to the discharge of the obligations under the Credit
Agreement, the Senior Collateral Agent) to secure the
obligations of CIT, CIT Funding and the Guarantors under the
notes and the Junior Credit Facilities (collectively,
“Sweep Accounts”).
Amounts on deposit in the Sweep Accounts shall be released as
follows:
(i) (a) to pay obligations under the Credit Agreement,
(b) after the discharge of obligations under the Credit
Agreement, to repurchase, repay or redeem notes or the Junior
Credit Facilities (including purchases of notes in open-market
transactions, pursuant to tender offers or otherwise) or any
other obligations thereunder or (c) to make Required Bank
Investments; provided that Other Available Cash
shall have been used first to satisfy Required Bank
Investments; or
(ii) so long as (x) no Default or Event of Default has
occurred and is continuing and (y) both before and after
giving effect thereto, Other Available Cash is less than or
equal to $500 million, (a) to make payments with
respect to TTF Requirements, (b) to make Permitted Bank
Investments, (c) to pay scheduled payments on Qualified
Debt Obligations, (d) to fund Other Available Cash or
(e) to fund Business Reinvestments.
Amounts released shall be applied by CIT within two
(2) Business Days following receipt as set forth above.
CIT shall be required, within the Applicable Repayment Period,
to apply an amount equal to the Available Sweep Amount
(x) to repay obligations under the Credit Agreement and
(y) after the discharge of obligations under the Credit
Agreement, to redeem at par or repurchase or repay notes or the
Junior Credit Facilities (including purchases of notes in
open-market transactions, pursuant to tender offers or
otherwise).
Within 45 days after the end of each Fiscal Quarter
beginning with the first full Fiscal Quarter following the Issue
Date (the “Notice Date”), CIT will furnish to the
holders of notes or cause the trustee to furnish to the holders
of notes, a report that will specify the amount of:
(a) the Sweep Cash Amount as of the end of such Fiscal
Quarter;
(b) Other Available Cash as of the end of such Fiscal
Quarter;
(c) payments made during such Fiscal Quarter with respect
to TTF Requirements and payments on Qualified Debt Obligations
and the projected amounts of such payments for the following
12-month
period;
(d) Permitted Bank Investments and Required Bank
Investments made during such Fiscal Quarter;
(e) Business Reinvestments made during such Fiscal
Quarter; and
(f) payments made or required to be made to repay or
repurchase Indebtedness outstanding under Credit Agreement,
Junior Credit Facilities or notes, as applicable, during the
Fiscal Quarter in which such report is received.
89
Without limiting the foregoing, CIT shall use commercially
reasonable efforts (taking into account other near-term
obligations and other liquidity sources) to apply Excess Sweep
Amounts at the end of each Applicable Repayment Period to repay
obligations under the Credit Agreement and, after the discharge
of obligations under the Credit Agreement, to redeem at par or
repurchase or repay notes or the Junior Credit Facilities
(including purchases of notes in open-market transactions,
pursuant to tender offers or otherwise).
Capitalized terms used herein are defined as follows:
“Applicable Percentage” means with respect to the
applicable business unit or segment specified below:
(a) Corporate Finance (excluding Small Business
Lending) — 100%;
(b) Student Lending — 100%;
(c) Rail — 100%;
(d) Aerospace — 100%;
(e) Trade Finance — 0% prior to a Platform
Transfer of Trade Finance and after such Platform Transfer, 100%
of any cash proceeds received on assets remaining in CIT or its
Restricted Subsidiaries (net of amounts due to clients);
(f) U.S. Vendor Finance — 0% prior to a
Platform Transfer of U.S. Vendor Finance and after such
Platform Transfer 100% of any cash proceeds received on assets
remaining in CIT or its Restricted Subsidiaries; and
(g) Small Business Lending — 0% prior to a
Platform Transfer of Small Business Lending and after such
Platform Transfer 100% of any cash proceeds received on assets
remaining in CIT or its Restricted Subsidiaries.
“Applicable Repayment Period” means: (i) with
respect to repayments of obligations under the Credit Agreement,
the five business day period following the Notice Date occurring
after the end of the applicable Fiscal Quarter and
(ii) with respect to repurchase or repayments of notes or
the Junior Credit Facilities, the
90-day
period following the end of the applicable Fiscal Quarter.
“Available Sweep Amount” means, for any Fiscal
Quarter, an amount equal to (a) the sum of (i) the
balance on deposit in the Sweep Accounts at the end of such
Fiscal Quarter and (ii) Other Available Cash at the end of
such Fiscal Quarter in excess of $500 million minus
(b) the sum of (i) TTF Requirements, (ii) the
amount of Permitted Bank Investments which, at such time, are
both allowed and expected to be made, (iii) Required Bank
Investments which, at such time, either are or will be required
to be made and (iv) the amount of Business Reinvestments
permitted to be made in the next twelve months.
“Business Reinvestments” means investments (whether
new, modified or amended) in the Corporate Finance (excluding
Small Business Lending), Rail and Aerospace business units or
segments not to exceed the sum of (i) $500 million in
the aggregate in any twelve-month period plus
(ii) an amount equal to the aggregate of contractual
commitments in existence on October 12, 2009 to purchase or
fund such Corporate Finance assets.
“Excess Sweep Amounts” means, for any Fiscal Quarter,
an amount equal to (a) the balance on deposit in the Sweep
Accounts at the end of such Fiscal Quarter minus
(b) the sum of (i) $2.0 billion and (ii) the
Available Sweep Amount for such Fiscal Quarter.
“Other Available Cash” means, at any time of
determination, available cash of CIT and its Restricted
Subsidiaries held in accounts other than the Sweep Accounts
(excluding (i) restricted cash balances and (ii) cash
held by or for third parties (including securitization entities)
or Foreign Subsidiaries).
“Permitted Bank Investments” means Investments to be
made pursuant to clauses (15) and (16) of the
definition of “Permitted Investments.”
“Platform Transfer” means the contribution of a
Platform and related Platform Assets to CIT Bank.
90
“Qualified Debt Obligations” means Indebtedness of
CIT, secured Indebtedness of Subsidiaries of CIT that is
recourse to CIT and Indebtedness of CIT Rail Leasing
Trust I in excess of funds available in CIT Rail Leasing
Trust I to repay such Indebtedness.
“Required Bank Investments” means Investments to be
made under clause (12) of the definition of “Permitted
Investments.”
“Sweep Cash Amount” means, for all business units and
segments described in the definition of “Applicable
Percentage,” the product of (x) subject to certain
exceptions, freely transferable cash collections identified by
CIT or a Restricted Subsidiary in good faith and consistent with
past practices as having been generated by owned assets in
respect of such business units and segments (excluding cash
collections received by Regulated Entities and cash collections
received by Subsidiaries operating outside the United States,
the repatriation of which to the United States would violate
applicable law or result in an adverse tax or regulatory issue,
as determined by CIT in good faith), net of (i) aggregate
operating and other expenses for each such business unit or
segment (including allocation of such expenses by CIT) incurred
in the Ordinary Course of Business consistent with past
practice, (ii) costs associated with the servicing of
assets incurred in the Ordinary Course of Business,
(iii) the amount of such collections which are required to
be applied to pay debt service (including without limitation in
respect of securitizations, conduits or similar financings,
total return swaps or secured debt) or payments under operating
leases in respect of transportation finance leases and
(iv) the amount of such collections which are required to
be posted in restricted accounts and cash held by or for third
parties (including securitization entities) and (y) the
Applicable Percentage.
“TTF Requirements” means the sum of: (1) payments
to be made during the twelve-month period following the last day
of each Fiscal Quarter (x) pursuant to contractual
commitments to purchase aerospace and railcar assets (including
related progress payments) in existence on October 12,
2009, net of any related committed financing and (y) in
respect of Qualified Debt Obligations; and (2) a reserve of
50% of future obligations under committed and undrawn lines in
respect of transactions in which CIT or a Restricted Subsidiary
is lead agent.
Repurchase
at the Option of Holders
Change
of Control
If a Change of Control occurs, each holder of notes will have
the right to require CIT or CIT Funding, as applicable, to
repurchase all or any part (equal to consideration per 2,000
principal amount of notes and integral multiples of
consideration per 1,000 principal amount of notes in excess
thereof) of that holder’s notes pursuant to a Change of
Control Offer on the terms set forth in the indentures. In the
Change of Control Offer, CIT or CIT Funding, as applicable, will
offer a Change of Control Payment in cash equal to 101% of the
aggregate principal amount of notes repurchased plus accrued and
unpaid interest, if any, on the notes repurchased to the date of
purchase, subject to the rights of holders of notes on the
relevant record date to receive interest due on the relevant
interest payment date. Within 30 days following any Change
of Control, CIT or CIT Funding, as applicable, will mail a
notice to each holder describing the transaction or transactions
that constitute the Change of Control and offering to repurchase
notes on the Change of Control Payment Date specified in the
notice, which date will be no earlier than 30 days and no
later than 60 days from the date such notice is mailed,
pursuant to the procedures required by the indentures and
described in such notice.
CIT or CIT Funding, as applicable, will comply with the
requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent those laws and regulations
are applicable in connection with the repurchase of the notes as
a result of a Change of Control. To the extent that the
provisions of any securities laws or regulations conflict with
the Change of Control provisions of the indentures, CIT or CIT
Funding, as applicable, will comply with the applicable
securities laws and regulations and will not be deemed to have
breached its obligations under the Change of Control provisions
of the indentures by virtue of such compliance.
91
On the Change of Control Payment Date, CIT or CIT Funding, as
applicable, will, to the extent lawful:
(1) accept for payment all notes or portions of notes
properly tendered pursuant to the Change of Control Offer;
(2) deposit with the paying agent an amount equal to the
Change of Control Payment in respect of all notes or portions of
notes properly tendered; and
(3) deliver or cause to be delivered to the trustee the
notes properly accepted together with an officers’
certificate stating the aggregate principal amount of notes or
portions of notes being purchased by CIT or CIT Funding, as
applicable.
The paying agent will promptly mail to each holder of notes
properly tendered the Change of Control Payment for such notes,
and the trustee will promptly authenticate and mail (or cause to
be transferred by book entry) to each holder a new note equal in
principal amount to any unpurchased portion of the notes
surrendered, if any. CIT or CIT Funding, as applicable, will
publicly announce the results of the Change of Control Offer on
or as soon as reasonably practicable after the Change of Control
Payment Date.
The provisions described above that require CIT or CIT Funding,
as applicable, to make a Change of Control Offer following a
Change of Control will be applicable whether or not any other
provisions of the indentures are applicable. Except as described
above with respect to a Change of Control, the indentures do not
contain provisions that permit the holders of the notes to
require that CIT or CIT Funding, as applicable, repurchase or
redeem the notes in the event of a takeover, recapitalization or
similar transaction.
CIT or CIT Funding, as applicable, will not be required to make
a Change of Control Offer upon a Change of Control if (1) a
third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set
forth in the indentures applicable to a Change of Control Offer
made by CIT or CIT Funding, as applicable, and purchases all
notes properly tendered and not withdrawn under the Change of
Control Offer, or (2) notice of redemption has been given
pursuant to the indentures as described above under the caption
“— Optional Redemption,” unless and until
there is a default in payment of the applicable redemption
price. Notwithstanding anything to the contrary herein, a Change
of Control Offer may be made in advance of a Change of Control,
conditional upon such Change of Control, if a definitive
agreement is in place for the Change of Control at the time of
making of the Change of Control Offer.
The definition of Change of Control includes a phrase relating
to the direct or indirect sale, lease, transfer, conveyance or
other disposition of “all or substantially all” of the
properties or assets of CIT or CIT Funding, as applicable, and
its Subsidiaries taken as a whole. Although there is a limited
body of case law interpreting the phrase “substantially
all,” there is no precise established definition of the
phrase under applicable law. Accordingly, the ability of a
holder of notes to require CIT or CIT Funding, as applicable, to
repurchase its notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets
of CIT or CIT Funding, as applicable, and its Subsidiaries taken
as a whole to another Person or group may be uncertain.
Asset
Sales
CIT will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(1) CIT (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of the Asset Sale at least
equal to the Fair Market Value of the assets or Equity Interests
issued or sold or otherwise disposed of (in connection with a
Large Asset Sale, as determined in writing by an accounting,
appraisal or investment banking firm of national
standing); and
92
(2) at least 75% of the consideration received in the Asset
Sale by CIT or such Restricted Subsidiary is in the form of Cash
or Cash Equivalents. For purposes of this provision, each of the
following will be deemed to be Cash:
(a) any liabilities, as shown on CIT’s most recent
consolidated balance sheet, of CIT or any Restricted Subsidiary
(other than contingent liabilities and liabilities that are by
their terms subordinated to the notes or any Note Guarantee)
that are assumed or forgiven by the transferee of any such
assets pursuant to a customary novation or other agreement that
releases CIT or such Restricted Subsidiary from further
liability; provided that, if the entity
consummating the Asset Sale is a Guarantor, or if the assets to
be sold directly or indirectly include Equity Interests of a
Guarantor, then only liabilities of a Guarantor that are assumed
or forgiven by the transferee shall be included for purposes of
this clause (a);
(b) any securities, notes or other obligations received by
CIT or any such Restricted Subsidiary from such transferee that
are converted by CIT or such Restricted Subsidiary into Cash
within 120 days after the consummation of the Asset Sale,
to the extent of the Cash received in that conversion;
(c) except in connection with a Large Asset Sale, any stock
or assets of the kind referred to in clauses (4) or
(6) of the next paragraph of this covenant (including,
without limitation, financing and leasing assets and related
collateral); and
(d) notes that are redeemed or repurchased (by exchange
offer or otherwise) by the purchaser of the assets in connection
with the transaction pursuant to which the Asset Sale is
consummated,
provided, however, that if such Asset Sale is made
by any Subsidiary that is a Guarantor or any of its
Subsidiaries, then such Cash, stock or assets referred to in the
foregoing clauses (b) through (d) must have been received
by a Subsidiary that is a Guarantor or any of its Subsidiaries.
If the assets or Equity Interests issued or sold or otherwise
disposed of include assets or Equity Interests of CIT Funding,
notwithstanding any provision to the contrary contained herein,
the Net Proceeds received by CIT or such Restricted Subsidiary
shall be at least equal to the sum of (i) the amount then
outstanding under the Credit Agreement plus (ii) an
amount sufficient to repurchase all of the Series B notes
then outstanding pursuant to an Asset Sale Offer assuming all
such outstanding Series B notes were tendered in such an
Asset Sale Offer.
Within 365 days after the receipt of any Net Proceeds from
an Asset Sale (other than a Large Asset Sale), CIT (or the
applicable Restricted Subsidiary, as the case may be) may apply
such Net Proceeds at its option:
(1) to repay Indebtedness outstanding under Credit
Facilities and, if the Indebtedness repaid is revolving credit
Indebtedness, to correspondingly reduce commitments with respect
thereto;
(2) to make one or more offers to the holders of the notes
(and, at the option of CIT, the holders of Pari Passu Debt) to
purchase notes (and such other Pari Passu Debt) pursuant to and
subject to the conditions applicable to Asset Sale Offers
described below;
(3) to repurchase, repay or redeem Pari Passu Debt and, if
the Indebtedness repaid is revolving credit Indebtedness, to
correspondingly reduce commitments with respect thereto;
(4) to acquire all or substantially all of the assets of,
or any Capital Stock of, another Permitted Business, if, after
giving effect to any such acquisition of Capital Stock, the
Permitted Business is or becomes a Restricted Subsidiary of CIT;
(5) to make a capital expenditure;
(6) to acquire (or to provide funding to a Subsidiary to
acquire) other assets (including Portfolio Assets) that are used
or useful in a Permitted Business or to otherwise fund a
Permitted Business; or
(7) to fund new originations of Portfolio Assets (including
to fund revolver advances and obligations related to letters of
credit provided to or on behalf of customers and borrowers under
loan or letter of
93
credit facilities in the Ordinary Course of Business) or to
provide funding to Subsidiaries to facilitate the foregoing;
provided that if the Net Proceeds applied to any
of the uses set forth in clauses (4) through (7) above
arise from a Sale of Collateral, then the assets or stock
acquired with such Net Proceeds shall be held by a Guarantor (or
a direct or indirect Subsidiary of a Guarantor) and pledged as
Collateral.
Within 365 days after the receipt of any Net Proceeds from
a Large Asset Sale, CIT (or the applicable Restricted
Subsidiary, as the case may be) must apply such Net Proceeds:
(1) First, to repay indebtedness outstanding under the
Credit Agreement;
(2) Second, to the extent of the balance of Net Proceeds
after application in accordance with the immediately preceding
clause (1), to make one or more offers to the holders of the
notes and to the holders of Junior Credit Facilities (containing
provisions similar to those set forth in the indentures with
respect to offers to prepay, purchase or redeem with the
proceeds of sales of assets) to purchase the notes and to
purchase or prepay such other Junior Credit Facilities, pursuant
to and subject to the conditions applicable to Asset Sale Offers
described below; provided that if the aggregate
principal amount of notes and Junior Credit Facilities tendered
into such offer exceeds such balance of Net Proceeds, then the
notes and the Junior Credit Facilities will be purchased on a
pro rata basis; and
(3) Third, to the extent of the balance of Net Proceeds
after application in accordance with the immediately preceding
clauses (1) and (2), at its option, any of the uses set
forth in clauses (3) through (7) above.
Pending the final application of any Net Proceeds, CIT may
temporarily reduce revolving credit borrowings of CIT or its
Subsidiaries or otherwise invest the Net Proceeds in any manner
that is not prohibited by the indentures. In the case of
clauses (4) and (6) above, a binding commitment shall
be treated as a permitted application of the Net Proceeds from
the date of such commitment; provided that
(x) CIT uses commercially reasonable efforts to so apply
such Net Proceeds as soon as practicable after entering into
such binding commitment and such investment is consummated
within 450 days after receipt by CIT or any Restricted
Subsidiary of the Net Proceeds of any Asset Sale and (y) if
such investment is not consummated within the period set forth
in subclause (x), the Net Proceeds not so applied will be deemed
to be Excess Proceeds.
Any Net Proceeds from Asset Sales that are not applied or
invested as provided in the third or fourth paragraph of this
covenant will constitute “Excess Proceeds.”
When the aggregate amount of Excess Proceeds equals or exceeds
$100.0 million, within 30 days thereof, CIT will make
an Asset Sale Offer to all holders of notes and all holders of
other Pari Passu Debt containing provisions similar to those set
forth in the indentures with respect to offers to purchase or
redeem with the proceeds of sales of assets to purchase the
maximum principal amount of notes and such other Pari Passu Debt
that may be purchased out of the Excess Proceeds. The offer
price in any Asset Sale Offer will be equal to 100% of the
principal amount plus accrued and unpaid interest, if any, to
the date of purchase, and will be payable in cash. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, CIT
may use those Excess Proceeds for any purpose not otherwise
prohibited by the indentures. If the aggregate principal amount
of notes and other Pari Passu Debt tendered into such Asset Sale
Offer exceeds the amount of Excess Proceeds, the notes and such
other Pari Passu Debt will be purchased on a pro rata basis.
Upon completion of each Asset Sale Offer, the amount of Excess
Proceeds will be reset at zero.
CIT and CIT Funding, as applicable, will comply with the
requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent those laws and regulations
are applicable in connection with each repurchase of notes
pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with
the Asset Sale provisions of the indentures, CIT and CIT
Funding, as applicable, will comply with the applicable
securities laws and regulations and will not be deemed to have
breached its obligations under the Asset Sale provisions of the
indentures by virtue of such compliance.
94
Selection
and Notice
If less than all of the notes are to be redeemed at any time,
the trustee will select notes for redemption on a pro
rata basis unless otherwise required by law or applicable
stock exchange requirements.
No notes of consideration per 2,000 principal amount of notes or
less can be redeemed in part. Notices of redemption will be
mailed by first class mail at least 30 but not more than
60 days before the applicable redemption date to each
holder of notes to be redeemed at its registered address, except
that redemption notices may be mailed more than 60 days
prior to a redemption date if the notice is issued in connection
with a defeasance of the notes or a satisfaction and discharge
of the applicable indenture.
If any note is to be redeemed in part only, the notice of
redemption that relates to that note will state the portion of
the principal amount of that note that is to be redeemed. A new
note in principal amount equal to the unredeemed portion of the
original note will be issued in the name of the holder of notes
upon cancellation of the original note. Notes called for
redemption become due on the date fixed for redemption. On and
after the applicable redemption date, interest ceases to accrue
on notes or portions of notes called for redemption.
Certain
Covenants
Restricted
Payments
CIT will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment
or distribution on account of CIT’s or any of its
Restricted Subsidiaries’ Equity Interests (including,
without limitation, any payment in connection with any merger or
consolidation involving CIT or any of its Restricted
Subsidiaries) or to the direct or indirect holders of CIT’s
or any of its Restricted Subsidiaries’ Equity Interests in
their capacity as such (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of
CIT);
(2) purchase, redeem or otherwise acquire or retire for
value (including, without limitation, in connection with any
merger or consolidation involving CIT) any Equity Interests of
(x) CIT or (y) any Unrestricted Subsidiary (unless a
Permitted Investment);
(3) make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value any
Indebtedness of CIT or any Guarantor that is subordinated
(either contractually in right of payment or in respect of
Collateral) to the notes or to any Note Guarantee (excluding any
intercompany Indebtedness between or among CIT and any of its
Restricted Subsidiaries), except (x) a payment of interest
or principal at the Stated Maturity thereof or (y) a
payment, purchase, redemption, defeasance or other acquisition
or retirement for value of any such Indebtedness in anticipation
of satisfying a sinking fund obligation, principal installment
or final maturity, in each case due within one year of the date
of payment, purchase, redemption, defeasance, acquisition or
retirement; or
(4) make any Restricted Investment (all such payments and
other actions set forth in these clauses (1) through
(4) above being collectively referred to as
“Restricted Payments”),
unless, at the time of and after giving effect to such
Restricted Payment:
(1) no Default or Event of Default has occurred and is
continuing or would occur as a consequence of such Restricted
Payment; and
(2) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by CIT and its
Restricted Subsidiaries since the Issue Date (excluding
Restricted Payments permitted by clauses (2), (3), (4), (6),
(7), (8), (9) and (10) of the next succeeding
paragraph), is less than the sum, without duplication, of:
(a) 50% of the Consolidated Net Income of CIT for the
period (taken as one accounting period) from the beginning of
the first fiscal quarter commencing after the Issue Date to the
end of CIT’s most recently ended fiscal quarter for which
internal financial statements are available at the time of
95
such Restricted Payment (or, if such Consolidated Net Income for
such period is a deficit, less 100% of such deficit); plus
(b) 100% of the aggregate net cash proceeds received by CIT
since the Issue Date as a contribution to its common equity
capital or from the issue or sale of Equity Interests of CIT
(other than Disqualified Stock) or from the issue or sale of
convertible or exchangeable Disqualified Stock or convertible or
exchangeable debt securities of CIT that have been converted
into or exchanged for such Equity Interests (other than Equity
Interests (or Disqualified Stock or debt securities) sold to a
Subsidiary of CIT); plus
(c) to the extent that any Restricted Investment that was
made after the Issue Date is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (i) the cash
return of capital with respect to such Restricted Investment
(less the cost of disposition, if any) and (ii) the initial
amount of such Restricted Investment; plus
(d) to the extent that any Unrestricted Subsidiary of CIT
designated as such after the Issue Date is redesignated as a
Restricted Subsidiary after the Issue Date, the Fair Market
Value of CIT’s Investment in such Subsidiary as of the date
of such redesignation; plus
(e) 100% of any dividends received by CIT or any Restricted
Subsidiary after the Issue Date from an Unrestricted Subsidiary
of CIT, to the extent such dividends were not otherwise included
in Consolidated Net Income of CIT for such period.
The preceding provisions will not prohibit:
(1) the payment of any dividend or the consummation of any
irrevocable redemption within 60 days after the date of
declaration of the dividend or giving of the redemption notice,
as the case may be, if at the date of declaration or notice, the
dividend or redemption payment would have been permitted under
the applicable indenture;
(2) the making of any Restricted Payment in exchange for,
or out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of CIT) of, Equity Interests of
CIT (other than Disqualified Stock) or from the substantially
concurrent contribution of common equity capital to CIT;
provided that the amount of any such net cash
proceeds that are utilized for any such Restricted Payment will
be excluded from clause (2)(b) of the preceding paragraph;
(3) (x) the repurchase, redemption, defeasance or
other acquisition or retirement for value of Indebtedness of CIT
or any Restricted Subsidiary that is contractually subordinated
to the notes or to any Note Guarantee with the net cash proceeds
from a substantially concurrent incurrence of Permitted
Refinancing Indebtedness in respect of such Indebtedness and
(y) the repurchase, redemption, defeasance or other
acquisition or retirement for value of Indebtedness of CIT or
any Restricted Subsidiary that is subordinated in respect of
Collateral to the notes or to any Note Guarantee with the net
cash proceeds from a substantially concurrent incurrence of
Permitted Refinancing Indebtedness in respect of such
Indebtedness;
(4) the payment of any dividend (or, in the case of any
partnership or limited liability company, any similar
distribution) by a Restricted Subsidiary of CIT to the holders
of its Equity Interests on a pro rata basis;
provided that if such Restricted Subsidiary is a
Guarantor, such payment must be made to a Guarantor;
provided, further, however, that, such
payment may be made to CIT if paid in cash;
(5) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of CIT or any
Restricted Subsidiary of CIT held by any current or former
officer, director or employee of CIT or any of its Restricted
Subsidiaries pursuant to any equity subscription agreement,
stock option agreement, shareholders’ agreement or similar
agreement; provided that the aggregate price paid
for all such repurchased, redeemed, acquired or retired Equity
Interests may not exceed $10.0 million in any twelve-month
period, plus the aggregate amount of Restricted Payments
permitted (but not made) pursuant to this clause (5) in the
previous calendar year;
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(6) the repurchase of Equity Interests deemed to occur upon
the exercise of stock options to the extent such Equity
Interests represent a portion of the exercise price of those
stock options;
(7) payments of cash by CIT or any of its Restricted
Subsidiaries in lieu of the issuance of fractional shares upon
the exercise of options or warrants or the conversion or
exchange of Capital Stock of any such Person;
(8) any repricing or issuance of employee stock options or
the adoption of bonus arrangements, and payments pursuant to
such arrangements;
(9) the purchase by CIT of fractional shares arising out of
stock dividends, splits or combinations or business
combinations; and
(10) other Restricted Payments in an aggregate amount not
to exceed $500.0 million since the Issue Date.
Notwithstanding anything to the contrary, CIT Funding shall not
be permitted to make any Restricted Payments.
The amount of all Restricted Payments (other than cash) will be
the Fair Market Value on the date of the Restricted Payment of
the asset(s) or securities proposed to be transferred or issued
by CIT or such Restricted Subsidiary, as the case may be,
pursuant to the Restricted Payment. For purposes of determining
compliance with this covenant, if a Restricted Payment meets the
criteria of more than one of the exceptions described in
clauses (1) through (10) above or is entitled to be
made according to the first paragraph of this covenant, CIT may,
in its sole discretion, classify the Restricted Payment in any
manner that complies with this covenant.
Incurrence
of Indebtedness and Issuance of Preferred Stock
CIT will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to
(collectively, “incur”) any Indebtedness
(including Acquired Debt), and CIT will not issue any
Disqualified Stock, other than Permitted Debt (as defined below).
For the purposes of the indentures, “Permitted
Debt” will be defined as:
(1) Indebtedness of CIT and its Restricted Subsidiaries
under the Credit Agreement in an aggregate principal amount at
any one time outstanding (with letters of credit being deemed to
have a principal amount equal to the maximum potential liability
of CIT and its Restricted Subsidiaries thereunder) in an amount
not to exceed (A) the lesser of (x) $9.5 billion
minus the amount outstanding under the TRS Facility or
(y) the amounts committed or outstanding under the Credit
Agreement on the Issue Date plus $100.0 million,
minus (B) the amount of all permanent repayments
and/or
permanent commitment reductions under the Credit Agreement;
(2) Indebtedness owed (A) to CIT or any Guarantor or
(B) to any Subsidiary; provided that any
event which results in any such Subsidiary ceasing to be a
Subsidiary or any subsequent transfer of such Indebtedness
(other than to CIT or another Subsidiary) shall be deemed, in
each case, to constitute an Incurrence of such Indebtedness not
permitted by this clause (2);
(3) Indebtedness under the notes and the Note Guarantees
issued on the Issue Date;
(4) Indebtedness incurred by CIT or any of its Restricted
Subsidiaries arising from agreements providing for
indemnification, adjustment of purchase price or similar
obligations incurred in connection with the acquisition or
disposition of any business or assets of or by CIT or any
Subsidiary or Equity Interests of a Subsidiary;
(5) Indebtedness which may be deemed to exist pursuant to
(i) any guaranties of obligations other than Indebtedness,
or (ii) performance, surety, statutory, appeal or similar
obligations incurred in the Ordinary Course of Business;
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(6) Indebtedness in respect of netting services, overdraft
protections and otherwise in connection with customary Deposit
Accounts maintained by CIT or any Restricted Subsidiary as part
of its ordinary cash management program;
(7) performance guaranties in the Ordinary Course of
Business of the obligations (other than Indebtedness for money
borrowed) of suppliers, customers, franchisees and licensees of
CIT and its Subsidiaries;
(8) the Guarantee by CIT or any Restricted Subsidiary of
Indebtedness of CIT or any Restricted Subsidiary (other than
Guarantees by any Guarantor or any of its Restricted
Subsidiaries of Indebtedness of CIT (unless the Parent Pledge
has been granted) or any Restricted Subsidiary that is not a
Subsidiary of a Guarantor) that was permitted to be incurred by
another provision of this covenant;
(9) Indebtedness existing on the Issue Date not otherwise
set forth in clauses (1) through (8) or (10) through (22) of
this paragraph;
(10) Indebtedness of CIT or any of its Subsidiaries under
Rate Management Transactions entered into in the Ordinary Course
of Business and not for speculative purposes;
(11) purchase money Indebtedness or Capital Lease
Obligations of CIT or any of its Restricted Subsidiaries;
provided that such Indebtedness or Capital Lease
Obligations (x) may be incurred at the time of purchase of
the assets acquired in connection therewith or financed
thereunder or within 180 days thereafter, and (y) is
or are secured only by (1) assets acquired in connection
with such financing or financed thereunder and intangibles and
proceeds related thereto (“PMSI Assets”),
(2) any other PMSI Assets which may be acquired in
connection with or financed under Indebtedness or Capital Lease
Obligations which are part of the same transaction or a related
series of transactions as such Indebtedness or Capital Lease
Obligations, and (3) any other assets which are not
prohibited by the terms of the indentures from being pledged to
secure such Indebtedness or Capital Lease Obligations;
(12) Permitted Funding Indebtedness;
(13) Permitted Refinancing Indebtedness of Indebtedness
described in clause (3), (9) or (11) (including subsequent
refinancings of the foregoing that constitute Permitted
Refinancing Indebtedness); provided that, any such
Indebtedness, to the extent secured, shall not be secured by any
collateral other than collateral that secured the Indebtedness
being refinanced or collateral substantially similar thereto;
(14) Indebtedness incurred or assumed in connection with or
related to Bank Activities;
(15) (i) customary subordinated Indebtedness (whether
term or revolving) owed by finance Subsidiaries that are Special
Purpose Entities or other subsidiaries in connection with
securitizations, conduits or like transactions incurred in the
Ordinary Course of Business to enable such Special Purpose
Entity or such other subsidiaries to acquire Portfolio Assets to
be transferred to such entities under such transactions, and
(ii) limited guaranties of obligations of financing
subsidiaries that are Special Purpose Entities and other
Subsidiaries in connection with securitization, conduit
facilities and like transactions related to Ordinary Course of
Business activities (including, without limitation, to the
extent applicable, performance guaranties (other than payment
obligations with respect to the underlying Indebtedness that
exceed 10% of the amount of the Indebtedness) and guaranties
consistent with the delivery of a “true
sale”/“absolute transfer” opinion with respect to
any transfer by Company or any Restricted Subsidiary to the
applicable financing Special Purpose Entity, Restricted
Subsidiary or other Subsidiary);
(16) Guaranties by Aerospace, CIT Leasing Corporation or
other Restricted Subsidiaries operating in CIT’s
Transportation Finance segment of Indebtedness of Unrestricted
Subsidiaries with respect to the financing of newly acquired
transportation assets or the lease of transportation assets in
the Ordinary Course of Business;
(17) guaranties by CIT or any Restricted Subsidiary of
Indebtedness of any Restricted Subsidiary incurred in the
Ordinary Course of Business;
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(18) performance guaranties by CIT or a Restricted
Subsidiary in connection with its incurrence in the Ordinary
Course of Business of Indebtedness of Obligations of an
Owner-Trustee (other than payment Obligations with respect to
such Indebtedness that would exceed 10% of the amount of the
Indebtedness);
(19) Indebtedness under, and guaranties of, the TRS
Facility;
(20) Indebtedness under, and guaranties of, LC Facilities
in an aggregate amount not to exceed $750.0 million;
(21) obligations of Restricted Subsidiaries to pay the
deferred purchase price of receivables acquired in the trade
finance business in the Ordinary Course of Business; and
(22) other Indebtedness of CIT and its Restricted
Subsidiaries in an aggregate amount not to exceed at any time
the greater of $500.0 million or 1% of Total Assets.
Notwithstanding anything to the contrary, CIT Funding shall not
be permitted to incur any Indebtedness other than Series B
notes.
For purposes of determining compliance with this
“Incurrence of Indebtedness and Issuance of Preferred
Stock” covenant, in the event that an item of proposed
Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1)
through (22) above, CIT will be permitted to classify such
item of Indebtedness on the date of its incurrence, or later
reclassify all or a portion of such item of Indebtedness, in any
manner that complies with this covenant. Indebtedness under
Credit Facilities outstanding on the Issue Date will initially
be deemed to have been incurred on such date in reliance on the
exception provided by clause (1) (or in the case of Credit
Facilities other than the Credit Agreement, clause (9)) of the
definition of Permitted Debt. Indebtedness under the TRS
Facility outstanding on the Issue Date will initially be deemed
to have been incurred on such date in reliance on the exception
provided by clause (19) of the definition of Permitted
Debt. Indebtedness under the LC Facilities outstanding on the
Issue Date will initially be deemed to have been incurred on
such date in reliance on the exception provided by clause (20)
of the definition of Permitted Debt. The accrual of interest,
the accretion or amortization of original issue discount, the
payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, the
reclassification of preferred stock as Indebtedness due to a
change in accounting principles, and the payment of dividends on
Disqualified Stock in the form of additional shares of the same
class of Disqualified Stock will not be deemed to be an
incurrence of Indebtedness or an issuance of Disqualified Stock
for purposes of this covenant. Notwithstanding any other
provision of this covenant, the maximum amount of Indebtedness
that CIT or any Restricted Subsidiary may incur pursuant to this
covenant shall not be deemed to be exceeded solely as a result
of fluctuations in exchange rates or currency values.
The amount of any Indebtedness outstanding as of any date will
be:
(1) the accreted value of the Indebtedness, in the case of
any Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, in the case
of any other Indebtedness; and
(3) in respect of Indebtedness of another Person secured by
a Lien on the assets of the specified Person, the amount of the
Indebtedness of the other Person.
Liens
CIT will not and will not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or
suffer to exist or become effective any Lien of any kind (other
than Permitted Liens) upon any of their property or assets, now
owned or hereafter acquired.
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Sale
and Leaseback Transactions
CIT will not and will not permit any of its Restricted
Subsidiaries to, directly or indirectly enter into any sale and
leaseback transaction; provided that CIT or one of
its Restricted Subsidiaries may enter into a sale and leaseback
transaction if:
(1) CIT or such Restricted Subsidiary could have
(a) incurred Indebtedness in an amount equal to the
Attributable Indebtedness relating to such sale and leaseback
transaction pursuant to the covenant described under the caption
“Incurrence of Indebtedness and Issuance of Preferred
Stock” and (b) incurred a Lien to secure such
Indebtedness pursuant to the covenant described under the
caption “Liens;”
(2) the gross cash proceeds of such sale and leaseback
transactions are at least equal to the Fair Market Value of the
property that is subject to such sale and leaseback
transaction; and
(3) the transfer of assets in such sale and leaseback
transaction is permitted by, and CIT or the applicable
Restricted Subsidiary applies the proceeds of such transaction
in compliance with, the covenant described under the caption
“Repurchase at the Option of Holders — Asset
Sales.”
However, the preceding restrictions will not apply to: (i) a
sale and leaseback transaction constituting a Portfolio Asset
and (ii) sale and leaseback transactions entered into in
connection with or related to the Ordinary Course of Business.
Dividend
and Other Restrictions Affecting Restricted
Subsidiaries
CIT will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to
exist or become effective any consensual encumbrance or
restriction on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its
Capital Stock to CIT or any of its Restricted Subsidiaries, or
with respect to any other interest or participation in, or
measured by, its profits, or pay any Indebtedness owed to CIT or
any of its Restricted Subsidiaries;
(2) make loans or advances to CIT or any of its Restricted
Subsidiaries; or
(3) sell, lease or transfer any of its properties or assets
to CIT or any of its Restricted Subsidiaries.
However, the preceding restrictions will not apply to
encumbrances or restrictions existing under or by reason of:
(1) agreements and Credit Facilities as in effect on the
Issue Date and any amendments, restatements, modifications,
renewals, supplements, refundings, replacements or refinancings
of those agreements; provided that the amendments,
restatements, modifications, renewals, supplements, refundings,
replacements or refinancings are not materially more
restrictive, taken as a whole, with respect to such dividend and
other payment restrictions than those contained in those
agreements on the Issue Date;
(2) the indentures, the notes and the Note Guarantees;
(3) applicable law, rule, regulation or order;
(4) any agreement or instrument of a Person acquired by CIT
or any of its Restricted Subsidiaries as in effect at the time
of such acquisition (except to the extent such agreement or
instrument was entered into in connection with or in
contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties
or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired;
(5) agreements evidencing purchase money obligations,
Permitted Funding Indebtedness and Capital Lease Obligations
that impose restrictions on the property purchased, sold,
transferred or leased of the nature described in clause (3)
of the preceding paragraph;
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(6) provisions limiting the disposition or distribution of
assets or property (including any agreement for the sale or
other disposition of a Restricted Subsidiary) in asset sale
agreements, sale-leaseback agreements, stock sale agreements and
other similar agreements, which limitation is applicable only to
the assets that are the subject of such agreements;
(7) Permitted Refinancing Indebtedness; provided
that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are not
materially more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being
refinanced;
(8) Liens permitted to be incurred under the provisions of
the covenant described above under the caption
“— Liens” that limit the right of the debtor
to dispose of the assets subject to such Liens;
(9) customary provisions restricting assignments, pledges,
subletting or other transfers or dispositions or dividends or
distributions contained in contracts, leases, licenses,
documentation relating to securitizations, conduit facilities
and other similar transactions, joint venture agreements or
equity investment agreements and similar agreements entered into
in the Ordinary Course of Business or in assets obtained in
workouts or by foreclosure or exercise of remedies;
(10) restrictions on cash or other deposits or net worth
imposed by customers or lessors under contracts or leases
entered into in the Ordinary Course of Business;
(11) agreements relating to Indebtedness issued by CIT
Australia and CIT China, in each case, as in effect on the Issue
Date;
(12) agreements relating to the LC Facilities, in each
case, as in effect on the Issue Date;
(13) agreements relating to Junior Credit Facilities, in
each case, as in effect on the Issue Date; and
(14) any encumbrances or restrictions imposed by any
amendments or refinancings of the contracts, instruments or
obligations referred to above in clauses (2), (5), (11),
(12) or (13); provided that such amendments or
refinancings are not materially more restrictive, with respect
to encumbrances or restrictions set forth in clauses (1),
(2) or (3) of the preceding paragraph, taken as a
whole, than such encumbrances and restrictions prior to such
amendment or refinancing (as determined by CIT in good faith).
Merger,
Consolidation or Sale of Assets
CIT will not, directly or indirectly: (1) consolidate or
merge with or into another Person (whether or not CIT is the
surviving corporation); or (2) sell, assign, transfer,
convey or otherwise dispose of all or substantially all of the
properties or assets of CIT and its Restricted Subsidiaries,
taken as a whole, in one or more related transactions, to
another Person, unless:
(1) either: (a) CIT is the surviving corporation; or
(b) the Person formed by or surviving any such
consolidation or merger (if other than CIT) or to which such
sale, assignment, transfer, conveyance or other disposition has
been made is a Person organized or existing under the laws of
the United States, any state of the United States or the
District of Columbia;
(2) the Person formed by or surviving any such
consolidation or merger (if other than CIT) or the Person to
which such sale, assignment, transfer, conveyance or other
disposition has been made assumes by contract or operation of
law all the obligations of CIT under the notes, the
Series B Guarantees and the indentures pursuant to
agreements reasonably satisfactory to the trustee; and
(3) immediately after, and upon giving effect to, such
transaction, no Default or Event of Default exists.
In addition, CIT will not, directly or indirectly, lease all or
substantially all of the properties and assets of it and its
Restricted Subsidiaries, taken as a whole, in one or more
related transactions, to any other Person.
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This “Merger, Consolidation or Sale of Assets”
covenant will not apply to:
(1) a merger of CIT with an Affiliate solely for the
purpose of reincorporating CIT in another jurisdiction; or
(2) any consolidation or merger, or any sale, assignment,
transfer, conveyance, lease or other disposition of assets
between or among CIT and its Restricted Subsidiaries.
Transactions
with Affiliates
CIT will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or
amend any transaction, contract, agreement, loan, advance or
guarantee with, or for the benefit of, any Affiliate of CIT
involving aggregate consideration in excess of
$250.0 million (each, an “Affiliate
Transaction”), unless:
(1) the Affiliate Transaction is on terms that are no less
favorable to CIT or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction
by CIT or such Restricted Subsidiary with an unrelated
Person; and
(2) CIT delivers to the trustee:
(a) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration
in excess of $250.0 million, a resolution of the Board of
Directors of CIT set forth in an officers’ certificate
certifying that such Affiliate Transaction complies with this
covenant and that such Affiliate Transaction has been approved
by a majority of the disinterested members of the Board of
Directors of CIT; or
(b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration
in excess of $500.0 million, an opinion as to the fairness
to CIT or such Subsidiary of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or
investment banking firm of national standing.
The following items will not be deemed to be Affiliate
Transactions and, therefore, will not be subject to the
provisions of the prior paragraph:
(1) any employment agreement, severance agreement, employee
benefit plan, retirement or bonus plans, officer or director
indemnification agreement or any similar arrangement entered
into by CIT or any of its Restricted Subsidiaries in the
Ordinary Course of Business or approved in good faith by the
Board of Directors of CIT and payments pursuant thereto;
(2) transactions between or among CIT
and/or its
Restricted Subsidiaries (other than transactions among
Guarantors (and, if the Parent Pledge is granted, CIT) or their
Subsidiaries, on the one hand, and non-Guarantors, on the other
hand);
(3) payment of reasonable directors’ fees to members
of the Board of Directors of CIT;
(4) any issuance of Equity Interests (other than
Disqualified Stock) of CIT to Affiliates of CIT (other than
Guarantors and their Subsidiaries);
(5) Restricted Payments that do not violate the provisions
of the applicable indenture described above under the caption
“— Restricted Payments;”
(6) 23A Transactions and other transactions in connection
with or related to Bank Activities or which are otherwise
required by applicable law or regulation;
(7) transactions involving (other than Investments in,
Indebtedness or Asset Sales to or from) Care Investment Trust,
Inc.;
(8) any accommodation lease arrangements arising from
cross-border leasing transactions with a Subsidiary entered into
in the Ordinary Course of Business;
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(9) ordinary course transactions between an owner trust,
its Owner-Trustee and the beneficiary of the owner trust, solely
to the extent such transactions relate to the operation and
governance of the owner trust;
(10) transactions with Affiliates in connection with
workouts, foreclosures or in connection with the compromise,
resolution or full or partial satisfaction of obligations of
trade creditors or customers in the Ordinary Course of
Business; and
(11) (a) customary subordinated loan transactions
(whether term or revolving) with finance Subsidiaries that are
Special Purpose Entities or other Subsidiaries in connection
with securitizations, conduits or like transactions related to
Ordinary Course of Business activities to enable such Special
Purpose Entities or such other Subsidiaries to acquire Portfolio
Assets to be transferred to such entities under such
transactions; and (b) customary limited guaranties of
obligations of finance Subsidiaries that are Special Purpose
Entities or other Subsidiaries in connection with
securitizations, conduits or like transactions related to
Ordinary Course of Business activities (including, without
limitation, to the extent applicable, performance guaranties
(other than payment obligations with respect to the underlying
Indebtedness that exceed 10% of the amount of the Indebtedness)
and the guaranties consistent with the delivery of a “true
sale”/“absolute transfer” opinion with respect to
any transfer by CIT or any Restricted Subsidiary to the
applicable financing Special Purpose Entity, Restricted
Subsidiary or other Subsidiary.
Business
Activities
CIT will not, and will not permit any of its Restricted
Subsidiaries to, engage in any business other than Permitted
Businesses, except to such extent as would not be material to
CIT and its Restricted Subsidiaries, taken as a whole.
Except as otherwise permitted by the applicable indenture, CIT
will not directly own any assets other than (i) Capital
Stock of Subsidiaries, (ii) assets in respect of Rate
Management Transactions, (iii) Cash and Cash Equivalents
and other immaterial assets held in accordance with Ordinary
Course of Business activities consistent with past practice and
(iv) intellectual property consistent with past practice.
Anything to the contrary notwithstanding, at no time shall CIT
Funding engage in any business activities other than owning
intercompany receivables from CIT Financial Ltd. and its
liabilities under the Credit Agreement and the Series B
notes and activities incidental to its organizational existence.
Additional
Note Guarantees
If CIT or any of its Restricted Subsidiaries acquires or creates
another Domestic Subsidiary after the Issue Date, then that
newly acquired or created Domestic Subsidiary will become a
Guarantor and execute a supplemental indenture and deliver an
opinion of counsel satisfactory to the trustee within 30
business days of the date on which it was acquired or created.
Designation
of Restricted and Unrestricted Subsidiaries
The Board of Directors of CIT may designate any Restricted
Subsidiary other than CIT Funding to be an Unrestricted
Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted
Subsidiary, the aggregate Fair Market Value of all outstanding
Investments owned by CIT and its Restricted Subsidiaries in the
Subsidiary designated as Unrestricted will be deemed to be an
Investment made as of the time of the designation and will
reduce the amount available for Restricted Payments under the
covenant described above under the caption
“— Restricted Payments” or under one or more
clauses of the definition of Permitted Investments, as
determined by CIT. That designation will only be permitted if
the Investment would be permitted at that time and if the
Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary.
Any designation of a Subsidiary of CIT as an Unrestricted
Subsidiary after the Issue Date will be evidenced to the trustee
by filing with the trustee a certified copy of a resolution of
the Board of Directors giving effect to such designation and an
officers’ certificate certifying that such designation
complied with the preceding conditions and was permitted by the
covenant described above under the caption
“— Restricted
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Payments.” If, at any time, any Unrestricted Subsidiary
would fail to meet the preceding requirements as an Unrestricted
Subsidiary, it will thereafter cease to be an Unrestricted
Subsidiary for purposes of the applicable indenture and any
Indebtedness of such Subsidiary will be deemed to be incurred by
a Restricted Subsidiary of CIT as of such date and, if such
Indebtedness is not (or any Liens securing such Indebtedness are
not) permitted to be incurred as of such date under the covenant
described under the caption “— Incurrence of
Indebtedness and Issuance of Preferred Stock” (or
“— Liens”), CIT will be in default of such
covenant. The Board of Directors of CIT may at any time
designate any Unrestricted Subsidiary to be a Restricted
Subsidiary of CIT; provided that such designation
will be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of CIT of any outstanding Indebtedness of
such Unrestricted Subsidiary, and such designation will only be
permitted if (1) such Indebtedness is (or any Liens
securing such Indebtedness are) permitted under the covenant
described under the caption “— Incurrence of
Indebtedness and Issuance of Preferred Stock,” calculated
on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period; and (2) no
Default or Event of Default would be in existence following such
designation.
Payments
for Consent
CIT will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, pay or cause to be paid
any consideration to or for the benefit of any holder of notes
for or as an inducement to any consent, waiver or amendment of
any of the terms or provisions of the applicable indenture or
the notes unless such consideration is offered to be paid and is
paid to all holders of the notes that consent, waive or agree to
amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.
Certain
Equipment Refinancings
It is anticipated that the indentures will contain provisions
permitting CIT and its Restricted Subsidiaries to enter into
transactions to refinance and re-establish certain aircraft and
rail equipment financings and certain receivables financings,
and which would include exceptions to, among other things, the
restrictions in the indentures on incurring Indebtedness,
granting Liens and making Asset Sales to permit such
refinancings and re-establishments, provided,
however, that any such exceptions would be
consistent with the provisions contained in the Credit Agreement
as in effect on the Issue Date.
CIT
Australia
The indentures may, to the extent CIT agrees to certain
modifications of the terms of the CIT Australia Notes, include
further limitations on the ability of CIT and the Restricted
Subsidiaries to enter into certain transactions with CIT
Australia.
Transfer
of Operating Platforms
Notwithstanding anything in the indentures to the contrary, CIT
and its Restricted Subsidiaries shall have the right to cause a
Platform or Platforms and related Platform Assets to be
contributed to CIT Bank (directly from a Subsidiary (including a
Guarantor) or from a Subsidiary to CIT and then from CIT to CIT
Bank) without limit or restriction. For the avoidance of doubt,
such transfers and contributions shall not constitute Asset
Sales or Restricted Payments, and shall not be subject to the
restrictions on Liens or Affiliate Transactions set forth in the
applicable indenture.
As used above, the term (i) “Platform” means a
business unit or units (or portions thereof) in CIT’s
Transportation Finance, Trade Finance, Corporate Finance or
Vendor Finance business units or segments as such units or
segments exist on the Issue Date, and (ii) “Platform
Assets” means any and all employees, assets (excluding
Portfolio Assets and trade accounts receivables, but including
the underlying trade finance contracts), personnel, systems,
intellectual property, books and records, contracts and
contractual rights, and other assets necessary for the operation
of the Platform.
Prior to making any Platform Transfer, the Board of Directors of
CIT, in consultation with the chief executive officer of CIT,
shall have determined that the Platform Transfer is in the best
interests of CIT’s stockholders and would not cause CIT to
be unable to pay Indebtedness or other Obligations when due.
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Reports
Whether or not required by the rules and regulations of the SEC,
so long as any notes are outstanding, CIT will furnish to the
holders of notes or cause the trustee to furnish to the holders
of notes, within 15 days after CIT is required to file the
same with the SEC:
(1) all quarterly and annual reports that would be required
to be filed with the SEC on
Forms 10-Q
and 10-K if
CIT were required to file such reports; and
(2) all current reports that would be required to be filed
with the SEC on
Form 8-K
if CIT were required to file such reports.
All such reports will be prepared in all material respects in
accordance with all of the rules and regulations applicable to
such reports. Each annual report on
Form 10-K
will include a report on CIT’s consolidated financial
statements by CIT’s certified independent accountants. In
addition, CIT will file a copy of each of the reports referred
to in clauses (1) and (2) above with the SEC for
public availability within the time periods specified in the
rules and regulations applicable to such reports (unless the SEC
will not accept such a filing) and will post the reports on its
website within those time periods.
If, at any time, CIT is no longer subject to the periodic
reporting requirements of the Exchange Act for any reason, CIT
will maintain a non-public website on which holders of notes,
prospective investors and securities analysts are given access
to the quarterly and annual financial information and CIT will
direct holders of notes, prospective investors and securities
analysts on its publicly available CIT website to contact
CIT’s chief financial officer to obtain access to the
non-public website.
If CIT has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial
information required by the preceding paragraphs will include a
reasonably detailed presentation, either on the face of the
financial statements or in the footnotes thereto, and in
Management’s Discussion and Analysis of Financial Condition
and Results of Operations, of the financial condition and
results of operations of CIT and its Restricted Subsidiaries
separate from the financial condition and results of operations
of the Unrestricted Subsidiaries of CIT.
In addition, CIT and the Guarantors agree that, for so long as
any notes remain outstanding, if at any time they are not
required to file with the SEC the reports required by the
preceding paragraphs, they will furnish to the holders of notes
and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.
Events of
Default and Remedies
Each of the following is an “Event of Default”:
(1) default for 30 days in the payment when due of
interest on the notes;
(2) default in the payment when due (at maturity, upon
redemption or otherwise) of the principal of, or premium, if
any, on, the notes;
(3) failure by CIT or any of its Restricted Subsidiaries to
comply with the provisions described under the captions
“— Repurchase at the Option of
Holders — Change of Control,”
“— Repurchase at the Option of
Holders — Asset Sales” or
“— Certain Covenants — Merger,
Consolidation or Sale of Assets;”
(4) failure by CIT or any of its Restricted Subsidiaries
for 60 days after notice to CIT by the trustee or the
holders of at least 25% in aggregate principal amount of the
notes then outstanding voting as a single class to comply with
any of the other agreements in the applicable indenture;
(5) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured
or evidenced any Indebtedness for money borrowed by CIT or any
of its Restricted Subsidiaries (or the payment of which is
guaranteed by CIT or any of its Restricted
105
Subsidiaries), whether such Indebtedness or Guarantee now
exists, or is created after the Issue Date, if that default:
(a) is caused by a failure to pay principal of, or interest
or premium, if any, on, such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on
the date of such default (a “Payment
Default”); or
(b) results in the acceleration of such Indebtedness prior
to its express maturity,
and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default
or the maturity of which has been so accelerated, aggregates
$250.0 million or more;
(6) failure by CIT or any of its Restricted Subsidiaries to
pay final judgments entered by a court or courts of competent
jurisdiction aggregating in excess of $250.0 million, which
judgments are not paid, discharged or stayed for a period of
60 days;
(7) certain events of bankruptcy or insolvency described in
the applicable indenture with respect to (i) CIT or any
Restricted Subsidiary that is a Significant Subsidiary,
(ii) any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary or
(iii) CIT Bank;
(8) any Note Guarantee of any Significant Subsidiary ceases
to be in full force and effect (other than in accordance with
the terms of such Note Guarantee and the applicable indenture)
or is declared null and void and unenforceable or found to be
invalid or any Guarantor that is a Significant Subsidiary denies
its liability under its Note Guarantee (other than by reason of
release of a Guarantor from its Note Guarantee in accordance
with the terms of the applicable indenture and the Note
Guarantee); and
(9) any security interest and Lien purported to be created
by any Security Document with respect to any Collateral,
individually or in the aggregate, having a Fair Market Value in
excess of $100.0 million shall cease to be in full force
and effect, or shall cease to give the respective Notes
Collateral Agent, for the benefit of the holders, the Liens,
rights, powers and privileges purported to be created and
granted thereby (including a perfected second-priority security
interest in and Lien on, all of the Collateral thereunder
(except as otherwise expressly provided in the applicable
indenture, the Security Documents and the Intercreditor
Agreement)) in favor of the respective Notes Collateral Agent,
or shall be asserted by CIT or any Guarantor to not be, a valid,
perfected, second-priority (except as otherwise expressly
provided in the applicable indenture, the Security Documents or
the Intercreditor Agreement) security interest in or Lien on the
Collateral covered thereby; except to the extent that any such
loss of perfection or priority results from the failure of the
respective Notes Collateral Agent or the trustee (or an agent or
trustee on its behalf) to make filings, renewals and
continuations (or other equivalent filings) or take other
appropriate action or the failure of the respective Notes
Collateral Agent or the trustee (or an agent or trustee on its
behalf) to maintain possession of certificates actually
delivered to it (or such agent or trustee) representing
securities pledged under the Security Documents.
In the case of an Event of Default arising from certain events
of bankruptcy or insolvency, with respect to CIT, any Restricted
Subsidiary of CIT that is a Significant Subsidiary or any group
of Restricted Subsidiaries of CIT that, taken together, would
constitute a Significant Subsidiary, all outstanding notes will
become due and payable immediately without further action or
notice. If any other Event of Default occurs and is continuing,
the trustee or the holders of at least 25% in aggregate
principal amount of the then outstanding notes may declare all
the notes to be due and payable immediately.
Subject to certain limitations, holders of a majority in
aggregate principal amount of the then outstanding notes may
direct the trustee in its exercise of any trust or power. The
trustee may withhold from holders of the notes notice of any
continuing Default or Event of Default if it determines that
withholding notice is in their interest, except a Default or
Event of Default relating to the payment of principal, interest
or premium, if any.
Subject to the provisions of the applicable indenture relating
to the duties of the trustee, in case an Event of Default occurs
and is continuing, the trustee will be under no obligation to
exercise any of the rights or powers under the applicable
indenture at the request or direction of any holders of notes
unless such holders
106
have offered to the trustee reasonable indemnity or security
against any loss, liability or expense. Except to enforce the
right to receive payment of principal, premium, if any, or
interest when due, no holder of a note may pursue any remedy
with respect to the applicable indenture or the notes unless:
(1) such holder has previously given the trustee notice
that an Event of Default is continuing;
(2) holders of at least 25% in aggregate principal amount
of the then outstanding notes have requested the trustee to
pursue the remedy;
(3) such holders have offered the trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the trustee has not complied with such request within
60 days after the receipt of the request and the offer of
security or indemnity; and
(5) holders of a majority in aggregate principal amount of
the then outstanding notes have not given the trustee a
direction inconsistent with such request within such
60-day
period.
The holders of a majority in aggregate principal amount of the
then outstanding notes of a series by notice to the trustee may,
on behalf of the holders of all of the notes of such series,
rescind an acceleration or waive any existing Default or Event
of Default and its consequences under the applicable indenture
except a continuing Default or Event of Default in the payment
of interest or premium, if any, on, or the principal of, the
notes of such series.
CIT is required to deliver to the trustee annually a statement
regarding compliance with the indentures. Upon becoming aware of
any Default or Event of Default, CIT is required to deliver to
the trustee a statement specifying such Default or Event of
Default.
No
Personal Liability of Directors, Officers, Employees and
Stockholders
No director, officer, employee, incorporator or stockholder of
CIT or any Guarantor, as such, will have any liability for any
obligations of CIT or the Guarantors under the notes, the
indentures, the Note Guarantees or for any claim based on, in
respect of, or by reason of, such obligations or their creation.
Each holder of notes by accepting a note waives and releases all
such liability. The waiver and release are part of the
consideration for issuance of the notes. The waiver may not be
effective to waive liabilities under the federal securities laws.
Legal
Defeasance and Covenant Defeasance
CIT or CIT Funding, as applicable, may at any time, at the
option of its Board of Directors evidenced by a resolution set
forth in an officers’ certificate, elect to have all of its
obligations discharged with respect to all the series of
outstanding notes and all obligations of the applicable
Guarantors discharged with respect to their applicable Note
Guarantees (“Legal Defeasance”) except for:
(1) the rights of holders of outstanding notes to receive
payments in respect of the principal of, or interest or premium,
if any, on, such notes when such payments are due from the trust
referred to below;
(2) CIT’s or CIT Funding’s, as applicable,
obligations with respect to their respective notes concerning
issuing temporary notes, registration of notes, mutilated,
destroyed, lost or stolen notes and the maintenance of an office
or agency for payment and money for security payments held in
trust;
(3) the rights, powers, trusts, duties and immunities of
the trustee, and CIT’s or CIT Funding’s, as
applicable, and the Guarantors’ obligations in connection
therewith; and
(4) the Legal Defeasance and Covenant Defeasance provisions
of the applicable indenture.
In addition, CIT or CIT Funding, as applicable, may, at its
option and at any time, elect to have the obligations of CIT or
CIT Funding, as applicable, and the applicable Guarantors
released with respect to certain covenants (including its
obligation to make Change of Control Offers and Asset Sale
Offers) that are described in the applicable indenture
(“Covenant Defeasance”) and thereafter any
omission to comply with
107
those covenants will not constitute a Default or Event of
Default with respect to the applicable notes. In the event
Covenant Defeasance occurs, certain events (not including
non-payment, bankruptcy, receivership, rehabilitation and
insolvency events) described under “— Events of
Default and Remedies” will no longer constitute an Event of
Default with respect to the applicable notes.
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(1) CIT or CIT Funding, as applicable, must irrevocably
deposit with the trustee, in trust, for the benefit of the
holders of the applicable notes, Cash in the applicable currency
of such note, non-callable Government Obligations, or a
combination of Cash in the applicable currency of such note and
non-callable Government Obligations, in amounts as will be
sufficient, in the opinion of a nationally recognized investment
bank, appraisal firm or firm of independent public accountants,
to pay the principal of, or interest and premium, if any, on,
the outstanding applicable notes on the stated date for payment
thereof or on the applicable redemption date, as the case may
be, and CIT or CIT Funding, as applicable, must specify whether
such notes are being defeased to such stated date for payment or
to a particular redemption date;
(2) in the case of Legal Defeasance, CIT or CIT Funding, as
applicable, must deliver to the trustee an opinion of counsel
reasonably acceptable to the trustee confirming that
(a) CIT or CIT Funding, as applicable, has received from,
or there has been published by, the Internal Revenue Service a
ruling or (b) since the Issue Date, there has been a change
in the applicable federal income tax law, in either case to the
effect that, and based thereon such opinion of counsel will
confirm that, the holders of the outstanding applicable notes
will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, CIT or CIT Funding,
as applicable, must deliver to the trustee an opinion of counsel
reasonably acceptable to the trustee confirming that the holders
of the outstanding applicable notes will not recognize income,
gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not
occurred;
(4) no Default or Event of Default has occurred and is
continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be
applied to such deposit and the grant on any Lien securing such
borrowing) and the deposit will not result in a breach or
violation of, or constitute a default under, any other
instrument to which CIT or CIT Funding, as applicable, or any
Guarantor is a party or by which CIT or any Guarantor is bound;
(5) such Legal Defeasance or Covenant Defeasance will not
result in a breach or violation of, or constitute a default
under, any material agreement or instrument (other than the
indentures) to which CIT or CIT Funding, as applicable, or any
of Guarantor is a party or by which CIT or CIT Funding, as
applicable, or any Guarantor is bound;
(6) CIT or CIT Funding, as applicable, must deliver to the
trustee an officers’ certificate stating that the deposit
was not made by CIT with the intent of preferring the holders of
the applicable notes over the other creditors of CIT or CIT
Funding, as applicable, with the intent of defeating, hindering,
delaying or defrauding any creditors of CIT or CIT Funding, as
applicable, or others; and
(7) CIT or CIT Funding, as applicable, must deliver to the
trustee an officers’ certificate and an opinion of counsel,
each stating that all conditions precedent relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.
The Collateral will be released from the Lien securing the
applicable notes, as provided under the caption
“Collateral — Release or Subordination of
Collateral,” upon a Legal Defeasance or Covenant Defeasance
in accordance with the provisions described above.
108
Amendment,
Supplement and Waiver
Except as provided in the next three succeeding paragraphs, the
indentures, the notes, the Note Guarantees, any Intercreditor
Agreement or the Security Documents may be amended or
supplemented with the consent of the holders of at least a
majority in aggregate principal amount of the notes of each
affected series then outstanding under the applicable indenture
(including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for,
notes), with each series voting as a separate class, and any
existing Default or Event of Default or compliance with any
provision of the applicable indenture or the notes or the Note
Guarantees may be waived with the consent of the holders of a
majority in aggregate principal amount of the then outstanding
notes of each affected series (including, without limitation,
consents obtained in connection with a purchase of, or tender
offer or exchange offer for, notes), with each series voting as
a separate class. In addition, upon (i) a series of notes
having an Investment Grade Rating from Moody’s and S&P
and (ii) so long as no Default has occurred and is then
continuing with respect to notes of such series, with the
consent of the holders of at least a majority in aggregate
principal amount of the notes of such series then outstanding
any Security Document, any Intercreditor Agreement or the
provisions in the applicable indenture dealing with the
Collateral or the Security Documents or the application of trust
proceeds of the Collateral may be amended to release all or
substantially all of the Collateral from the Liens of the
Security Documents or to change or alter the priority of the
security interests in the Collateral with respect to (and only
with respect to) notes of such series.
Without the consent of each holder of notes affected, an
amendment, supplement or waiver may not (with respect to any
notes held by a non-consenting holder):
(1) reduce the principal amount of notes whose holders must
consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of
any note or alter the provisions with respect to the redemption
of the notes (other than provisions relating to the covenants
described above under the caption “— Repurchase
at the Option of Holders”);
(3) reduce the rate of or change the time for payment of
interest, including default interest, on any note;
(4) waive a Default or Event of Default in the payment of
principal of, or interest or premium, if any, on, the notes
(except a rescission of acceleration of the notes by the holders
of at least a majority in aggregate principal amount of the then
outstanding notes and a waiver of the Payment Default that
resulted from such acceleration);
(5) make any note payable in money other than that stated
in the notes;
(6) make any change in the provisions of the applicable
indenture relating to waivers of past Defaults or the rights of
holders of notes to receive payments of principal of, or
interest or premium, if any, on, the notes;
(7) waive a redemption payment with respect to any note
(other than a payment required by one of the covenants described
above under the caption “— Repurchase at the
Option of Holders”);
(8) release any Guarantor from any of its obligations under
its Note Guarantee or the applicable indenture, except in
accordance with the terms of such indenture;
(9) except as provided in the preceding paragraph, make any
change in any Security Document, any Intercreditor Agreement or
the provisions in the applicable indenture dealing with the
Collateral or the Security Documents or the application of trust
proceeds of the Collateral that would release all or
substantially all of the Collateral from the Liens of the
Security Documents (except as permitted by the terms of the
applicable indenture, the Security Documents and the applicable
Intercreditor Agreement) or change or alter the priority of the
security interests in the Collateral; or
(10) make any change in the preceding amendment and waiver
provisions.
109
Notwithstanding the preceding, without the consent of any holder
of notes of any series, CIT or CIT Funding, as applicable, the
Guarantors and the trustee may amend or supplement the
applicable indenture, any series of notes or the Note Guarantees:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or
in place of certificated notes;
(3) to provide for the assumption of CIT’s or CIT
Funding, as applicable, or a Guarantor’s obligations to
holders of notes and Note Guarantees in the case of a merger or
consolidation or sale of all or substantially all of CIT’s
or CIT Funding’s, as applicable, or such Guarantor’s
assets, as applicable;
(4) to make any change that would provide any additional
rights or benefits to the holders of such notes, increase the
interest rate applicable to any series of notes or that does not
adversely affect the legal rights under the applicable indenture
of any such holder;
(5) to comply with requirements of the SEC in order to
effect or maintain the qualification of the applicable indenture
under the Trust Indenture Act;
(6) to conform the text of the applicable indenture, the
Note Guarantees or the notes to any provision of this
Description of New Notes to the extent that such provision in
this Description of New Notes was intended to be a verbatim
recitation of a provision of the applicable indenture, the Note
Guarantees or the notes;
(7) to confirm and evidence the release, termination,
subordination or discharge of any Lien securing the notes when
such release, termination or discharge is permitted by the
applicable indenture, the Security Documents or any
Intercreditor Agreement;
(8) to provide for the issuance of additional notes in
accordance with the limitations set forth in the applicable
indenture as of the date of such indenture;
(9) to allow any Guarantor to execute a supplemental
indenture
and/or a
Note Guarantee with respect to the notes or to effect the
release of any Guarantor from any of its obligations under its
Note Guarantee or the applicable indenture (to the extent
permitted by such indenture); or
(10) in the case of any Intercreditor Agreement, in order
to subject the security interests in the Collateral in respect
of any Indebtedness secured by Liens on the Collateral with Pari
Passu Lien Priority to the terms of any Intercreditor Agreement,
in each case to the extent the incurrence of such Indebtedness,
and the grant of all Liens on the Collateral held for the
benefit of such Indebtedness were permitted hereunder.
The consent of the holders of any series of notes is not
necessary under the indentures, any Security Document or any
Intercreditor Agreement to approve the particular form of any
proposed amendment or waiver. It is sufficient if such consent
approves the substance of the proposed amendment or waiver.
Satisfaction
and Discharge
The applicable indenture will be discharged and will cease to be
of further effect as to all notes of any series (if all series
issued under the applicable indenture are not to be affected)
issued thereunder, when:
(1) either:
(a) all notes of such series that have been authenticated,
except lost, stolen or destroyed notes that have been replaced
or paid and notes for whose payment money has been deposited in
trust and thereafter repaid to CIT or CIT Funding, as
applicable, have been delivered to the trustee for
cancellation; or
(b) all notes of such series that have not been delivered
to the trustee for cancellation have become due and payable by
reason of the mailing of a notice of redemption or otherwise or
will become due and payable within one year and CIT or CIT
Funding, as applicable, or any Guarantor
110
has irrevocably deposited or caused to be deposited with the
trustee as trust funds in trust solely for the benefit of the
holders of such notes, Cash in the applicable currency of such
note, non-callable Government Obligations, or a combination of
Cash in the applicable currency of such note and non-callable
Government Obligations, in amounts as will be sufficient,
without consideration of any reinvestment of interest, to pay
and discharge the entire Indebtedness on the notes of such
series not delivered to the trustee for cancellation for
principal, premium, if any, and accrued interest to the date of
maturity or redemption;
(2) no Default or Event of Default has occurred and is
continuing on the date of the deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be
applied to such deposit and the grant on any Lien securing such
borrowing) and the deposit will not result in a breach or
violation of, or constitute a default under, any other
instrument to which CIT or CIT Funding, as applicable, or any
Guarantor is a party or by which CIT or CIT Funding, as
applicable, or any Guarantor is bound;
(3) CIT or CIT Funding, as applicable, or any Guarantor has
paid or caused to be paid all sums payable by it under the
applicable indenture; and
(4) CIT or CIT Funding, as applicable, has delivered
irrevocable instructions to the trustee under the applicable
indenture to apply the deposited money toward the payment of the
notes at maturity or on the redemption date, as the case may be.
In addition, CIT or CIT Funding, as applicable, must deliver an
officers’ certificate and an opinion of counsel to the
trustee stating that all conditions precedent to satisfaction
and discharge have been satisfied.
The Collateral will be released from the Lien securing the
notes, as provided under the caption
“Collateral — Release or Subordination of
Collateral,” upon a satisfaction and discharge in
accordance with the provisions described above.
Concerning
the Trustee
If the trustee becomes a creditor of CIT or CIT Funding, as
applicable, or any Guarantor, the indentures limit the right of
the trustee to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such
claim as security or otherwise. The trustee will be permitted to
engage in other transactions; however, if it acquires any
conflicting interest it must eliminate such conflict within
90 days, apply to the SEC for permission to continue as
trustee (if the indentures have been qualified under the
Trust Indenture Act) or resign.
The holders of a majority in aggregate principal amount of the
then outstanding series of notes under the applicable indenture,
voting together as a single class, will have the right to direct
the time, method and place of conducting any proceeding for
exercising any remedy available to the trustee, subject to
certain exceptions. The indentures provide that in case an Event
of Default occurs and is continuing, the trustee will be
required, in the exercise of its power, to use the degree of
care of a prudent man in the conduct of his own affairs. Subject
to such provisions, the trustee will be under no obligation to
exercise any of its rights or powers under the indentures at the
request of any holder of notes, unless such holder has offered
to the trustee security and indemnity satisfactory to it against
any loss, liability or expense.
Certain
Definitions
Set forth below are certain defined terms used in the
indentures. Reference is made to the indentures for a full
disclosure of all defined terms used therein, as well as any
other capitalized terms used herein for which no definition is
provided.
“23A Transaction” means any transfer or
transfers of assets of CIT or any Restricted Subsidiary to CIT
Bank pursuant to waivers of Section 23A of the Federal
Reserve Act.
111
“Acquired Debt” means, with respect to any
specified Person:
(1) Indebtedness of any other Person existing at the time
such other Person is merged with or into or became a Subsidiary
of such specified Person, whether or not such Indebtedness is
incurred in connection with, or in contemplation of, such other
Person merging with or into, or becoming a Subsidiary of, such
specified Person; provided, however, that
Indebtedness of such acquired Person which is redeemed,
defeased, retired or otherwise repaid at the time of or
immediately upon consummation of the transactions by which such
Person merges with or into or becomes a Subsidiary of such
Person shall not be Acquired Debt; and
(2) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
“Aerospace” means CIT Aerospace International.
“Affiliate” of any specified Person means any
other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified
Person. For purposes of this definition, “control,” as
used with respect to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of
the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise. For
purposes of this definition, the terms “controlling,”
“controlled by” and “under common control
with” have correlative meanings.
“Asset Sale” means:
(1) the sale, lease, conveyance or other disposition of any
assets (including rights); provided that the sale,
lease, conveyance or other disposition of all or substantially
all of the assets of CIT and its Restricted Subsidiaries taken
as a whole will be governed by the provisions of the applicable
indenture described above under the caption
“— Repurchase at the Option of
Holders — Change of Control”
and/or the
provisions described above under the caption
“— Certain Covenants — Merger,
Consolidation or Sale of Assets” and not by the provisions
of the Asset Sale covenant; and
(2) the issuance of Equity Interests in any of CIT’s
Restricted Subsidiaries or the sale of Equity Interests in any
of its Restricted Subsidiaries.
Notwithstanding the preceding, none of the following items will
be deemed to be an Asset Sale:
(1) any single transaction or series of related
transactions that involves assets having a Fair Market Value of
less than $25.0 million;
(2) a transfer of assets between or among CIT and its
Restricted Subsidiaries, except a transfer by a Guarantor or
Subsidiary of a Guarantor (or, if the Parent Pledge is granted,
CIT) to a non-Guarantor or a Subsidiary of a non-Guarantor;
(3) a transfer of assets to an Unrestricted Subsidiary in
the Ordinary Course of Business or consistent with past
practice, provided that the Net Proceeds thereof
shall be applied as required by the third paragraph under the
caption “— Asset Sales;”
(4) an issuance of Equity Interests by a Restricted
Subsidiary of CIT to CIT or to a Restricted Subsidiary of CIT,
provided that Equity Interests of a Guarantor or
of a direct or indirect Subsidiary of a Guarantor may only be
issued to a Guarantor or a Subsidiary of a Guarantor,
provided, further, however, that a
Guarantor that is directly owned by CIT may issue Equity
Interests to CIT;
(5) the sale, funding or other disposition or lease of
Portfolio Assets or other assets (including, without limitation,
equipment) in the Ordinary Course of Business;
(6) any sale or other disposition of damaged, worn-out or
obsolete assets or assets that are no longer useful in the
business of CIT or any Restricted Subsidiary;
(7) the sale or other disposition of Cash or Cash
Equivalents;
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(8) sales or grants of licenses or sublicenses of
intellectual property, and licenses, leases or subleases of
other assets, of CIT or any Restricted Subsidiary to the extent
not materially interfering with the business of CIT and the
Restricted Subsidiaries;
(9) a Restricted Payment that is permitted by the covenant
described above under the caption “— Certain
Covenants — Restricted Payments” or that is a
Permitted Investment;
(10) disposition of Investments, receivables or other
assets in connection with the workout, compromise, settlement or
collection thereof or exercise of remedies with respect thereto,
in the Ordinary Course of Business or in bankruptcy, foreclosure
or similar proceedings;
(11) to the extent allowable under Section 1031 of the
Internal Revenue Code of 1986, any exchange of like property
(excluding any boot thereon) that are used or useful in a
Permitted Business;
(12) the sale or other disposition of Equity Interests of
an Unrestricted Subsidiary;
(13) Bank Activities; and
(14) the sale of a portfolio of commercial aviation
aircraft and related operating lease agreements having an
aggregate net book value of up to $900.0 million.
“Asset Sale Offer” has the meaning assigned to
that term in the applicable indenture governing the notes.
“Attributable Indebtedness” in respect of a
sale and leaseback transaction means, as of the time of
determination, the present value (discounted at the rate per
annum equal to the rate of interest implicit in the lease
involved in such sale and leaseback transaction, as determined
in good faith by CIT) of the obligation of the lessee thereunder
for rental payments (excluding, however, any amounts required to
be paid by such lessee, whether or not designated as rent or
additional rent, on account of maintenance and repairs,
insurance, taxes, assessments, water rates or similar charges or
any amounts required to be paid by such lessee thereunder
contingent upon the amount of sales or similar contingent
amounts) during the remaining term of such lease (including any
period for which such lease has been extended or may, at the
option of the lessor, be extended). In the case of any lease
which is terminable by the lessee upon the payment of a penalty,
such rental payments shall also include the amount of such
penalty, but no rental payments shall be considered as required
to be paid under such lease subsequent to the first date upon
which it may be so terminated.
“Bank Activities” means (i) 23A
Transactions and (ii) any transfer or transfers of assets,
Liens, Indebtedness, subordinations, participations, payments,
assignments, reimbursements, purchases, granting of security
interests, perfection thereof, and replacements thereof to
secure obligations, servicing or other agreements or actions by
CIT or any Restricted Subsidiary in favor of CIT Bank required
to be taken or which would be prudent to take in order to comply
with all agreements now and hereafter entered into between any
of CIT or any Restricted Subsidiary and CIT Bank, or CIT Bank
and its regulators, and all laws, federal, state, foreign and
local statutes, rules, guidelines, regulations, codes, executive
orders and administrative or judicial precedents or authorities,
including the interpretation thereof by any Governmental
Authority charged with the enforcement, interpretation or
administration thereof, and all administrative orders, directed
duties, requests, licenses and agreements with such governmental
authorities, whether or not having the force of law, all arising
from or relating to CIT Bank, together with all contractual
indemnifications in connection with each of the above, and any
and all actions undertaken in connection with any of the
foregoing activities.
“Bank Agent” means Barclays PLC or its
successor.
“Beneficial Owner” has the meaning assigned to
such term in
Rule 13d-3
and
Rule 13d-5
under the Exchange Act, except that in calculating the
beneficial ownership of any particular “person” (as
that term is used in Section 13(d)(3) of the Exchange Act),
such “person” will be deemed to have beneficial
ownership of all securities that such “person” has the
right to acquire by conversion or exercise of other securities,
whether such right is currently exercisable or is exercisable
only after the passage of time. The terms “Beneficially
Owns” and “Beneficially Owned” have a
corresponding meaning.
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“Board of Directors” means:
(1) with respect to a corporation, the board of directors
of the corporation or any committee thereof duly authorized to
act on behalf of such board;
(2) with respect to a partnership, the board of directors
of the general partner of the partnership;
(3) with respect to a limited liability company, the
managing member or members or any controlling committee of
managing members thereof; and
(4) with respect to any other Person, the board or
committee of such Person serving a similar function.
“Capital Lease Obligation” means, at the time
any determination is to be made, the amount of the liability in
respect of a capital lease that would at that time be required
to be capitalized on a balance sheet prepared in accordance with
GAAP, and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease
prior to the first date upon which such lease may be prepaid by
the lessee without payment of a premium or penalty.
“Capital Stock” means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any
and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock;
(3) in the case of a partnership or limited liability
company, partnership interests (whether general or limited) or
membership interests; and
(4) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person, but
excluding from all of the foregoing any debt securities
convertible into Capital Stock, whether or not such debt
securities include any right of participation with Capital Stock.
“Cash” means money, currency or a credit
balance in any demand or deposit account.
“Cash Equivalents” means, as at any date of
determination, (i) marketable securities and repurchase
agreements for marketable securities (a) issued or directly
and unconditionally guaranteed as to interest and principal by
the United States Government, or (b) issued by any agency
of the United States the obligations of which are backed by the
full faith and credit of the United States, in each case
maturing within one year after such date; (ii) marketable
direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one
year after such date and having, at the time of the acquisition
thereof, a rating of at least
A-1 from
S&P or at least
P-1 from
Moody’s; (iii) commercial paper maturing no more than
one year from the date of creation thereof and having, at the
time of the acquisition thereof, a rating of at least
A-1 from
S&P or at least
P-1 from
Moody’s; (iv) time deposits or bankers’
acceptances maturing within one year after such date and issued
or accepted by any lender or by any commercial bank (including
any branch of a commercial bank) that (a) in the case of a
commercial bank organized under the laws of the United States of
America, any state thereof or the District of Columbia is at
least “adequately capitalized” (as defined in the
regulations of its primary Federal banking regulator), and has
Tier 1 capital (as defined in such regulations) of not less
than $100,000,000 or (b) in the case of any other
commercial bank has a short-term commercial paper rating from
S&P of at least
A-1 or from
Moody’s of at least
P-1; and
(v) shares of any money market mutual fund that has
(a) net assets of not less than $500,000,000, and
(b) the highest rating obtainable from either S&P or
Moody’s.
“Change of Control” means the occurrence of any
of the following:
(1) any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the Beneficial Owner of more than 50% of the total
outstanding Voting Stock of CIT (measured by voting power rather
than the number of shares);
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(2) CIT consolidates with or merges with or into any Person
or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any such
Person, or any such Person consolidates with or merges into or
with CIT in any such event pursuant to a transaction in which
the outstanding Voting Stock of CIT is converted into or
exchanged for cash, securities or other property, other than any
such transaction where:
(A) the Voting Stock of CIT outstanding immediately prior
to such transaction is changed into or exchanged for Voting
Stock (other than Disqualified Capital Stock) of the surviving
corporation constituting a majority of the outstanding shares of
such Voting Stock (measured by voting power rather than the
number of shares) of such surviving corporation (immediately
after giving effect to such issuance); and
(B) immediately after such transaction, no
“person” or “group” (as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act), is the
Beneficial Owner of more than 50% of the total outstanding
Voting Stock (measured by voting power rather than the number of
shares) of the surviving corporation; or
(3) CIT is liquidated or dissolved or the Board of
Directors of CIT adopts a plan of liquidation or dissolution
other than in a transaction which complies with the provisions
described under “— Consolidation, Merger, Sale of
Assets.”
“Change of Control Offer” has the meaning
assigned to that term in the applicable indenture governing the
notes.
“CIT Australia” means CIT Group (Australia)
Limited.
“CIT Australia Notes” means, collectively, the
6.00% Fixed Rate Notes due 3 March 2011 (CUSIP
AU300CGAL010) and the 3 month BBSW plus 34bp Floating Rate
Notes due 3 March 2011 (CUSIP AU300CGAL028) issued by CIT
Australia.
“CIT Bank” means, collectively, CIT Bank, a
bank organized under the laws of the State of Utah, and its
consolidated subsidiaries, together with any other banking
institution which is owned directly or indirectly by CIT from
time to time (including without limitation, any banking
institution which is merged with or into CIT Bank or any of its
subsidiaries or which is the successor in interest to such CIT
Bank).
“CIT China” means CIT Finance and Leasing
Corporation.
“CIT Funding” means CIT Group Funding Company
of Delaware LLC, a Delaware limited liability company.
“Collateral” means, collectively, the Series A
Collateral and Series B Collateral.
“Consolidated Net Income” means, with respect
to any specified Person for any period, the aggregate of the Net
Income of such Person and its Restricted Subsidiaries and
Regulated Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP; provided that:
(1) the Net Income (but not loss) of any Person that is not
a Restricted Subsidiary or Regulated Subsidiary or that is
accounted for by the equity method of accounting will be
included only to the extent of the amount of dividends or
similar distributions paid in cash to the specified Person or a
Restricted Subsidiary of the Person;
(2) solely for the purpose of determining the amount
available for Restricted Payments under clause (2)(a) of the
first paragraph of “Certain Covenants —
Restricted Payments,” the Net Income of any Restricted
Subsidiary will be excluded to the extent that the declaration
or payment of dividends or similar distributions by that
Restricted Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary
or its stockholders, except to the extent that any dividend or
distribution is actually made in cash and not otherwise included
therein;
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(3) solely for the purpose of determining the amount
available for Restricted Payments under clause (2)(a) of the
first paragraph of “Certain Covenants —
Restricted Payments,” the Net Income of any Regulated
Subsidiary will be excluded to the extent that the declaration
or payment of dividends or similar distributions by such
Regulated Subsidiary of such Net Income is not at the time
permitted by the operation of the terms of its charter or any
agreement or instrument with a Person, other than such Regulated
Subsidiary’s applicable regulatory authorities, or any
judgment or decree applicable to such Regulated Subsidiary
(except to the extent that (x) any dividend or distribution
is actually made in cash and not otherwise included therein or
(y) such Regulated Subsidiary reasonably believes, in good
faith, that such Net Income could have been distributed,
declared or paid as a dividend or similar distribution without
having caused such Regulated Subsidiary to fail to be at least
“adequately capitalized” as defined in the regulations
of applicable regulatory authorities, or to meet minimum capital
requirements imposed by applicable regulatory
authorities); and
(4) the cumulative effect of a change in accounting
principles will be excluded.
“Credit Agreement” means that certain Amended
and Restated Credit and Guaranty Agreement, dated as of
July 29, 2009, by and among CIT, and certain of its
subsidiaries and Barclays Bank PLC, as administrative agent and
collateral agent, and the lenders party thereto, including any
related notes, Guarantees, collateral documents, instruments and
agreements executed in connection therewith, and, in each case,
as amended, restated, modified, renewed, refunded, replaced
(whether upon or after termination or otherwise) or refinanced
(including by means of sales of debt securities to institutional
investors) in whole or in part from time to time.
“Credit Facilities” means, one or more debt
facilities (including, without limitation, the Credit Agreement)
or commercial paper facilities (secured or unsecured), in each
case, with banks or other institutional lenders providing for
revolving credit loans, term loans, receivables or asset based
financing (including through the sale of receivables or assets
to such lenders or to special purpose entities formed to borrow
from such lenders against such receivables or assets) or letters
of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced (whether upon or after termination
or otherwise) or refinanced (including by means of sales of debt
securities to institutional investors) in whole or in part from
time to time.
“Credit Party” means each Person that is a
Credit Party as defined in and pursuant to the Credit Agreement.
“Default” means any event that is, or with the
passage of time or the giving of notice or both would be, an
Event of Default.
“Deposit Account” means a demand, time,
savings, passbook or like account with a bank, savings and loan
association, credit union or like organization, other than an
account evidenced by a negotiable certificate of deposit.
“Disqualified Stock” means any Capital Stock
that, by its terms (or by the terms of any security into which
it is convertible, or for which it is exchangeable, in each
case, at the option of the holder of the Capital Stock), or upon
the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise,
or redeemable at the option of the holder of the Capital Stock,
in whole or in part, on or prior to the date that is
91 days after the date on which the notes mature.
Notwithstanding the preceding sentence, any Capital Stock that
would constitute Disqualified Stock solely because the holders
of the Capital Stock have the right to require CIT to repurchase
such Capital Stock upon the occurrence of a change of control or
an asset sale will not constitute Disqualified Stock if the
terms of such Capital Stock provide that CIT may not repurchase
or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with the covenant
described above under the caption “— Certain
Covenants — Restricted Payments.” The amount of
Disqualified Stock deemed to be outstanding at any time for
purposes of the applicable indenture will be the maximum amount
that CIT and its Restricted Subsidiaries may become obligated to
pay upon the maturity of, or pursuant to any mandatory
redemption provisions of, such Disqualified Stock, exclusive of
accrued dividends.
“Domestic Subsidiary” means any Restricted
Subsidiary that was formed under the laws of the United States
or any state of the United States or the District of Columbia.
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“Equity Interests” means Capital Stock and all
warrants, options or other rights to acquire Capital Stock (but
excluding any debt security that is convertible into, or
exchangeable for, Capital Stock).
“Fair Market Value” means the value that would
be paid by a willing buyer to an unaffiliated willing seller in
a transaction not involving distress or necessity of either
party, as determined in good faith by the chief financial
officer, chief accounting officer, treasurer, assistant
treasurer, or controller, and, in the case of any transaction
involving aggregate consideration in excess of
$750.0 million, the Board of Directors of CIT or the
Restricted Subsidiary, as applicable, which determination will
be conclusive (unless otherwise provided in the applicable
indenture).
“FDIC” means the United States Federal Deposit
Insurance Corporation or any successor thereto.
“GAAP” means generally accepted accounting
principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements
of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a
significant segment of the accounting profession of the United
States, which are in effect from time to time. At any time after
the Issue Date, CIT may elect to apply IFRS accounting
principles in lieu of GAAP and, upon any such election,
references herein to GAAP shall thereafter be construed to mean
IFRS (except as otherwise provided in the applicable indenture);
provided that calculation or determination in the
applicable indenture that requires the application of GAAP for
periods that include fiscal quarters ended prior to CIT’s
election to apply IFRS shall remain as previously calculated or
determined in accordance with GAAP. CIT shall give notice of any
such election made in accordance with this definition to the
trustee and the Holders of notes.
“Governmental Authority” means any federal,
state, municipal, national or other government, governmental
department, commission, board, bureau, court, agency or
instrumentality or political subdivision thereof or any entity
or officer exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to any
government or any court, in each case whether associated with a
state of the United States, the United States, or a foreign
state or government.
“Guarantee” means, with respect to any Person,
any obligation, contingent or otherwise, of such Person
guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation of any other Person in any
manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, that is
(a) an obligation of such Person the primary purpose or
intent of which is to provide assurance to an obligee that the
obligation of the obligor thereof will be paid or discharged, or
any agreement relating thereto will be complied with, or the
holders thereof will be protected (in whole or in part) against
loss in respect thereof; or (b) a liability of such Person
for an obligation of another through any agreement (contingent
or otherwise) (i) to purchase, repurchase or otherwise
acquire such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation (whether
in the form of loans, advances, stock purchases, capital
contributions or otherwise) or (ii) to maintain the
solvency or any balance sheet item, level of income or financial
condition of another if, in the case of any agreement described
under subclauses (i) or (ii) of this clause (b), the
primary purpose or intent thereof is as described in
clause (a) above.
“Guarantors” means each of:
(1) each Wholly Owned Domestic Subsidiary of CIT on the
Issue Date (other than CIT Funding); and
(2) any other Wholly Owned Domestic Subsidiary of CIT that
executes a Note Guarantee in accordance with the provisions of
the applicable indenture,
and their respective successors and assigns, in each case, until
the Note Guarantee of such Person has been released in
accordance with the provisions of the applicable indenture.
“Immaterial Subsidiary” means, as of any date,
any Subsidiary (A) that (i)(a) has assets with an aggregate
Fair Market Value less than $5.0 million, (b) has
aggregate revenues less than $5.0 million for the most
recently ended four full fiscal quarters for which financial
statements were delivered as set forth under
“— Reports” immediately preceding the date
on which the calculation is required to be made, and (c) is
not
117
integral to the business or operations of CIT and its
Subsidiaries (other than Immaterial Subsidiaries), and
(ii) has no Subsidiaries (other than Immaterial
Subsidiaries), or (B) the Capital Stock of which was
acquired in connection with the workout of assets or exercise of
remedies in the Ordinary Course of Business or as the proceeds
of collateral securing a loan or other financing asset or in
connection with servicing or managing assets in the Ordinary
Course of Business.
“Indebtedness” as applied to any Person, means,
without duplication, (i) all indebtedness for borrowed
money; (ii) Capital Lease Obligations; (iii) all
obligations of such Person evidenced by notes, bonds or similar
instruments or upon which interest payments are customarily paid
and all obligations in respect of drafts accepted representing
extensions of credit whether or not representing obligations for
borrowed money; (iv) any obligation owed for all or any
part of the deferred purchase price of property or services
(excluding trade payables incurred in the Ordinary Course of
Business having a term of less than six (6) months that are
not overdue by more than sixty (60) days) which purchase
price is (a) due more than six (6) months from the
date of incurrence of the obligation in respect thereof or
(b) evidenced by a note or similar written instrument;
(v) all obligations created or arising under any
conditional sale or other title retention agreement with respect
to property acquired by such person; (vi) all indebtedness
secured by any Lien on any property or asset owned or held by
that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse
to the credit of that Person; (vii) the face amount of any
letter of credit or letter of guaranty issued, bankers’
acceptances facilities, surety bond and similar credit
transactions for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings or
drafts; (viii) the direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary
course),
co-making,
discounting with recourse or sale with recourse by such Person
of the obligation of another; (ix) any obligation of such
Person the primary purpose or intent of which is to provide
assurance to an obligee that the obligation of the obligor
thereof will be paid or discharged, or any agreement relating
thereto will be complied with, or the holders thereof will be
protected (in whole or in part) against loss in respect thereof;
(x) any liability of such Person for an obligation of
another through any agreement (contingent or otherwise)
(a) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of
loans, advances, stock purchases, capital contributions or
otherwise) or (b) to maintain the solvency or any balance
sheet item, level of income or financial condition of another
if, in the case of any agreement described under
subclauses (a) or (b) of this clause (x), the primary
purpose or intent thereof is as described in clause (ix)
above; (xi) all obligations of such Person in respect of
any exchange traded or over the counter derivative transaction,
including any Rate Management Transaction, whether entered into
for hedging or speculative purposes; (xii) all obligations
of such Person, contingent or otherwise, to purchase, redeem,
retire or otherwise acquire for value any Capital Stock of such
Person and (xiii) all Attributable Indebtedness of such
Person. Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture in which such
Person is a general partner or joint venturer, unless such
Indebtedness is expressly or by operation of law non-recourse to
such Person.
“Intercreditor Agreement” means the
intercreditor agreement dated as of the Issue Date among the
trustee, the Notes Collateral Agent, the Bank Agent, CIT and
each Guarantor, as it may be amended from time to time in
accordance with the applicable indenture.
“Investment Grade Rating” means a Moody’s
rating of Baa3 or higher and an S&P rating of BBB− or
higher, in each case with a stable outlook.
“Investments” means, with respect to any
Person, all direct or indirect investments by such Person in
other Persons (including Affiliates) in the forms of loans
(including Guarantees or other obligations but excluding
extensions of trade credit, accounts receivables or deposits
made in the Ordinary Course of Business), advances or capital
contributions (excluding commission, travel and similar advances
to officers and employees made in the Ordinary Course of
Business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on
a balance sheet prepared in accordance with GAAP. If CIT or any
Subsidiary of CIT sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of CIT such that,
after giving effect to any such sale or disposition, such Person
is no longer a Subsidiary of CIT, CIT will be deemed to have
made an Investment on the date of any such sale or disposition
equal to the Fair Market Value of CIT’s Investments in such
Subsidiary
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that were not sold or disposed of in an amount determined as
provided in the final paragraph of the covenant described above
under the caption “— Certain
Covenants — Restricted Payments.” The acquisition
by CIT or any Subsidiary of CIT of a Person that holds an
Investment in a third Person will be deemed to be an Investment
by CIT or such Subsidiary in such third Person in an amount
equal to the Fair Market Value of the Investments held by the
acquired Person in such third Person in an amount determined as
provided in the final paragraph of the covenant described above
under the caption “— Certain
Covenants — Restricted Payments.” Except as
otherwise provided in the applicable indenture, the amount of an
Investment will be determined at the time the Investment is made
and without giving effect to subsequent changes in value.
“Issue Date” means the date on which the notes
are originally issued.
“Joint Venture” means a joint venture,
partnership or other similar arrangement, in each case with a
Person or Persons who are not Subsidiaries of CIT, whether in
corporate, partnership or other legal form; provided, in no
event shall any corporate Restricted Subsidiary of any Person be
considered to be a Joint Venture to which such Person is a party.
“Junior Credit Facilities” shall have the
meaning set forth in “Description of Material
Indebtedness — Junior Credit Facilities.”
“Large Asset Sale” means any Asset Sale,
whether in a single transaction or series of related
transactions, that involves assets having a Fair Market Value
equal to or in excess of $500.0 million.
“LC Facilities” means (i) that certain
5-Year
Letter of Credit Issuance and Reimbursement Agreement, dated as
of May 23, 2005, among CIT, J.P. Morgan Securities
Inc., as sole lead arranger and bookrunner, Barclays Bank PLC,
as syndication agent, Bank of America, N.A. and Citibank, N.A.,
as documentation agents, JPMorgan Chase Bank, N.A., as
administrative agent and as issuing bank, and the several banks
and other financial institutions as lenders thereto (as in
effect as of the Issue Date), and (ii) that certain letter
of credit issuance and reimbursement agreement to be entered
into among CIT, certain Subsidiaries of CIT and Bank of America,
N.A. (or another issuing bank acceptable to CIT) and any
documents entered into or otherwise related thereto (including
any cash collateral agreement), in each case, as the same may be
amended, amended and restated, supplemented or otherwise
modified, replaced or refinanced from time to time.
“Lien” means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset, whether or not filed,
recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction.
“Moody’s” means Moody’s Investor
Services, Inc.
“Net Income” means, with respect to any
specified Person, the net income (loss) of such Person,
determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however:
(1) any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in
connection with: (a) any sale or other disposition of
assets; or (b) the disposition of any securities by such
Person or any of its Restricted Subsidiaries or Regulated
Subsidiaries or the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries or Regulated
Subsidiaries;
(2) cancellation of indebtedness income relating to the
acquisition of notes; and
(3) any extraordinary gain (but not loss), together with
any related provision for taxes on such extraordinary gain (but
not loss).
“Net Proceeds” means the aggregate cash
proceeds received by CIT or any of its Restricted Subsidiaries
in respect of any Asset Sale (including, without limitation, any
cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct
costs relating to such Asset Sale, including, without
limitation, legal, accounting and investment banking fees, and
sales commissions, and any
119
relocation expenses incurred as a result of the Asset Sale,
taxes paid or payable as a result of the Asset Sale, in each
case, after taking into account any available tax credits or
deductions and any tax sharing arrangements, and amounts
required to be applied to the repayment of Indebtedness secured
by a Lien on the asset or assets that were the subject of such
Asset Sale and any reserve for adjustment in respect of the sale
price of such asset or assets established in accordance with
GAAP.
“Non-Recourse Debt” means Indebtedness:
(1) as to which neither CIT nor any of its Restricted
Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly
liable as a guarantor or otherwise, or (c) constitutes the
lender; and
(2) no default with respect to which (including any rights
that the holders of the Indebtedness may have to take
enforcement action against an Unrestricted Subsidiary) would
permit upon notice, lapse of time or both any holder of any
other Indebtedness of CIT or any of its Restricted Subsidiaries
to declare a default on such other Indebtedness or cause the
payment of such Indebtedness to be accelerated or payable prior
to its Stated Maturity.
“Notes Collateral Agent” means The Bank of
New York Mellon.
“Note Guarantee” means the Guarantee by each
Guarantor of CIT’s or CIT Funding’s, as applicable,
obligations under the applicable indenture and the notes,
executed pursuant to the provisions of the applicable indenture.
“Note Obligations” means, collectively, the
Series A Obligations and the Series B Obligations.
“Obligations” means any principal, interest
(including interest which, but for the filing of a petition in
bankruptcy with respect to an obligor, would have accrued on any
Obligation, whether or not a claim is allowed against such
obligor for such interest in the related proceeding), penalties,
fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any
Indebtedness.
“Ordinary Course of Business” means each of the
following: (i) all activities conducted by CIT and its
Subsidiaries in the ordinary course of their businesses,
regardless of frequency, including, without limitation, the
following activities: providing, arranging or syndicating
financing (whether debt or equity), holding Portfolio Assets and
their other assets and properties asset management and
servicing, factoring, trade accounts receivable purchasing,
trade accounts receivable management services, leasing (both
capital and operating leasing, and sales and exchanges pursuant
to such leasing, and real estate leasing and subleasing to or
from third parties with respect to operating locations),
purchases, sales, transfers or other dispositions of Portfolio
Assets, investment advisory services, insurance products, vendor
financing, management, purchases and sales or other dispositions
of assets and Capital Stock (including Investments in Joint
Ventures) acquired in workouts of Portfolio Assets or factoring
facilities, in each case in this clause (i), to third parties or
to Subsidiaries in the ordinary course of business,
(ii) any financings (including any Investments and other
transactions in connection therewith) of the foregoing
activities through securitizations, secured financings, bank
loans, conduit facilities, trusts, special purpose vehicles or
other means, (iii) any related workout, exercise of
remedies or restructuring activities, including, without
limitation, formation of a special purpose vehicle to acquire,
hold or dispose of assets and Capital Stock obtained in
connection with such restructuring or other activities,
(iv) managing and operating assets and businesses acquired
through the exercise of remedies, (v) business associated
with investments, banking or investment banking (including
commercial and retail deposit taking) and (vi) any
reasonable extension or evolution of the foregoing activities.
“Owner-Trustee” means the owner trustee (not in
its individual capacity but solely as trustee) of an owner
trust, the property of which is beneficially owned by a grantor
in the furtherance of the Ordinary Course of Business.
“Pari Passu Debt” means Indebtedness of CIT or
a Restricted Subsidiary that is senior or pari passu in
right of payment with the notes. For the purposes of this
definition, no Indebtedness will be considered to be senior or
junior by virtue of being secured on a first or junior priority
basis.
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“Pari Passu Lien Priority” means, relative to
specified Indebtedness, having a Lien priority equal to that of
the Lien in favor of the holders of the notes on the Collateral
and subject to the Intercreditor Agreements.
“Permitted Business” means the businesses
engaged in by CIT and its Subsidiaries on the Issue Date as
described in this offering memorandum (including the documents
incorporated by reference herein) and businesses that are
reasonably related thereto or reasonable extensions or
reasonable evolutions thereof.
“Permitted Funding Indebtedness” means any
(i) Indebtedness incurred in the Ordinary Course of
Business, the proceeds (if any) of which are used in the
Ordinary Course of Business, including, without limitation,
customary loans or lines of credit (revolving and term), asset
swaps, factoring agreements, trade accounts receivable
purchasing agreements, securitizations and conduits and other
similar transactions, total return swaps, secured financings,
letters of credit facilities, aircraft acquisition financings,
purchase money financing, repurchase transactions, reverse
repurchase transactions or warehouse financings (including any
reasonable extension or evolution of such activities including
for purposes of financing other types of financial or operating
assets), and (ii) any and all indemnification or guaranty
obligations arising in connection with any of the foregoing
activities.
“Permitted Investments” means:
(1) any Investment in CIT or in a Restricted Subsidiary of
CIT, other than an Investment by a Guarantor or a Subsidiary of
a Guarantor in CIT (unless the Parent Pledge is granted) or a
Subsidiary that is not a Guarantor or a Subsidiary of a
Guarantor;
(2) any Investment in Cash and Cash Equivalents;
(3) any Investment by CIT or any Restricted Subsidiary of
CIT in a Person, if as a result of such Investment:
(a) such Person becomes a direct or indirect Wholly Owned
Restricted Subsidiary of CIT; or
(b) such Person is merged, consolidated or amalgamated with
or into, or transfers or conveys substantially all of its assets
to, or is liquidated into, CIT or a Wholly Owned Restricted
Subsidiary of CIT;
(4) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant
to and in compliance with the covenant described above under the
caption “— Repurchase at the Option of
Holders — Asset Sales;”
(5) any acquisition of assets or Capital Stock solely in
exchange for the issuance of Equity Interests (other than
Disqualified Stock) of CIT;
(6) any Investments received in compromise, resolution or
full or partial satisfaction of (A) obligations of trade
creditors or customers of CIT or any of its Subsidiaries,
including pursuant to any workout, restructure,
foreclosure, exercise of remedies, plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of any
trade creditor or customer; or (B) litigation, arbitration
or other disputes with Persons who are not Affiliates;
(7) Investments represented by Rate Management Transactions
entered into in the Ordinary Course of Business and not for
speculative purposes and the TRS Facility;
(8) loans or advances to employees made in the Ordinary
Course of Business of CIT or any Restricted Subsidiary of CIT;
(9) repurchases of the notes as long as such notes are
promptly retired;
(10) Investments other than the TRS Facility existing on
the Issue Date (or Investments other than the TRS Facility made
after the Issue Date pursuant to the terms of agreements in
existence on the Issue Date, as in effect on the Issue Date) and
any Investment that replaces, refinances or refunds an existing
Investment other than the TRS Facility; provided
that the new Investment is in an amount that does not
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exceed the amount replaced, refinanced or refunded, and is made
in the same Person as the Investment replaced, refinanced or
refunded;
(11) endorsements of negotiable instruments and documents
in the Ordinary Course of Business;
(12) Investments in CIT Bank or any other Regulated
Subsidiary required by, or necessary or prudent under, the Bank
Holding Company Act, the Federal Reserve Act or the Federal
Deposit Insurance Act or any other domestic or foreign law or
regulation applicable to CIT or its Affiliates or required by
any Governmental Authority and any approval, waiver, consent,
stipulation, agreement or commitment entered into in connection
therewith or related thereto;
(13) Investments represented by guarantees and intercompany
loans that are otherwise permitted under the applicable
indenture;
(14) Investments (other than in CIT) made in the Ordinary
Course of Business;
(15) Investments by a Guarantor in any Regulated Subsidiary
in the form of a loan or advance having a maturity not to exceed
12 months from the date of such loan or advance related to
or in connection with a Platform Transfer that is evidenced by
an intercompany note, secured by the assets financed by such
loan or advance, provided that the intercompany
note is pledged as Collateral;
(16) Investments in Regulated Subsidiaries having an
aggregate Fair Market Value not to exceed $400.0 million in
any Yearly Period; and
(17) other Investments in any Person (other than a
Regulated Subsidiary) having an aggregate Fair Market Value
(measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken
together with all other Investments made pursuant to this
clause (17) that are at the time outstanding, not to exceed
$100.0 million.
Notwithstanding anything to the contrary, none of CIT or any
Restricted Subsidiary shall make any Investment in CIT Funding.
“Permitted Liens” means:
(1) Liens on assets of CIT or any Restricted Subsidiary
securing Indebtedness under the Credit Agreement;
(2) Liens for taxes, assessments or governmental charges or
claims (i) for amounts not yet overdue, or (ii) for
amounts that are overdue if obligations with respect to such
taxes, assessments or governmental charges are being contested
in good faith by appropriate proceedings promptly instituted and
diligently conducted so long as such reserves or other
appropriate provisions, if any, as shall be required by GAAP
shall have been made for any such contested amounts;
(3) statutory Liens of landlords, banks (and rights of set
off), carriers, warehousemen, mechanics, repairmen, workmen and
materialmen, ordinary course liens on aircraft for airport,
navigation, and other en-route charges, permitted Liens under
leases and other Liens imposed by law (other than any such Lien
imposed pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or by ERISA) (i) for amounts not yet
overdue, or (ii) for amounts that are overdue and that (in
the case of any such amounts overdue for a period in excess of
five (5) days) are being contested in good faith by
appropriate proceedings, so long as such reserves or other
appropriate provisions, if any, as shall be required by GAAP
shall have been made for any such contested amounts;
(4) Liens incurred in connection with workers’
compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return of money
bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money or other Indebtedness), so
long as no foreclosure, sale or similar proceedings have been
commenced with respect to any portion of the Collateral on
account thereof, or deposits made to secure liability to
insurance carriers;
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(5) easements, rights of way, restrictions, encumbrances,
encroachments, and other minor defects or irregularities in
title or ownership rights, in each case which do not and will
not interfere in any material respect with the value or use of
the property to which such Lien is attached or with the ordinary
conduct of the business of CIT or any of its Restricted
Subsidiaries;
(6) any interest or title of or through a lessor or
sublessor under any lease of real or personal property permitted
hereunder;
(7) Liens solely on any cash earnest money deposits made by
CIT or any of its Restricted Subsidiaries in connection with any
letter of intent or purchase agreement the consummation of which
would be permitted hereunder;
(8) purported Liens evidenced by the filing of
precautionary UCC financing statements relating to transactions
and Liens evidenced by the filing of UCC financing statements
related to securitizations, conduit facilities and similar
transactions, in each case, entered into in the Ordinary Course
of Business;
(9) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties
in connection with the importation of goods;
(10) any zoning or similar law or right reserved to or
vested in any governmental office or agency to control or
regulate the use of any real property;
(11) licenses or sublicenses of patents, trademarks and
other intellectual property rights granted by CIT or any of its
Restricted Subsidiaries in the Ordinary Course of Business;
(12) Liens existing on the Issue Date (and, in the case of
property that replaces property existing on the Issue Date, the
equivalent Lien on such replacement property to the extent the
applicable collateral agreements as in effect on the Issue Date
require Liens on such replacement property) and Liens incurred
after the Issue Date pursuant to the terms of agreements in
existence on the Issue Date as in effect on the Issue Date;
(13) Liens constituting (and rights of set-off and any
rights of use, possession or disposition with respect to)
deposits with derivatives counterparties as may be required
pursuant to any Rate Management Transaction in connection with
Indebtedness permitted pursuant to clauses (10) or (19) of
the second paragraph of the covenant entitled
“— Certain Covenants — Incurrence of
Indebtedness and Issuance of Preferred Stock;”
(14) Liens securing Indebtedness permitted pursuant to
clause (11) of the second paragraph of the covenant
entitled “— Certain Covenants —
Incurrence of Indebtedness and Issuance of Preferred Stock;”
(15) Liens created, incurred, assumed or permitted to exist
in connection with or related to Bank Activities;
(16) Liens on assets other than Collateral securing
Indebtedness permitted pursuant to clause (12) of the
second paragraph of the covenant entitled
“— Certain Covenants — Incurrence of
Indebtedness and Issuance of Preferred Stock;”
(17) Liens on the assets of a Restricted Subsidiary that is
not a Credit Party securing Indebtedness and other obligations
of such Restricted Subsidiary incurred in compliance with the
applicable indenture;
(18) Liens (i) that are rights of set-off
(A) relating to the establishment of depository relations
with banks not given in connection with the issuance of
Indebtedness, (B) relating to pooled deposit or sweep
accounts of CIT or any of its Subsidiaries to permit
satisfaction of overdraft or similar obligations and other cash
management activities incurred in the Ordinary Course of
Business, (C) relating to purchase orders and other
agreements entered into with customers of CIT or any of its
Subsidiaries in the Ordinary Course of Business, or
(D) relating to transactions with a syndicate member or
participant or agent or letter of credit bank or issuer in a
loan transaction in the Ordinary Course of Business, and
(ii) of a collecting bank arising under
Section 4-210
of the Uniform Commercial Code on items in the course of
collection, (A) encumbering reasonable customary initial
deposits and margin deposits and attaching to commodity trading
accounts or other brokerage accounts incurred in the Ordinary
Course of Business,
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and (B) in favor of banking institutions arising as a
matter of law or pursuant to customary account agreements
encumbering deposits (including the right of set-off) and which
are within the general parameters customary in the banking
industry;
(19) Liens on Series A Collateral securing the
Series A Obligations and obligations under the
Series A Guarantees and Liens on Series B Collateral
securing Series B Notes Obligations and obligations under
the Series B Guarantees;
(20) Liens in favor of CIT or any Restricted Subsidiary,
provided that for the purposes of this clause
Guarantors and Subsidiaries of Guarantors may only grant Liens
in favor of other Guarantors
and/or
Subsidiaries of Guarantors;
(21) Liens existing on assets or property at the time
acquired in connection with a workout, exercise of remedies or
foreclosure or as the proceeds of collateral securing a
Portfolio Asset, in each case, in the Ordinary Course of
Business; and other customary Liens set forth in documentation
related thereto or created, incurred, assumed or permitted to
exist with respect to Portfolio Assets funded or acquired in the
Ordinary Course of Business;
(22) Liens on the assets of CIT and its subsidiaries in
favor of CIT Bank to secure obligations of CIT or any Subsidiary
to CIT Bank existing on the Issue Date other than those
permitted under clause (12) above; provided, the
aggregate amount of the value of such assets shall not exceed
$150.0 million, measured in the case of each asset at the
time such Liens is created and without giving effect to any
reduction in the value of the asset subject to the Lien;
(23) Liens on Cash and Cash Equivalents in an aggregate
amount not to exceed $550.0 million of CIT or any
Restricted Subsidiary securing Indebtedness in an amount not to
exceed $750.0 million of CIT and any Restricted Subsidiary
incurred under LC Facilities and Liens on intangible contract or
similar rights and documents related to letters of credit issued
thereunder;
(24) Liens on (and rights of set-off and any rights of use,
possession or disposition with respect to) Cash, Cash
Equivalents and intangible contract or similar rights securing
the daily mark-to-market obligations of CIT Financial Ltd., CIT
Financial (Barbados) Srl and CIT under a TRS Facility;
(25) other Liens on assets other than the Collateral
securing Indebtedness of CIT or any Restricted Subsidiary
incurred at a time when no Default or Event of Default shall
have occurred and be continuing in an aggregate amount not to
exceed $250.0 million at any time outstanding;
(26) (1) Liens on assets (including the proceeds
thereof) acquired by or assigned to a Restricted Subsidiary
pursuant to operation of the trade finance business in the
Ordinary Course of Business; provided, as of the date of
acquisition such Liens were in existence to secure an obligation
of the seller or assignor of such asset and such Liens were not
created by any Restricted Subsidiary in contemplation of such
acquisition or assignment, and (2) Liens that are leases on
aircraft, rail assets or any other leased assets that are leased
in the Ordinary Course of Business;
(27) Liens on leased assets (including Portfolio Assets)
arising from the action or inaction of a third-party lessee; and
(28) any extensions, substitutions, replacements or
renewals of the foregoing; provided, any such Lien shall
encumber only the same collateral encumbered by the Lien being
so extended, substituted, replaced or renewed and such Lien
shall be of the same priority or of a junior priority to the
Lien being so extended, substituted, replaced or renewed.
“Permitted Refinancing Indebtedness” means any
Indebtedness of CIT or any of its Restricted Subsidiaries issued
in exchange for, or the net proceeds of which are used to renew,
refund, refinance, replace, defease or discharge other
Indebtedness of CIT or any of its Restricted Subsidiaries (other
than intercompany Indebtedness or Disqualified Stock);
provided that:
(1) the principal amount (or accreted value, if applicable)
of such Permitted Refinancing Indebtedness does not exceed the
principal amount (or accreted value, if applicable) plus
available
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commitments for funding of the Indebtedness renewed, refunded,
refinanced, replaced, defeased or discharged (plus all accrued
interest on the Indebtedness and the amount of all fees and
expenses, including premiums, incurred in connection therewith
plus an amount equal to up to 2% of the principal amount thereof
with respect to any required interest or payment reserves on
such Permitted Refinancing Indebtedness);
(2) such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being
renewed, refunded, refinanced, replaced, defeased or discharged;
(3) if the Indebtedness being renewed, refunded,
refinanced, replaced, defeased or discharged is subordinated in
right of payment to the notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final
maturity date of, and is subordinated in right of payment to,
the notes on terms that are not materially less favorable, taken
as a whole, to the holders of notes as those contained in the
documentation governing the Indebtedness being renewed,
refunded, refinanced, replaced, defeased or discharged;
(4) if the Indebtedness being renewed, refunded,
refinanced, replaced, defeased or discharged is secured by
collateral, such Permitted Refinancing Indebtedness shall
encumber no additional collateral other than the collateral
securing the Indebtedness being renewed, refunded, refinanced,
replaced, defeased or discharged at such time and the Lien
securing such Permitted Refinancing Indebtedness shall be of the
same or of a priority junior to the Lien securing the
Indebtedness being renewed, refunded, refinanced, replaced,
defeased or discharged; and
(5) if the Indebtedness being refunded, refinanced,
renewed, replaced or extended was initially incurred by CIT,
such Permitted Refinancing Indebtedness is incurred by CIT, and
provided, further, that Permitted Refinancing
Indebtedness shall not include Indebtedness of a Subsidiary that
is not a Guarantor that refunds, refinances, renews or replaces
Indebtedness of CIT or a Guarantor.
“Person” means any individual, corporation,
partnership, Joint Venture, association, joint-stock company,
trust, unincorporated organization, limited liability company or
government or other entity.
“Portfolio Assets” means, any assets or rights
acquired, funded, held, managed, financed, syndicated or
otherwise generated or disposed of in the Ordinary Course of
Business, including, without limitation, loans, leases,
equipment, intellectual property rights, securities and
investment property (equity or otherwise), mortgages and
instruments (negotiable or otherwise), receivables, trade
payables or trade account receivables, and any other financial
assets and the proceeds and products of the foregoing.
“Rate Management Transactions” means any
transaction (including an agreement with respect thereto) now
existing or hereafter entered into by CIT or any Restricted
Subsidiary which is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond option, interest
rate option, foreign exchange transaction, cap transaction,
floor transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction,
currency option or any other similar transaction (including any
option with respect to any of these transactions) or any
combination thereof, whether linked to one or more interest
rates, foreign currencies, commodity prices, equity prices or
other financial measures, or the purchase of credit default
swaps.
“Regulated Subsidiary” means any entity
directly regulated by a Governmental Authority, including CIT
Bank and its subsidiaries, or whose assets or business consist
primarily of assets (e.g., licenses) or businesses regulated
directly by a Governmental Authority.
“Restricted Investment” means an Investment
other than a Permitted Investment.
“Restricted Subsidiary” of a Person means any
Subsidiary of the referent Person that is not an Unrestricted
Subsidiary.
“S&P” means Standard &
Poor’s Ratings Group, a division of The McGraw Hill
Corporation.
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“Sale of Collateral” means the sale, lease,
conveyance or other disposition of any Collateral or the Equity
Interests of an owner, whether directly or indirectly, of
Collateral.
“Securities Account” means a “securities
account” as defined in
Section 8-501
of the UCC, with a bank or like organization.
“Security Agreements” means, collectively, the
Series A Security Agreement and the Series B Security
Agreement.
“Security Documents” means the Security
Agreements, the Intercreditor Agreements and each other security
document or pledge agreement executed by CIT or any Guarantor
and delivered in accordance with applicable local or foreign law
to grant a valid, perfected security interest in any property as
collateral for the Note Obligations, in each case, as amended,
restated, supplemented or otherwise modified from time to time.
“Series A Obligations” means all
Obligations of CIT under the Series A notes and under the
Junior Credit Facilities.
“Series B Obligations” means all
Obligations of CIT Funding under the Series B notes.
“Series A Security Agreement” shall have the
meaning set forth in “Collateral — Assets
Securing Senior Obligations, Series A Obligations and Series B
Obligations.”
“Series B Security Agreement” shall have the
meaning set forth in “Collateral — Assets
Securing Senior Obligations, Series A Obligations and Series B
Obligations.”
“Significant Subsidiary” means any Restricted
Subsidiary or a Regulated Subsidiary that would be a
“significant subsidiary” as defined in Article 1,
Rule 1-02
of
Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation
is in effect on the Issue Date.
“Special Purpose Entity” means a Person formed
by CIT or a Subsidiary of CIT in the Ordinary Course of Business
for a limited purpose or having a limited business purpose.
“Stated Maturity” means, with respect to any
installment of interest or principal on any series of
Indebtedness, the date on which the payment of interest or
principal was scheduled to be paid in the documentation
governing such Indebtedness as of the issue date of such
Indebtedness, and will not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
“Subsidiary” means, with respect to any
specified Person:
(1) any corporation, association or other business entity
of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any
contingency and after giving effect to any voting agreement or
stockholders’ agreement that effectively transfers voting
power) to vote in the election of directors, managers or
trustees of the corporation, association or other business
entity is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other
Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners
of which are that Person or one or more Subsidiaries of that
Person (or any combination thereof).
“Total Assets” means the total consolidated
assets of CIT and its Subsidiaries as set forth on the most
recent consolidated balance sheet of CIT and its Subsidiaries
for which financial statements were delivered as set forth under
“— Reports” immediately preceding the date
on which any calculation of Total Assets is being made, on a pro
forma basis for transactions consummated on or prior to or
simultaneously with the date of the calculation.
“TRS Facility” means that certain Confirmation,
Credit Support Annex, ISDA Master Agreement and ISDA Schedule,
each dated June 6, 2008 between CIT Financial Ltd. and
Goldman Sachs International, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part
from time to time.
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“Unrestricted Subsidiary” means (i) any
Special Purpose Entity (whether bankruptcy remote or not),
Regulated Subsidiary, Joint Venture, Immaterial Subsidiary or
any limited purpose trust of which an Owner Trustee is trustee
and (ii) any other Subsidiary of CIT other than CIT Funding
that is designated by the Board of Directors of CIT as an
Unrestricted Subsidiary pursuant to a resolution of the Board of
Directors, but only to the extent that such Subsidiary described
in this clause (ii):
(1) has no Indebtedness other than Non-Recourse Debt;
(2) except as permitted by the covenant described above
under the caption “— Certain
Covenants — Transactions with Affiliates,” is not
party to any agreement, contract, arrangement or understanding
with CIT or any Restricted Subsidiary of CIT unless the terms of
any such agreement, contract, arrangement or understanding are
no less favorable to CIT or such Restricted Subsidiary than
those that might be obtained at the time from Persons who are
not Affiliates of CIT;
(3) is a Person with respect to which neither CIT nor any
of its Restricted Subsidiaries has any direct or indirect
obligation (a) to subscribe for additional Equity Interests
or (b) to maintain or preserve such Person’s financial
condition or to cause such Person to achieve any specified
levels of operating results; and
(4) has not Guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of CIT or any of
its Restricted Subsidiaries.
“Voting Stock” of any specified Person as of
any date means the Capital Stock of such Person that is at the
time entitled to vote in the election of the Board of Directors
of such Person.
“Weighted Average Life to Maturity” means, when
applied to any Indebtedness at any date, the number of years
obtained by dividing:
(1) the sum of the products obtained by multiplying
(a) the amount of each then remaining installment, sinking
fund, serial maturity or other required payments of principal,
including payment at final maturity, in respect of the
Indebtedness, by (b) the number of years (calculated to the
nearest one-twelfth) that will elapse between such date and the
making of such payment; by
(2) the then outstanding principal amount of such
Indebtedness.
“Wholly Owned” means, with respect to any
Person, any other Person all of the Capital Stock of which
(other than directors’ qualifying shares required by law,
shares owned by any director, officer or employee of CIT or any
Subsidiary and shares issued to foreign nationals to the extent
required by applicable foreign law) is owned by such Person
directly
and/or
through other Wholly Owned Persons.
“Yearly Period” means, as of any date of
determination, the 365 day period immediately preceding
such date.
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BOOK-ENTRY,
DELIVERY AND FORM
Except as set forth below, New Notes will be issued in
registered, global form in minimum denominations of $1 and
integral multiples of $1 in excess thereof. The global notes
will be deposited upon issuance with the trustee, as custodian
for The Depository Trust Company (“DTC”), in New
York, New York, and registered in the name of DTC or in the name
of Cede & Co., its nominee, in each case for credit to
an account of a direct or indirect participant in DTC as
described below.
Except as set forth below, the global notes may be transferred,
in whole and not in part, only to DTC, to another nominee of DTC
or to a successor of DTC or its nominee. Beneficial interests in
the global notes may not be exchanged for New Notes in
certificated form except in the limited circumstances described
below. See “— Exchange of Book-Entry Notes for
Certificated Notes.” Except in the limited circumstances
described below, owners of beneficial interests in the global
notes will not be entitled to receive physical delivery of
Certificated Notes (as defined below).
Initially, the trustee will act as paying agent and registrar.
The New Notes may be presented for registration of transfer and
exchange at the offices of the registrar.
Certain
Procedures
The following description of the operations and procedures of
DTC, Euroclear and Clearstream are provided solely as a matter
of convenience. These operations and procedures are solely
within the control of the respective settlement systems and are
subject to changes by them from time to time. We take no
responsibility for these operations and procedures and urge
investors to contact the system or their participants directly
to discuss these matters.
DTC has advised us that DTC is a limited-purpose trust company
created to hold securities for its participating organizations
(collectively, the “Participants”) and to facilitate
the clearance and settlement of transactions in those securities
between Participants through electronic book-entry changes in
accounts of its Participants. The Participants include
securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. Access to
DTC’s system is also available to other entities such as
banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either
directly or indirectly (collectively, the “Indirect
Participants”).
Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interests in, and transfers
of ownership interests in, each security held by or on behalf of
DTC are recorded on the records of the Participants and Indirect
Participants.
DTC has also advised us that, pursuant to procedures established
by it, (i) upon deposit of the New Notes, DTC will credit
the accounts of Participants with portions of the principal
amount of the global notes and (ii) ownership of such
interests in the New Notes will be shown on, and the transfer of
ownership thereof will be effected only through, records
maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to
other owners of beneficial interest in the global notes).
All interests in a global note, including those held through
Euroclear or Clearstream or other applicable Clearing Systems,
may be subject to the procedures and requirements of DTC. Those
interests held through Euroclear or Clearstream or other
applicable Clearing Systems may also be subject to the
procedures and requirements of such systems. The laws of some
states require that certain persons take physical delivery in
definitive form of securities that they own. Consequently, the
ability to transfer beneficial interests in a global note to
such persons will be limited to that extent. Because DTC can act
only on behalf of Participants, which in turn act on behalf of
Indirect Participants and certain banks, the ability of a person
having beneficial interests in a global note to pledge such
interests to persons or entities that do not participate in the
DTC system, or otherwise take actions in respect of such
interests, may be affected by the lack of a physical certificate
evidencing such interests.
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Except as described below, owners of interests in the global
notes will not have New Notes registered in their names, will
not receive physical delivery of New Notes in certificated form
and will not be considered the registered owners or
“holders” thereof under the applicable indenture
governing the New Notes for any purpose.
Payments in respect of the principal of, premium, if any, and
interest on a global note registered in the name of DTC or its
nominee will be payable to DTC in its capacity as the registered
holder under the applicable indenture governing the New Notes.
Under the terms of the applicable indenture governing the New
Notes, we and the trustee will treat the persons in whose names
the New Notes, including the global notes, are registered as the
owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither
we, the trustee nor any of our or the trustee’s agents has
or will have any responsibility or liability for (i) any
aspect of DTC’s records or any Participant’s or
Indirect Participant’s records relating to or payments made
on account of beneficial ownership interest in the global notes,
or for maintaining, supervising or reviewing any of DTC’s
records or any Participant’s or Indirect Participant’s
records relating to the beneficial ownership interests in the
global notes or (ii) any other matter relating to the
actions and practices of DTC or any of its Participants or
Indirect Participants. DTC has advised us that its current
practice, upon receipt of any payment in respect of securities
such as the New Notes (including principal and interest), is to
credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their
respective holdings in the principal amount of beneficial
interest in the relevant security as shown on the records of DTC
unless DTC has reason to believe it will not receive payment on
such payment date. Payments by the Participants and the Indirect
Participants to the beneficial owners of New Notes will be
governed by standing instructions and customary practices and
will be the responsibility of the Participants or the Indirect
Participants and will not be the responsibility of DTC, the
trustee or us. Neither we nor the trustee will be liable for any
delay by DTC or any of its Participants in identifying the
beneficial owners of the New Notes, and we and the trustee may
conclusively rely on and will be protected in relying on
instructions from DTC or its nominee for all purposes.
Except for trades involving only Euroclear and Clearstream and
other applicable Clearing Systems participants, interests in the
global notes are expected to be eligible to trade in DTC’s
Same-Day
Funds Settlement System and secondary market trading activity in
such interests will, therefore, settle in immediately available
funds, subject in all cases to the rules and procedures of DTC
and its Participants. See
“— Same-Day
Settlement and Payment.” Transfers between Participants in
DTC will be effected in accordance with DTC’s procedures,
and will be settled in
same-day
funds, and transfers between participants in Euroclear and
Clearstream and other applicable Clearing Systems will be
effected in the ordinary way in accordance with their respective
rules and operating procedures.
Crossmarket transfers between the Participants in DTC, on the
one hand, and Euroclear or Clearstream or other applicable
Clearing Systems participants, on the other hand, will be
effected through DTC in accordance with DTC’s rules on
behalf of Euroclear or Clearstream or other applicable Clearing
Systems, as the case may be, by its respective depositary;
however, such cross-market transactions will require delivery of
instructions to Euroclear or Clearstream or other applicable
Clearing Systems, as the case may be, by the counterparty in
such system in accordance with the rules and procedures and
within the established deadlines (Brussels time) of such system.
Euroclear or Clearstream or other applicable Clearing Systems,
as the case may be, will, if the transaction meets its
settlement requirements, deliver instructions to its respective
depositary to take action to effect final settlement on its
behalf by delivering or receiving interests in the relevant
global note in DTC, and making or receiving payment in
accordance with normal procedures for
same-day
funds settlement applicable to DTC. Euroclear and Clearstream
and other applicable Clearing Systems participants may not
deliver instructions directly to the depositaries for Euroclear
or Clearstream or other applicable Clearing Systems.
DTC has advised us that it will take any action permitted to be
taken by a holder of New Notes only at the direction of one or
more Participants to whose account DTC has credited the
interests in the global notes and only in respect of such
portion of the aggregate principal amount of the New Notes as to
which such Participant or Participants has or have given such
direction. However, if there is an event of default under the
New Notes, DTC reserves the right to exchange the global notes
for legended New Notes in certificated form, and to distribute
such New Notes to its Participants.
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Neither we nor the trustee nor any of our or their respective
agents will have any responsibility for the performance by DTC,
Euroclear and Clearstream and other applicable Clearing Systems
or their respective participants or indirect participants of
their respective obligations under the rules and procedures
governing their operations.
Exchange
of Book-Entry Notes for Certificated Notes
A global note is exchangeable for definitive New Notes in
registered certificated form (“Certificated Notes”) if
(i) DTC (x) notifies us that it is unwilling or unable
to continue as depositary for the global notes and we thereupon
fail to appoint a successor depositary or (y) has ceased to
be a clearing agency registered under the Exchange Act,
(ii) we, at our option, and subject to DTC’s
procedures, notify the trustee in writing that we elect to cause
the issuance of the Certificated Notes or (iii) there shall
have occurred and be continuing a default or event of default
with respect to the New Notes. In addition, beneficial interests
in a global note may be exchanged for Certificated Notes upon
request but only upon prior written notice given to the trustee
by or on behalf of DTC in accordance with the applicable
indenture governing the New Notes, and in accordance with the
certification requirements set forth in the applicable indenture
governing the New Notes. In all cases, Certificated Notes
delivered in exchange for any global note or beneficial
interests therein will be registered in the names, and issued in
any approved denominations, requested by or on behalf of DTC (in
accordance with its customary procedures).
Same-Day
Settlement and Payment
Payments in respect of the New Notes represented by global notes
(including principal, premium, if any, and interest) will be
made by wire transfer of immediately available funds to the
accounts specified by the global note holder. With respect to
New Notes in certificated form, we will make all payments of
principal, premium, if any, and interest, by wire transfer of
immediately available funds to the accounts specified by the
holders thereof or, if no such account is specified, by mailing
a check to each such holder’s registered address. The New
Notes represented by the global notes are expected to trade in
DTC’s
Same-Day
Funds Settlement System, and any permitted secondary market
trading activity in such New Notes will, therefore, be required
by DTC to be settled in immediately available funds. We expect
that secondary trading in any certificated New Notes will also
be settled in immediately available funds.
Because of time zone differences, the securities account of a
Euroclear or Clearstream or other applicable Clearing Systems
participant purchasing an interest in a global note from a
Participant in DTC will be credited, and any such crediting will
be reported to the relevant Euroclear or Clearstream or other
applicable Clearing Systems participant, during the securities
settlement processing day (which must be a business day for
Euroclear and Clearstream and other applicable Clearing Systems)
immediately following the Settlement Date of DTC. DTC has
advised us that cash received in Euroclear or Clearstream or
other applicable Clearing Systems as a result of sales of
interests in a global note by or through a Euroclear or
Clearstream or other applicable Clearing Systems participant to
a Participant in DTC will be received with value on the
Settlement Date of DTC but will be available in the relevant
Euroclear or Clearstream or other applicable Clearing Systems
cash account only as of the business day for Euroclear or
Clearstream or other applicable Clearing Systems following
DTC’s Settlement Date.
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DESCRIPTION
OF THE NEW PREFERRED STOCK
The following summarizes the material terms of the New Preferred
Stock, but does not purport to be complete and is subject to and
qualified in its entirety by reference to our certificate of
incorporation, as amended, and the certificate of designations
relating to the New Preferred Stock, which we will file with the
Secretary of State of the State of Delaware and include as an
exhibit to a current report on
Form 8-K
that we will file with the SEC at or prior to the issuance of
the New Preferred Stock.
General
As of the date of this Offering Memorandum and Disclosure
Statement we have four classes of preferred stock outstanding.
For a description of our outstanding preferred stock, see
“Description of Capital Stock.”
The New Preferred Stock will not be convertible into, or
exchangeable for, shares of any other class or series of our
stock or our other securities. The New Preferred Stock has no
stated maturity and will not be subject to any sinking fund,
retirement fund or purchase fund or other obligation of ours to
mandatorily redeem, repurchase or retire the New Preferred
Stock. The New Preferred Stock will, however, be subject to
redemption at our option, in whole or in part, at a price per
share equal to the liquidation preference.
The New Preferred Stock will be fully paid and nonassessable
when issued, which means that holders will have paid their
purchase price in full by tendering the Old Notes and that we
may not ask them to surrender additional funds. Holders of the
New Preferred Stock will not have preemptive or subscription
rights to acquire more of our stock. Holders of the New
Preferred Stock have class voting rights, together with holders
of parity stock having like voting rights, with respect to
certain fundamental changes in the terms of the New Preferred
Stock. In addition, holders of the New Preferred Stock will be
entitled to vote with holders of common stock and each share of
New Preferred Stock is entitled to 58.6 votes per share
when voting with the holders of common stock.
Ranking
The New Preferred Stock will have a liquidation preference of
$1,400 per share and will rank equally with the Series A
Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock and the Series D Preferred
Stock and at least equally to any other series of our preferred
stock that we may from time to time issue (except for any senior
series that may be issued with the requisite consent of the
holders of the New Preferred Stock), and will rank senior to our
common stock and any other stock that ranks junior to the New
Preferred Stock with respect to distributions of assets upon
liquidation, dissolution or winding up of CIT Group Inc.
The New Preferred Stock are equity interests in CIT Group Inc.
and do not constitute indebtedness. In the event of bankruptcy,
liquidation, dissolution, reorganization or similar proceeding
with respect to us, our indebtedness will effectively rank
senior to the New Preferred Stock, and the holders of our
indebtedness will be entitled to the satisfaction of any amounts
owed to them prior to the payment of the liquidation preference
of any capital stock, including the New Preferred Stock.
Dividends
The New Preferred Stock will have no stated dividend. In
addition, we do not intend to declare or pay dividends on the
New Preferred Stock. So long as any shares of New Preferred
Stock remain outstanding no dividend shall be declared or paid
on our common stock or any other shares of our junior stock
(other than a dividend payable solely in the form of junior
stock) and no common stock or other junior stock shall be
purchased, redeemed or otherwise acquired for consideration by
us, directly or indirectly (other than (1) as a result of a
reclassification of junior stock for or into other junior stock
or the exchange or conversion of one share of junior stock for
or into another share of junior stock; (2) repurchases in
support of our employee benefit and compensation programs; and
(3) through the use of the proceeds of a substantially
contemporaneous sale of junior stock).
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As used herein, ‘‘junior stock’’ means any
class or series of our stock that ranks junior to the New
Preferred Stock as to the distribution of our assets upon any
liquidation, dissolution or winding up of CIT Group Inc.
Junior stock includes our common stock.
Liquidation
Rights
In the event that we voluntarily or involuntarily liquidate,
dissolve or wind up our affairs, holders of the New Preferred
Stock and any parity stock are entitled to receive out of our
assets available for distribution to stockholders, after
satisfaction of liabilities to creditors, if any, and before any
distribution of assets is made on our common stock or any of our
other shares of stock ranking junior as to such a distribution
to the New Preferred Stock and any parity stock, a liquidating
distribution in the amount of $1,400 per share of New Preferred
Stock. Holders of the New Preferred Stock will not be entitled
to any other amounts from us after they have received their full
liquidation preference.
In any such distribution, if our assets are not sufficient to
pay the liquidation preferences in full to all holders of the
New Preferred Stock and all holders of any parity stock, the
amounts paid to the holders of New Preferred Stock and to the
holders of any parity stock will be paid pro rata
in accordance with the respective aggregate liquidation
preferences of those holders. In any such distribution, the
“liquidation preference” of any holder of preferred
stock means the amount payable to such holder in such
distribution, including any declared but unpaid dividends (and
any unpaid, accrued cumulative dividends in the case of any
holder of parity stock on which dividends accrue on a cumulative
basis, if any). If the liquidation preference has been paid in
full to all holders of the New Preferred Stock and any holders
of parity stock, the holders of our other stock shall be
entitled to receive all our remaining assets according to their
respective rights and preferences.
For purposes of this section, a merger or consolidation by us
with or into any other entity, including a merger or
consolidation in which the holders of the New Preferred Stock
receive cash, securities or property for their shares, or the
sale, lease or exchange of all or substantially all of our
assets will not constitute a liquidation, dissolution or winding
up of our affairs.
As used herein, ‘‘parity stock’’ means any
other class or series of our preferred stock that ranks equally
with the New Preferred Stock in the distribution of our assets
on any liquidation, dissolution or winding up of CIT Group
Inc. Parity stock includes our Series A Preferred Stock,
our Series B Preferred Stock, our Series C Preferred
Stock and our Series D Preferred Stock.
Redemption
The New Preferred Stock is not subject to any mandatory
redemption, sinking fund, retirement fund, purchase fund or
other similar provisions. The New Preferred Stock will be
redeemable at our option at any time, as described below, in
whole or in part, upon not less than 30 nor more than 60
calendar days’ notice, at a redemption price equal to
$1,400 per share of New Preferred Stock. Holders of the New
Preferred Stock will have no right to require the redemption or
repurchase of the New Preferred Stock.
If the New Preferred Stock is to be redeemed, the notice of
redemption shall be given by first class mail (or delivered
through the customary practices of DTC) to the holders of record
of the New Preferred Stock to be redeemed, not less than 30 nor
more than 60 calendar days prior to the date fixed for
redemption thereof; provided that, if the New
Preferred Stock is held in book-entry form through DTC, we may
give such notice in any manner permitted by DTC. Each notice of
redemption will include a statement setting forth:
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the redemption date;
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the number of shares of New Preferred Stock to be redeemed;
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the redemption price; and
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the place or places where holders may surrender certificates
evidencing the New Preferred Stock for payment of the redemption
price.
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132
If notice of redemption of any New Preferred Stock has been
given and if the funds necessary for such redemption have been
set aside by us for the benefit of the holders of any New
Preferred Stock so called for redemption, then, from and after
the redemption date, such New Preferred Stock shall no longer be
deemed outstanding and all rights of the holders of such New
Preferred Stock will terminate, except the right to receive the
redemption price.
In case of any redemption of only part of the New Preferred
Stock at the time outstanding, the New Preferred Stock to be
redeemed shall be selected pro rata.
Voting
Rights
Whether the vote or consent of the holders of a plurality,
majority or other portion of the shares of New Preferred Stock
and any preferred stock that ranks equally with the New
Preferred Stock either or both as to the payment of dividends
and/or as to
the distribution of assets upon liquidation, dissolution or
winding up of CIT Group Inc. and upon which like voting rights
have been conferred and are exercisable has been cast or given
on any matter on which the holders of shares of New Preferred
Stock are entitled to vote shall be determined by reference to
the specified liquidation preference amounts of the New
Preferred Stock and such other voting preferred stock voted or
covered by the consent.
So long as any shares of New Preferred Stock remain outstanding,
we will not, without the affirmative vote or consent of the
holders of at least two-thirds of the outstanding New Preferred
Stock and all other series of voting preferred stock entitled to
vote thereon, voting together as a single class, given in person
or by proxy, either in writing or at a meeting:
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amend or alter the provisions of our certificate of
incorporation or the certificate of designations for the New
Preferred Stock so as to authorize or create, or increase the
authorized amount of, any specific class or series of stock
ranking senior to the New Preferred Stock with respect to
payment of dividends or the distribution of our assets upon
liquidation, dissolution or winding up of CIT Group Inc.;
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amend, alter or repeal the provisions of our certificate of
incorporation or the certificate of designations for the New
Preferred Stock so as to materially and adversely affect the
special rights, preferences, privileges and voting powers of the
New Preferred Stock, taken as a whole; or
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consummate a binding share exchange or reclassification
involving the New Preferred Stock or a merger or consolidation
of us with another entity, unless in each case (i) the New
Preferred Stock remains outstanding or, in the case of any such
merger or consolidation with respect to which we are not the
surviving or resulting entity, are converted into or exchanged
for preference securities of the surviving or resulting entity
or its ultimate parent, and (ii) such New Preferred Stock
remaining outstanding or such preference securities, as the case
may be, have such rights, preferences, privileges and voting
powers, taken as a whole, as are not materially less favorable
to the holders thereof than the rights, preferences, privileges
and voting powers of the New Preferred Stock, taken as a whole,
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provided, however, that (1) any increase in
the amount of the Company’s authorized but unissued shares
of preferred stock, (2) any increase in the authorized or
issued shares of New Preferred Stock, and (3) the creation
and issuance, or an increase in the authorized or issued amount,
of other series of preferred stock ranking equally with or
junior to the New Preferred Stock with respect to the payment of
dividends (whether such dividends are cumulative or
non-cumulative)
and/or the
distribution of assets upon our liquidation, dissolution or
winding up, will not be deemed to materially and adversely
affect the special rights, preferences, privileges or voting
powers of the New Preferred Stock.
If any amendment, alteration, repeal, share exchange,
reclassification, merger or consolidation described above would
materially and adversely affect one or more but not all series
of voting preferred stock (including the New Preferred Stock for
this purpose), then only the series of preferred stock
materially and adversely affected and entitled to vote shall
vote as a class in lieu of all other series of preferred stock.
In addition, the holders of New Preferred Stock will be entitled
to vote upon all matters upon which holders of common stock have
the right to vote, and, in connection with such matters, will be
entitled to
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58.6 votes per share, such votes to be counted together
with all other shares of capital stock having general voting
powers and not separately as a class including the vote on the
Recapitalization.
Without the consent of the holders of the New Preferred Stock,
so long as such action does not adversely affect the special
rights, preferences, privileges and voting powers of the New
Preferred Stock, taken as a whole, we may amend, alter,
supplement or repeal any terms of the New Preferred Stock:
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to cure any ambiguity, or to cure, correct or supplement any
provision contained in the certificate of designations for the
New Preferred Stock that may be defective or
inconsistent; or
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to make any provision with respect to matters or questions
arising with respect to the New Preferred Stock that is not
inconsistent with the provisions of the certificate of
designations.
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The foregoing voting provisions will not apply if, at or prior
to the time when the act with respect to which such vote would
otherwise be required shall be effected, all outstanding shares
of New Preferred Stock shall have been redeemed or called for
redemption upon proper notice and sufficient funds shall have
been set aside by us for the benefit of the holders of New
Preferred Stock to effect such redemption.
Listing
of the New Preferred Stock
We do not intend to list the New Preferred Stock on any exchange.
Transfer
Agent and Registrar
BNY Mellon Shareowner Services will be the transfer agent,
registrar and redemption agent for the New Preferred Stock.
Book-Entry;
Delivery and Form
Each share of New Preferred Stock will be deposited with, or on
behalf of, DTC or any successor thereto, as depositary, and
registered in the name of Cede & Co., its nominee.
Purchases of the New Preferred Stock under DTC’s book-entry
system must be made by or through direct participants, which
will receive a credit for the New Preferred Stock on the records
of DTC. The ownership interest of each actual purchaser of the
New Preferred Stock, which we refer to as the “beneficial
owner,” is in turn to be recorded on the participants’
records. Beneficial owners will not receive written confirmation
from DTC of their purchase, but beneficial owners are expected
to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings
from the direct participant or indirect participant through
which the beneficial owner entered into the transaction.
Transfers of ownership interests in the New Preferred Stock will
be effected only through entries made on the books of
participants acting on behalf of beneficial owners. Beneficial
owners will not receive certificates representing their
ownership interests in the New Preferred Stock, except in the
event that use of the book-entry system for the New Preferred
Stock is discontinued. The laws of some states require that
certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may
impair the ability to own, transfer or pledge beneficial
interests in the New Preferred Stock.
To facilitate subsequent transfers, all New Preferred Stock
deposited by participants with DTC are registered in the name of
DTC’s nominee, Cede & Co., or such other name as
may be requested by an authorized representative of DTC. The
deposit of the New Preferred Stock with DTC and their
registration in the name of Cede & Co. or such other
DTC nominee effect no change in beneficial ownership. DTC has no
knowledge of the actual beneficial owners of the New Preferred
Stock. DTC’s records reflect only the identity of the
direct participants to whose accounts such New Preferred Stock
are credited, which may or may not be the beneficial owners. The
participants will remain responsible for keeping account of
their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to
participants, by direct participants to indirect participants,
and by direct participants and indirect participants to
beneficial owners, will be governed
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by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Redemption notices shall be sent to DTC.
In those cases where a vote is required, neither DTC nor
Cede & Co. (nor any other DTC nominee) will itself
consent or vote with respect to New Preferred Stock, unless
authorized by a direct participant in accordance with DTC’s
procedures. Under its usual procedures, DTC mails an omnibus
proxy to us as soon as possible after the record date. The
omnibus proxy assigns Cede & Co.’s consenting or
voting rights to those direct participants to whose accounts the
shares of New Preferred Stock are credited on the record date
(identified in a listing attached to the omnibus proxy).
Payments on the New Preferred Stock will be made to
Cede & Co. or such other nominee as may be requested
by an authorized representative of DTC. DTC’s practice is
to credit direct participants’ accounts upon DTC’s
receipt of funds and corresponding detail information from us on
the relevant payment date in accordance with their respective
holdings shown on DTC’s records. Payments by participants
to beneficial owners will be governed by standing instructions
and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in
“street name,” and will be the responsibility of such
participant and not of DTC nor its nominee or us, subject to any
statutory or regulatory requirements as may be in effect from
time to time. Payments to Cede & Co. (or such nominee
as may be requested by an authorized representative of DTC) is
our responsibility, disbursement of such payments to direct
participants is the responsibility of DTC and disbursement of
such payments to the beneficial owners is the responsibility of
direct and indirect participants.
The information in this section concerning DTC and DTC’s
book-entry system has been obtained from sources that we believe
to be reliable, but we take no responsibility for the accuracy
thereof. We have no responsibility for the performance by DTC or
its participants of their respective obligations as described
herein or under the rules and procedures governing their
respective operations.
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RECAPITALIZATION
AFTER THE OFFERS
If we successfully consummate the Offers, we intend to
effectuate the Recapitalization in a manner that, assuming 100%
participation in the Offers, will result in (i) holders of
our currently outstanding common stock retaining 2.5% of our
common stock, (ii) the United States Department of the
Treasury, as holder of our Fixed Rate Cumulative Perpetual
Preferred Stock, Series D (“Series D Preferred
Stock”), being reclassified into 5.4% of our common stock,
(iii) holders of our other series of currently outstanding
preferred stock being reclassified into approximately 1.0% of
our common stock and (iv) holders of New Preferred Stock
being reclassified into approximately 91.1% of our common stock.
The Recapitalization will require us to increase the number of
shares of our authorized common stock and to reclassify our
preferred stock into common stock (the
“Reclassification”). In addition, to comply with NYSE
continued listing requirements, we may be required to combine
our outstanding shares of common stock into a lesser number of
shares (the “Reverse Stock Split”) promptly following
the Reclassification.
The Reclassification is subject to approval by the holders of a
majority of our outstanding voting stock (common stock and New
Preferred Stock voting together as a single class) and, with
respect to the reclassification of our preferred stock into
common stock only, by holders of at least two-thirds of our
6.350% Non-Cumulative Preferred Stock Series A
(“Series A Preferred Stock”), our Non-Cumulative
Preferred Stock, Series B (“Series B Preferred
Stock”), our 8.75% Non-Cumulative Perpetual Convertible
Preferred Stock, Series C (“Series C Preferred
Stock”) and our New Preferred Stock, voting together as a
single class, determined by reference to the aggregate
liquidation preference, and not number of shares, of all such
series. In addition, the approval of the United States
Department of the Treasury, as holder of our Series D Preferred
Stock, is required to approve the reclassification of its
preferred stock into common stock, which, approval we received
on October 15, 2009, as described above under
“Summary — Other Recent Developments.”
In order to effectuate the Reclassification, as soon as
practicable following consummation of the Offers, we intend to
file a proxy statement with the SEC and hold a stockholders
meeting to:
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Amend our Certificate of Incorporation to increase the number of
shares of our authorized common stock from 600 million to
at least 18 billion; and
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Reclassify our outstanding preferred stock, including our New
Preferred Stock, into approximately 15.3 billion shares of
our common stock with such shares allocated (i) pro
rata based on aggregate liquidation preference to holders
of our preferred stock (other than the Series D Preferred
Stock) and (ii) 5.4% to holders of our Series D
Preferred Stock.
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Assuming 100% participation in the Offers, the New Preferred
Stock issued will consist of approximately 68.3 million
shares having an aggregate liquidation preference of
approximately $95.6 billion and representing
(i) approximately 99% of the aggregate combined liquidation
preference of our Series A Preferred Stock, our Series B
Preferred Stock, our Series C Preferred Stock and the New
Preferred Stock, and (ii) approximately 91.1% of the
aggregate voting power of our outstanding voting stock. If we
receive the minimum level of participation in the Offers
required to satisfy the Liquidity and Leverage Condition, the
New Preferred Stock issued will consist of approximately 45.0
million shares having an aggregate liquidation preference of
approximately $63.0 billion and representing (i) approximately
98% of the aggregate combined liquidation preference of our
Series A Preferred Stock, our Series B Preferred Stock, our
Series C Preferred Stock and the New Preferred Stock, and (ii)
approximately 87.1% of the aggregate voting power of our
outstanding voting stock. As a result, if we consummate the
Offers, holders of New Preferred Stock will have, collectively,
sufficient voting power to approve the increase in authorized
common shares and, except for the reclassification of the
Series D Preferred Stock into common stock, which requires
the approval of the United States Department of the Treasury,
which approval we have received as noted above, the
reclassification of our preferred stock, including our New
Preferred Stock, into common stock.
To comply with NYSE continued listing requirements, we may be
required to hold an additional stockholders meeting as promptly
as practicable following the Reclassification to approve the
Reverse Stock Split. In the Reverse Stock Split, each share of
our common stock issued and outstanding would be converted into
and become such fraction of a fully paid and nonassessable share
of our common stock as shall be
136
reasonably determined by our board of directors. The
consummation of the Reverse Stock Split is conditioned, among
other things, upon the approval by the requisite vote of the
holders of common stock outstanding and entitled to vote on the
matter.
The following table sets forth the percentage of our equity and
voting power, and (as applicable) the number of shares of common
stock per share of preferred stock, that will be held by holders
of the New Preferred Stock and each other class or series of our
currently outstanding capital stock assuming (x) 100%
participation in the Offers, and (y) minimum participation
in the Offers required to satisfy the Liquidity and Leverage
Condition, in each case on a pro forma basis after giving effect
to the Recapitalization:
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100% Participation
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Minimum Participation
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Percentage of
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Common Shares
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Percentage of
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Common Shares
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Equity and Voting
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Per Share of
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Equity and Voting
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Per Share of
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Power
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Preferred Stock
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Power
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Preferred Stock
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New Preferred Stock
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91.1%
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209.25325
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90.6%
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315.62451
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Series A Preferred Stock
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0.3%
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3.73667
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0.5%
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5.63615
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Series B Preferred Stock
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0.1%
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14.94666
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0.2%
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22.54461
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Series C Preferred Stock
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0.6%
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7.47333
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0.8%
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11.27230
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Series D Preferred Stock
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5.4%
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363.46172
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5.4%
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363.46172
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Common Stock(1)
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2.5%
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N/A
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2.5%
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N/A
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(1) |
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Existing shares of common stock remain outstanding. |
Even though holders of the New Preferred Stock will hold,
collectively, sufficient voting power to approve the
Recapitalization (other than the reclassification of the
Series D Preferred Stock into common stock, which requires
the approval of the United States Department of the Treasury,
which approval we have received as noted above), there can be no
assurance that such holders will vote to approve the
Recapitalization. In addition, we may seek relief under
Chapter 11 of the Bankruptcy Code before the
Recapitalization is complete, one or more stakeholders may file
an action to prevent us from consummating the Recapitalization,
or a stakeholder or third party may intervene in a manner that
prevents us from consummating the Recapitalization. See
“Risk Factors — Risks Related to Consummation of
the Offers.”
137
DESCRIPTION
OF MATERIAL INDEBTEDNESS
Senior
Credit Facility
On July 20, 2009, the Company and certain of its
subsidiaries entered into a senior secured term loan facility
(the “Original Credit Facility”) for up to
$3 billion with Barclays Bank PLC, as administrative agent
and collateral agent, and the lenders party thereto, of which
$2 billion had been drawn as of July 20, 2009. On
July 29, 2009, the Company and certain of its subsidiaries
entered into an Amended and Restated Credit and Guaranty
Agreement for up to $3 billion, as further amended on
August 3, 2009, August 31, 2009, and
September 30, 2009, with Barclays Bank PLC, as
administrative agent and collateral agent, and the lenders party
thereto, which amended and restated the terms of the Original
Credit Facility (as amended by the First Amendment thereto,
dated as of August 3, 2009, the Second Amendment thereto,
dated as of August 31, 2009, and the Third Amendment
thereto, dated as of September 30, 2009 and effective as of
October 1, 2009, the “Senior Credit Facility”).
The Senior Credit Facility provides for an additional
$1 billion in borrowings, which had been drawn as of
August 4, 2009. The Company and certain of its domestic
subsidiaries are borrowers under the Senior Credit Facility
(collectively, the “Borrowers”). See
“Collateral — Guarantors and Foreign
Grantors” for the description of the Series A
Guarantors, Series B Guarantors and Foreign Grantors.
CIT Group Inc. is in discussions regarding a potential amendment
and restatement of the Senior Credit Facility (the “Senior
Facility Amendment”) to permit additional commitments for
multiple-draw senior secured term loans in an aggregate
principal amount not to exceed an additional $6.4 billion.
The Borrowers are in discussions to obtain lender commitments
for additional senior secured term loans of up to
$3 billion and, the option to request commitments for
senior secured term loans of up to an additional
$3.4 billion. Drawings on the additional senior secured
term loan commitments would be used (i) in part to
refinance specified existing indebtedness of the Company not
subject to the offers, (ii) in part to provide for
additional permitted conduit financings, (iii) in part to
cash collateralize obligations in respect of letters of credit
having a face amount of up to $500 million issued under
existing and new facilities for the benefit of CIT Group Inc.
and its subsidiaries and (iv) in part for general corporate
purposes in an aggregate principal amount of up to
$500 million. CIT Group Inc. is also seeking certain other
changes to the Senior Credit Facility in the Senior Facility
Amendment, including certain covenant revisions, changes to
permit the addition of borrowers, the addition of collateral
released or repurchased in connection with the refinancing of
existing indebtedness of the Company not subject to the offers,
which additional collateral may include, but shall not be
limited to (i) trade receivables, proceeds, collections and
documents related thereto, and related equipment and accounts;
(ii) asset-based securities that are backed predominantly
by aircraft leases, railcar leases, other equipment loans or
leases, student loans, commercial loans (including but not
limited to collateralized loan obligations), vendor finance
obligations and trade finance obligations; (iii) commercial
loan assets and related documents; (iv) aircraft and
related rights and documents, including lease rights; and
(v) railcars and underlying subleases subject to head
leases, and the succession by Bank of America, N.A. as
administrative agent and collateral agent under the Senior
Credit Facility. CIT Group Inc. expects to finalize in the
coming days the addition of consents to the amendments described
above, subject to agreement of definitive documentation and
customary closing conditions.
The Senior Credit Facility matures in January 2012 and bears
interest at LIBOR plus 10%, with a 3% LIBOR floor, payable
monthly. It provides for (i) a commitment fee of 5% of the
total advances made thereunder, payable upon the funding of each
advance, (ii) an unused line fee with respect to undrawn
commitments at the rate of 1% per annum and (iii) a 2% exit
fee on amounts prepaid or repaid and the unused portion of any
existing commitment.
The Senior Credit Facility is secured by a perfected first
priority (subject to limited exceptions) lien pursuant to the
Amended and Restated Collateral Agreement, dated as of
July 29, 2009, among the Series A Guarantors, the
Series B Guarantors, the Foreign Grantors and the Senior
Collateral Agent (as amended by the First Amendment thereto,
dated August 31, 2009, the “Senior Security
Agreement”) to secure all obligations under the Senior
Credit Facility (such obligations, the “Senior
Obligations”) on the following collateral (other than the
Senior Excluded Property, the “Senior Collateral”):
the Blanket Lien Collateral, the Rail Collateral, the Aircraft
Collateral and the Pledged Foreign Equity Collateral. The Senior
Collateral currently includes (i) a
138
pledge by Delaware Funding of substantially all of its personal
property, (ii) a pledge of 65% of the equity in CIT
Financial (Alberta) ULC and Arrendadora Capita Corp. and
(iii) a pledge of 100% of the equity in certain domestic
subsidiaries, including CIT Holdings, LLC and Capita
International L.L.C. We have requested that the lenders under
the Senior Credit Facility release, rescind or terminate
(i) the pledge by Delaware Funding and the pledge of equity
in CIT Financial (Alberta) ULC, (ii) the pledge of equity
in Arrendadora Capita Corp. in excess of 44% of the voting
shares and (iii) the pledge of any equity in such domestic
subsidiaries in excess of 65% of the voting shares, in each case
prior to the issuance of the New Notes. To the extent that we
are not successful in obtaining these releases, rescissions and
terminations, the collateral which is not rescinded, released or
terminated will be included in the Series A Collateral and the
Series B Collateral. See “Collateral —
Assets Securing Senior Obligations and Junior Obligations.”
Substantially the same assets excluded from the scope of
Series A Collateral and Series B Collateral are also
excluded from the Senior Collateral. See
“Collateral — Scope of Collateral.”
Letter of
Credit Facility
CIT Group Inc. and certain of its subsidiaries are in
discussions to obtain lender commitments of up to
$500 million for a revolving senior secured letter of
credit facility (the “L/C Facility”) for the issuance
of letters of credit for the benefit of CIT Group Inc. and
certain of its subsidiaries. The L/C Facility would be secured
by a perfected senior priority security interest in cash
deposited to an account controlled by the agent under the L/C
Facility and such cash and accounts securing the L/C Facility
would be excluded from collateral under the Senior Credit
Facility, the New Notes, the Junior Credit Facilities and the
Senior Facility Amendment. CIT Group Inc. expects to finalize in
the coming days the terms and conditions of the L/C Facility
commitments. The Company anticipates that over time the L/C
Facility will replace the Company’s current letter of
credit agreement with JPMorgan Chase Bank, N.A.
Unsecured
Credit Facilities
On April 13, 2005, the Company entered into a senior
unsecured revolving credit facility (the “2005
Revolver”) for up to $2.1 billion with Citigroup
Global Markets Inc., as joint lead arranger and bookrunner, Banc
of America Securities LLC, as joint lead arranger and
bookrunner, Citibank, N.A., as administrative agent, Bank of
America, N.A., as Syndication Agent, JPMorgan Chase Bank, N.A.
as syndication agent, Barclays Bank plc, as documentation agent
and the lenders from time to time party thereto. The Company is
the borrower under the 2005 Revolver. The 2005 Revolver has a
tenor of five years. Loans under the 2005 Revolver may be made
as Eurodollar loans, base rate loans or fixed rate loans.
Borrowings under the 2005 Revolver are to be used for general
corporate purposes and to repay outstanding indebtedness.
The 2005 Revolver includes customary affirmative and negative
covenants, including, among other things, and subject to certain
exceptions, limitations on the ability of the Company to incur
liens, sell all or substantially all of its assets and permit a
diminution in its net worth below $4.0 billion. The Company
may at any time and from time to time prepay loans under the
2005 Revolver, in whole or in part, without premium or penalty;
provided, however, that the Company may not prepay
any principal of any competitive bid loans issued under the 2005
Revolver.
On December 6, 2006, the Company entered into a senior
unsecured revolving credit facility (the “2006
Revolver” and together with the 2005 Revolver, the
“Revolvers”) for up to $1 billion with Citigroup
Global Markets Inc., as joint lead arranger and bookrunner,
Barclays Capital, as joint lead arranger and bookrunner,
Citibank, N.A., as administrative agent, Barclays Bank plc, as
syndication agent, Bank of America, N.A., as co-documentation
agent, JPMorgan Chase Bank, N.A. as co-documentation agent and
the lenders from time to time party thereto. The Company is the
borrower under the 2006 Revolver. The 2006 Revolver has a tenor
of five years. Loans under the 2006 Revolver may be made as
Eurodollar loans, base rate loans or fixed rate loans.
Borrowings under the 2006 Revolver are to be used for general
corporate purposes and to repay outstanding indebtedness.
The 2006 Revolver includes customary affirmative and negative
covenants, including, among other things, and subject to certain
exceptions, limitations on the ability of the Company to incur
liens, sell all or
139
substantially all of its assets and permit a diminution in its
net worth below $4.0 billion. The Company may at any time
and from time to time prepay loans under the 2006 Revolver, in
whole or in part, without premium or penalty; provided,
however, that the Company may not prepay any principal of
any competitive bid loans issued under the 2006 Revolver.
On September 30, 2005, the Company entered into a JPY 20
Billion Term Loan Agreement with Mizuho Corporate Bank, Ltd., as
arranger, initial lender and agent, and the lenders party
thereto (the “Mizuho JPY Facility”). On
September 29, 2006, the Company entered into a
$100.0 million Five-Year Term Loan Agreement with Mizuho,
as arranger and agent, and the lenders party thereto (the
“Mizuho USD Facility” and together with the Mizuho JPY
Facility, the “Mizuho Facilities”). Each of the Mizuho
Facilities has a tenor of five years. Borrowings under the
Mizuho JPY Facility are to be used for general operating
purposes, and borrowings under the Mizuho USD Facility are to be
used for general corporate and operating purposes and to repay
outstanding indebtedness.
The Mizuho Facilities include customary affirmative and negative
covenants, including, among other things, and subject to certain
exceptions, limitations on the ability of the Company to incur
liens, sell all or substantially all of its assets and permit a
diminution in its net worth below $4.0 billion. The Company
may at any time and from time to time prepay loans under the
Mizuho Facilities, in whole or in part, without premium or
penalty.
Junior
Credit Facilities
The Company has proposed to the lenders under the Revolvers and
the Mizuho Facilities an
out-of-court
restructuring of the obligations thereunder pursuant to which
accepting lenders would receive, in satisfaction of all amounts
owed to such lenders, obligations under new credit facilities
providing economically equivalent terms as the New Notes (the
“Junior Credit Facilities”) and New Preferred Stock.
Under the Junior Credit Facilities the restructured obligations
will be apportioned among five different tranches with the same
maturity dates as the maturity dates for the five series of New
Notes. The covenants and other terms of the Junior Credit
Facilities will be substantially the same as the covenants and
terms of the New Notes. The lien on the Series A Collateral
will secure both the obligations under the Junior Credit
Facilities and the obligations under the New Notes on a pari
passu basis.
To implement the proposed restructuring under the Revolvers, the
Company will exercise its right under applicable provisions of
the Revolvers to remove accepting lenders from the facilities
and provide them with the Junior Credit Facilities, and in each
case New Common Interests or Preferred Stock, in satisfaction of
all obligations owed to such lenders. Consummation of the
restructuring of the obligations under each Revolver is
conditioned upon obtaining the consent of the majority lenders
under that Revolver to certain amendments to such Revolver. The
amendments include deleting the requirement that a specified
amount of commitments remain in effect under each Revolver after
the removal of accepting lenders from such Revolver, and
permitting the Company to make payments of amounts due to any
lender that is being removed in such form of non-cash
consideration that is acceptable to such lender.
Consummation of the proposed restructuring under each of the
Mizuho Facilities is conditioned upon obtaining the requisite
consent of the lenders under such facility to an amendment to
the applicable credit agreement to add a provision that is
substantially similar to the provision contained in the
Revolvers providing for the ability of the Company to remove
lenders from the facility (after giving effect to the amendments
of such provision described above). In the event that the
requisite consent of the lenders to such amendment is obtained,
concurrently with effectiveness of such amendments the Company
would implement the restructuring under the Mizuho Facilities by
exercising its right under such provision to remove accepting
lenders from the Mizuho Facilities and provide them with the
Junior Credit Facilities and New Preferred Stock. The unanimous
consent of all lenders is required to amend the Mizuho JPY
Facility; the consent of the majority lenders is required to
amend the Mizuho USD Facility.
The lien on the Series A Collateral securing the
obligations under the Series A Notes and the Junior Credit
Facilities will be in favor of the Series A Collateral
Agent. Both the lenders under the Junior Credit Facilities and
the Series A Indenture Trustee will appoint the
Series A Collateral Agent as collateral agent
140
pursuant to the Series A Collateral Agency Agreement. In
accordance with the Series A Collateral Agency Agreement,
proceeds to which the holders of the Series A Notes and the
lenders under the Junior Credit Facilities are entitled will be
applied on a pro rata basis to the obligations
owed to such holders and lenders, subject to the terms of the
Senior-Junior Intercreditor Agreement and the Junior
Intercreditor Agreement.
In connection with the offer to lenders to restructure their
indebtedness out of court, the Company is soliciting acceptances
of the lenders to the Plan of Reorganization. Under the Plan of
Reorganization, the Credit Agreements will be terminated and, if
the applicable class of lenders accepts the Plan of
Reorganization, the lenders would receive their pro
rata share of indebtedness under Junior Credit Facilities
and New Common Interests. If the applicable class of lenders
does not accept the Plan of Reorganization and the Plan of
Reorganization is nevertheless confirmed, lenders in such class
will receive their pro rata share of Series A
Notes in lieu of indebtedness under Junior Credit Facilities.
See “The Plan of Reorganization.”
Other
Secured Financing
The Company uses or has used on-balance sheet secured financing
transactions to finance business segments such as consumer
(student loans), trade finance (factoring receivables),
corporate finance, including advances from under facilities with
GSI facility and Wells Fargo, and vendor finance, among others.
In 2008, the Company refinanced $8 billion of secured
funding facilities including approximately $4 billion of
conduit facilities that finance on balance sheet
government-guaranteed student loans, a $2.7 billion conduit
facility to finance equipment loans and leases and a
$1.3 billion conduit facility that finance trade finance
receivables.
Intercompany
Notes
CIT Group Funding Company of Canada (“Original CIT
Funding”) was incorporated in Nova Scotia, Canada on
October 28, 2003. CIT Financial Ltd. (“CFL”), as
issuer, executed and delivered to Original CIT Funding, as payee
three promissory notes dated July 5, 2005 in the amounts of
$502,588,633
(“2005-1
Note”), $502,588,633
(“2005-2
Note”) and $703,624,085
(“2005-3
Note”) and two promissory notes dated November 1, 2006
each in the amount of $249,052,500 (together, the “2006
Notes”) (the
2005-1 Note,
2005-2 Note,
2005-3 Note
and 2006 Notes each, an “Intercompany Note” and
collectively the “Intercompany Notes”). Original CIT
Funding, as subscriber, and CIT Holdings (Barbados) SRL
(“CIT Barbados”), as issuer, executed and delivered
three subscription agreements dated as of July 5, 2005 and
two subscription agreements dated as of November 1, 2006
(each a “CIT Funding Subscription Agreement” and
collectively the “CIT Funding Subscription
Agreements”).
The 2005-1
Note and
2005-2 Note
mature on July 1, 2010 and interest is payable
semi-annually on April 15 and October 15 at the rate of LIBOR
(as defined in the
2005-1 and
2005-2
Notes) plus 75 basis points. The
2005-3 Note
matures on June 1, 2015 and interest is payable
semi-annually on April 15 and October 15 at 5.35%. By their
terms and upon agreement between CFL and Delaware Funding, at
any time on or before the then-current maturity date(s), the
maturity dates under each of the
2005-1 Note,
the 2005-2
Note and the
2005-3 Note
may be extended to a date no later than June 1, 2025. In
agreeing to extend the maturity date(s) under the
2005-1 Note,
the 2005-2
Note and/or the
2005-3 Note,
CFL and Delaware Funding may likewise agree to a new interest
rate to be applicable under each such Note.
The 2006 Notes mature on November 2, 2011 and interest is
payable semi-annually on April 15 and October 15 at the rate of
LIBOR (as defined in the 2006 Notes) plus 48.5 basis
points. By their terms and upon agreement between CFL and
Delaware Funding, at any time on or before the then-current
maturity date, the maturity dates under each of the 2006 Notes
may be extended to a date no later than October 1, 2026. In
agreeing to extend the maturity dates under the 2006 Notes, CFL
and Delaware Funding may likewise agree to a new interest rate
to be applicable under each such 2006 Note.
In connection with its obligations under each of the applicable
CIT Funding Subscription Agreements, Original CIT Funding, as
debtor, and CIT Barbados, as secured party, executed and
delivered three security agreements dated as of July 5,
2005 and two security agreements dated as of November 1,
2006 (each a “CIT Funding Security Agreement” and
collectively the “CIT Funding Security Agreements”),
each security agreement granting CIT Barbados a security
interest in one of the Intercompany Notes. CIT Barbados, as
141
contributor, and CFL, as recipient, executed and delivered a
capital contribution agreement dated as of July 5, 2005 and
a capital contribution agreement dated as of November 1,
2006 (each a “Capital Contribution Agreement” and
collectively the “Capital Contribution Agreements”).
In connection with its obligations under each of the applicable
Capital Contribution Agreements, CIT Barbados, as debtor, and
CFL, as secured party, executed and delivered a security
agreement dated as of July 5, 2005 and a security agreement
dated as of November 1, 2006 (each a “Barbados
Security Agreement” and collectively the “Barbados
Security Agreement”), each security agreement granting CFL
a security interest in CIT Barbados’ rights under the 2005
or 2006, as the case may be, CIT Funding Subscription
Agreements, CIT Funding Security Agreements and Intercompany
Notes.
CIT Leasing, as support provider, executed and delivered
separately to each of Original CIT Funding and CIT Barbados,
each as support, recipient, two support agreements dated as of
July 5, 2005 and November 1, 2006 (each a “CIT
Leasing Support Agreement” and collectively the “CIT
Leasing Support Agreement”). CIT Leasing, Original CIT
Funding, CIT Barbados and CFL executed and delivered a
characterization agreement dated as of July 5, 2005 and a
characterization agreement dated as of November 1, 2006
(each a “Characterization Agreement” and collectively
the “Characterization Agreements”).
The Intercompany Notes, the CIT Funding Subscription Agreements,
the CIT Funding Security Agreements, the Capital Contribution
Agreements, the Barbados Security Agreements, the CIT Leasing
Support Agreements and the Characterization Agreements are
collectively referred to herein as the “Documents.”
On December 28, 2007, the status of Original CIT Funding as
an unlimited company was terminated, and Original CIT Funding
was registered as a limited company under the name CIT Group
Funding Company of Canada Limited (“Converted CIT
Funding”), pursuant to the Companies Act (Nova Scotia) (the
“Nova Scotia Conversion”). On December 31, 2007,
Converted CIT Funding was domesticated as a limited liability
company under the Delaware Limited Liability Company Act under
the name CIT Group Funding Company of Delaware (herein referred
to as Delaware Funding) and as of such date a certificate of
discontinuance was issued with respect to Converted Delaware
Funding under the Companies Act (Nova Scotia) (the
“Delaware Domestication”).
In connection with Original CIT Funding effecting the Nova
Scotia Conversion and the Delaware Domestication, Original CIT
Funding, CIT Barbados, CFL and CIT Leasing entered into a
Assumption and Confirmation Agreement dated as of
January 1, 2008 (the “Assumption and Confirmation
Agreement”) whereby, among other things, Delaware Funding
was deemed to be the same company as Original CIT Funding and
Converted CIT Funding and succeeded to all of the business,
undertaking, property (including the Intercompany Notes),
assets, rights, entitlements, franchises, licenses and permits
of each of Original CIT Funding and Converted Delaware Funding.
By the Assumption and Confirmation Agreement, Delaware Funding
likewise assumed, confirmed, and agreed to perform, observe and
comply with and be bound by each and ever present and future
covenant, agreement, term, condition, undertaking, appointment,
duty, indemnity, debt, liability, obligation and security
interest of Original CIT Funding and Converted CIT Funding (and
from and after the effective time of the Delaware Domestication,
of Delaware Funding) under each of the Documents and under any
document or instrument executed and delivered or furnished by
either of Original CIT Funding and Converted CIT Funding in
connection therewith. Moreover, by the Assumption and
Confirmation Agreement, Delaware Funding confirmed and agreed
that, by virtue of Original CIT Funding effecting the Nova
Scotia Company Conversion and the Delaware Domestication and the
Assumption and Confirmation Agreement, all of the present and
future right, title and interest of Delaware Funding in an to
all present and future Collateral (as such term is defined in
each CIT Funding Security Agreement) is and shall continue to be
subject to, and mortgaged, charged, pledged, hypothecated and
assigned to, and subject to a security interest in favor of, CIT
Barbados in accordance with the terms and provisions of such CIT
Funding Security Agreement as general and continuing security
for the due payment and performance of all of the present and
future Liabilities (as such term is defined in such CIT Funding
Security Agreement).
The use of proceeds of the Intercompany Notes following their
issuance have been and continue to be for the net proceeds to
provide additional working funds for Delaware Funding and its
subsidiaries. The Intercompany Notes are reflected on Delaware
Funding’s balance sheet at face value and no discount or
other adjustment is applied to the value of the Intercompany
Notes.
142
Certain holders of the Canadian Senior Unsecured Notes (as
defined herein) may contend that, in addition to a claim against
Delaware Funding on account of the Canadian Senior Unsecured
Notes, such holders maintain a claim against CIT Leasing (as
sole shareholder of Delaware Funding) on account of any
shortfall in payment of the Canadian Senior Unsecured Notes.
As set forth in the Liquidation Analysis attached hereto as
Appendix B, Delaware Funding may be unable to collect the
proceeds of the Intercompany Notes in full from CFL in the
context of a liquidation of CFL due to, among other things,
CFL’s cash flow levels and the first lien security
interests maintained by CIT Barbados against the Intercompany
Notes.
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COLLATERAL
Series A
Guarantors, Series B Guarantors and Foreign
Grantors
Because Delaware Funding is prevented by certain agreements from
granting liens on its assets, Delaware Funding will not pledge
any of its assets to secure the Series B Obligations.
Except for the Parent Pledge, CIT Group Inc. will not pledge any
of its assets to secure either the Series A Obligations or
the Series B Obligations; and except for the Parent Pledge,
neither has CIT Group Inc. pledged any of its assets to secure
the Senior Obligations. There can be no assurances that the
Parent Pledge will be effected.
Each Series A Guarantor will guarantee (the
“Series A Guarantees”) all obligations of CIT
Group Inc. under the Series A Notes (including the payment
of principal, interest and premium, if any) and the Junior
Credit Facilities as well as all obligations of each other
Series A Guarantor under their guarantees of the
Series A Notes and the Junior Credit Facilities (the
“Series A Obligations”). Each Series A
Grantor will grant security interests in certain of their assets
to secure the Series A Guarantees. In addition, the Parent
Pledge may also secure the obligations of CIT Group Inc. under
the Series A Notes. Delaware Funding is not and will not
guarantee the Series A Notes and neither will it grant
liens to secure either the Series A Notes or the
Series B Notes.
Each Series B Guarantor will guarantee (the
“Series B Guarantees”) all obligations of
Delaware Funding under the Series B Notes (including the
payment of principal, interest and premium, if any) and all
obligations of each other Series B Guarantor under their
guarantees of the Series B Notes (the “Series B
Obligations”) and the Series B Guarantors (with the
exception of CIT Group Inc.) will grant security interests in
certain of their assets to secure the Series B Guarantees.
In addition, the Parent Pledge may also secure the obligations
of CIT Group Inc. under the Series B Notes. Delaware
Funding is not and will not grant liens to secure its
obligations under the Series B Notes. Certain owner trusts,
the beneficiaries of which are subsidiaries, will also pledge
and mortgage Aircraft Collateral to secure the Series A
Obligations and Series B Obligations.
For a list identifying the currently anticipated Series A
Guarantors and Series B Guarantors (with the exception of
CIT Group Inc.) see Appendix D. In the future, other of our
affiliates may become Series A Guarantors and Series B
Guarantors. In the event that the Senior Facility Amendments are
effected, and the proceeds are used to refinance certain of our
existing indebtedness, it is anticipated that the borrowers
under any refinanced facilities (or other designated
subsidiaries of CIT Group Inc.) will become Series A
Guarantors and Series B Guarantors and parties to both the
Series A Security Agreement and the Series B Security
Agreement. Likewise, with certain exceptions, any domestic
subsidiaries wholly owned by CIT Group Inc. are required to
guarantee the Series A Obligations and the Series B
Obligations and (subject to certain exclusions described below)
grant security interests in their assets pursuant to the
Series A Security Agreement and Series B Security
Agreement. Certain subsidiaries of CIT Group Inc. including
Delaware Funding, CIT Bank and other regulated subsidiaries,
special purpose entities, joint ventures and immaterial
subsidiaries have not provided, and will not provide, guarantees
or pledge any collateral. As used herein, “Guarantors”
means, in the case of the Series A Notes, the Series A
Guarantors, and in the case of the Series B Notes, the
Series B Guarantors.
Although they will not issue guarantees, certain foreign
subsidiaries of CIT Group Inc. will also enter into both the
Series A Security Agreement and Series B Security
Agreement and grant security interests in certain equity
interests in certain of their subsidiaries to secure the
Series A Obligations and Series B Obligations: CIT
Financial (Barbados) Srl.; CIT Holdings Canada ULC; CIT Group
Holdings (UK) Limited; and CIT Holding No. 2 (Ireland)
(each such foreign subsidiary, a “Foreign Grantor”).
Assets
Securing Senior Obligations, Series A Obligations and
Series B Obligations
Separate liens will be created by the Series A Guarantors
and the Series B Guarantors to secure the Series A
Notes and the Series B Notes. In the case of the
Series A Notes, the holders of the Series A Notes and
the Junior Administrative Agents will appoint an agent
(“Series A Collateral Agent”) and the lien
granted by each of the Series A Guarantors pursuant to a
security agreement (the “Series A Security
Agreement”) to the Series A Collateral Agent will
secure all of the Series A Obligations, which includes not
only the
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obligations of CIT Group Inc. under the Series A Notes and
the obligations of each Series A Guarantor under such
guarantor’s guarantee of the Series A Notes, but also
the obligations of CIT Group Inc. under the Junior Credit
Facilities and the obligations of each Series A Guarantor
under such guarantor’s guarantee of the Junior Credit
Facilities. The Foreign Grantors will grant liens under the
Series A Security Agreement to secure the Series A
Obligations.
In the case of the Series B Notes, the holders of the
Series B Notes will appoint an agent (the
“Series B Collateral Agent”) and the lien granted
by each of the Series B Guarantors pursuant to a security
agreement (the “Series B Security Agreement”) to
the Series B Collateral Agent will secure the Series B
Obligations. The Foreign Grantors will grant liens under the
Series B Security Agreement to secure the Series B
Obligations.
The Senior Collateral Agent, the Series A Collateral Agent
and the Series B Collateral Agent will each have security
interests in substantially the same assets of the Series A
Guarantors, the Series B Guarantors and the Foreign
Grantors including: the Blanket Lien Collateral, the Rail
Collateral, the Aircraft Collateral, and the Pledged Foreign
Equity Collateral. The security interests of the Series A
Collateral Agent and the Series B Collateral Agent, will
each be subordinate in all respects to the security interest of
the Senior Collateral Agent in the same assets.
Each Series A Guarantor and Series B Guarantor will
grant a blanket lien (subject to certain exclusions described
below) on its rights in all of its personal property, including
(subject to certain exceptions) accounts, chattel paper,
equipment, general intangibles, instruments, inventory and
investment property and proceeds of any of the foregoing (the
“Blanket Lien Collateral”). The Blanket Lien
Collateral consists not only of assets existing at the time of
the granting of the security interest but any assets of the same
type subsequently acquired by a Series A Guarantor or a
Series B Guarantor. The Pledged Foreign Equity Collateral
consists of certain rights of the Foreign Grantors in and to the
following: 65% of the voting shares and 100% of the nonvoting
shares in CIT Financial Ltd. and CIT Vendor Finance (UK)
Limited, all of the shares in CIT Aerospace International
(except one nominee share) and 49% of the shares in CIT Group
Finance (Ireland). The Foreign Grantors will grant security
interests in the Pledged Foreign Equity Collateral. For a
description of the Aircraft Collateral and Rail Collateral, see
“— Transportation Finance Collateral —
Aircraft Collateral” and “— Transportation
Finance Collateral — Rail Collateral.”
Neither the Senior Collateral Agent, the Series A
Collateral Agent nor the Series B Collateral Agent will
have a perfected security interest in certain items of
collateral of the Series A Guarantors, the Series B
Guarantors or the Foreign Grantors:
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any asset, to the extent the pledge of such asset is restricted
or prohibited by any permitted agreement or by applicable law;
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except for Rail Collateral, Aircraft Collateral, Pledged Foreign
Equity Collateral, certain intellectual property and certain
Deposit Accounts and Securities Accounts, as to which additional
actions will be taken, assets not subject to the UCC or not
perfected by the filing of a financing statement under the
Uniform Commercial Code in an appropriate jurisdiction to the
extent the Senior Collateral Agent has not taken such action.
These excluded assets may include real estate and leases of real
property, insurance, rights represented by a judgment, property
governed by federal law or treaties, tort claims, certain types
of intellectual property, motor vehicles, goods represented by
documents, letters of credit, accessions and commingled goods
and money;
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interests in aircraft, engines and certain other aircraft or
engine components or parts owned by the Series A Guarantors
and the Series B Guarantors (including fractional interests
in aircraft) other than those constituting Aircraft Collateral;
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rail cars, locomotives or other rolling stock owned by the
Series A Guarantors and the Series B Guarantors, other
than those constituting Rail Collateral;
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in the event the Senior Facility Amendments become effective,
and assets are released from any liens securing our existing
secured facilities, certain of those assets (including any cash
collateral now securing such facilities) may be excluded from
the scope of collateral; and
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in the case of equity interests, (i) at a minimum, 35% of
the voting stock in any entity organized under the laws of a
jurisdiction other than a state of the United States, and 51% of
the equity interest in CIT Group Finance (Ireland);
(ii) the excess over 44% of the voting shares in
Arrendadora Capita Corp. and (iii) the excess over 65% of
the voting shares in certain domestic subsidiaries of CIT Group
Inc. that are disregarded entities or holding companies with
equity in foreign subsidiaries including CIT Holdings, LLC,
Capita International L.L.C., and Arrendadora Capita Corp.
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In addition, we are prevented from granting a lien on nineteen
(19) aircraft by the terms of certain agreements to which
we are a party. At such time as the Collateral Agent executes
letters of quiet enjoyment acceptable to the lessees of such
aircraft, such aircraft will constitute Aircraft Collateral.
As of August 31, 2009, the carrying value of the assets
constituting collateral was approximately $27 billion and
of that amount, approximately $10 billion was attributable
to equity interests in certain foreign subsidiaries.
The collateral for the Series A Notes and Series B
Notes consists primarily of the following assets:
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Corporate Finance Collateral. Certain
Series A Guarantors and Series B Guarantors provide
financing to borrowers who are primarily small and middle market
companies. Financing assets include working capital loans
secured by accounts receivable and inventories, term loans
secured by fixed assets, term loans secured by real estate and
leveraged loans based on operating cash flow and enterprise
valuation. This loan collateral is primarily senior secured and
secure loans that may be fixed or variable rate, and revolving
or term. Additionally, the assets of such Series A
Guarantors or Series B Guarantors may include equipment
loans and equipment leases and rights under sale-leaseback
arrangements.
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Transportation Finance
Collateral. Certain Series A Guarantors
and Series B Guarantors provide customized leasing and
secured financing primarily to end-users of aircraft and rolling
stock as well as leveraged loans based on operating cash flow
and enterprise valuation to borrowers in the transportation and
defense sectors. The assets include equipment subject to
operating leases and single investor leases, equity portions of
leveraged leases and sale and leaseback arrangements, as well as
loans secured by equipment and other fixed assets. End-users
include major and regional airlines worldwide, corporate users
of business aircraft, North American railroad companies and
freight carriers, and middle-market to larger-sized
transportation and defense companies.
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Rail Collateral. As of October 1,
2009, the rail collateral consisted of approximately 49,000
railcars and other rolling stock (and leases thereof) owned by
C.I.T. Leasing Corporation, The CIT Group/Corporate Aviation,
Inc. or The CIT Group/Equipment Financing (subject to releases
permitted under the Senior Credit Facility, the “Rail
Collateral”). The CIT Group/Equipment Financing, Inc. may
acquire title to a substantial amount of additional rolling
stock if its leases of such rolling stock are terminated. In
such event, the additional rolling stock would be added to the
Rail Collateral pledged first to secure the Senior Obligations
and, subject to the Senior-Junior Intercreditor Agreement, the
Series A Obligations and the Series B Obligations. The
owners and pledgors of the railcars and other rolling stock are
in the business of leasing railcars and other rolling stock to
lessees pursuant to full service leases under which the lessor
maintains the leased railcars and other rolling stock, or
pursuant to net leases under which the lessee is responsible for
maintenance and other expenses associated with the leased
railcars and other rolling stock. Substantially all of the
railcars and other rolling stock are subject to leases to United
States and Canadian lessees.
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Aircraft Collateral. As of
October 1, 2009, the aircraft collateral consisted of
(i) fourteen (14) commercial aircraft registered in
the United States and associated lease agreements to United
States and
non-United
States lessees, (ii) six (6) business aircraft
registered in the United States and associated lease agreements
to United States and
non-United
States lessees, (iii) three (3) spare engines,
(iv) thirteen (13) commercial aircraft registered in
Canada leased to Canadian lessees, and (v) nine
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(9) commercial aircraft registered in other countries that
are a party to the Cape Town Convention (collectively, but
subject to releases permitted under the Senior Credit Facility,
the “Aircraft Collateral”). The CIT Group/Equipment
Financing, Inc. or C.I.T. Leasing Corporation (or an owner trust
of which C.I.T. Leasing Corporation is the beneficiary) owns and
will pledge all of the Aircraft Collateral to both the
Series A Collateral Agent and Series B Collateral
Agent, other than the Aircraft Collateral registered in China.
The Aircraft Collateral registered in China is owned and will be
pledged to both the Series A Collateral Agent and
Series B Collateral Agent by CIT China 12, Inc., CIT China
13, Inc., CIT China 2, Inc. and CIT China 3, Inc. We may acquire
title to new aircraft if and to the extent the loan facility
(“the ECA Facility”) relating to such aircraft is
repaid. In such event, additional aircraft would become
collateral pledged to secure the Senior Obligations and, subject
to the Senior-Junior Intercreditor Agreement, the Series A
Obligations and the Series B Obligations. As soon as
practicable after the ECA Facility is repaid, such aircraft
would be subject to substantially the same security interests in
favor of the Senior Collateral Agent and, subject to the
Senior-Junior Intercreditor Agreement, the Series A Collateral
Agent and the Series B Collateral Agent, as have been
granted in favor of the agent for the ECA Facility. Such
security interests are likely to be of limited value because all
such aircraft are registered outside the US and a large portion
of the security interests under the ECA Facility in such
aircraft are not perfected. The owners of the Aircraft
Collateral are in the business of leasing aircraft and engines
under net leases to lessees in the United States and multiple
foreign jurisdictions. Substantially all the aircraft
constituting Aircraft Collateral are currently subject to leases
to unrelated lessees, except for one business aircraft that is
leased to CIT Group (NJ) LLC and two business aircraft that are
currently off-lease. All aircraft and spare engines may be used
inside or outside the United States.
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Trade Finance Collateral. The CIT
Group/Commercial Services, Inc. provides factoring, trade
accounts receivable purchasing, trade accounts receivable
management services, secured financing and letters of credit
facilities to businesses that operate in several industries
including apparel, textile, furniture, home furnishings and
consumer electronics. Receivables created or acquired in the
conduct of such Series A Guarantor or Series B
Guarantor’s business include working capital and term loan
receivables and trade accounts receivable due from both domestic
and foreign account debtors. Many of the trade accounts
receivable are due from retailers. The Series A Guarantor
and the Series B Guarantor also assists its clients in
opening letters of credit, collateralized by trade accounts
receivable and other assets, for the benefit of their
clients’ suppliers. The purchase of trade accounts
receivable, commonly known as “factoring”, gives rise
to a factoring fee that is commensurate with the underlying
degree of credit risk of the account debtor, recourse and sales
volume, and which is generally a percentage of the gross face
amount of each factored receivable. The Series A Guarantor
and the Series B Guarantor also may advance funds to its
clients, typically in an amount up to 80% of eligible trade
accounts receivable, charging interest on the advance (in
addition to any applicable factoring fees).
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Vendor Finance Collateral. Certain
Series A Guarantors and Series B Guarantors provide
financing for purchases of equipment in many industries
including information technology, office products,
telecommunications equipment and industrial equipment. Vendors
include manufacturers, dealers, and distributors and such
Series A Guarantors or Series B Guarantors enter into
traditional vendor finance programs as well as joint ventures
and profit sharing agreements with such vendors. The assets
include operating leases, finance leases, software installment
payment agreements, as well as loans secured by equipment. In
the case of certain joint ventures, these Series A Guarantors
and Series B Guarantors engage in financing activities with
the vendor through a distinct legal entity that is jointly owned
by the Series A Guarantor or the Series B Guarantor
and the vendor. In other cases, these Series A Guarantors
and Series B Guarantors do not establish new entities but
instead enter into agreements with vendors to share proceeds
from the customer financing provided by such Series A
Guarantors and Series B Guarantors.
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Equity. Certain equity interests will
be pledged to both the Series A Collateral Agent and
Series B Collateral Agent. In some cases, these equity
interests are owned by Series A Guarantors and
Series B Guarantors and, in other cases, these equity
interests are owned by Foreign Grantors.
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Equity Interests Owned by Series A Guarantors and
Series B Guarantors.
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Among the assets pledged by Series A Guarantors and
Series B Guarantors are 100% of the equity interests in
their domestic subsidiaries and all of the non-voting equity
interests and 65% of the voting equity interests in their
first-tier foreign subsidiaries.
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Foreign Equity Interests Owned by Foreign Grantors.
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Both the Series A Collateral and Series B Collateral
includes pledges by the Foreign Grantors of their equity
interests (the “Pledged Foreign Equity Collateral”) in
certain of their subsidiaries to secure both the Series A
Obligations and the Series B Obligations.
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Equity Pledge of CIT Financial Ltd. by CIT Financial
(Barbados) Srl. Both the Series A
Collateral and the Series B Collateral will include 65% of
the voting shares and 100% of the nonvoting shares in CIT
Financial Ltd. The primary assets of CIT Financial Ltd. consist
of financing assets including working capital loans, term loans,
leveraged loans, equipment loans, equipment leases, conditional
sales agreements and other installment sales contracts generally
on a senior secured basis; however, neither the Series A
Collateral nor the Series B Collateral will include any
assets owned by CIT Financial Ltd., but only the equity interest
in CIT Financial Ltd. owned by CIT Financial (Barbados) Srl. In
addition to filing under the UCC, each grant will be perfected
by appropriate filings pursuant to Canadian law. Any additional
steps required for enforcement under Barbados law will be taken
including the registration of the pledges. Under Barbados law,
the maximum amount of collateral securing each pledge will be
limited to the value stated in each such pledge agreement.
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Equity Pledge of CIT Aerospace International by CIT
Holdings Canada ULC. Both the Series A
Collateral and the Series B Collateral will include
substantially all of the shares in CIT Aerospace International,
an Irish company owned by CIT Holdings Canada ULC, a Canadian
company; one share in CIT Aerospace International is owned by
CIT Financial Ltd. as a nominee and such share will not be
included in either the Series A Collateral or Series B
Collateral. The primary assets of CIT Aerospace International
consist of commercial aircraft subject to net operating leases
with non-North American airlines; however, neither the
Series A Collateral nor the Series B Collateral will
include any assets owned by CIT Aerospace International, but
only the equity interest in CIT Aerospace International owned by
CIT Holdings Canada ULC. The pledges will be granted pursuant to
both the Series A Security Agreement and Series B
Security Agreement and pledges entered into pursuant to Irish
law. In addition to filing under the UCC, each grant will be
perfected pursuant to Irish law. Such pledge will be released on
or after January 20, 2012 subject to certain conditions
including a determination that such pledge could have material
adverse tax consequences to the Company or its affiliates. To
the extent that the interest of the Series A Collateral
Agent and the Series B Collateral Agent in such equity is
released, the interests of the Senior Collateral Agent will be
simultaneously released in such equity interest.
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Equity Pledge of CIT Group Finance (Ireland) by CIT
Holdings No. 2 (Ireland). Both the
Series A Collateral and the Series B Collateral will
include 49% of the shares in CIT Group Finance (Ireland), an
Irish company. The primary asset of CIT Group Finance (Ireland)
consists of the operating platform used to service the European
Vendor Finance Collateral; however, neither the Series A
Collateral nor the Series B Collateral will include any
assets owned by CIT Group Finance (Ireland), but only include
the equity interest in CIT Group Finance (Ireland) owned by CIT
Holdings No. 2 (Ireland). The pledges will be granted
pursuant to both the Series A Security Agreement and
Series B Security Agreement and a pledge entered into
pursuant to Irish law. In addition to filing under the UCC, each
grant will be perfected pursuant to Irish law.
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Equity Pledge of CIT Vendor Finance (UK) Limited by CIT
Group Holdings (UK) Limited. Both the
Series A Collateral and the Series B Collateral will
include 65% of the shares (not to exceed 65% of the voting
shares) in CIT Vendor Finance (UK) Limited. The primary assets
of CIT Vendor Finance (UK) Limited consist of loan and lease
receivables and residual interests; however, neither
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the Series A Collateral nor Series B Collateral will
include any assets owned by CIT Vendor Finance (UK) Limited, but
only include the equity interest in CIT Vendor Finance (UK)
Limited owned by CIT Group Holdings (UK) Limited. The pledges
will be granted pursuant to both the Series A Security
Agreement and Series B Security Agreement and will be
perfected by filing under the UCC, but will not be granted or
perfected under the laws of England and Wales. As a result of
the failure to grant or perfect under the laws of England and
Wales, neither pledge will be enforceable under the laws of
England and Wales. See “Risk Factors — Risks
Related to Collateral Securing the New Notes.”
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Assets To Be Released from Existing Permitted Liens or
Returned or Repurchased. If the Senior
Facility Amendment becomes effective, certain proceeds may be
used to pay existing secured indebtedness and such repayment
will result in either the repurchase of assets or the release of
any liens securing such indebtedness. See “Description of
Material Indebtedness — Senior Credit Facility.”
There can be no assurance that the Senior Facility Amendment
will become effective or, if effective, that the proceeds will
be used to repay existing secured indebtedness.
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Perfection
of Security Interest
In addition to the filing of UCC financing statements in the
appropriate jurisdictions under the Uniform Commercial Code and
certain filings with respect to the Rail Collateral, the
Aircraft Collateral, the Pledged Foreign Equity Collateral and
certain items of intellectual property, public filings will be
made on behalf of the Series A Collateral Agent and the
Series B Collateral Agent if and to the extent that the
same type and the same number of filings were made by or on
behalf of the Senior Collateral Agent. Each of the Series A
Collateral Agent and the Series B Collateral Agent will
appoint the Senior Collateral Agent pursuant to the Junior
Intercreditor Agreement as bailee of the Series A
Collateral Agent and Series B Collateral Agent, to hold
certain assets (such as stock certificates).
In the case of the Foreign Pledged Equity Collateral, certain
filings will be made and other actions will be taken with
respect to the Foreign Pledged Equity Collateral under the laws
of Canada, Ireland and Barbados; however, no actions will be
taken under the laws of England and Wales. The pledge by CIT
Financial (Barbados) Srl of 65% of the voting shares and 100% of
the non-voting shares in CIT Financial Ltd. will be perfected by
filing pursuant to Canadian law, and will be registered in
Barbados. The pledge by CIT Holdings Canada of all of the shares
in CIT Aerospace International, except one nominee share which
is owned by CIT Financial Ltd. as a nominee, will be perfected
pursuant to Irish law. The pledge by CIT Holdings No. 2
(Ireland) of 49% of the shares in CIT Group Finance (Ireland)
will be perfected pursuant to Irish law. The pledge by CIT Group
Holdings (UK) Limited of 65% of the voting shares and 100% of
the nonvoting shares in CIT Vendor Finance (UK) Limited will be
perfected only by means of the filing of a financing statement
under the Uniform Commercial Code, and no action will be taken
under the laws of England and Wales and accordingly the pledge
may not be enforceable under the laws of England and Wales.
“Risk Factors — Risks Related to Collateral
Securing the New Notes.”
The liens of the Series A Collateral Agent and the
Series B Collateral Agent on Aircraft Collateral will be
perfected through the appropriate combination of UCC filings,
mortgages, FAA filings and Cape Town Filings only for aircraft
registered in the United States or Canada and spare engines
located in the United States. However, each of the mortgages,
FAA filings and Cape Town Filings requires the signature or
consent of the Series A Collateral Agent and the
Series B Collateral Agent, respectively. Without such a
signature or consent, the mortgages, FAA filings and Cape Town
Filings will not be made and the liens of the Series A
Collateral Agent and the Series B Collateral Agent,
respectively, on the Aircraft Collateral consisting of United
States registered aircraft, certain Canadian registered aircraft
and such spare engines will not be perfected.
Although there will be UCC filings and Cape Town Filings made
for other Aircraft Collateral, these filings are of limited
value. Therefore, there can be no assurance that the liens of
the Series A Collateral Agent and the Series B
Collateral Agent, respectively, on the Aircraft Collateral
registered outside the United States or Canada will be perfected.
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Surface Transportation Board filings, recordations and
applicable memoranda of security agreement will be made in
respect of the Rail Collateral, giving each of the Series A
Collateral Agent and the Series B Collateral Agent a
perfected lien over the Rail Collateral.
Series A
Collateral Agency Agreement
The lien of both the Series A Collateral Agent and
Series B Collateral Agent will be automatically released or
subordinated in connection with certain activities of the
Company permitted under the Series A Indenture and the
Series B Indenture, including permitted asset sales,
permitted liens as well as activities conducted by the Company
in the Ordinary Course of Business. Ordinary Course of Business
includes financing, factoring, trade accounts, receivable
purchasing, asset sales and leasing in the ordinary course of
the business of the Company and its restricted subsidiaries. See
“Description of New Notes — Certain
Definitions — Ordinary Course of Business.””
The Series A Indenture, the Series B Indenture, as
well as the Junior Credit Facilities, will contain provisions
permitting liens and other encumbrances that may rank senior to
the liens of the Series A Collateral Agent and
Series B Collateral Agent, including liens existing as of
the issuance of the Series A Notes and Series B Notes,
pledges to CIT bank and purchase money liens. See
“Description of New Notes — Permitted Liens.”
The Series A Trustee, each of the Junior Administrative
Agents and the Series A Collateral Agent will enter into a
collateral agency agreement (the “Series A Collateral
Agency Agreement”) to govern the relative rights among the
holders of the Series A Obligations with respect to the
collateral securing the Series A Obligations. Pursuant to
the Series A Collateral Agency Agreement, the Series A
Trustee and each of the Junior Administrative Agents will
appoint the Series A Collateral Agent as its agent.
Subject to the terms of the Senior-Junior Intercreditor
Agreement and the Junior Intercreditor Agreement, the
Series A Collateral Agency Agreement will specify that any
proceeds of collateral securing the Series A Obligations
received by the Series A Collateral Agent for distribution
under the Series A Collateral Agency Agreement will be
shared among the Series A Trustee and each Junior
Administrative Agent on a pro rata basis, on behalf of the
respective holders of Series A Obligations. Such proceeds
will be delivered to the Series A Trustee and each Junior
Administrative Agent for distribution under the terms of the
respective agreements governing the Series A Obligations.
The Series A Collateral Agency Agreement will provide that
the Series A Collateral Agent will only act upon the
direction of the Series A Trustee or Junior Administrative
Agents collectively representing the requisite holders or
secured parties under one or more series of Series A Notes
or Junior Credit Facilities that, individually or in the
aggregate, constitutes more than 50% of the aggregate
outstanding principal amount and unused commitments, if any, of
the then outstanding Series A Notes and Junior Credit
Facilities. The Series A Collateral Agency Agreement may be
amended only with the consent of the Series A Trustee and
the Junior Administrative Agents each of whom are directed to
give such consent pursuant to the Indenture or Junior Credit
Facilities, as applicable.
Release
or Subordination of Collateral
The liens of each of the Series A Collateral Agent and
Series B Collateral Agent will be automatically released or
subordinated to the interests of third parties on substantially
the same terms on which the lien of the Senior Collateral Agent
will be released or subordinated. The Series A Indenture,
the Series B Indenture, as well as the Junior Credit
Facilities, will contain customary provisions permitting liens
and other encumbrances that may rank senior to the liens of the
Series A Collateral Agent and Series B Collateral
Agent and will also permit liens encumbering the collateral as
of the issuance of the Series A Notes and Series B
Notes, pledges to CIT Bank as well as purchase money and other
permitted liens. See “Description of New Notes —
Permitted Liens.” In addition, the lien of both the
Series A Collateral Agent and Series B Collateral
Agent may be automatically released or subordinated in
connection with certain activities of the Company in the
Ordinary Course of Business. See “Description of New
Notes — Certain Definitions — Ordinary
Course of Business.”
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Although the Company is required to use the proceeds of certain
asset sales to pay the Senior Obligations, Series A
Obligations and Series B Obligations, there is no
requirement that proceeds of sales of leases and other
dispositions received in connection with Ordinary Course of
Business activities be used to satisfy Senior Obligations,
Series A Obligations or Series B Obligations. Neither
is there any requirement that proceeds of collateral received by
a Series A Guarantor and Series B Guarantor pursuant
to an intercompany transfer be used to satisfy the Senior
Obligations, Series A Obligations and Series B
Obligations.
Although the security interest of each of the Series A
Collateral Agent and Series B Collateral Agent is released
or subordinated automatically pursuant to a transaction that is
permitted under the Series A Indenture or Series B
Indenture, in some circumstances we may request that the
Series A Collateral Agent and the Series B Collateral
Agent execute documents evidencing the release or subordination.
Under the Junior Intercreditor Agreement, each of the
Series A Collateral Agent and Series B Collateral
Agent is directed to execute documentation evidencing release or
subordination of its respective liens if the Senior Collateral
Agent subordinates or releases its lien as to such Collateral,
and furthermore such liens will be released or subordinated upon
receipt of a certificate from the Series A Guarantor,
Series B Guarantor or Foreign Grantor requesting such
release or subordination that such release or subordination is
permitted under the terms of the Series A Indenture and
Series A Security Agreement or Series B Indenture and
Series B Security Agreement, as applicable.
Senior-Junior
Intercreditor Agreement among the Senior Collateral Agent, the
Series A Collateral Agent and the Series B Collateral
Agent
CIT Group Inc., the other issuers of Senior Obligations and
Junior Obligations and the Series A Guarantors, Senior B
Guarantors, Delaware Funding and the Foreign Grantors, as
obligors, will enter into an intercreditor agreement (the
“Senior-Junior Intercreditor Agreement”) with
(i) the administrative agent and collateral agent under the
Senior Credit Facility (including its successors and assigns in
such capacity, the “Senior Credit Facility
Representative”), (ii) a senior agent (the
“Senior Collateral Agent”) on behalf of the holders of
the obligations under the Senior Credit Facility (including any
extension or refinancing thereof or the inclusion of additional
indebtedness permitted to be secured by a pari passu lien, the
“Senior Obligations”, and the holders thereof the
“Senior Lien Secured Parties”), (iii) a junior
agent (the “Series A Collateral Agent”) on behalf
of the holders of the obligations under the Series A Notes
and the Junior Credit Facilities (collectively, the
“Series A Obligations”, and the holders thereof
the “Series A Secured Parties”) and (iv) a
junior agent (the “Series B Collateral Agent”) on
behalf of the holders of the obligations under the Series B
Notes (the “Series B Obligations”, and the
holders thereof the “Series B Secured Parties”).
The Series A Secured Parties and the Series B Secured
Parties are herein referred to as the “Junior Secured
Parties” and the Series A Obligations and the
Series B Obligations are herein referred to as the
“Junior Obligations”. Each of the Senior Obligations,
the Series A Obligations and the Series B Obligations
are herein referred to as a “Class of Lien
Obligations.”
The Senior-Junior Intercreditor Agreement will provide for the
allocation of rights between the Senior Lien Secured Parties and
the Junior Lien Secured Parties with respect to their respective
interests in the collateral securing any Junior Obligations and
the enforcement provisions relating thereto. The Senior-Junior
Intercreditor Agreement will contain, among other provisions,
the following agreements:
Any liens purporting to secure Senior Obligations (the
“Senior Priority Liens”) will rank prior and senior to
any liens purporting to secure the Series A Obligations
(the “Series A Liens”) or any liens purporting to
secure the Series B Obligations (the “Series B
Liens” and together with the Series A Liens, the
“Junior Priority Liens”).
To the extent, and only to the extent, permitted by the
provisions of the documentation governing the Senior Obligations
(the “Senior Lien Debt Documents”), the documentation
governing the Junior Obligations (including the Junior
Intercreditor Agreement, the “Junior Lien Debt
Documents”) and the Senior-Junior Intercreditor Agreement,
CIT Group Inc., the other issuers of Junior Obligations, the
Series A Guarantors, the Series B Guarantors and
Delaware Funding may incur, issue or sell one or more series or
classes of Junior Obligations (the “Additional Junior Lien
Debt”). The Additional Junior Lien Debt may be secured by
the Junior Priority Liens and may be guaranteed by the
Series A Guarantors and the Series B Guarantors on a
junior secured basis and secured by liens granted by the Foreign
Grantors on a junior secured basis, if the
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trustee, administrative agent, collateral agent or similar agent
(an “Authorized Representative”) in respect of the
Additional Junior Lien Debt becomes a party to the Senior-Junior
Intercreditor Agreement, the Junior Intercreditor Agreement and,
if applicable, the Series A Collateral Agency Agreement by
satisfying the conditions set forth in such documents. The
Senior-Junior Intercreditor Agreement may be amended from time
to time without the consent of the Senior Lien Secured Parties
or the Junior Lien Secured Parties to add the Authorized
Representatives of any applicable Additional Junior Lien Debt.
Until the Discharge of Senior Obligations, only the Senior
Collateral Agent shall act or refrain from acting with respect
to the collateral securing any Senior Obligations or any Junior
Obligations and then only on the instructions of the Senior
Credit Facility Representative provided that the
Series A Collateral Agent or the Series B Collateral
Agent may exercise its rights and remedies with respect to the
collateral after a period of 180 days if the Senior
Collateral Agent is not diligently pursuing its rights and
remedies with respect to the collateral if an amendment to the
Senior Credit Facility to permit such exercise of rights and
remedies after 180 days is obtained. The Senior Credit
Facility Representative shall have the right, by instructing the
Senior Collateral Agent, to take actions with respect to the
collateral securing any Senior Obligations or Junior Obligations.
Following the Discharge of Senior Obligations or as otherwise
permitted under the Senior-Junior Intercreditor Agreement, and
subject to and in accordance with the terms of the Junior
Intercreditor Agreement, only the Series A Collateral Agent
and the Series B Collateral Agent shall act or refrain from
acting with respect to collateral securing any of the Junior
Obligations, subject to the terms of the Junior Intercreditor
Agreement. The Junior Intercreditor Agreement will govern the
rights of the Authorized Representatives of any other series of
Junior Obligations to take actions with respect to the
collateral securing any of the Junior Obligations.
The foregoing lien priority will be applicable notwithstanding
any invalidity, subordination or avoidance of any Senior
Priority Lien or Junior Priority Lien or any failure to perfect
any Senior Priority Lien or Junior Priority Lien and
notwithstanding any provision of the UCC or any other applicable
law to the contrary and regardless of whether any of the Senior
Obligations or the Junior Obligations is otherwise found to be
unenforceable, deficient or subordinated to any other claim of
any person and any other circumstance. Each Senior Lien Secured
Party and each Junior Lien Secured Party will agree not to
directly or indirectly contest or directly or indirectly support
any other person in contesting the priority, validity or
enforceability of any other Class of Lien Obligations
(including, without limitation, any claim in any bankruptcy or
insolvency proceeding by the Senior Lien Secured Parties for
post-petition interest on account of the Senior Priority Liens
or expenses in connection with such proceeding) or any lien
securing any such Class of Lien Obligations and any reference to
a Class of Lien Obligations shall include any such invalid,
subordinated or recharacterized obligations provided for in the
agreements creating such Class of Lien Obligations.
So long as there are both Senior Obligations and Junior
Obligations outstanding, (i) neither CIT Group Inc., any
other issuer of Senior Obligations or Junior Obligations, any
Series A Guarantor, any Series B Guarantor nor any
Foreign Grantor will grant any lien to secure any Junior
Obligations unless CIT Group Inc., such other issuer of Senior
Obligations or Junior Obligations or such Series A
Guarantor, Series B Guarantor or Foreign Grantor, as
applicable, has granted a lien to secure the Senior Obligations,
(ii) except with respect to liens granted by Delaware
Funding, neither CIT Group Inc., any other issuer of Senior
Obligations or Junior Obligations, any Series A Guarantor,
any Series B Guarantor, nor any Foreign Grantor will grant
any lien to secure any Senior Obligations unless CIT Group Inc.,
such other issuer of Senior Obligations or Junior Obligations or
such Series A Guarantor, Series B Guarantor, or
Foreign Grantor, as applicable, has granted a lien to secure the
Junior Obligations, and (iii) the aggregate amount of
Senior Obligations outstanding at any time shall not exceed a
defined amount, as set forth in the Senior-Junior Intercreditor
Agreement. Any proceeds from any lien granted in contravention
of the foregoing will be subject to distribution in accordance
with the turnover provisions set forth in the Senior-Junior
Intercreditor Agreement. Any amendment, waiver or consent under
any security documents governing the Senior Obligations shall
automatically apply to the corresponding security documents
governing the Junior Obligations (subject to the limitations on
any release of the Junior Priority Liens set forth in the
Senior-Junior Intercreditor Agreement or the Junior
Intercreditor Agreement). Any liens received by any of the
Junior Lien Secured Parties against CIT Group Inc., any other
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issuer of Senior Obligations or Junior Obligations or any
Series A Guarantor, Series B Guarantor or Foreign
Grantor as judgment creditors shall also be subject to the terms
of the Senior-Junior Intercreditor Agreement and the Junior
Intercreditor Agreement.
Until all Senior Obligations (other than contingent indemnity
obligations) have been indefeasibly paid in cash in full, any
letters of credit outstanding thereunder (if applicable) have
been returned (or cash collateralized on terms satisfactory to
the Senior Collateral Agent and the applicable issuing bank) and
all commitments to extend credit that would constitute Senior
Obligations have been terminated (the “Discharge of Senior
Obligations”), the Senior Collateral Agent on behalf of the
Senior Lien Secured Parties shall have the sole right to enforce
or forbear from enforcing any liens on the collateral and none
of the Series A Collateral Agent, the Series B
Collateral Agent or any Junior Lien Secured Party will seek to
enforce any Junior Priority Lien or object to any enforcement
action in respect of the Senior Priority Liens (or forbearance
from enforcing the Senior Priority Liens) or take or agree to
take any action that would hinder or delay any exercise of
rights and remedies undertaken by the Senior Collateral Agent on
behalf of the Senior Lien Secured Parties. Notwithstanding the
foregoing, the Series A Collateral Agent, the Series B
Collateral Agent and the Junior Lien Secured Parties may, except
to the extent expressly prohibited or restricted by the
Senior-Junior Intercreditor Agreement or the Junior
Intercreditor Agreement, (i) exercise their rights and
remedies with respect to the collateral after a period of
180 days if the Senior Collateral Agent is not diligently
pursuing its rights and remedies with respect to the collateral,
if an amendment to the Senior Credit Facility to permit such
exercise of rights and remedies after 180 days is obtained,
(ii) make protective filings in respect of the Junior
Priority Liens, (iii) exercise rights of unsecured
creditors against CIT Group Inc., the other issuers of Junior
Obligations, the Series A Guarantors, the Series B
Guarantors and the Foreign Grantors (provided that in no event
may the Series A Collateral Agent, the Series B
Collateral Agent or any Junior Lien Secured Party file any
involuntary petition for bankruptcy against CIT Group Inc., any
other issuers of Junior Obligations, any Series A
Guarantor, Series B Guarantor or any Foreign Grantor),
(iv) bid for and purchase (for cash only) any collateral in
any foreclosure proceeding, (v) vote on any plan of
reorganization so long as not inconsistent with the vote of the
Senior Collateral Agent, (vi) accelerate the respective
Junior Obligations, (vii) file a lawsuit to collect any
Junior Obligations so long as such lawsuit seeks only a money
judgment and does not seek to enforce or impose any lien on any
collateral and (viii) deliver default notices, cease and
desist letters and similar notices to CIT Group Inc., any other
issuer of Junior Obligations or any Series A Guarantor,
Series B Guarantor or any Foreign Grantor.
The Junior Priority Liens on any item of collateral will be
automatically released (x) in connection with any
disposition of such collateral pursuant to any enforcement
action by the Senior Lien Secured Parties, (y) upon any
sale or disposition of such collateral pursuant to a transaction
permitted by the Senior Lien Debt Documents and the Junior Lien
Debt Documents so long as the Senior Priority Liens are released
in connection therewith or (z) in connection with any other
release of the Senior Priority Liens in any such collateral
(other than in connection with a refinancing in full or
prepayment in full of the Senior Obligations). In addition,
other than in connection with a refinancing in full or
prepayment in full of the Senior Obligations, in the event that
any Series A Guarantor, Series B Guarantor or Foreign
Grantor is released from its guaranty or pledge obligations with
respect to the Senior Obligations, such Series A Guarantor,
Series B Guarantor or Foreign Grantor will be automatically
released from its obligations with respect to the Junior
Obligations.
Any proceeds from any enforcement action in respect of the
collateral, other than in respect of the Parent Pledge, shall be
applied first, to the payment in full or cash collateralization
of the Senior Obligations in such order as specified in the
Senior Lien Debt Documents and second, upon the occurrence of
the Discharge of Senior Obligations, to the payment in full of
the Junior Obligations in such order as specified in the Junior
Lien Debt Documents. Prior to the Discharge of the Senior
Obligations, any property or proceeds from any direct or
indirect enforcement of any Junior Priority Lien or received on
account of or by virtue of any Junior Priority Lien in any
bankruptcy or liquidation proceeding will be turned over by the
Series A Collateral Agent or Series B Collateral
Agent, as applicable, and the Junior Lien Secured Party
receiving such proceeds or property for application in
accordance with the foregoing. If the Parent Pledge is effected,
any property or proceeds in respect of the Parent Pledge will be
turned over ratably to the Senior Collateral Agent and the
holders of the Old Notes.
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As between the Senior Lien Secured Parties and the Junior Lien
Secured Parties, the Senior Collateral Agent and the Senior Lien
Secured Parties shall have the sole right to settle or
compromise any insurance claims relating to the collateral and
to receive all proceeds under such policies relating thereto
until the occurrence of the Discharge of Senior Obligations.
None of the Junior Lien Debt Documents shall be amended or
refinanced (whether or not such Class of Lien Obligations is
secured by any lien on the collateral at such time), in
violation of the Senior-Junior Intercreditor Agreement.
Until the Discharge of Senior Obligations has occurred:
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None of the Series A Collateral Agent, Series B
Collateral Agent or any Junior Lien Secured Party will object to
any use of “cash collateral” (as defined in
Section 363(a) of Title 11 of the United States Code
(the “Bankruptcy Code”)) in respect of any collateral
or to any
debtor-in-possession
financing (“DIP Financing”) which is to be secured by
any lien on the collateral that is approved by the Senior
Collateral Agent and will be deemed to have consented to such
use of cash collateral or DIP Financing and will agree that any
such DIP Financing may be secured by a lien on the collateral
ranking senior to the Junior Priority Liens; provided
that if the Senior Lien Secured Parties are granted any
additional security interests in connection with such use of
cash collateral or DIP Financing, the Junior Lien Secured
Parties may seek junior liens on such additional collateral
(ranking junior to any liens for such DIP Financing and to the
liens securing the Senior Obligations and otherwise with the
priority set forth above).
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Until the Discharge of Senior Obligations has occurred, none of
the Series A Collateral Agent, Series B Collateral
Agent or any Junior Lien Secured Party shall be entitled to
oppose any disposition of any collateral consented to by the
Senior Collateral Agent.
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None of the Series A Collateral Agent, Series B
Collateral Agent or any Junior Lien Secured Party will object to
any request by the Senior Collateral Agent or the Senior Lien
Secured Parties for “adequate protection” on account
of the Senior Priority Liens. In certain circumstances, the
Series A Collateral Agent, the Series B Collateral
Agent or any other Junior Lien Secured Parties may request (and
the Senior Lien Secured Parties may object to any such request
for) “adequate protection” on account of the Junior
Priority Liens. The Junior Lien Secured Parties may seek
administrative claims and fees and expenses to the extent sought
by the Senior Lien Secured Parties.
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None of the Series A Collateral Agent, Series B
Collateral Agent or any Junior Lien Secured Party shall be
entitled to oppose any request by the Senior Collateral Agent or
the Senior Lien Secured Parties for allowance and payment of
post-petition interest, fees or expenses constituting Senior
Obligations to the extent of the value of the Senior Priority
Lien on the collateral, such value to be determined without
regard to the existence of the Junior Priority Liens.
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The grants of the Senior Priority Liens and the Junior Priority
Liens shall constitute separate and distinct grants of liens,
and accordingly, the claims of the Senior Lien Secured Parties,
the holders of the Series A Obligations and the holders of
the Series B Obligations must be separately classified in
any plan of reorganization.
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The Series A Collateral Agent, the Series B Collateral
Agent and the Junior Lien Secured Parties may, except to the
extent expressly prohibited or restricted by the Senior-Junior
Intercreditor Agreement or the Junior Intercreditor Agreement,
exercise rights and remedies of unsecured creditors (provided
that in no event may the Series A Collateral Agent, the
Series B Collateral Agent or any Junior Lien Secured Party
file any involuntary petition for bankruptcy against CIT Group
Inc., any other issuers of Junior Obligations, any Series A
Guarantor, Series B Guarantor or any Foreign Grantor).
The holders of the Junior Obligations are not entitled to
support any plan of reorganization that is inconsistent with the
provisions described above (including the turnover provisions
described above).
In the event CIT Group Inc. or its applicable subsidiaries shall
receive net cash proceeds that are required to be applied to the
Senior Obligations or the Junior Obligations prior to the
occurrence of the Discharge of
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Senior Obligations, such net cash proceeds shall be applied
first to the payment in full of the Senior Obligations on a pro
rata basis as specified in the Senior Lien Debt Documents prior
to the payment of the Junior Obligations.
The Senior Collateral Agent, the Senior Lien Secured Parties,
the Series A Collateral Agent, the Series B Collateral
Agent and the Junior Lien Secured Parties are entitled to
enforce their rights under the Senior-Junior Intercreditor
Agreement and the Junior Intercreditor Agreement, including in
any bankruptcy or insolvency proceeding, and including through
specific performance, and are granted powers of attorney and
claim holder status in furtherance of such enforcement rights.
If at any time following the occurrence of the Discharge of
Senior Obligations, (x) CIT Group Inc., any other issuer of
Senior Obligations, any Series A Guarantor, Series B
Guarantor or any Foreign Grantor designates any other credit
facility or issuance of indebtedness as constituting
“Senior Obligations” (including, as a result of any
refinancing of Senior Obligations) and the indebtedness is
permitted in accordance with the Senior-Junior Intercreditor
Agreement or (y) any Senior Lien Secured Party is required
by applicable law to return any payment received by it in
respect of the Senior Obligations, then the Discharge of Senior
Obligations shall be deemed not to have occurred with respect to
such Senior Obligations (from the date such new credit facility
or issuance of indebtedness is incurred in the case of the
foregoing clause (x) and retroactively as though such
Discharge of Senior Obligations had never occurred in the case
of the foregoing clause (y)).
Junior
Intercreditor Agreement between Series A Collateral Agent
and the Series B Collateral Agent
The Series A Collateral Agent and the Series B
Collateral Agent will enter into an intercreditor agreement (the
“Junior Intercreditor Agreement”) that will provide
for the allocation of rights between the Junior Lien Secured
Parties with respect to their respective interests in the
collateral and the enforcement provisions relating thereto. The
Junior Intercreditor Agreement will also provide that
irrespective of the date and time of attachment or perfection
thereof, the liens on the collateral in respect of the
Series A Secured Parties and the Series B Secured
Parties shall be equal and ratable for the benefit of all Junior
Lien Secured Parties. Furthermore, the Junior Intercreditor
Agreement will include provisions relating to turnover
obligations with respect to the equal and ratable sharing of the
proceeds of the collateral, exercise of remedies in respect of
each of the Series A Obligations and the Series B
Obligations, releases of collateral and amendments to the Junior
Lien Debt Documents. The Junior Priority Liens on any item of
collateral will be automatically released (x) in connection
with any disposition of such collateral pursuant to any
enforcement action by the Junior Lien Secured Parties,
(y) upon any sale or disposition of such collateral
pursuant to a transaction permitted by the Junior Lien Debt
Documents so long as the Junior Priority Liens are released in
connection therewith or (z) in connection with any other
release of the Junior Priority Liens in any such collateral
(other than in connection with a refinancing in full or
prepayment in full of another Class of Lien Obligations
constituting Junior Obligations). In addition, other than in
connection with a refinancing in full or prepayment in full of
the Junior Obligations, in the event that any Series A
Guarantor, Series B Guarantor or Foreign Grantor is
released from its guaranty or pledge obligations with respect to
any Class of Lien Obligations constituting Junior Obligations,
such Series A Guarantor, Series B Guarantor or Foreign
Grantor will be automatically released from its obligations with
respect to all Classes of Lien Obligations constituting Junior
Obligations.
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DESCRIPTION
OF CAPITAL STOCK
This section contains a description of our capital stock. The
following summary of the terms of our capital stock is not meant
to be complete and is qualified by reference to our certificate
of incorporation, as amended, and our by-laws, as amended, which
are incorporated by reference into this Offering Memorandum and
Disclosure Statement.
As of June 30, 2009, our authorized capital stock consisted
of: (1) 600,000,000 shares of common stock, par value
$0.01 per share, of which 398,289,150 shares were issued,
including 392,067,503 that were issued and outstanding, and
6,221,647 that were issued and held in treasury; and
(2) 100,000,000 shares of preferred stock, par value
$0.01 per share, of which were issued and outstanding:
14,000,000 shares of Series A Preferred Stock, with a
liquidation preference of $25 per share, 1,500,000 shares
of Series B Preferred Stock, with a liquidation preference
of $100 per share; 11,500,000 shares of Series C
Preferred Stock, with a liquidation preference of $50 per share
and 2,330,000 shares of Series D Preferred Stock, with
a liquidation preference of $1,000 per share.
Common
Stock
Each share of our common stock entitles the holder thereof to
one vote on all matters, including the election of directors,
and, except as otherwise required by law or provided in any
resolution adopted by our board of directors with respect to any
series of preferred stock, the holders of the shares of common
stock will possess all voting power. Our certificate of
incorporation does not provide for cumulative voting in the
election of directors. Generally, all matters to be voted on by
the stockholders must be approved by a majority, or, in the case
of the election of directors, by a plurality, of the votes cast,
subject to state law and any voting rights granted to any of the
holders of preferred stock. Notwithstanding the foregoing,
approval of the following three matters requires the vote of
holders of
662/3%
of our outstanding capital stock entitled to vote in the
election of directors: (1) amending, repealing or adopting
of by-laws by the stockholders; (2) removing directors
(which is permitted for cause only); and (3) amending,
repealing or adopting any provision that is inconsistent with
certain provisions of our certificate of incorporation. The
holders of common stock do not have any preemptive rights. There
are no subscription, redemption, conversion or sinking fund
provisions with respect to the common stock.
Subject to any preferential rights of any outstanding series of
preferred stock that our board of directors may create, from
time to time, the holders of common stock will be entitled to
dividends as may be declared from time to time by the board of
directors from funds available therefor. Upon liquidation of
CIT, subject to the rights of holders of any preferred stock
outstanding, the holders of common stock will be entitled to
receive our assets remaining after payment of liabilities
proportionate to their pro rata ownership of the
outstanding shares of common stock.
Preferred
Stock
Our board of directors has the authority, without further action
of our stockholders, to issue up to 100,000,000 shares of
preferred stock, par value $0.01 per share, in one or more
series and to fix the powers, preferences, rights and
qualifications, limitations or restrictions thereof, including
dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preferences and the number of shares
constituting any series or the designations of the series. The
issuance of preferred stock could adversely affect the holders
of common stock. The potential issuance of preferred stock may
have the effect of discouraging, delaying or preventing a change
of control of CIT, may discourage bids for the common stock at a
premium over market price of the common stock and may adversely
affect the market price of the common stock.
6.350%
Non-Cumulative Preferred Stock, Series A
Voting rights. The Series A Preferred
Stock has no voting rights, other than class voting on certain
matters that could adversely affect the Series A Preferred
Stock. A two-thirds vote of the outstanding Series A
Preferred Stock and all other series of voting preferred stock
entitled to vote thereon is required to create or increase any
class of stock ranking senior to the Series A Common Stock;
to materially and adversely affect the special rights,
preferences, privileges and voting powers of the Series A
Preferred Stock; or to consummate certain mergers,
consolidations or reclassifications where the Series A
Preferred Stock does not remain
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outstanding or is not converted into preference securities of a
surviving entity, or has terms materially less favorable than
the existing rights, preferences, privileges and voting powers
of the Series A Preferred Stock. Certain events are
expressly deemed not to be adverse, however, including: the
distribution of the Company’s assets upon liquidation; the
creation of stock ranking equally or junior to the Series A
Preferred Stock; the increase of authorized but not issued
shares of any series of Preferred Stock, and the increase of
authorized or issued shares of the Series A Preferred
Stock. If dividends on the Series A Preferred Stock have
not been declared and paid for an aggregate of six dividend
periods or more, whether or not consecutive, the holders of 20%
or more of the Series A Preferred Stock may call a special
meeting of the Company’s board, in which the number of
directors on the Company’s board of directors will
automatically be increased by two and the holders of such
Series A Preferred Stock, voting together as a single class
with holders of any and all other series of voting preferred
stock then outstanding, will be entitled to vote for the
election of a total of two additional members of the
Company’s board of directors subject to certain conditions.
Whether the vote of a plurality, majority or other portion of
the shares of Series A Preferred Stock and all other series
of voting preferred stock entitled to vote on a matter has been
cast or given will be determined by the liquidation preference
of the Series A Preferred Stock and such other series of
voting preferred stock.
If and when dividends for at least four dividend periods,
whether or not consecutive, following a nonpayment of dividends
have been paid in full, or declared and a sum sufficient for
such payment is set aside, the holders of the Series A
Preferred Stock will immediately be divested of the foregoing
voting rights, subject to the revesting of such rights in the
event of each subsequent nonpayment and the term of office of
each preferred stock director so elected will terminate and the
number of directors on the Company’s board of directors
will automatically decrease by two.
Dividends. Non-cumulative cash dividends paid
at an annual fixed-rate of 6.350%; payable quarterly in arrears,
when and if declared by the board of directors. So long as any
share of Series A Preferred Stock remains outstanding,
(1) no dividend will be declared and paid on any common
stock or any junior stock (other than dividends payable solely
in junior stock) and (2) no shares of common stock or
junior stock will be purchased, redeemed, or otherwise acquired
for consideration by the Company, directly or indirectly (other
than as (a) a result of a reclassification of junior stock
for or into other junior stock, or the exchange or conversion of
one share of junior stock for or into another share of junior
stock, (b) repurchases in support of the Company’s
employee benefit and compensation programs and (c) through
the use of the proceeds of a substantially contemporaneous sale
of junior stock), during a dividend period, unless, in each
case, the full dividends for the most recent dividend payment
date on all outstanding shares of Series A Preferred Stock
and any parity stock have been paid or declared and a sum
sufficient for the payment of those dividends has been set aside
for future payment.
Subject to certain conditions, the certificate of designations
on the Series A Preferred Stock prohibits the declaration
of dividends on the Series A Preferred Stock if:
(1) Tangible Equity Amount (as such term is defined in the
certificate of designations) is less than 5.5% of Total Managed
Assets (as such term is defined in the certificate of
designations) for most recently completed quarter end or
(2) Average Four Quarters Fixed Charge Ratio (as such term
is defined in the certificate of designations) for most recently
completed quarter end is less than 1.10.
Redemption/maturity. No stated maturity date.
Not redeemable prior to September 15, 2010. Redeemable
thereafter at $25 per share at the option of the Company.
Liquidation Rights. In the event of any
dissolution, liquidation or winding up of the Company, holders
of Series A Preferred Stock and any parity stock are
entitled to receive out of the assets of the Company available
for distribution to stockholders, after satisfaction of
liabilities to creditors, if any, and before any distribution of
assets is made on the Company’s common stock and any junior
stock, a liquidating distribution in the amount of $25 per share
plus any declared and unpaid dividends, without the accumulation
of any undeclared dividends.
Preemptive rights. None.
157
Non-Cumulative
Preferred Stock, Series B
Voting rights. The Series B Preferred
Stock has no voting rights, other than class voting on certain
matters that could adversely affect the Series B Preferred
Stock. A two-thirds vote of the outstanding Series B
Preferred Stock and all other series of voting preferred stock
entitled to vote thereon is required to create or increase any
class of stock ranking senior to the Series B Common Stock;
to materially and adversely affect the special rights,
preferences, privileges and voting powers of the Series B
Preferred Stock; or to consummate certain mergers,
consolidations or reclassifications where the Series B
Preferred Stock does not remain outstanding or is not converted
into preference securities of a surviving entity, or has terms
materially less favorable than the existing rights, preferences,
privileges and voting powers of the Series B Preferred
Stock. Certain events are expressly deemed not to be adverse,
however, including: the distribution of the Company’s
assets upon liquidation; the creation of stock ranking equally
or junior to the Series B Preferred Stock; the increase of
authorized but not issued shares of any series of Preferred
Stock, and the increase of authorized or issued shares of the
Series B Preferred Stock. If dividends on the Series B
Preferred Stock have not been declared and paid for an aggregate
of six dividend periods or more, whether or not consecutive, the
holders of 20% or more of the Series B Preferred stock may
call a special meeting of the Company’s board, in which the
number of directors on the Company’s board of directors
will automatically be increased by two and the holders of such
Series B Preferred Stock, voting together as a single class
with holders of any and all other series of voting preferred
stock then outstanding, will be entitled to vote for the
election of a total of two additional members of the
Company’s board of directors subject to certain conditions.
Whether the vote of a plurality, majority or other portion of
the shares of Series B Preferred Stock and all other series
of voting preferred stock entitled to vote on a matter has been
cast or given will be determined by the liquidation preference
of the Series B Preferred Stock and such other series of
voting preferred stock.
If and when dividends for at least four dividend periods,
whether or not consecutive, following a nonpayment of dividends
have been paid in full, or declared and a sum sufficient for
such payment is set aside, the holders of the Series B
Preferred Stock will immediately be divested of the foregoing
voting rights, subject to the revesting of such rights in the
event of each subsequent nonpayment and the term of office of
each preferred stock director so elected will terminate and the
number of directors on the Company’s board of directors
will automatically decrease by two.
Dividends. Non-cumulative cash dividends paid
at an annual fixed-rate of 5.189% through and including
September 15, 2010 and after September 15, 2010, at
the applicable adjustable rate as specified in the certificate
of designations; payable quarterly in arrears, when and if
declared by the board of directors. So long as any share of
Series B Preferred Stock remains outstanding, (1) no
dividend will be declared and paid on any common stock or any
junior stock (other than dividends payable solely in junior
stock) and (2) no shares of common stock or junior stock
will be purchased, redeemed, or otherwise acquired for
consideration by the Company, directly or indirectly (other than
as (a) a result of a reclassification of junior stock for
or into other junior stock, or the exchange or conversion of one
share of junior stock for or into another share of junior stock,
(b) repurchases in support of the Company’s employee
benefit and compensation programs and (c) through the use
of the proceeds of a substantially contemporaneous sale of
junior stock), during a dividend period, unless, in each case,
the full dividends for the most recent dividend payment date on
all outstanding shares of Series B Preferred Stock and any
parity stock have been paid or declared and a sum sufficient for
the payment of those dividends has been set aside for future
payment.
Subject to certain conditions, the certificate of designations
on the Series B Preferred Stock prohibits the declaration
of dividends on the Series B Preferred Stock if:
(1) Tangible Equity Amount (as such term is defined in the
certificate of designations) is less than 5.5% of Total Managed
Assets (as such term is defined in the certificate of
designations) for most recently completed quarter end or
(2) Average Four Quarters Fixed Charge Ratio (as such term
is defined in the certificate of designations) for most recently
completed quarter end is less than 1.10.
Redemption/maturity. No stated maturity date.
Not redeemable prior to September 15, 2010. Redeemable
thereafter at $100 per share at the option of the Company.
158
Liquidation Rights. In the event of any
dissolution, liquidation or winding up of the Company, holders
of Series B Preferred Stock and any parity stock are
entitled to receive out of the assets of the Company available
for distribution to stockholders, after satisfaction of
liabilities to creditors, if any, and before any distribution of
assets is made on the Company’s common stock and any junior
stock, a liquidating distribution in the amount of $100 per
share plus any declared and unpaid dividends, without the
accumulation of any undeclared dividends.
Preemptive rights. None.
8.75%
Non-Cumulative Perpetual Convertible Preferred Stock,
Series C
Voting rights. The Series C Preferred
Stock has no voting rights, other than class voting on certain
matters that could adversely affect the Series C Preferred
Stock. A two-thirds vote of the outstanding Series C
Preferred Stock and all other series of voting preferred stock
entitled to vote thereon is required to create or increase any
class of stock ranking senior to the Series C Common Stock;
to materially and adversely affect the special rights,
preferences, privileges and voting powers of the Series C
Preferred Stock; or to consummate certain mergers,
consolidations or reclassifications where the Series C
Preferred Stock does not remain outstanding or is not converted
into preference securities of a surviving entity, or has terms
materially less favorable than the existing rights, preferences,
privileges and voting powers of the Series C Preferred
Stock. Certain events are expressly deemed not to be adverse,
however, including: the distribution of the Company’s
assets upon liquidation; the creation of stock ranking equally
or junior to the Series C Preferred stock; the increase of
authorized but not issued shares of any series of Preferred
Stock, and the increase of authorized or issued shares of the
Series C Preferred Stock. If dividends on the Series C
Preferred Stock have not been declared and paid for an aggregate
of six dividend periods or more, whether or not consecutive, the
holders of 20% or more of the Series C Preferred Stock may
call a special meeting of the Company’s board, in which the
number of directors on the Company’s board of directors
will automatically be increased by two and the holders of such
Series C Preferred Stock, voting together as a single class
with holders of any and all other series of voting preferred
stock then outstanding, will be entitled to vote for the
election of a total of two additional members of the
Company’s board of directors subject to certain conditions.
Whether the vote of a plurality, majority or other portion of
the shares of Series C Preferred Stock and all other series
of voting preferred stock entitled to vote on a matter has been
cast or given will be determined by the liquidation preference
of the Series C Preferred Stock and such other series of
voting preferred stock.
If and when dividends for at least four dividend periods,
whether or not consecutive, following a nonpayment of dividends
have been paid in full, or declared and a sum sufficient for
such payment is set aside, the holders of the Series C
Preferred Stock will immediately be divested of the foregoing
voting rights, subject to the revesting of such rights in the
event of each subsequent nonpayment and the term of office of
each preferred stock director so elected will terminate and the
number of directors on the Company’s board of directors
will automatically decrease by two.
Dividends. Non-cumulative cash dividends paid
at an annual fixed-rate of 8.75%; payable quarterly in arrears,
when and if declared by the board of directors. So long as any
share of Series C Preferred Stock remains outstanding, (A)
(1) no dividend will be declared and paid on any junior
stock (other than dividends payable solely in junior stock) and
(2) no shares of junior stock will be purchased, redeemed,
or otherwise acquired for consideration by the Company, directly
or indirectly (other than as (a) a result of a
reclassification of junior stock for or into other junior stock,
or the exchange or conversion of one share of junior stock for
or into another share of junior stock, (b) repurchases in
support of the Company’s employee benefit and compensation
programs and (c) through the use of the proceeds of a
substantially contemporaneous sale of junior stock), during a
dividend period, unless, in each case, the full dividends for
the most recent dividend payment date on all outstanding shares
of Series C Preferred Stock and any parity stock have been
paid or declared and a sum sufficient for the payment of those
dividends has been set aside and (B) no dividend will be
declared and paid on any parity stock, unless, the full
dividends for the then-current dividend payment date on all
outstanding shares of Series C Preferred Stock have been
paid or declared and a sum sufficient for the payment of those
dividends has been set aside for future payment.
159
Redemption/maturity. Not redeemable by the
Company at any time.
Conversion into Common Stock. On or after
June 20, 2015, if the closing price of the Company’s
common stock exceeds 150% of the then-applicable conversion
price for 20 trading days (whether or not consecutive) during
any period of 30 consecutive trading days, the Company may at
its option cause some or all of the Series C Preferred
Stock to be converted into common stock at the then applicable
conversion rate.
Pursuant to the terms of the conversion into Common Stock, no
Series C Preferred Stock holder is entitled to receive
shares of Common stock upon conversion to the extent such
receipt would cause such holder to become beneficial owner of
more than 9.9% of the shares of Common Stock outstanding.
The Series C Preferred Stock may be converted at any time,
at the option of the holder, into 3.9526 shares of the
Company’s common stock, plus cash in lieu of fractional
shares, subject to anti-dilution adjustments. Also, in the event
(i) a “person” or a “group” within the
meaning of Section 13(d)(3) of the Exchange Act becomes the
direct or indirect beneficial owner of shares of the
Company’s common stock representing more than 50% of the
voting power or (ii) subject to certain conditions,
consummation of the consolidation or merger of the Company or a
similar transaction or any sale, lease, or other transfer of all
or substantially all of the Company’s and its
subsidiaries’ consolidated assets, taken as a whole, each
holder, upon each of the above acquisitions, has the option to
convert and receive shares of common stock at a rate specified
in the certificate of designations. In addition, in the event of
certain fundamental changes, including delisting of the
Company’s common stock, each holder, upon the occurrence of
such fundamental change, can elect to convert each share of the
Series C Preferred Stock at a specified adjusted conversion
price set forth in the certificate of designations.
In the event of (i) a consolidation or merger with or into
another person pursuant to which the Company’s common stock
will be converted into cash, securities, or other property of
the Company or another person (ii) any sale, transfer,
lease, or conveyance to another person of all or substantially
all of the Company’s property and assets, in each case
pursuant to which the Company’s common stock will be
converted into cash, securities, or other property; or
(iii) any statutory exchange of the Company’s
securities with another person (other than in connection with a
merger or acquisition), each share of Series C Preferred
Stock outstanding immediately prior to each of the above
reorganization events will, without the consent of the holders
of the Series C Preferred Stock, become convertible into
the kind and amount of securities, cash, and other property or
assets that a holder of a number of shares of common stock equal
to the conversion rate per share of Series C Preferred
Stock prior to such reorganization event would have owned or
been entitled to receive upon such reorganization event.
Liquidation Rights. In the event of any
dissolution, liquidation or winding up of the Company, holders
of Series C Preferred Stock and any parity stock are
entitled to receive out of the assets of the Company available
for distribution to stockholders, after satisfaction of
liabilities to creditors, if any, and before any distribution of
assets is made on the Company’s common stock and any junior
stock, a liquidating distribution in the amount of $50 per share
plus any declared and unpaid dividends, without the accumulation
of any undeclared dividends.
Preemptive rights. None.
Fixed
Rate Cumulative Perpetual Preferred Stock,
Series D
Voting rights. The Series D Preferred
Stock has no voting rights, other than class voting on certain
matters that could adversely affect the Series D Preferred
Stock. The Series D Preferred Stock has the right to vote
as a single class on certain charter amendments and
reclassification transactions that affect the Series D
Preferred Stock. Certain events are expressly deemed not to be
adverse, however, including: the distribution of the
Company’s assets upon liquidation; the creation of stock
ranking equally or junior to the Series D Preferred Stock;
the increase of authorized but not issued shares of stock
ranking equally or junior to the Series D Preferred Stock;
the increase of authorized but not issued shares of any series
of Preferred Stock, and the increase of authorized or issued
shares of the Series D Preferred Stock. If dividends on the
Series D Preferred Stock have not been declared and paid
for an aggregate of six dividend periods or more, whether or
160
not consecutive, the holders of 20% or more of the Series C
Preferred Stock may call a special meeting of the Company’s
board, in which the number of directors on the Company’s
board of directors will automatically be increased by two and
the holders of such Series D Preferred Stock, voting
together as a single class with holders of any and all other
series of voting parity stock then outstanding, will be entitled
to vote for the election of a total of two additional members of
the Company’s board of directors subject to certain
conditions. The two directors will be elected annually and will
serve until all accrued and unpaid dividends for all past
dividend periods on the Series D Preferred Stock have been
paid in full.
Dividends. Cumulative dividends on the
Series D Preferred Stock will accrue on the liquidation
preference at a rate of 5% per annum for the first five years,
and at a rate of 9% per annum thereafter, but will be paid only
when declared by the Company’s board of directors; payable
quarterly in arrears. So long as any share of Series D
Preferred Stock remains outstanding, (1) no dividend will
be declared or paid on any common stock, junior stock (other
than dividends payable solely in shares of common stock) or
parity stock and (2) no common stock, junior stock or
parity stock will be, directly or indirectly, purchased,
redeemed or otherwise acquired for consideration by the Company
or any of its subsidiaries unless, all accrued and unpaid
dividends for all past dividend periods on all outstanding
shares of Series D Preferred Stock have been paid or
declared and a sum sufficient for the payment of those dividends
has been set aside. The foregoing limitation shall not apply to
(i) redemptions, purchases or other acquisitions of shares
of common stock or other junior stock in connection with the
administration of any employee benefit plan in the ordinary
course of business (including purchases to offset the Share
Dilution Amount (as such term is defined in the certificate of
designations) pursuant to a publicly announced repurchase plan)
and consistent with past practice, provided that
any purchases to offset the Share Dilution Amount shall in no
event exceed the Share Dilution Amount; (ii) purchases or
other acquisitions by a broker-dealer subsidiary of the Company
solely for the purpose of market-making, stabilization or
customer facilitation transactions in junior stock or parity
stock in the ordinary course of its business;
(iii) purchases by a broker-dealer subsidiary of the
Company of capital stock of the Company for resale pursuant to
an offering by the Company of such capital stock underwritten by
such broker-dealer subsidiary; (iv) any dividends or
distributions of rights or junior stock in connection with a
stockholders’ rights plan or any redemption or repurchase
of rights pursuant to any stockholders’ rights plan;
(v) the acquisition by the Company or any of its
subsidiaries of record ownership in junior stock or parity stock
for the beneficial ownership of any other persons (other than
the Company any of its subsidiaries), including as trustees or
custodians; and (vi) the exchange or conversion of junior
stock for or into other junior stock or of parity stock for or
into other parity stock (with the same or lesser aggregate
liquidation amount) or junior stock, in each case, solely to the
extent required pursuant to binding contractual agreements
entered into prior to December 23, 2008 or any subsequent
agreement for the accelerated exercise, settlement or exchange
thereof for common stock.
Redemption/maturity. No stated maturity date.
After the date that is three years from the date of issuance of
the Series D Preferred Stock, the Company may, at its
option, redeem, in whole or in part, from time to time, the
Series D Preferred Stock then outstanding. Prior to this
date, the Company may redeem the Series D Preferred Stock
if (i) the Company has raised aggregate gross proceeds in
one or more Qualified Equity Offerings (as defined in the
Purchase Agreement for such Series D Preferred Stock and
set forth below) of not less than the Minimum Amount (as defined
in the Purchase Agreement) and (ii) the aggregate
redemption price does not exceed the aggregate net cash proceeds
from such Qualified Equity Offerings. Any redemption of the
Series D Preferred Stock shall be at a redemption price
equal to (i) the liquidation preference per share plus
(ii) any accrued and unpaid dividends. Holders of the
Series D Preferred Stock do not have any right to require
the redemption or repurchase of any shares of the Series D
Preferred Stock. Any redemption of the Series D Preferred
Stock is subject to the consent of the Board of Governors of the
Federal Reserve System. A “Qualified Equity Offering”
means the sale and issuance for cash by the Company, to persons
other than the Company or any Company subsidiary, after
December 31, 2008, of shares of any and all series of
perpetual preferred stock of the Company, including the
Series D Preferred Stock, common stock or any combination
of such stock, that, in each case, qualify as and may be
included in Tier 1 Capital of the Company at the time of
issuance under the applicable risk-based capital guidelines of
the Board of Governors of the Federal Reserve System (other than
any such sales and issuances made pursuant to agreements or
161
arrangements entered into, or pursuant to financing plans which
were publicly announced on or prior to October 13, 2008).
Liquidation Rights. In the event of any
dissolution, liquidation or winding up of the Company, holders
of Series D Preferred Stock are entitled to receive out of
our assets available for distribution to stockholders, after
satisfaction of liabilities to creditors, if any, and before any
distribution of assets is made on the Company’s common
stock and any junior stock, a liquidating distribution in the
amount of $1000 per share plus any declared and unpaid dividends.
Preemptive rights. None.
New
Preferred Stock
See “Description of the New Preferred Stock” for a
description of the terms of the New Preferred Stock to be issued
in connection with the Offers.
Tax
Benefits Preservation Plan
On August 13, 2009, we entered into a Tax Benefits Preservation
Plan. The purpose of the Tax Benefits Preservation Plan is to
protect our ability to utilize our net operating losses and
other tax attributes to offset future income. Our ability to
utilize our tax attributes in the future could be limited if we
undergo an “ownership change” for U.S. federal
income tax purposes. An ownership change is generally defined as
a greater than 50 percentage point increase in equity
ownership by five-percent shareholders in any three-year period.
The Tax Benefits Preservation Plan is designed to reduce the
likelihood of an ownership change by, among other things,
discouraging any person or group from becoming a 5% stockholder
and dissuading existing 5% stockholders from acquiring
additional shares of our stock.
Under the Tax Benefits Preservation Plan, one preferred share
purchase right (a “Right”) was distributed as a
dividend for each share of our common stock held by stockholders
of record as of the close of business on August 24, 2009. Each
Right entitles the registered holder to purchase from us one
one-millionth of a share of a series of our preferred stock
designated as Junior Participating Preferred Stock, Series E at
a price of $15 per unit, subject to adjustment.
The Rights will be triggered in any instance of a person or
group becoming an “Acquiring Person” (as defined in
the Tax Benefits Preservation Plan) without first obtaining
approval of at least a majority of the members of our Board of
Directors, unless the Board of Directors determines the
person’s status as an Acquiring Person does not jeopardize
or endanger our utilization of our tax attributes. The Rights
will not be triggered in connection with an issuance of
securities by us that was approved by our Board of Directors,
including the Offers or Plan of Reorganization. If triggered,
each Right will entitle the holder (other than the person or
group that caused the Rights to become exercisable) to purchase
our common stock at a 50% discount to the then market price; and
the Rights owned by the Acquiring Person or group become void.
Alternatively, if the rights are triggered, our Board of
Directors may decide instead to exchange all or part of the
exercised Rights (other than those held by the Acquiring Person)
for shares of our common stock. The Rights will expire at 5:00
p.m. (New York City time) on August 24, 2019 unless such date is
extended or the Rights are earlier redeemed or exchanged by us.
Other than the Tax Benefits Preservation Plan, the Company does
not have any other rights plan or “poison pill.”
162
VOTING
AGENT, EXCHANGE AGENT, INFORMATION AGENT,
SWISS NOTE TENDER AGENT AND FINANCIAL ADVISORS
In connection with the Offers, CIT and Delaware Funding have
retained Financial Balloting Group LLC to act as voting agent
and exchange agent, D.F. King & Co., Inc. as information
agent, Banc of America Securities LLC and Citigroup Global
Markets Inc. as financial advisors, and UBS AG to act as Swiss
Note Tender Agent (together the “Agents”), each of
which will receive customary fees for their services. CIT and
Delaware Funding have agreed to reimburse each of the
Agents’ respective out-of-pocket expenses and to indemnify
each Agent against certain liabilities, including liabilities
under federal securities laws and to contribute to payments that
such Agent may be required to make in respect thereof. No fees
or commissions have been or will be paid by CIT to any broker,
dealer or other person, other than the Agents, in connection
with the Offers or the solicitation of acceptances of the Plan
of Reorganization.
Questions and requests for assistance or additional copies of
this Offering Memorandum and Disclosure Statement or the related
Letter of Transmittal
and/or
Ballot may be directed to the information agent. The contact
information for the information agent is set forth on the back
cover of this Offering Memorandum and Disclosure Statement.
Holders of Old Notes may also contact their broker, dealer,
custodian bank, depository, trust company or other nominee for
assistance concerning the Offers.
Letters of transmittal and/or Ballots and all correspondence in
connection with an Offer should be sent or delivered to the
exchange agent in accordance with the instructions contained in
Letter of Transmittal and/or Ballot. Any holder or beneficial
owner that has questions concerning tender procedures should
contact the information agent at telephone numbers set forth on
the back cover of this Offering Memorandum and Disclosure
Statement.
None of the Agents assumes any responsibility for the accuracy
or completeness of the information concerning CIT or Delaware
Funding contained or incorporated by reference in this Offering
Memorandum and Disclosure Statement or for any failure by CIT or
Delaware Funding to disclose events that may have occurred and
may affect the significance or accuracy of such information.
163
THE PLAN
OF REORGANIZATION
CIT AND DELAWARE FUNDING HAVE NOT COMMENCED CHAPTER 11
CASES, NOR HAVE THEY TAKEN ANY CORPORATE ACTION AUTHORIZING THE
COMMENCEMENT OF SUCH CASES. IF THE OFFERS ARE NOT CONSUMMATED,
CIT AND DELAWARE FUNDING MAY COMMENCE CHAPTER 11 CASES
UNDER THE BANKRUPTCY CODE TO RESTRUCTURE THEIR FINANCIAL
AFFAIRS. THIS OFFERING MEMORANDUM AND DISCLOSURE STATEMENT
SOLICITS YOUR ADVANCE ACCEPTANCE OF THE PLAN OF REORGANIZATION,
A COPY OF WHICH IS ATTACHED TO THIS OFFERING MEMORANDUM AND
DISCLOSURE STATEMENT AS APPENDIX C, AND WHICH CONTAINS
IMPORTANT INFORMATION RELEVANT TO YOUR DECISION TO ACCEPT THE
PLAN OF REORGANIZATION. PLEASE READ THE PLAN OF REORGANIZATION
COMPLETELY AND CAREFULLY.
To enhance the likelihood that we will succeed in our
restructuring efforts, we have formulated the Plan of
Reorganization for our reorganization under Chapter 11 of
the Bankruptcy Code. The Plan of Reorganization covers CIT Group
Inc. and Delaware Funding (together, the “Filing
Entities”) (and not any of their operating subsidiaries),
and provides the treatment set forth below to holders of claims
against and interests in CIT and Delaware Funding, which
treatment differs in certain material respects from the
treatment provided pursuant to the Offers. In the event that the
conditions to the Offers are not satisfied or waived, or if we
for any reason believe that it would be more advantageous or
expeditious to pursue, and there is sufficient support for, the
Plan of Reorganization, the Filing Entities may seek to file a
case under Chapter 11 of the Bankruptcy Code. If the Plan
of Reorganization is confirmed and consummated, all holders of
claims against and interests in CIT and Delaware Funding would
receive the treatment set forth below, whether or not they vote
for acceptance of the Plan of Reorganization.
The statements contained in this Offering Memorandum and
Disclosure Statement include summaries of the provisions
contained in the Plan of Reorganization and in documents
referred to therein. The statements contained in this Offering
Memorandum and Disclosure Statement do not purport to be precise
or complete statements of all the terms and provisions of the
Plan of Reorganization or documents referred to therein, and
reference is made to the Plan of Reorganization and to such
documents for the full and complete statements of such terms and
provisions.
The Plan of Reorganization itself and the documents referred to
therein control the actual treatment of Claims against and
Interests in the Filing Entities under the Plan of
Reorganization and will, upon the Effective Date, be binding
upon all holders of Claims against and Interests in the Filing
Entities and the Estates, the Reorganized Debtors and other
parties in interest. In the event of any conflict between this
Offering Memorandum Disclosure Statement, on the one hand, and
the Plan of Reorganization or any other operative document
thereunder, on the other hand, the terms of the Plan of
Reorganization and such other operative document(s) are
controlling.
In the event that Delaware Funding does not obtain sufficient
votes to confirm the Plan of Reorganization, Delaware Funding
expressly reserves the right to forgo filing a petition for
relief under the Bankruptcy Code (as defined herein), to
withdraw the Plan of Reorganization solely with respect to
Delaware Funding, to dismiss or convert any pending bankruptcy
case Delaware Funding or any other appropriate actions and the
Plan of Reorganization, to the extent confirmed, shall be solely
with respect to CIT Group Inc.
WE HAVE NOT MADE ANY DECISION AT THIS TIME TO COMMENCE ANY
CHAPTER 11 CASES, AND RESERVE ALL OF OUR RIGHTS TO PURSUE
ANY AND ALL OF OUR STRATEGIC ALTERNATIVES IN THE EVENT THE
OUT-OF-COURT ALTERNATIVE IS NOT CONSUMMATED.
Glossary
Set forth below is a glossary of certain terms used in the
description of the Plan of Reorganization. To the extent that
terms are defined differently in the Glossary and elsewhere in
this Offering Memorandum and Disclosure Statement, for the
purposes of this section only, the definitions in this Glossary
are controlling. To the extent not defined in this Glossary or
otherwise defined in this Offering Memorandum and Disclosure
164
Statement, capitalized terms used in the description of the Plan
of Reorganization have the meanings ascribed to them in
Article I of the Plan of Reorganization attached hereto as
Appendix C.
1.1 “2005
5-Year
Unsecured Credit Agreement” means the
5-Year
Credit Agreement, dated as of April 13, 2005, by and among
CIT Group Inc., Citigroup Global Markets Inc., as joint lead
arranger and bookrunner, Banc of America Securities LLC, as
joint lead arranger and bookrunner, Citibank, N.A., as
administrative agent, Bank of America, N.A. and JPMorgan Chase
Bank, N.A., as syndication agents, Barclays Bank plc, as
documentation agent and the Lenders party thereto.
1.2 “2005 Syndicated Term Loan Agreement”
means the JPY 20 Billion Syndicated Term Loan Agreement,
dated as of September 30, 2005, by and among CIT Group
Inc., Mizuho Corporate Bank, Ltd. as arranger, initial lender
and agent and the Lenders party thereto.
1.3 “2006
5-Year
Unsecured Credit Agreement” means the
5-Year
Credit Agreement, dated as of December 6, 2006, by and
among CIT Group Inc., Citigroup Global Markets Inc., as joint
lead arranger and bookrunner, Barclays Capital, as joint lead
arranger and bookrunner, Citibank, N.A., as administrative
agent, Barclays Bank plc, as syndication agent, Bank of America,
N.A., and JPMorgan Chase Bank, N.A., as co-documentation agents
and the Lenders party thereto.
1.4 “2006
5-Year Term
Loan Agreement” means the $100,000,000 Five-Year Term
Loan Agreement, dated as of September 29, 2006, by and
among CIT Group Inc., Mizuho Corporate Bank, Ltd. as arranger,
initial lender and agent and the Lenders party thereto.
1.5 “2010 Canadian Senior Unsecured Notes”
means the 4.65% Notes due July 1, 2010, issued by CIT
Group Funding Company of Canada (n/k/a Delaware Funding) and
guaranteed by CIT Group Inc., pursuant to the Indenture dated as
of May 31, 2005.
1.6 “2011 Canadian Senior Unsecured Notes”
means the 5.60% Notes due November 2, 2011, issued by
CIT Group Funding Company of Canada (n/k/a Delaware Funding) and
guaranteed by CIT Group Inc., pursuant to Indenture dated as of
November 1, 2006.
1.7 “2015 Canadian Unsecured Notes” means
the 5.20% Senior Notes due June 1, 2015, issued by CIT
Group Funding Company of Canada (n/k/a Delaware Funding) and
guaranteed by CIT Group Inc., pursuant to the Indenture dated as
of May 31, 2005.
1.8 “2015 Hybrid Convertible/Equity Notes”
means the equity units offered by CIT Group Inc. with a stated
amount of $25, which equity units consist of a forward purchase
contract issued by CIT Group Inc. and, initially, a
1/40
undivided beneficial ownership interest in a $1,000 principal
amount senior note due November 15, 2015 issued by the CIT
Group Inc.
1.9 “Administrative Claim” means a Claim
arising under Bankruptcy Code section 507(a)(2) for costs
and expenses of administration of the Chapter 11 Cases
under Bankruptcy Code sections 503(b), 507(b), or
1114(e)(2), including (a) any actual and necessary costs
and expenses, incurred after the Petition Date, of preserving
the Estate and operating the business of the Filing Entities
(such as wages, salaries and commissions for services and
payments for goods, leased equipment and premises) and
(b) all other claims entitled to administrative claim
status pursuant to a Final Order of the Bankruptcy Court,
including Professional Fee Claims.
1.10 “Allowed” means, with respect to a
Claim within a particular Class, an Allowed Claim of the type
described in such Class.
1.11 “Allowed Claim” means a Claim
(i) as to which no objection or request for estimation has
been filed on or before the Claims Objection Deadline or the
expiration of such other applicable period fixed by the
Bankruptcy Court or the Plan of Reorganization; (ii) as to
which any objection has been settled, waived, withdrawn or
denied by a Final Order or in accordance with the Plan of
Reorganization; or (iii) that is allowed (a) by a
Final Order, (b) by an agreement between the holder of such
Claim and the Filing Entities or the Reorganized Debtors or
(c) pursuant to the terms of the Plan of Reorganization;
provided, however, that, notwithstanding anything
in the Plan of Reorganization to the contrary, by treating a
Claim as an “Allowed
165
Claim” under (i) above (the expiration of the Claims
Objection Deadline or other applicable deadline), the Filing
Entities do not waive their rights to contest the amount and
validity of any disputed, contingent
and/or
unliquidated Claim in the time, manner and venue in which such
Claim would have been determined, resolved or adjudicated if the
Chapter 11 Cases had not been commenced. An Allowed Claim
(i) includes a Disputed Claim to the extent such Disputed
Claim becomes Allowed after the Effective Date and
(ii) shall be net of any valid setoff exercised with
respect to such Claim pursuant to the provisions of the
Bankruptcy Code and applicable law. Unless otherwise specified
in the Plan of Reorganization, in section 506(b) of the
Bankruptcy Code or by Final Order of the Bankruptcy Court,
“Allowed Claim” shall not, for purposes of
distributions under the Plan of Reorganization, include interest
on such Claim accruing from and after the Petition Date.
1.12 “Australian Senior Unsecured Notes”
means (i) those certain 6.00% fixed rate notes due
March 3, 2011 issued by CIT Group (Australia) Limited and
guaranteed by CIT Group Inc. and (ii) those certain
3 month BBSW plus 34 bp Floating Rate Notes due
March 3, 2011 issued by CIT Group (Australia) Limited and
guaranteed by CIT Group Inc.
1.13 “Australian Senior Unsecured Note
Claim” means a Claim on account of the Australian
Senior Unsecured Notes.
1.14 “Ballot(s)” means each of the ballot forms
distributed to each Holder of a Claim or Interest entitled to
vote to accept or reject the Plan of Reorganization.
1.15 “Bankruptcy Code” means title 11
of the United States Code,
11 U.S.C. §§ 101-1532,
as now in effect or hereafter amended.
1.16 “Bankruptcy Court” means the United
States Bankruptcy Court for the Southern District of New York or
any other court with jurisdiction over the Chapter 11 Cases.
1.17 “Bankruptcy Rules” means,
collectively, the Federal Rules of Bankruptcy Procedure, the
Official Bankruptcy Forms, the Federal Rules of Civil Procedure,
and the Local Rules of Bankruptcy Practice and Procedure of the
United States Bankruptcy Court for the Southern District of New
York, as now in effect or hereafter amended, as applicable to
the Chapter 11 Cases or proceedings therein, as the case
may be.
1.18 “Board” shall have the meaning set
forth in Article IV.L of the Plan of Reorganization.
1.19 “Business Day” means any day,
excluding Saturdays, Sundays or “legal holidays” (as
defined in Bankruptcy Rule 9006(a)), on which commercial
banks are open for business in New York, New York.
1.20 “Canadian Senior Unsecured Notes”
means the 2010 Canadian Senior Unsecured Notes, the 2011
Canadian Senior Unsecured Notes and the 2015 Canadian Senior
Unsecured Notes.
1.21 “Canadian Senior Unsecured Note
Claim” means a Claim on account of the Canadian Senior
Unsecured Notes.
1.22 “Canadian Senior Unsecured Note
Exchange” shall have the meaning ascribed to it in
Article IV.A of the Plan of Reorganization.
1.23 “Canadian Senior Unsecured Note Guarantee
Claim” means a Claim on account of CIT Group
Inc.’s guarantee of the Canadian Senior Unsecured Notes.
1.24 “Canadian Senior Unsecured Note
Indentures” means (1) the Indenture by and between
CIT Group Funding Company of Canada, as Issuer, CIT Group Inc.,
as Guarantor, and JPMorgan Chase Bank, N.A., as Trustee, dated
as of May 31, 2005 (as amended and supplemented), under
which the 4.65% Senior Notes due July 1, 2010 and the
5.20% Senior Notes due June 1, 2015 were issued, and
(2) the Indenture by and between CIT Group Funding Company
of Canada, as Issuer, CIT Group Inc., as Guarantor, and Bank of
New York, as Trustee, dated as of November 1, 2006 (as
amended and supplemented), under which the 5.60% Senior
Notes due November 2, 2011 were issued.
1.25 “Canadian Senior Unsecured Note
Litigation” means (i) that certain litigation
instituted in the United States District Court for the Southern
District of New York, captioned ACP Master, Ltd. et al. v.
CIT Group Funding Company of Delaware, LLC, Civil Action
No. 09 CIV 8144 and filed on or about
166
September 23, 2009 and (ii) that certain litigation
instituted in the Court of Chancery of the State of Delaware,
captioned Aurelius Capital Master, Ltd. et al. v. Votek
et al., Case
No. 4914-
and filed on or about September 23, 2009 by certain holders
of Canadian Senior Unsecured Notes.
1.26 “Cash” means legal tender of the
United States or equivalents thereof.
1.27 “Cash Collateralization” shall have
the meaning set forth in Article III.G.6 of the Plan of
Reorganization.
1.28 “Chapter 11 Cases” means the
chapter 11 cases of the Filing Entities.
1.28 “Claim” means a claim, as defined in
section 101(5) of the Bankruptcy Code, against the Filing
Entities.
1.29 “Claims Objection Deadline” means the
first Business Day that is the latest of (i) the Effective
Date; (ii) as to a particular Claim, 180 days after
the filing of a proof of claim, or request for payment of, such
Claim; or (iii) such other date as may be established by
the Bankruptcy Court.
1.30 “Class” means one of the classes of
Claims or Interests listed in Article III of the Plan of
Reorganization.
1.31 “Class 8-11
Excess Value Amount” shall have the meaning ascribed to
it in Article IV.H of the Plan of Reorganization.
1.32 “Class 8-11
Par Recovery Amount” means the amount, measured as
of the Petition Date, that would imply a recovery to holders of
Long-Dated Senior Unsecured Note Claims, Senior Unsecured Note
Claims, Senior Unsecured Term Loan Claims and Senior Unsecured
Credit Agreement Claims equal to one hundred percent (100%) of
the amount of Allowed Claims of all such Classes in the
aggregate.
1.33 “Class 8-11
Securities” means New Notes and New Common Interests
distributed to holders of Long-Dated Senior Unsecured Note
Claims, Senior Unsecured Note Claims, Senior Unsecured Term Loan
Claims and Senior Unsecured Credit Agreement Claims pursuant to
Articles III.G.8, III.G.9, III.G.10 and III.G.11
and Articles IV.B, IV.C, IV.D and IV.E of the Plan of
Reorganization.
1.34 “Class 12 Par Recovery
Amount” means the amount, measured as of the Petition
Date, that would imply a recovery to holders of Senior
Subordinated Note Claims equal to one hundred percent (100%) of
the amount of the Allowed Claim of such Class.
1.35 “Class 13 Par Recovery
Amount” means the amount, measured as of the Petition
Date, that would imply a recovery to holders of Junior
Subordinated Note Claims equal to one hundred percent (100%) of
the amount of the Allowed Claim of such Class.
1.36 “Class 15 Par Recovery Amount”
means the amount, measured as of the Petition Date, equal to the
aggregate combined liquidation preference of the Old Preferred
Interests, plus accrued and unpaid dividends thereon.
1.37 “Collateral” means any property or
interest in property of the Estate subject to a lien or security
interest to secure the payment or performance of a Claim, which
lien or security interest is not subject to avoidance under the
Bankruptcy Code or otherwise invalid under the Bankruptcy Code
or applicable law.
1.38 “Committee” means any official
committee appointed in the Chapter 11 Cases, as such
committee may be reconstituted from time to time.
1.39 “Confirmation Date” means the date of
entry of the Confirmation Order on the docket of the Bankruptcy
Court.
1.40 “Confirmation Hearing” means the
Bankruptcy Court’s hearing to consider confirmation of the
Plan of Reorganization, as such hearing may be adjourned or
continued from time to time.
1.41 “Confirmation Order” means the
Bankruptcy Court’s order confirming the Plan of
Reorganization under section 1129 of the Bankruptcy Code.
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1.42 “Contingent Value Rights” shall have
the meaning ascribed to it in Article IV.H of the Plan of
Reorganization.
1.43 “Cure” means the payment of Cash by
the Filing Entities, or the distribution of other property (as
the parties may agree or the Bankruptcy Court may order), as
necessary to cure defaults under an executory contract or
unexpired lease of one or more of the Filing Entities and to
permit the Filing Entities to assume that contract or lease
under section 365(a) of the Bankruptcy Code.
1.44 “CVRs” shall have the meaning
ascribed to it in Article IV.H of the Plan of
Reorganization.
1.45 “D&O Claims” means any Claim
arising from the Filing Entities’ indemnification
obligations under their constituent documents or other written
agreements
and/or
pursuant to applicable general corporation law or other
applicable business organization law, including those Claims
described in Article VII.G of the Plan of Reorganization.
1.46 “Delaware Funding” means CIT Group
Funding Company of Delaware LLC (f/k/a CIT Group Funding Company
of Canada).
1.47 “DIP Facility” means any postpetition
debtor-in-possession
credit facility provided to the Filing Entities during the
Chapter 11 Cases pursuant to the DIP Facility Agreement.
1.48 “DIP Facility Agreement” means the
credit agreement and related security agreements, mortgages and
similar documents governing the DIP Facility by and between the
Filing Entities and the DIP Lender.
1.49 “DIP Facility Claim” means a Claim
arising under or as a result of the DIP Facility.
1.50 “DIP Lender” means the lender(s)
under the DIP Facility Agreement.
1.51 “Disallowed Claim” means any Claim
against the Filing Entities which has been disallowed, in whole
or in part, by Final Order or written agreement between the
Filing Entities and the holder of such Claim, to the extent of
such disallowance.
1.52 “Disbursing Agent” means the
Reorganized Debtors or any party designated by the Reorganized
Debtors, in their sole discretion, to serve as disbursing agent
under the Plan of Reorganization.
1.53 “Disputed Claim” means any Claim, or
any portion thereof, that is not an Allowed Claim or a
Disallowed Claim.
1.54 “Distribution Date” means the date,
occurring as soon as practicable after the Effective Date (but
in no event more than ten (10) Business Days thereafter),
on which the Disbursing Agent first makes distributions to
holders of Allowed Claims as provided in Article V of the
Plan of Reorganization.
1.55 “Early Electing Long-Dated Senior Unsecured
Note Claims Holder(s)” means a holder of a Long-Dated
Senior Unsecured Note Claim who makes election to either
(i) participate in the transactions contemplated by the
Offering Memorandum or (ii) receive the treatment set forth
in Article III.G.8.b.A of the Plan of Reorganization by the
Early Election Date.
1.56 “Early Election Date” means the
expiration date of the Offering Memorandum, which is currently
October 29, 2009 but is subject to extension.
1.57 “Electing Long-Dated Senior Unsecured Note
Claims Holder(s)” means a holder of a Long-Dated Senior
Unsecured Note Claim who makes election to either
(i) participate in the transactions contemplated by the
Offering Memorandum or (ii) receive the treatment set forth
in Article III.G.8.b.A of the Plan of Reorganization by
either the Early Election Date or the Late Election Date.
1.58 “Effective Date” means a date
selected by the Filing Entities, which date shall be on or after
the first Business Day on which all conditions to the
consummation of the Plan of Reorganization set forth in
Article X.A of the Plan of Reorganization have been
satisfied or waived.
1.59 “Estate” means the estate of each of
the Filing Entities in the Chapter 11 Cases, as created
under section 541 of the Bankruptcy Code.
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1.60 “Exchanges” shall have the meaning
ascribed to it in Article IV.G of the Plan of
Reorganization.
1.61 “Exit Facility” means any exit credit
facility provided to Reorganized CIT on the Effective Date
pursuant to the Exit Facility Agreement.
1.62 “Exit Facility Agreement” means the
credit agreement and related security agreements, mortgages and
similar documents governing the Exit Facility by and between
Reorganized CIT and the Exit Facility Lender.
1.63 “Exit Facility Documents” shall have
the meaning set forth in Article IV.J of the Plan of
Reorganization.
1.64 “Exit Facility Lender” means the
lender(s) under the Exit Facility Agreement.
1.65 “Fair Market Value” means, with
respect to any security as of the applicable Measurement Date,
(i) in the case of New Common Interests, (x) if such
security is listed or traded on a national securities exchange
for at least 10 consecutive Trading Days, the daily
volume-weighted average price of such security for the 10
consecutive Trading Days immediately preceding the Measurement
Date as reported by Bloomberg, L.P. (or, if no such price is
reported by Bloomberg, L.P. for any particular Trading Day
during such
10-Trading
Day period, the daily volume-weighted average price of such
security as officially reported for such Trading Day on the
principal securities exchange on which such security is then
listed or admitted to trading shall be used for purposes of
calculating such
10-day
volume-weighted average price), or (y) if such security is
not listed or admitted to trading on any national securities
exchange for at least 10 consecutive Trading Days, the fair
market value of such security as reasonably determined by the
Disbursing Agent, after consultation with a financial advisor,
on the basis of such information as it considers appropriate
(without regard to any illiquidity or minority discounts) and
(ii) in the case of the New Notes, (A) if bid and ask
quotations for such security are readily available and the
Disbursing Agent, after consultation with a financial advisor,
determines such quotations are a reliable indicator of the value
of such security, the average of the daily bid and ask
quotations of such securities for the 10 consecutive
Trading Days immediately preceding the applicable Measurement
Date, or (B) if bid and ask quotations for such security
are not readily available or the Disbursing Agent, after
consultation with a financial advisor, determines such
quotations are not a reliable indicator of value, the fair
market value of such security as reasonably determined by the
Disbursing Agent, after consultation with a financial advisor,
on the basis of such information as it considers appropriate.
1.66 “Federal Reserve” shall have the
meaning ascribed to it in Article IV.M of the Plan of
Reorganization.
1.67 “Final Order” means an order or
judgment, entered by the Bankruptcy Court or other court of
competent jurisdiction, that has not been amended, modified or
reversed, and as to which (i) no stay is in effect,
(ii) the time to seek rehearing, file a notice of appeal or
petition for certiorari has expired and (iii) no appeal,
request for a stay, petition seeking certiorari, or other review
is pending; provided, however, that the
possibility that a motion under section 502(j) of the
Bankruptcy Code, Rule 59 or 60 of the Federal Rules of
Civil Procedure, or any analogous rule (whether federal or
state) may be but has not then been filed with respect to such
order shall not cause such order not to be a Final Order.
1.68 “General Unsecured Claim” means a
Claim that is not a DIP Facility Claim, Administrative Claim,
Priority Tax Claim, Other Priority Claim, Other Secured Debt
Claim, Guarantee Claim, Canadian Senior Unsecured Note Claim,
Canadian Senior Unsecured Note Guarantee Claim, Long-Dated
Senior Unsecured Note Claim, Senior Unsecured Note Claim, Senior
Unsecured Term Loan Claim, Senior Unsecured Credit Agreement
Claim, Senior Subordinated Note Claim, Junior Subordinated Note
Claim, Subordinated 510(b) Claim.
1.69 “Guarantee” means a guarantee of
collection, payment, or performance, including a servicer
performance guaranty, made by the Filing Entities as to the
obligations of an affiliate or subsidiary of CIT Group Inc. but
not including CIT Group Inc.’s guarantee of the Canadian
Senior Unsecured Notes.
1.70 “Guarantee Claim” means a Claim
against the Filing Entities on account of a Guarantee (other
than the Canadian Senior Unsecured Note Guarantee Claim).
169
1.71 “Impaired” means, when used with
reference to a Claim or Interest, a Claim or Interest that is
impaired within the meaning of section 1124 of the
Bankruptcy Code.
1.72 “Intercompany Claim” means a
prepetition Claim by a Debtor or a non-Debtor affiliate against
another Debtor or non-Debtor affiliate.
1.73 “Intercompany Notes” means
(i) those three promissory notes issued, executed and
delivered by CIT Financial Ltd. to Delaware Funding (f/k/a CIT
Group Funding Company of Canada) as payee and dated July 5,
2005 in the amounts of $502,588,633, $502,588,633 and
$703,624,085 and (ii) those two promissory notes issued,
executed and delivered by CIT Financial Ltd. to Delaware Funding
(f/k/a CIT Group Funding Company of Canada) as payee and dated
November 1, 2006 each in the amount of $249,052,500.
1.74 “Interest” means the legal,
equitable, contractual and other rights of any Person (including
any 401(k) plan or plan participant) with respect to the Old
Common Interests, the Old Preferred Interests or any Other
Equity Rights of the Filing Entities, whether or not
transferable, and the legal, equitable, contractual or other
rights of any Person to acquire or receive any of the foregoing.
1.75 “JPM” means JPMorgan Chase Bank, N.A.
solely in its capacity as administrative agent and issuing bank
under the JPM L/C Facility Agreement.
1.76 “JPM L/C Facility” means the letter
of credit facility or facilities established pursuant to the JPM
L/C Facility Agreement.
1.77 “JPM L/C Facility Agreement” means
the 2005
5-Year
Letter of Credit Issuance and Reimbursement Agreement, dated as
of May 23, 2005, by and among CIT Group, Inc.,
J.P. Morgan Securities Inc. as Sole Lead Arranger and
Bookrunner, JPMorgan Chase Bank, N.A. as Administrative Agent
and Issuing Bank, Barclays Bank PLC as Syndication Agent and
Bank of America, N.A. and Citibank, N.A. as Documentation Agents
and the Lenders as party thereto.
1.78 “JPM L/C Facility Claim” means a
Claim on account of amounts issued and outstanding under the JPM
L/C Facility.
1.79 “Junior CVRs” shall have the meaning
ascribed to it in Article IV.H of the Plan of
Reorganization.
1.80 “Junior Subordinated Notes” means the
6.10% Junior Subordinated Notes due March 15, 2067 issued
by CIT Group Inc. pursuant to the Indenture dated as of
January 20, 2006 and the First Supplemental Indenture dated
as of January 31, 2007 with CUSIP number 125577AX4.
1.81 “Junior Subordinated Note Claim”
means a Claim on account of the Junior Subordinated Notes.
1.82 “Junior Subordinated Notes Exchange”
shall have the meaning ascribed to it in Article IV.G of
the Plan of Reorganization.
1.83 “Liens” shall have the meaning set
forth in Article IV.A of the Plan of Reorganization.
1.84 “Late Electing Long-Dated Senior Unsecured
Note Claims Holder(s)” means a holder of a Long-Dated
Senior Unsecured Note Claim who makes election to either
(i) participate in the transactions contemplated by the
Offering Memorandum or (ii) receive the treatment set forth
in Article III.G.8.b.A of the Plan of Reorganization after
the Early Election Date but before the Late Election Date.
1.85 “Late Election Date” means the date
that is ten (10) Business Days after the Early Election
Date.
1.86 “Litigation Claims” means all claims,
rights of action, suits or proceedings, whether in law or in
equity, whether known or unknown, that the Filing Entities or
their Estates may hold against any Person, except such claims
that are released under the Plan of Reorganization or the
Confirmation Order.
1.87 “Long-Dated Senior Unsecured Notes”
means the senior unsecured notes listed on Schedule 2 to
the Plan of Reorganization.
1.88 “Long-Dated Senior Unsecured Note
Claim” means a Claim on account of the Long-Dated
Senior Unsecured Notes.
170
1.89 “Long-Dated Senior Unsecured Note
Exchange” shall have the meaning ascribed to it in
Article IV.B of the Plan of Reorganization.
1.90 “Measurement Date” means the date
that is sixty (60) days after the Effective Date,
provided that if such date is not a Business Day, the
Measurement Date shall be the first Business Day following such
date.
1.91 “N&GC” shall have the meaning
set forth in Article IV.M of the Plan of Reorganization.
1.92 “New Common Interests” means the
shares of common interests in Reorganized CIT authorized under
the Plan of Reorganization and Reorganized CIT’s bylaws as
of the Effective Date.
1.93 “New Notes” means collectively the
Series A Notes and the Series B Notes as described in
the Offering Memorandum.
1.94 “New Notes Indentures” means that
certain New Notes indenture documentation, to be filed by the
Filing Entities as a Plan Supplement, prior to the Confirmation
Hearing.
1.95 “New Securities” shall have the
meaning set forth in Article V.C of the Plan of
Reorganization.
1.96 “Non-Electing Long-Dated Senior Unsecured Note
Claims Holder(s)” means a holder of a Long-Dated Senior
Unsecured Note Claim who (a) does not make an election to
either (i) participate in the transactions contemplated by
the Offering Memorandum or (ii) receive the treatment set
forth in Article III.G.8.b.A of the Plan of Reorganization
by the Late Election Date or (b) who votes against the Plan
of Reorganization.
1.97 “Old Common Interests” means the
shares of common stock of CIT Group Inc. issued and outstanding
immediately prior to the Effective Date.
1.98 “Old Delaware Funding Interests”
means the equity interests in Delaware Funding outstanding
immediately prior to the Effective Date.
1.99 “Old Interests” means collectively
the Old Common Interests, the Old Preferred Interests and the
Old Delaware Funding Interests.
1.100 “Old Preferred Interests” means the
shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred
Stock of CIT Group Inc. issued and outstanding immediately prior
to the Effective Date.
1.101 “Other Equity Interests” means the
Interests represented by the Other Equity Rights.
1.102 “Other Equity Rights” means,
collectively, any options, warrants, conversion rights, rights
of first refusal, finders fee arrangements, or other rights,
contractual or otherwise, to acquire, subscribe for, receive or
cause to be redeemed any common interests or preferred interests
of the Filing Entities, or other ownership interests in the
Filing Entities, and any contracts, subscriptions, commitments
or agreements pursuant to which any non-Filing Entity party was
or could have been entitled to receive or cause to be redeemed
shares, securities or other ownership interests in the Filing
Entities.
1.103 “Other Priority Claim” means a Claim
entitled to priority under section 507(a) of the Bankruptcy
Code other than a DIP Facility Claim, Administrative Claim or
Priority Tax Claim.
1.104 “Other Secured Claim” means a Claim
that is secured by a valid, duly perfected lien as of the
Petition Date on property in which the Estate has an interest or
that is subject to setoff under section 553 of the
Bankruptcy Code, to the extent of the value of the Claim
holder’s interest in the Estate’s interest in such
property or to the extent of the amount subject to setoff, as
applicable, as determined pursuant to section 506(a) of the
Bankruptcy Code or, in the case of setoff, pursuant to
section 553 of the Bankruptcy Code.
1.105 “Other Unsecured Debt Claims” means
the Australian Senior Unsecured Note Claims and any senior
unsecured notes that are not listed on Schedule 1 or
Schedule 2 to the Plan of Reorganization to which the
Filing Entities are borrowers or issuers.
171
1.106 “Person” means an individual,
corporation, partnership, joint venture, association, joint
stock company, limited liability company, limited liability
partnership, trust, estate, unincorporated organization,
governmental unit or other entity as defined in
section 101(15) of the Bankruptcy Code.
1.107 “Petition Date” means the date on
which the Filing Entities filed their petition for relief
commencing the Chapter 11 Cases.
1.108 “Plan of Reorganization” means the
plan of reorganization and all exhibits and schedules thereto,
as amended, modified or supplemented from time to time as
permitted thereunder and by the Bankruptcy Code.
1.109 “Plan Supplement” means the
compilation of documents, including any exhibits to the Plan of
Reorganization not included therewith in form and substance
reasonably satisfactory to the Filing Entities and the Steering
Committee, that the Filing Entities shall file with the
Bankruptcy Court on or before the date that is five
(5) days prior to the Confirmation Hearing.
1.110 “Postpetition Interest” means
interest accruing on and after the Petition Date on a Claim.
1.111 “Preferred Stock CVRs” shall have
the meaning ascribed to it in Article IV.H of the Plan of
Reorganization.
1.112 “Priority Tax Claim” means a Claim
that is entitled to priority under section 507(a)(8) of the
Bankruptcy Code.
1.113 “Pro Rata” means with reference to
any distribution on account of or in exchange for any Claim in
any Class, the proportion that the amount of a Claim (numerator)
bears to the aggregate amount of all Claims (including Disputed
Claims, but excluding Disallowed Claims) (denominator) in such
Class.
1.114 “Professional” means any
professional employed in the Chapter 11 Cases pursuant to
section 327 or 1103 of the Bankruptcy Code.
1.115 “Professional Fee Claim” means a
Claim of a Professional for compensation or reimbursement of
costs and expenses relating to services incurred after the
Petition Date and prior to and including the Effective Date.
1.116 “Reinstate,”
“Reinstated” or
“Reinstatement” means (i) leaving
unaltered the legal, equitable and contractual rights to which a
Claim entitles the holder of such Claim so as to leave such
Claim unimpaired in accordance with section 1124 of the
Bankruptcy Code or (ii) notwithstanding any contractual
provision or applicable law that entitles the holder of such
Claim to demand or receive accelerated payment of such Claim
after the occurrence of a default, (a) curing any such
default that occurred before or after the Petition Date, other
than a default of a kind specified in section 365(b)(2) of
the Bankruptcy Code; (b) reinstating the maturity of such
Claim as such maturity existed before such default;
(c) compensating the holder of such Claim for any damages
incurred as a result of any reasonable reliance by such holder
on such contractual provision or such applicable law; and
(d) not otherwise altering the legal, equitable or
contractual rights to which such Claim entitles the holder of
such Claim; provided, however, that other than contractual
rights set forth in the Senior Credit Facility, any contractual
right that does not pertain to the payment when due of principal
and interest on the obligation on which such Claim is based,
including, but not limited to, financial covenant ratios,
negative pledge covenants, covenants or restrictions on merger
or consolidation, and affirmative covenants regarding corporate
existence, prohibiting certain transactions or actions
contemplated by the Plan of Reorganization, or conditioning such
transactions or actions on certain factors, shall not be
required to be reinstated in order to accomplish Reinstatement
and shall be deemed cured on the Effective Date.
1.117 “Reorganized CIT” means CIT Group
Inc. on and after the Effective Date.
1.118 “Reorganized CIT Certificate of
Incorporation” means the certificate of incorporation
of Reorganized CIT in effect under the laws of the State of
Delaware, as amended by the Plan of Reorganization,
substantially in the form annexed to the Plan of Reorganization
as
Exhibit A-1.
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1.119 “Reorganized Debtors” means
Reorganized CIT and Reorganized Delaware Funding.
1.120 “Reorganized Delaware Funding” means
Delaware Funding on and after the Effective Date.
1.121 “Reorganized Delaware Funding Amendment to
Limited Liability Company Agreement” means the
amendment to Reorganized Delaware Funding’s limited
liability company agreement in effect under the laws of the
State of Delaware, as amended by the Plan of Reorganization,
substantially in the form annexed to the Plan of Reorganization
as
Exhibit A-3.
1.122 “Reorganized Delaware Funding Certificate of
Amendment to Certificate of Formation” means the
certificate of amendment to the certificate of formation of
Reorganized Delaware Funding in effect under the laws of the
State of Delaware, as amended by the Plan of Reorganization,
substantially in the form annexed to the Plan of Reorganization
as
Exhibit A-2.
1.123 “Security” shall have the meaning
ascribed to it in Section 101(49) of the Bankruptcy Code.
1.124 “Senior Credit Facility” means that
certain Amended and Restated Credit and Guaranty Agreement dated
as of July 29, 2009 (as amended, supplemented or otherwise
modified from time to time) by and among CIT Group Inc., a
Delaware corporation, certain subsidiaries of CIT Group Inc.
listed on the signature pages thereto, Barclays Bank PLC, as
administrative agent and collateral agent, and the banks and
other financial institutions from time to time party thereto as
agents and lenders together with all collateral and loan
documents contemplated thereby or executed in connection
therewith.
1.125 “Senior CVRs” shall have the meaning
ascribed to it in Article IV.H of the Plan of
Reorganization.
1.126 “Senior Subordinated Notes” means
the 12.00% Subordinated Notes due December 18, 2018
issued by CIT Group Inc. pursuant to the Indenture dated as of
January 20, 2006 and the Second Supplemental Indenture
dated as of December 24, 2008 with CUSIP
numbers 125581FS2 and U17186AF1.
1.127 “Senior Subordinated Note Claim”
means a Claim on account of the Senior Subordinated Notes.
1.128 “Senior Subordinated Notes Exchange”
shall have the meaning ascribed to it in Article IV.F of
the Plan of Reorganization.
1.129 “Senior Unsecured Credit Agreement
Claim” means a Claim on account of the Senior Unsecured
Credit Agreements.
1.130 “Senior Unsecured Credit Agreement
Exchange” shall have the meaning ascribed to it in
Article IV.E of the Plan of Reorganization.
1.131 “Senior Unsecured Credit Agreements”
means the 2005
5-Year
Unsecured Credit Agreement and the 2006
5-Year
Unsecured Credit Agreement.
1.132 “Senior Unsecured Note Claim” means
a Claim on account of the Senior Unsecured Notes.
1.133 “Senior Unsecured Note Exchange”
shall have the meaning ascribed to it in Article IV.C of
the Plan of Reorganization.
1.134 “Senior Unsecured Notes” means
(i) the senior unsecured notes listed on Schedule 1 to
the Plan of Reorganization and (ii) the 2015 Hybrid
Convertible/Equity Notes.
1.135 “Senior Unsecured Term Loan Claim”
means a Claim on account of the Senior Unsecured Term Loans.
1.136 “Senior Unsecured Term Loan
Exchange” shall have the meaning ascribed to it in
Article IV.D of the Plan of Reorganization.
1.137 “Senior Unsecured Term Loans” means
the 2006
5-Year Term
Loan Agreement and the 2005 Syndicated Term Loan Agreement.
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1.138 “Series A Notes” means the
“Series A” secured notes issued by CIT Group Inc.
and guaranteed by certain of its affiliates (but not guaranteed
by Delaware Funding) pursuant to the New Notes Indenture and as
described in the Offering Memorandum and as amended from time to
time pursuant thereto.
1.139 “Series A Preferred Stock”
means those 14 million shares of non-voting preferred stock
issued by CIT Group Inc. on July 26, 2005, with a par value
of $0.01 per share, which shares are redeemable at the Filing
Entities’ option after September 15, 2010 at
$25 per share.
1.140 “Series B Notes” means the
“Series B” secured notes issued by Delaware
Funding and guaranteed by CIT Group Inc., on an unsecured basis
(except for the lien CIT Group Inc. may grant on substantially
all its personal property with certain exclusions), and on a
secured basis by all current and future domestic wholly owned
subsidiaries CIT Group Inc., with the exception of Delaware
Funding, CIT Bank and other regulated subsidiaries, special
purpose entities and immaterial subsidiaries pursuant to the New
Notes Indenture and as described in the Offering Memorandum and
as amended from time to time pursuant thereto.
1.141 “Series B Preferred Stock”
means those 1.5 million shares of non-voting preferred
stock issued by CIT Group Inc. on July 26, 2005, with a par
value of $0.01 per share, which shares are redeemable at the
Filing Entities’ option after September 15, 2010 at
$100 per share.
1.142 “Series C Preferred Stock”
means those 11.5 million shares of non-voting, convertible
preferred stock issued by CIT Group Inc. between April 21,
2008 and April 23, 2008, with a par value of $0.01 per
share, which shares have a liquidation preference of $50 per
share.
1.143 “Series D Preferred Stock”
means those 2.33 million shares of preferred stock issued
by CIT Group Inc. on December 31, 2008 to the United States
Department of Treasury, with a par value of $0.01 per share,
which shares have a liquidation preference of $1,000 per share.
1.144 “Steering Committee” means
(a) as long as the Senior Credit Facility remains in
effect, the Lenders Steering Committee as defined therein and
(b) if the Senior Credit Facility no longer remains in
effect, an ad hoc committee of those noteholders consisting of
the members of the Lenders Steering Committee as defined therein
that voted to approve the Plan of Reorganization and continue to
be represented by Paul, Weiss, Rifkind, Wharton &
Garrison LLP and Houlihan Lokey Howard & Zukin Capital
in each of cases (a) and (b), acting where applicable
by vote of a majority of the members thereof.
1.145 “Steering Committee Nominees” shall
have the meaning set forth in Article IV.M. of the Plan of
Reorganization.
1.146 “Subordinated 510(b) Claim” means
any Claim subordinated pursuant to Bankruptcy Code
section 510(b), which shall include any Claim arising from
the rescission of a purchase or sale of Old Interests, any Claim
for damages arising from the purchase or sale of any Old
Interests, or any Claim for reimbursement, contribution or
indemnification on account of any such Claim.
1.147 “Trading Day” means, with respect to
any security listed or traded on a securities exchange or other
quotations system, a day on which such security is traded or
quoted on the principal securities exchange or quotation system
on which such security is then listed or quoted.
1.148 “Unimpaired” means, with reference
to a Claim or Interest, a Claim or Interest that is not impaired
within the meaning of section 1124 of the Bankruptcy Code.
Reasons
for the Solicitation
The solicitation is being conducted at this time to obtain
(prior to the filing of any voluntary petition for
reorganization of the Filing Entities under Chapter 11 of
the Bankruptcy Code) the requisite acceptances of the Plan of
Reorganization. We anticipate that by conducting the acceptance
solicitation in advance of commencing any Chapter 11 Cases,
if Chapter 11 Cases were commenced, the duration of the
Chapter 11 Cases will be significantly shortened, and the
administration of the cases, which otherwise could be lengthy,
complex, and extremely expensive, will be greatly simplified and
much less costly. The Bankruptcy Code defines
“acceptance” of a plan by a class of claims as
acceptance by creditors in that class that hold at least
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two-thirds in dollar amount and more than one-half in number of
the claims that cast ballots for acceptance or rejection of the
plan. Acceptance of a plan by a class of interests requires
acceptance by at least two-thirds of the amount of interests of
such class that cast ballots for acceptance or rejection of the
plan.
Anticipated
Events During the Chapter 11 Case
If CIT and Delaware Funding cannot consummate the out-of-court
restructuring and CIT and Delaware Funding receive the requisite
votes for acceptance of the Plan of Reorganization, the Filing
Entities may file voluntary petitions for relief under
Chapter 11 of the Bankruptcy Code. At that time, all
actions and proceedings against the Filing Entities and all acts
to obtain property from the Filing Entities will be stayed under
section 362 of the Bankruptcy Code. The Filing Entities
will continue to operate their businesses and manage their
property as debtors in possession pursuant to
sections 1107(a) and 1108 of the Bankruptcy Code.
The Filing Entities do not expect the Chapter 11 Cases to
be protracted. To expedite their emergence from Chapter 11,
the Filing Entities on the Petition Date, in addition to filing
this Offering Memorandum and Disclosure Statement and the Plan
of Reorganization, would file motions seeking the relief
detailed below, among other relief, from the Bankruptcy Court.
Such relief, if granted, will facilitate the administration of
the Chapter 11 Cases; there can be no assurance, however,
that the Bankruptcy Court will grant the relief sought.
Applications
For Retention Of The Filing Entities’
Professionals
The Filing Entities intend to seek retention of certain
professionals to represent it and assist it in connection with
the Chapter 11 Case. These professionals were intimately
involved with the negotiation and development of the
restructuring transactions and the Plan of Reorganization. These
professionals include, among others, Skadden, Arps, Slate,
Meagher & Flom LLP, as bankruptcy counsel for CIT and
Delaware Funding; Evercore Partners, as investment banker for
CIT and Delaware Funding; and FTI Consulting, Inc., as financial
advisor for CIT and Delaware Funding.
Motion
To Approve Combined Disclosure Statement And Confirmation
Hearing
The Filing Entities intend to seek an order scheduling a
combined hearing on this Offering Memorandum and Disclosure
Statement and confirmation of the Plan of Reorganization (the
“Confirmation Hearing”) for a date not more than
45 days following the Petition Date. At the Confirmation
Hearing, the Filing Entities will seek approval of this Offering
Memorandum and Disclosure Statement and confirmation of the Plan
of Reorganization pursuant to sections 1125, 1128 and 1129
of the Bankruptcy Code. At that time, the Filing Entities will
also request that the Bankruptcy Court approve the prepetition
solicitation of votes on the Plan of Reorganization. There can
be no assurance that the Bankruptcy Court will approve the
Filing Entities’ request to schedule the Confirmation
Hearing within 45 days of the Petition Date will be granted.
Motion
To Continue Using Existing Cash Management Systems
Because the Filing Entities expect the Chapter 11 Cases to
be pending for less than two (2) months, and because of the
administrative hardship that any operating changes would impose,
the Filing Entities intend to seek authority to continue using
their existing cash management system, bank accounts and
business forms and to follow their internal investment and
deposit guidelines. Absent the Bankruptcy Court’s
authorization of the continued use of the cash management
system, the Filing Entities’ cash flow could be impaired to
the detriment of the Filing Entities’ Estate and creditors.
Continued use of their existing cash management system will
facilitate the Filing Entities’ smooth and orderly
transition into the Chapter 11 Cases, minimize the
disruption of their businesses while in Chapter 11, and
expedite their emergence from Chapter 11. As a result of
set-up time
and expenses, requiring the Filing Entities to adopt and
implement a new cash management system would likely increase the
costs of the Chapter 11 Cases. For the same reasons,
requiring the Filing Entities to close their existing bank
accounts and establish new accounts or requiring them to create
new business forms would only frustrate their efforts to
reorganize expeditiously.
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Motion
For Authority To Pay Prepetition Employee Wages And Associated
Benefits
The Filing Entities believe that they have a valuable asset in
their work force and that any delay in paying prepetition
compensation or benefits to their employees would destroy their
relationships with employees and irreparably harm employee
morale at a time when the continued dedication, confidence and
cooperation of their employees is most critical. The Filing
Entities are grateful to their employees for their help, without
which a restructuring would not be possible. Accordingly, the
Filing Entities will seek authority to pay compensation and
benefits in the Chapter 11 Cases which were accrued but
unpaid as of the Petition Date.
Motion
To Approve DIP Financing
If the Filing Entities file for Chapter 11, they may need
to obtain short-term working capital financing in the form of
the DIP Facility. While the Filing Entities do not, as of the
date hereof, have a commitment for such financing, they would
expect to obtain such a commitment if it appears that such
financing would be needed and the restructuring transactions
will not be consummated outside bankruptcy. The amount of any
such DIP Financing is not presently determinable, but prompt
Bankruptcy Court approval of the DIP Facility may be necessary
to enable the Filing Entities to address their funding and other
commitments and to otherwise maintain normal operations and
strong relationships with their vendors, customers, and
suppliers during the Chapter 11 Cases. Absent an agreement
with the DIP Lenders, the DIP Facility would need to be paid off
upon the Filing Entities’ emergence from Chapter 11.
Motion
To Pay Unimpaired Trade Claims In The Ordinary Course Of
Business
“Trade Claims” are prepetition general unsecured
claims against the Filing Entities arising from or with respect
to the delivery of goods or services to the Filing Entities in
the ordinary course of business; they are among the claims
included in the class of Claims denominated Class 5 General
Unsecured Claims. Notwithstanding provisions of the Bankruptcy
Code that would otherwise require the Filing Entities to defer
payment of Trade Claims until the Effective Date, the Filing
Entities intend to seek authority from the Bankruptcy Court to
pay, in the ordinary course of business, the Trade Claims of
those providers of goods and services that agree in writing to
continue to provide the Filing Entities with customary trade
terms on an ongoing basis. Because certain goods and services
are essential to the businesses of the Filing Entities’
non-debtor affiliates, the relief sought in this motion is
critical to uninterrupted operations during the Chapter 11
Cases.
Motion
to Fund Certain Obligations to CIT Bank Pursuant to
Commitments to Federal Reserve Board
The Filing Entities anticipate that, within thirty days of
commencing the Chapter 11 Cases, the Filing Entities may be
obligated to make certain payments to CIT Bank as a result of
commitments to the Federal Reserve Board and, potentially, other
regulatory agencies. These obligations relate to the waivers the
Federal Reserve Board granted of section 23A of the Federal
Reserve Act requirements. Through the motion, the Filing
Entities would seek authority to make such payments to honor
commitments to regulatory agencies.
Motion
To Continue Funding Loan Commitments And Factoring Client
Receivables
The Filing Entities may file a motion seeking authorization (but
not direction) to continue funding loan commitments, lines of
credits, factoring, receivable and collection management
products and secured financing to their customers. The Filing
Entities believe that such financing transactions are in the
ordinary course of the Filing Entities’
and/or their
non-debtor affiliates’ businesses and, as such, do not
require court approval. Nonetheless, the Filing Entities may
file the motion in an abundance of caution and to ensure a
seamless transition for their customers.
Motion
To Honor the Written Agreement and the Cease and Desist
Orders
We and Delaware Funding will seek to honor obligations to the
FDIC and the UDFI under the Cease and Desist Orders and to the
Federal Reserve under the Written Agreement during the pendency
of any Chapter 11
176
Cases. The Filing Entities therefore intend to file a motion
seeking Bankruptcy Court authority to honor the Cease and Desist
Orders and Written Agreement obligations during the
Chapter 11 Cases.
Motion
to Annul the Automatic Stay Nunc Pro Tunc to the Petition
Date
CIT Group Inc. has issued guarantees of various obligations of
its direct and indirect subsidiaries. As set forth in the Plan
of Reorganization, Guarantee Claims are unimpaired and will be
reinstated. For certain of the obligations the imposition of the
automatic stay with respect to enforcement of the CIT Group Inc.
guarantee may lead to an argument that the underlying obligation
is in technical default. Accordingly, the Filing Entities may
file a motion seeking to annul the automatic stay, effective as
of the Petition Date for certain of the Guarantee Claims to
avoid any potential for a technical default in the underlying
obligation.
Motion
To Establish Notice and Hearing Procedures Surrounding Transfers
of Equity Securities
The Filing Entities intend to seek an order to establish
notification procedures and restrictions on trading in equity
interests in CIT in order to preserve, to the extent possible,
the potential value of the Debtors’ net operating losses
and other tax attributes during the pendency of the
Chapter 11 Cases. The notification procedures and trading
restrictions, if imposed, would apply immediately to investors
that beneficially own or seek to acquire (i) at least 4.75%
of the outstanding shares of CIT common stock or (ii) at
least 4.50% of Series C Preferred Stock. For purposes of
the proposed procedures and restrictions, beneficial ownership
is measured in accordance with special U.S. federal income
tax rules that, among other things, take into account indirect
ownership, ownership by related parties and, in certain cases,
options to acquire common stock or Series C Preferred Stock.
Motion
To Waive Filing Of Schedules And Statement Of Financial
Affairs
Bankruptcy Code section 521 and Bankruptcy Rule 1007
direct that, unless otherwise ordered by the court, a debtor
must prepare and file certain schedules of claims, executory
contracts and unexpired leases and related information (the
“Schedules”) and a statement of financial affairs (the
“Statement”) within fifteen (15) days of the
commencement of a Chapter 11 case. The purpose of this
requirement is to provide a debtor’s creditors, equity
security holders and other interested parties with sufficient
information to make informed decisions with respect to the
debtor’s reorganization. In appropriate circumstances,
however, a bankruptcy court may modify or dispense with the
filing of the Schedules and the Statement pursuant to
section 521 of the Bankruptcy Code. The Filing Entities
believe that such circumstances would exist in the
Chapter 11 Cases, and that they should not be required to
file the Schedules and the Statement. The Filing Entities thus
intend to request that the Bankruptcy Court waive the necessity
of filing the Schedules and the Statement.
Timetable
for Chapter 11 Case
Assuming that the Bankruptcy Court approves the Filing
Entities’ Offering Memorandum and Disclosure Statement and
confirms the Plan of Reorganization, on the schedule requested
by the Filing Entities, the Filing Entities would seek to emerge
from Chapter 11 within approximately two (2) months of
the Petition Date. There can be no assurance, however, that the
Bankruptcy Court’s orders will permit the Chapter 11
Cases to proceed as expeditiously as anticipated.
Summary
of the Plan of Reorganization
Overview
of Chapter 11
Chapter 11 is the principal business reorganization chapter
of the Bankruptcy Code. Under Chapter 11 of the Bankruptcy
Code, a debtor is authorized to reorganize its business for the
benefit of itself, its creditors and interest holders. Another
goal of Chapter 11 is to promote equality of treatment for
similarly situated creditors and similarly situated interest
holders with respect to the distribution of a debtor’s
assets.
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The commencement of a Chapter 11 case creates an estate
that is comprised of all of the legal and equitable interests of
the debtor as of the filing date. The Bankruptcy Code provides
that the debtor may continue to operate its business and remain
in possession of its property as a “debtor in
possession.”
The consummation of a plan of reorganization is the principal
objective of a Chapter 11 case. A plan of reorganization
sets forth the means for satisfying claims against and interests
in a debtor. Confirmation of a plan of reorganization by the
Bankruptcy Court makes the plan binding upon the debtor, any
issuer of securities under the plan, any person or entity
acquiring property under the plan and any creditor of or equity
security holder in the debtor, whether or not such creditor or
equity security holder (i) is impaired under or has
accepted the plan or (ii) receives or retains any property
under the plan. Subject to certain limited exceptions and other
than as provided in the plan itself or the confirmation order,
the confirmation order discharges the debtor from any debt that
arose prior to the date of confirmation of the plan and
substitutes therefore the obligations specified under the
confirmed plan, and terminates all rights and interests of
equity security holders.
Please note that the estimated recoveries for Classes 7, 8,
9, 10 and 11 do not necessarily reflect the market value of the
Series A and Series B Notes.
THE REMAINDER OF THIS SECTION PROVIDES A SUMMARY OF THE
STRUCTURE AND MEANS FOR IMPLEMENTATION OF THE PLAN OF
REORGANIZATION, AND OF THE CLASSIFICATION AND TREATMENT OF
CLAIMS AND EQUITY INTERESTS UNDER THE PLAN OF REORGANIZATION,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PLAN OF
REORGANIZATION (AS WELL AS THE EXHIBITS THERETO AND
DEFINITIONS THEREIN), WHICH IS ANNEXED TO THIS OFFERING
MEMORANDUM AND DISCLOSURE STATEMENT AS APPENDIX C.
THE STATEMENTS CONTAINED IN THIS OFFERING MEMORANDUM AND
DISCLOSURE STATEMENT INCLUDE SUMMARIES OF THE PROVISIONS
CONTAINED IN THE PLAN OF REORGANIZATION AND IN DOCUMENTS
REFERRED TO THEREIN. THE STATEMENTS CONTAINED IN THIS OFFERING
MEMORANDUM AND DISCLOSURE STATEMENT DO NOT PURPORT TO BE PRECISE
OR COMPLETE STATEMENTS OF ALL THE TERMS AND PROVISIONS OF THE
PLAN OF REORGANIZATION OR DOCUMENTS REFERRED TO THEREIN, AND
REFERENCE IS MADE TO THE PLAN OF REORGANIZATION AND TO SUCH
DOCUMENTS FOR THE FULL AND COMPLETE STATEMENTS OF SUCH TERMS AND
PROVISIONS.
THE PLAN OF REORGANIZATION ITSELF AND THE DOCUMENTS REFERRED TO
THEREIN CONTROL THE ACTUAL TREATMENT OF CLAIMS AGAINST AND
EQUITY INTERESTS IN THE FILING ENTITIES UNDER THE PLAN OF
REORGANIZATION AND WILL, UPON OCCURRENCE OF THE EFFECTIVE DATE,
BE BINDING UPON ALL HOLDERS OF CLAIMS AGAINST AND EQUITY
INTERESTS IN THE FILING ENTITIES, THE ESTATE, THE REORGANIZED
DEBTORS, ALL PARTIES RECEIVING PROPERTY UNDER THE PLAN OF
REORGANIZATION, AND OTHER PARTIES IN INTEREST. IN THE EVENT OF
ANY CONFLICT BETWEEN THIS OFFERING MEMORANDUM AND DISCLOSURE
STATEMENT, ON THE ONE HAND, AND THE PLAN OF REORGANIZATION OR
ANY OTHER OPERATIVE DOCUMENT, ON THE OTHER HAND, THE TERMS OF
THE PLAN OF REORGANIZATION OR SUCH OTHER OPERATIVE DOCUMENT WILL
CONTROL.
Overall
Structure of the Plan of Reorganization
The Plan of Reorganization described herein provides for the
restructuring of the Filing Entities’ liabilities in a
manner designed to maximize recoveries to holders of claims
against and interests in the Filing Entities. The Plan of
Reorganization contemplates the Exchanges, pursuant to which
(i) holders of Canadian Senior Unsecured Note Claims will
receive their pro rata share of Series B
Notes, equal to a distribution in the amount of 100% of such
holder’s Allowed Canadian Senior Unsecured Note Claim if
such Class 7 votes to accept the Plan of Reorganization,
(ii) Electing Long-Dated Senior Unsecured Note Claims and
holders of Senior Unsecured Note Claims and, if Class 7
does not vote to accept the Plan of Reorganization and the Plan
of Reorganization is nonetheless confirmed, Canadian Senior
Unsecured Note Claims on account of CIT
178
Group Inc.’s guarantee of the Canadian Senior Unsecured
Notes, will receive their pro rata share of
(a) Series A Notes and (b) New Common Interests,
(iii) holders of Senior Unsecured Term Loans Claims and
Senior Unsecured Credit Agreements shall receive their
pro rata share of (a) indebtedness under
credit facilities of Reorganized CIT on substantially the same
terms as the Series A Notes in lieu of a distribution of
Series A Notes if such Classes vote to accept the Plan of
Reorganization or Series A Notes if such Classes do not
vote to accept the Plan of Reorganization and (b) New
Common Interests, and (iv) holders of Senior Subordinated
Note Claims and Junior Subordinated Note Claims shall receive
specified percentages of New Common Interests if such
Class 12 and Class 13 vote to accept the Plan of
Reorganization, as applicable, and Contingent Value Rights in
full satisfaction and settlement of such Claims and Interests.
Moreover, the Plan of Reorganization contemplates the issuance
of Contingent Value Rights to holders of Senior Subordinated
Note Claims, Junior Subordinated Note Claims and Old Preferred
Interests. The Plan of Reorganization also contemplates the Cash
Collateralization of the JPM L/C Facility.
The Filing Entities believe that (i) through the Plan of
Reorganization, holders of Allowed Claims will obtain a
substantially greater recovery from the Estates of the Filing
Entities than the recovery they would receive if (a) the
Filing Entities filed Chapter 11 petitions without prior
approval of the Plan of Reorganization by a majority of their
creditors or (b) the Filing Entities filed for
Chapter 7 protection, and (ii) the Plan of
Reorganization will afford the Filing Entities the opportunity
and ability to continue their business as viable going concerns
and preserve ongoing employment for the Filing Entities’
employees.
The Classes of Claims against and Interests in the Filing
Entities created under the Plan of Reorganization, the treatment
of those Classes under the Plan of Reorganization and
distributions, if any, to be made under the Plan of
Reorganization are described below.
Adequate
Information; Creditors Entitled to Vote on the Plan of
Reorganization
As more fully described below, the Plan of Reorganization
designates separate classes of Claims against and Interests in
the Filing Entities (other than DIP Claims, Administrative
Claims and Priority Tax Claims). Holders of Class 6,
Class 7, Class 8, Class 9, Class 10,
Class 11, Class 12 and Class 13 Claims would be
Impaired under the Plan of Reorganization and only the votes of
such Classes would be solicited. In addition to holders of DIP
Claims, Administrative Claims and Priority Tax Claims (which are
not classified under the Plan of Reorganization), holders of
Class 1, Class 2, Class 3, Class 4 and
Class 5 Claims and Class 17 Interests are Unimpaired
by the Plan of Reorganization, would not be entitled to vote to
accept or reject the Plan of Reorganization, and would be deemed
to have accepted the Plan of Reorganization. Holders of
Class 14 Claims and Class 16 and Class 18
Interests would be Impaired under the Plan of Reorganization,
would not receive or retain any property under the Plan of
Reorganization and would be deemed to have rejected the Plan of
Reorganization. Holders of Class 15 Old Preferred Interests
shall receive Contingent Value Rights. Such Claim and Interest
holders would not be entitled to vote to accept or reject the
Plan of Reorganization.
Bankruptcy Rule 3018(b) prescribes the conditions that must
be satisfied to count the ballots solicited with respect to a
plan of reorganization prior to the commencement of a
Chapter 11 case. Bankruptcy Rule 3018(b) requires that
(i) the Chapter 11 plan of reorganization must have
been disseminated to substantially all impaired creditors and
equity security holders in the class(es) entitled to vote,
(ii) the time prescribed for voting on the plan of
reorganization must be sufficient and (iii) the
solicitation must have been conducted in accordance with
section 1126(b) of the Bankruptcy Code, which requires
compliance with all applicable non-bankruptcy laws, rules, or
regulations or, if there are no such applicable laws, rules or
regulations, that the disclosure with respect to the plan of
reorganization contains “adequate information” as
defined in section 1125(a) of the Bankruptcy Code.
Section 1125(a)(1) defines “adequate information”
as information of a kind and in sufficient detail as far as is
reasonably practicable in light of the nature and history of a
company and the condition of such company’s books and
records, as would enable a hypothetical reasonable investor
typical of holders of claims or equity interests of the relevant
class to make an informed judgment about the plan of
reorganization.
We believe that all of the requirements of Bankruptcy
Rule 3018(b) would be satisfied in the event that we sought
confirmation of the Plan of Reorganization. This Offering
Memorandum and Disclosure Statement
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and the Plan of Reorganization, together with all of the
accompanying materials, are being transmitted to holders of
Class 6, Class 7, Class 8, Class 9,
Class 10, Class 11, Class 12 and Class 13.
We believe that this Offering Memorandum and Disclosure
Statement contains adequate information (within the meaning of
section 1125(a)(1) of the Bankruptcy Code) for all holders
of such Claims.
Certain
Matters Regarding Classification and Treatment of Claims and
Interests
Section 1123 of the Bankruptcy Code provides that a plan of
reorganization must classify the claims and interests of a
debtor’s creditors and equity interest holders. In
accordance with section 1123, the Plan of Reorganization
divides Claims and Interests into Classes and sets forth the
treatment for each Class (other than DIP Claims, Administrative
Claims and Priority Tax Claims which, pursuant to
section 1123(a)(1), need not and have not been classified).
The Filing Entities are required, under section 1122 of the
Bankruptcy Code, to classify Claims against and Interests in the
Filing Entities into Classes, each of which contain Claims and
Interests that are substantially similar to the other Claims and
Interests in such Class. We believe that the Plan of
Reorganization has classified all Claims and Interests in
compliance with the provisions of section 1122, but if
Chapter 11 Cases were to be commenced, it is possible that
a holder of a Claim or Interest may challenge our classification
of Claims and Interests and that the Bankruptcy Court may find
that a different classification is required for the Plan of
Reorganization to be confirmed. In that event, we would intend,
to the extent permitted by the Bankruptcy Code, the Plan of
Reorganization and the Bankruptcy Court, to make such reasonable
modifications of the classifications through the Plan of
Reorganization to permit confirmation and to use the acceptances
of the Plan of Reorganization that are marked on the Ballots
received in this Solicitation Package for purpose of obtaining
the approval of the reconstituted Class or Classes of which each
accepting holder ultimately would be deemed to be a member. Any
such reclassification could adversely affect the Class in which
such holder initially was a member, or any other Class in the
Plan of Reorganization, by changing the composition of such
Class and the vote required of that Class for approval of the
Plan of Reorganization. Furthermore, a reclassification of a
Claim or Interest after approval of the Plan of Reorganization
could necessitate a resolicitation of acceptances of the Plan of
Reorganization.
The classification of Claims and Interests and the nature of
distributions to members of each Class are summarized below. We
believe that the consideration, if any, that would be provided
through the Plan of Reorganization to holders of Claims and
Interests would reflect an appropriate resolution of their
Claims and Interests, and would take into account the differing
nature and priority (including applicable contractual
subordination) of such Claims and Interests. The Bankruptcy
Court would be required to find, however, that a number of
statutory tests are met before it could confirm the Plan of
Reorganization. Many of these tests are designed to protect the
interests of holders of Claims or Interests who would not be
entitled to vote on the Plan of Reorganization, or would not
vote to accept the Plan of Reorganization, but who would be
bound by the provisions of the Plan of Reorganization if it were
confirmed by the Bankruptcy Court. The “cramdown”
provisions of section 1129(b) of the Bankruptcy Code, for
example, permit confirmation of the Plan of Reorganization in
certain circumstances even if the Plan of Reorganization is not
been accepted by all Impaired Classes of Claims and Interests.
Although we believe that the Plan of Reorganization could be
confirmed under section 1129(b), there can be no assurance
that the requirements of such section would be satisfied.
The Filing Entities reserve the right to file a motion with the
Bankruptcy Court to combine Classes 7, 8 and 9.
Material
Terms of the Plan of Reorganization
Treatment
of Unclassified Claims
In accordance with section 1123(a)(1) of the Bankruptcy
Code, DIP Facility Claims, Administrative Claims and Priority
Tax Claims are not classified and holders of such Claims are not
entitled to vote on the Plan of Reorganization.
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DIP
Facility Claims
Each holder of an Allowed DIP Facility Claim shall receive, in
full satisfaction, settlement, release and discharge of and in
exchange for such Allowed DIP Facility Claim, on the later of
the Effective Date or the date on which such DIP Facility Claim
becomes payable pursuant to any agreement between the Filing
Entities and the holder of such DIP Facility Claim,
(i) Cash equal to the full amount of such holder’s
Allowed DIP Facility Claim or (ii) such other treatment as
to which the Filing Entities and such holder shall have agreed
upon in writing. The holder(s) of DIP Facility Claims shall be
deemed to have an Allowed Claim as of the Effective Date in such
amount as may be (i) agreed upon by such Claimholder(s) and
the Filing Entities or (ii) fixed by the Bankruptcy Court.
Administrative
Claims
Each holder of an Allowed Administrative Claim shall receive, in
full satisfaction, settlement, release and discharge of and in
exchange for its Administrative Claim, on the latest of
(i) the Distribution Date, (ii) the date on which its
Administrative Claim becomes an Allowed Administrative Claim,
(iii) the date on which its Administrative Claim becomes
payable under any agreement with the Filing Entities relating
thereto, (iv) in respect of liabilities incurred in the
ordinary course of business, the date upon which such
liabilities are payable in the ordinary course of the Filing
Entities’ business, consistent with past practice or
(v) such other date as may be agreed upon between the
holder of such Allowed Administrative Claim and the Filing
Entities or the Reorganized Debtors, as the case may be, Cash
equal to the unpaid portion of its Allowed Administrative Claim.
Priority
Tax Claims
The legal and equitable rights of the holders of Priority Tax
Claims are Unimpaired by the Plan of Reorganization. Unless the
holder of such claim and the Filing Entities agree to a
different treatment, on the Effective Date each holder of an
Allowed Priority Tax Claim shall have its Claim Reinstated.
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Classification
and Treatment of Claims and Interests
Summary
of Classified Claims and Interests
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Class
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Impaired/Unimpaired; Entitlement to Vote
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Class 1 — Other Priority Claims
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Unimpaired — Conclusively presumed to have accepted
the Plan of Reorganization and, therefore, not entitled to vote
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Class 2 — Other Secured Claims
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Unimpaired — Conclusively presumed to have accepted
the Plan of Reorganization and, therefore, not entitled to vote
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Class 3 — Other Unsecured Debt Claims Guarantee
Claims
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Unimpaired — Conclusively presumed to have accepted
the Plan of Reorganization and, therefore, not entitled to vote
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Class 4 — Intercompany Claims
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Unimpaired — Conclusively presumed to have accepted
the Plan of Reorganization and, therefore, not entitled to vote
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Class 5 — General Unsecured Claims
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Unimpaired — Conclusively presumed to have accepted
the Plan of Reorganization and, therefore, not entitled to vote
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Class 6 — JPM L/C Facility Claims
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Impaired — Entitled to vote
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Class 7 — Canadian Senior Unsecured Note Claims
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Impaired — Entitled to vote
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Class 8 — Long-Dated Senior Unsecured Note Claims
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Entitled to vote — Impaired if holders vote to accept
the Plan; Unimpaired if holders vote to reject or do not vote on
the Plan
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Class 9 — Senior Unsecured Note Claims
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Impaired — Entitled to vote
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Class 10 — Senior Unsecured Term Loan Claims
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Impaired — Entitled to vote
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Class 11 — Senior Unsecured Credit Agreement
Claims
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Impaired — Entitled to vote
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Class 12 — Senior Subordinated Note Claims
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Impaired — Entitled to vote
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Class 13 — Junior Subordinated Note Claims
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Impaired — Entitled to vote
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Class 14 — Subordinated 510(b) Claims
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Impaired — Deemed to have rejected the Plan of
Reorganization and, therefore, not entitled to vote
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Class 15 — Old Preferred Interests
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Impaired — Deemed to have rejected the Plan of
Reorganization and, therefore, not entitled to vote
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Class 16 — Old Common Interests
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Impaired — Deemed to have rejected the Plan of
Reorganization and, therefore, not entitled to vote
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Class 17 — Old Delaware Funding Interests
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Unimpaired — Conclusively presumed to have accepted
the Plan of Reorganization and, therefore, not entitled to vote
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Class 18 — Other Equity Interests (if any)
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Impaired — Deemed to have rejected the Plan of
Reorganization and, therefore, not entitled to vote
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Acceptance
by Impaired Classes
Impaired Class 6, Impaired Class 7, Impaired
Class 8, Impaired Class 9, Impaired Class 10,
Impaired Class 11, Impaired Class 12 and Impaired
Class 13 shall have accepted the Plan of Reorganization if
(i) the holders of at least two-thirds in amount of the
Allowed Claims actually voting in such classes have voted to
accept the Plan of Reorganization and (ii) the holders of
more than one-half in number of the Allowed Claims actually
voting in such classes have voted to accept the Plan of
Reorganization, in each case not counting the vote of any holder
designated under section 1126(e) of the Bankruptcy Code.
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Cramdown
The Filing Entities will request confirmation of the Plan of
Reorganization, as it may be modified from time to time, under
section 1129(b) of the Bankruptcy Code. The Filing Entities
reserve the right to modify the Plan of Reorganization to the
extent, if any, that confirmation pursuant to
section 1129(b) of the Bankruptcy Code requires
modification.
Elimination
Of Classes
Any Class that does not contain any Allowed Claims or any Claims
temporarily allowed for voting purposes under Bankruptcy
Rule 3018, as of the date of the commencement of the
Confirmation Hearing, shall be deemed to have been deleted from
the Plan of Reorganization for purposes of (a) voting to
accept or reject the Plan of Reorganization and
(b) determining whether it has accepted or rejected the
Plan of Reorganization under section 1129(a)(8) of the
Bankruptcy Code.
Non-Confirmation
of Plan of Reorganization for Delaware Funding
In the event that Class 7 Canadian Senior Unsecured Note
Claims do not vote to accept of the Plan of Reorganization, the
Filing Entities shall seek to confirm the Plan of Reorganization
only with respect to CIT Group Inc. Upon such non-confirmation
of the Plan of Reorganization solely with respect to Delaware
Funding, all references in the Plan of Reorganization to
“the Debtors” and “the Reorganized Debtors”
shall refer only to CIT Group Inc. and Reorganized CIT.
Treatment
of Classes
Pursuant to the terms of the Plan of Reorganization, each of the
holders of Claims and Interests in Classes 1 through 18
will receive the treatment described below.
Please note that the estimated recoveries for Class 7, 8,
9, 10 and 11 Claims do not necessarily reflect the market value
of the Series A Notes and Series B Notes.
1. Class 1 — Other Priority Claims
a. Claims in Class: Class 1 consists of all
Other Priority Claims against the Filing Entities.
b. Treatment: The legal, equitable and contractual
rights of the holders of Other Priority Claims are Unimpaired by
the Plan of Reorganization. Unless the holder of such Claim and
the Filing Entities agree to a different treatment, on the
Effective Date, each holder of an Allowed Other Priority Claim
shall have its Claim Reinstated.
2. Class 2 — Other Secured Claims
a. Claims in Class: Class 2 consists of Other
Secured Claims against the Filing Entities.
b. Treatment: The legal, equitable and contractual
rights of the holders of Other Secured Claims are Unimpaired by
the Plan of Reorganization. Unless the holder of such Claim and
the Filing Entities agree to a different treatment, on the
Effective Date, each holder of an Allowed Other Secured Claim
shall (i) have its Claim Reinstated, or (ii) receive,
in full satisfaction, settlement, release, and discharge of, and
in exchange for, such Other Secured Claim, either (w) Cash
in the full amount of such Allowed Other Secured Claim,
including any postpetition interest accrued pursuant to
section 506(b) of the Bankruptcy Code, (x) the
proceeds of the sale or disposition of the collateral securing
such Allowed Other Secured Claim to the extent of the value of
the holder’s secured interest in such collateral,
(y) the collateral securing such Allowed Other Secured
Claim and any interest on such Allowed Other Secured Claim
required to be paid pursuant to section 506(b) of the
Bankruptcy Code, or (z) such other distribution as
necessary to satisfy the requirements of section 1129 of
the Bankruptcy Code. If the Claim of a holder of an Other
Secured Claim exceeds the value of the Collateral that secures
it, such holder will have an Other Secured Claim equal to the
Collateral’s value and a General Unsecured Claim for the
deficiency.
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3. Class 3 — Other Unsecured Debt
Claims and Guarantee Claims
a. Claims in Class: Class 3 consists of Other
Unsecured Debt Claims and Guarantee Claims against the Filing
Entities.
b. Treatment: The legal, equitable and contractual
rights of the holders of Other Unsecured Debt Claims and
Guarantee Claims are Unimpaired by the Plan of Reorganization.
Unless the holder of such Claim and the Filing Entities agree to
a different treatment, on the Effective Date, each holder of an
Allowed Other Unsecured Debt Claim or an Allowed Guaranteed
Claim shall have its Claim Reinstated.
4. Class 4 — Intercompany Claims
a. Claims in Class: Class 4 consists of all
Intercompany Claims.
b. Treatment: The legal, equitable and contractual
rights of the holders of Intercompany Claims are Unimpaired by
the Plan of Reorganization. Unless the holder of such claim and
the Filing Entities agree to different treatment, on the
Effective Date, each holder of an Allowed Intercompany Claim
shall have its Claim Reinstated.
5. Class 5 — General Unsecured Claims
a. Claims in Class: Class 5 consists of all
General Unsecured Claims.
b. Treatment: The legal, equitable and contractual
rights of the holders of General Unsecured Claims are Unimpaired
by the Plan of Reorganization. Unless the holder of such claim
and the Filing Entities agree to different treatment, on the
Effective Date, each holder of an Allowed General Unsecured
Claim shall have its Claim Reinstated.
6. Class 6 — JPM L/C Facility Claims
a. Claims in Class: Class 6 consists of JPM L/C
Facility Claims in the Allowed amount of approximately
$261 million.
b. Treatment: The legal, equitable and contractual
rights of holders of JPM L/C Facility Claims are Impaired by the
Plan of Reorganization.
(i) If Class 6 JPM L/C Facility Claims votes to accept
the Plan of Reorganization, (i) on, or as soon as
reasonably practicable after, the Effective Date, Reorganized
CIT shall provide JPM with cash collateral on account of all
outstanding undrawn letters of credit issued under the JPM L/C
Facility in the percentages specified in the JPM L/C Facility
Agreement generally and no less than 103% of the face amount of
such outstanding undrawn letters of credit and JPM may apply
such cash collateral to any subsequently arising reimbursement
obligations under the JPM L/C Facility Agreement (the “Cash
Collateralization”) and (ii) in exchange for the Cash
Collateralization, JPM shall not pursue any subsidiary or
affiliate of CIT Group Inc. or any other entity that JPM
contends may be co-liable with CIT Group Inc. under the JPM L/C
Facility Agreement for any remedies, claims or causes of action
arising out of or relating to the JPM L/C Facility or the JPM
L/C Facility Agreement, as set forth in more detail in
Article IV.I of the Plan of Reorganization. All fees and
other charges arising under or in respect of the JPM L/C
Facility Agreement shall be paid on, or as soon as reasonably
practicable after, the Effective Date by Reorganized CIT. Upon
the Effective Date, each non-Debtor subsidiary and affiliate of
CIT Group Inc. that was or is a co-applicant or account party on
a letter of credit issued under the JPM L/C Facility shall
execute a release and waiver of any and all claims against JPM
and/or any
other lenders under the JPM L/C Facility in respect of the JPM
L/C Facility
and/or the
JPM L/C Facility Agreement arising prior to the Effective Date.
(ii) If Class 6 JPM L/C Facility Claims does not vote
to accept the Plan of Reorganization and the Plan of
Reorganization is nonetheless confirmed, (i) Reorganized
CIT shall satisfy any Claims for reimbursement under the JPM L/C
Facility that arose during the Chapter 11 Cases in full on,
or as soon as reasonably practicable after, the Effective Date
and (ii) following the Effective Date,
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Reorganized CIT shall pay all such Claims for reimbursement
under the JPM L/C Facility in the ordinary course of business
and upon the terms set forth in the JPM L/C Facility Agreement,
as set forth in more detail in Article IV.I of the Plan of
Reorganization. In exchange for Reorganized CIT maintaining the
reimbursement obligations in the immediately preceding
(i) and (ii), JPM shall not pursue any subsidiary or
affiliate of CIT Group Inc. or any other entity that JPM
contends may be co-liable with CIT Group Inc. under the JPM L/C
Facility Agreement for any remedies, claims or causes of action
arising out of or relating to the JPM L/C Facility or the JPM
L/C Facility Agreement, as set forth in more detail in
Article IV.I of the Plan of Reorganization of
Reorganization.
7. Class 7 — Canadian Senior
Unsecured Note Claims
a. Claims in Class: Class 7 consists of
Canadian Senior Unsecured Note Claims in the Allowed amount of
approximately $2,188 million, which constitutes principal
plus accrued but unpaid prepetition interest.
b. Treatment: The legal, equitable, and contractual
rights of holders of Canadian Senior Unsecured Note Claims are
Impaired by the Plan of Reorganization.
(i) If Class 7 Canadian Senior Unsecured Note Claims
votes to accept the Plan of Reorganization, on, or as soon as
reasonably practicable after, the Effective Date, each holder of
an Allowed Canadian Senior Unsecured Note Claim shall receive
its pro rata share of Series B Notes, equal to a
distribution in the amount of 100% of such holder’s Allowed
Canadian Senior Unsecured Note Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest), as set forth more fully in Article IV.A of the
Plan of Reorganization.
(ii) If Class 7 Canadian Senior Unsecured Note Claims
does not vote to accept the Plan of Reorganization and the Plan
of Reorganization is nonetheless confirmed, on, or as soon as
reasonably practicable after, the Effective Date, each holder of
an Allowed Canadian Senior Unsecured Note Claim shall receive
its pro rata share of (i) Series A
Notes, equal to a distribution in the amount of 70% of such
holder’s Allowed Canadian Senior Unsecured Note Claim
(which Allowed Claim constitutes principal plus accrued but
unpaid prepetition interest) and (ii) (a) 6.2% of New
Common Interests if Class 12 and Class 13 vote to
accept the Plan, (b) 6.3% of New Common Interests if
Class 12 votes to accept the Plan and Class 13 does
not vote to accept the Plan, (c) 6.8% of New Common
Interests if Class 12 does not vote to accept the Plan and
if Class 13 votes to accept the Plan, and (d) 6.8% of
New Common Interests if neither Class 12 nor Class 13
vote to accept the Plan, allocated to 30% of such holder’s
Allowed Canadian Senior Unsecured Note Claim (which Allowed
Claim constitutes principal plus accrued but unpaid prepetition
interest), each (i) and (ii) on account of the
Canadian Senior Unsecured Notes Guarantee Claim against CIT
Group Inc., as set forth more fully in Article IV.A of the
Plan of Reorganization;
c. If Class 7 Canadian Senior Unsecured Note Claims
does not vote to accept the Plan of Reorganization and the Plan
of Reorganization is nonetheless confirmed, the holders of
Allowed Canadian Senior Unsecured Note Claims shall retain their
Canadian Senior Unsecured Notes and Allowed Canadian Senior
Unsecured Note Claims against Delaware Funding, provided,
however that:
(i) such holders may not, in the aggregate, recover more
than the Allowed amount of their Canadian Senior Unsecured Note
Claim on account of the combined claims against CIT Group Inc.
and Delaware Funding; and
(ii) the Debtors reserve the right to, among other things,
(w) not amend the Senior Credit Facility to remove Delaware
Funding as a guarantor of the Senior Credit Facility,
(x) estimate the holders’ claims against Delaware
Funding after receiving the distribution of Series A Notes
and New Common Interests, (y) extend the maturity of those
certain Intercompany Notes in accordance with the terms thereof
or (z) merge Delaware Funding into CIT Group Inc. in
accordance with the terms of the Canadian Senior Unsecured Notes
Indentures.
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8. Class 8 — Long-Dated Senior
Unsecured Note Claims
a. Claims in Class: Class 8 consists of
Long-Dated Senior Unsecured Note Claims in the Allowed amount of
approximately $1,189 million, which constitutes principal
plus accrued but unpaid prepetition interest. For purposes of
determining the principal amount of Allowed Long-Dated Senior
Unsecured Note Claims with respect to the
non-U.S. dollar
denominated Long-Dated Senior Unsecured Notes, an equivalent
U.S.-dollar
principal amount of each such series of Long-Dated Senior
Unsecured Notes will be determined by multiplying the principal
amount of such Long-Dated Senior Unsecured Notes by the weekly
average of the applicable currency exchange rate in the most
recent Federal Reserve Statistical Release H.10 which has
become available prior to the Voting Deadline. Such equivalent
U.S. dollar principal amount will be used in all cases when
determining the consideration to be received pursuant to the
Long-Dated Senior Unsecured Note Exchange per $1,000 principal
amount of Long-Dated Senior Unsecured Notes so exchanged.
b. Treatment:
(i) Each Electing Long-Dated Senior Unsecured Note Claims
Holder shall be included in Class 8A and on, or as soon as
reasonably practicable after, the Effective Date, such holder of
an Allowed Long-Dated Senior Unsecured Note Claim shall receive
its pro rata share of (i) Series A
Notes, equal to a distribution in the amount of 70% of such
holder’s Allowed Long-Dated Senior Unsecured Note Claim
(which Allowed Claim constitutes principal plus accrued but
unpaid prepetition interest) and (ii) New Common Interests
allocated to 30% of such holder’s Allowed Long-Dated Senior
Unsecured Note Claim (which Allowed Claim constitutes principal
plus accrued but unpaid prepetition interest) as follows:
(A) if Class 7 Canadian Senior Unsecured Note Claims
votes to accept the Plan of Reorganization and (1) if
Class 12 and Class 13 vote to accept the Plan of
Reorganization, 3.6% of New Common Interests, (2) if
Class 12 votes to accept the Plan of Reorganization and
Class 13 does not vote to accept the Plan of
Reorganization, 3.6% of New Common Interests, (3) if
Class 12 does not vote to accept the Plan of Reorganization
and if Class 13 votes to accept the Plan of Reorganization,
3.9% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan of
Reorganization, 3.9% of New Common Interests or (B) if
Class 7 Canadian Senior Unsecured Note Claims does not vote
to accept the Plan of Reorganization and (1) if
Class 12 and Class 13 vote to accept the Plan of
Reorganization, 3.4% of New Common Interests, (2) if
Class 12 votes to accept the Plan and Class 13 does
not vote to accept the Plan of Reorganization, 3.4% of New
Common Interests, (3) if Class 12 does not vote to
accept the Plan of Reorganization and if Class 13 votes to
accept the Plan of Reorganization, 3.7% of New Common Interests,
or (4) if neither Class 12 nor Class 13 vote to
accept the Plan of Reorganization, 3.7% of New Common Interests,
as set forth more fully in Article IV.B of the Plan of
Reorganization.
(ii) Each Non Electing Long-Dated Senior Unsecured Note
Claim Holder shall be included in Class 8B and the legal,
equitable and contractual rights of the holders of the Non
Electing Long-Dated Senior Unsecured Note Claims are Unimpaired
by the Plan of Reorganization and such holders shall have their
Claims Reinstated.
(iii) Only the votes of Early Electing Long-Dated Senior
Unsecured Note Claims Holders shall be counted with respect to
acceptance or rejection of the Plan of Reorganization.
(iv) Only Electing Long-Dated Senior Unsecured Note Claims
Holders shall receive the treatment specified in
Article III.G.8.b.A of the Plan of Reorganization.
9. Class 9— Senior Unsecured Note
Claims
a. Claims in Class: Class 9 consists of Senior
Unsecured Note Claims in the Allowed amount of approximately
$25,504 million, which constitutes principal plus accrued
but unpaid prepetition interest. For purposes of determining the
principal amount of Allowed Senior Unsecured Note Claims with
respect to the
non-U.S. dollar
denominated Senior Unsecured Notes, an equivalent
U.S.-dollar
principal amount of each such series of Senior Unsecured Notes
will be determined by multiplying the principal amount of such
Senior Unsecured Notes by the weekly average of the applicable
currency exchange rate in the most
186
recent Federal Reserve Statistical Release H.10 which has become
available prior to the Voting Deadline. Such equivalent
U.S. dollar principal amount will be used in all cases when
determining the consideration to be received pursuant to the
Senior Unsecured Note Exchange per $1,000 principal amount of
Senior Unsecured Notes so exchanged.
b. Treatment: The legal, equitable, and contractual
rights of holders of Senior Unsecured Note Claims are Impaired
by the Plan of Reorganization. On, or as soon as reasonably
practicable after, the Effective Date, each holder of an Allowed
Senior Unsecured Note Claim shall receive its pro rata share of
(i) Series A Notes, equal to a distribution in the
amount of 70% of such holder’s Allowed Senior Unsecured
Note Claim (which Allowed Claim constitutes principal plus
accrued but unpaid prepetition interest) and (ii) New
Common Interests allocated to 30% of such holder’s Allowed
Senior Unsecured Note Claim (which Allowed Claim constitutes
principal plus accrued but unpaid prepetition interest) as
follows: (A) if Class 7 Canadian Senior Unsecured Note
Claims votes to accept the Plan and (1) if Class 12
and Class 13 vote to accept the Plan, 77.7% of New Common
Interests, (2) if Class 12 votes to accept the Plan
and Class 13 does not vote to accept the Plan, 78.3% of New
Common Interests, (3) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
84.7% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 84.7%
of New Common Interests or (B) if Class 7 Canadian
Senior Unsecured Note Claims does not vote to accept the Plan
and (1) if Class 12 and Class 13 vote to accept
the Plan, 72.5% of New Common Interests, (2) if
Class 12 votes to accept the Plan and Class 13 does
not vote to accept the Plan, 73.0% of New Common Interests,
(3) if Class 12 does not vote to accept the Plan and
if Class 13 votes to accept the Plan, 79.0% of New Common
Interests, or (4) if neither Class 12 nor
Class 13 vote to accept the Plan, 79.0% of New Common
Interests, as set forth more fully in Article IV.C of the
Plan of Reorganization.
10. Class 10— Senior Unsecured Term
Loan Claims
a. Claims in Class: Class 10 consists of Senior
Unsecured Term Loan Claims in the Allowed amount of
approximately $321 million, which constitutes principal
plus accrued but unpaid prepetition interest. Claims in
Classes 10 and 11 are pari passu and shall be
combined for voting purposes. The Filing Entities reserve the
right to seek Bankruptcy Court approval of a merger of
Class 10 and 11.
b. Treatment: The legal, equitable, and contractual
rights of holders of Senior Unsecured Term Loan Claims are
Impaired by the Plan of Reorganization.
(i) If Class 10 Senior Unsecured Term Loan Claims
votes to accept the Plan of Reorganization, on, or as soon as
reasonably practicable after, the Effective Date, each holder of
an Allowed Senior Unsecured Term Loan Claim shall receive its
pro rata share of (i) indebtedness under
credit facilities of Reorganized CIT on substantially the same
terms as the Series A Notes in lieu of a distribution of
the Series A Notes, equal to a distribution in the amount
of 70% of such holder’s Allowed Senior Unsecured Term Loan
Claim (which Allowed Claim constitutes principal plus accrued
but unpaid prepetition interest) and (ii) New Common
Interests allocated to 30% of such holder’s Allowed Senior
Unsecured Term Loan Claim (which Allowed Claim constitutes
principal plus accrued but unpaid prepetition interest) as
follows: (A) if Class 7 Canadian Senior Unsecured Note
Claims votes to accept the Plan and (1) if Class 12
and Class 13 vote to accept the Plan, 1.0% of New Common
Interests, (2) if Class 12 votes to accept the Plan
and Class 13 does not vote to accept the Plan, 1.0% of New
Common Interests, (3) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
1.1% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 1.1% of
New Common Interests or (B) if Class 7 Canadian Senior
Unsecured Note Claims does not vote to accept the Plan and
(1) if Class 12 and Class 13 vote to accept the
Plan, 0.9% of New Common Interests, (2) if Class 12
votes to accept the Plan and Class 13 does not vote to
accept the Plan, 0.9% of New Common Interests, (3) if
Class 12 does not vote to accept the Plan and if
Class 13 votes to accept the Plan, 1.0% of New Common
Interests, or (4) if neither Class 12 nor
Class 13 vote to accept the Plan, 1.0% of New Common
Interests, as set forth more fully in Article IV.D of the
Plan of Reorganization.
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(ii) If Class 10 Senior Unsecured Term Loan Claims
does not vote to accept the Plan of Reorganization and the Plan
of Reorganization is nonetheless confirmed, on, or as soon as
reasonably practicable after, the Effective Date, each holder of
an Allowed Senior Unsecured Term Loan Claim shall receive its
pro rata share of (i) Series A Notes,
equal to a distribution in the amount of 70% of such
holder’s Allowed Senior Unsecured Term Loan Claim (which
Allowed Claim constitutes principal plus accrued but unpaid
prepetition interest) and (ii) New Common Interests
allocated to 30% of such holder’s Allowed Senior Unsecured
Term Loan Claim (which Allowed Claim constitutes principal plus
accrued but unpaid prepetition interest) as follows: (A) if
Class 7 Canadian Senior Unsecured Note Claims votes to
accept the Plan and (1) if Class 12 and Class 13
vote to accept the Plan, 1.0% of New Common Interests,
(2) if Class 12 votes to accept the Plan and
Class 13 does not vote to accept the Plan, 1.0% of New
Common Interests, (3) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
1.1% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 1.1% of
New Common Interests or (B) if Class 7 Canadian Senior
Unsecured Note Claims does not vote to accept the Plan and
(1) if Class 12 and Class 13 vote to accept the
Plan, 0.9% of New Common Interests, (2) if Class 12
votes to accept the Plan and Class 13 does not vote to
accept the Plan, 0.9% of New Common Interests, (3) if
Class 12 does not vote to accept the Plan and if
Class 13 votes to accept the Plan, 1.0% of New Common
Interests, or (4) if neither Class 12 nor
Class 13 vote to accept the Plan, 1.0% of New Common
Interests, as set forth more fully in Article IV.D of the
Plan of Reorganization.
11. Class 11— Senior Unsecured Credit
Agreement Claims
a. Claims in Class: Class 11 consists of Senior
Unsecured Credit Agreement Claims in the Allowed amount of
approximately $3,101 million, which constitutes principal
plus accrued but unpaid prepetition interest. Claims in
Classes 10 and 11 are pari passu and shall be
combined for voting purposes. The Filing Entities reserve the
right to seek Bankruptcy Court approval of a merger of
Class 10 and Class 11.
b. Treatment: The legal, equitable, and contractual
rights of holders of Senior Unsecured Credit Agreement Claims
are Impaired by the Plan of Reorganization.
(i) If Class 11 Senior Unsecured Credit Agreement
Claims votes to accept the Plan of Reorganization, on, or as
soon as reasonably practicable after, the Effective Date, each
holder of an Allowed Senior Unsecured Credit Agreement Claim
shall receive its pro rata share of
(a) indebtedness under credit facilities of Reorganized CIT
on substantially the same terms as the Series A Notes in
lieu of a distribution of the Series A Notes, equal to a
distribution in the amount of 70% of such holder’s Allowed
Senior Unsecured Credit Agreement Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest) and (b) New Common Interests allocated to 30% of
such holder’s Allowed Senior Unsecured Credit Agreement
Claim (which Allowed Claim constitutes principal plus accrued
but unpaid prepetition interest) as follows: (A) if
Class 7 Canadian Senior Unsecured Note Claims votes to
accept the Plan and (1) if Class 12 and Class 13
vote to accept the Plan, 9.4% of New Common Interests,
(2) if Class 12 votes to accept the Plan and
Class 13 does not vote to accept the Plan, 9.5% of New
Common Interests, (3) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
10.3% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 10.3%
of New Common Interests or (B) if Class 7 Canadian
Senior Unsecured Note Claims does not vote to accept the Plan
and (1) if Class 12 and Class 13 vote to accept
the Plan, 8.8% of New Common Interests, (2) if
Class 12 votes to accept the Plan and Class 13 does
not vote to accept the Plan, 8.9% of New Common Interests,
(3) if Class 12 does not vote to accept the Plan and
if Class 13 votes to accept the Plan, 9.6% of New Common
Interests, or (4) if neither Class 12 nor
Class 13 vote to accept the Plan, 9.6% of New Common
Interests, as set forth more fully in Article IV.E of the
Plan of Reorganization.
(ii) If Class 11 Senior Unsecured Credit Agreement
Claims does not vote to accept the Plan of Reorganization and
the Plan of Reorganization is nonetheless confirmed, on, or as
soon as reasonably practicable after, the Effective Date, each
holder of an Allowed Senior Unsecured Credit Agreement Claim
shall (a) receive its pro rata share of
(i) Series A Notes, equal to a distribution in the
amount
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of 70% of such holder’s Allowed Senior Unsecured Credit
Agreement Claim (which Allowed Claim constitutes principal plus
accrued but unpaid prepetition interest) and (ii) New
Common Interests allocated to 30% of such holder’s Allowed
Senior Unsecured Credit Agreement Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest) as follows: (A) if Class 7 Canadian Senior
Unsecured Note Claims votes to accept the Plan and (1) if
Class 12 and Class 13 vote to accept the Plan, 9.4% of
New Common Interests, (2) if Class 12 votes to accept
the Plan and Class 13 does not vote to accept the Plan,
9.5% of New Common Interests, (3) if Class 12 does not
vote to accept the Plan and if Class 13 votes to accept the
Plan, 10.3% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 10.3%
of New Common Interests or (B) if Class 7 Canadian
Senior Unsecured Note Claims does not vote to accept the Plan
and (1) if Class 12 and Class 13 vote to accept
the Plan, 8.8% of New Common Interests, (2) if
Class 12 votes to accept the Plan and Class 13 does
not vote to accept the Plan, 8.9% of New Common Interests,
(3) if Class 12 does not vote to accept the Plan and
if Class 13 votes to accept the Plan, 9.6% of New Common
Interests, or (4) if neither Class 12 nor
Class 13 vote to accept the Plan, 9.6% of New Common
Interests, as set forth more fully in Article IV.E of the
Plan of Reorganization.
12. Class 12— Senior Subordinated
Note Claims
a. Claims in Class: Class 12 consists of Senior
Subordinated Note Claims in the Allowed amount of approximately
$1,200 million, which constitutes principal plus accrued
but unpaid prepetition interest.
b. Treatment: The legal, equitable, and contractual
rights of holders of Senior Subordinated Note Claims are
Impaired under the Plan of Reorganization. On, or as soon as
reasonably practicable after the Effective Date, each holder of
an Allowed Senior Subordinated Note Claim shall receive its
pro rata share of (i) (A) 7.5% of New Common
Interests if Class 7 and Class 13 vote to accept the
Plan of Reorganization, (B) 7.6% of New Common Interests if
Class 7 votes to accept the Plan of Reorganization and
Class 13 does not vote to accept the Plan of Reorganization
(C) 7.5% of New Common Interests if Class 7 does not
vote to accept the Plan of Reorganization and Class 13
votes to accept the Plan of Reorganization and (D) 7.6% of
New Common Interests if Class 7 and Class 13 do not
vote to accept the Plan of Reorganization; provided
that Class 12 votes to accept the Plan of
Reorganization; provided further however
that in the event that Class 12 does not vote to accept the
Plan of Reorganization but the Plan of Reorganization is
nonetheless confirmed, no holder of an Allowed Senior
Subordinated Note Claim shall receive any shares of New Common
Interests, and (ii) Contingent Value Rights, as set forth
more fully in Article IV.F and Article IV.H of the
Plan of Reorganization. The foregoing Class 12 treatment shall
not be adjusted in the event Class 13 receives the treatment
described in Article III.G.13.c of the Plan of Reorganization.
13. Class 13 — Junior Subordinated
Note Claims
a. Claims in Class: Class 13 consists of Junior
Subordinated Note Claims in the Allowed amount of approximately
$779 million, which constitutes principal plus accrued but
unpaid prepetition interest.
b. Treatment: The legal, equitable, and contractual
rights of holders of Junior Subordinated Note Claims are
Impaired under the Plan of Reorganization. On, or as soon as
reasonably practicable after, the Effective Date, each holder of
an Allowed Junior Subordinated Note Claim shall receive its
pro rata share of (a) 0.8% of New Common
Interests if Class 7 and Class 12 vote to accept the
Plan of Reorganization or (b) 0.7% of New Common Interests
if Class 7 does not vote to accept the Plan of
Reorganization and Class 12 votes to accept the Plan of
Reorganization; provided that Class 12 and
13 vote to accept the Plan of Reorganization;
provided further however that if
Class 12 and Class 13 do not vote to accept the Plan
of Reorganization but the Plan of Reorganization is nonetheless
confirmed, no holder of an Allowed Junior Subordinated Note
Claim shall receive any shares of New Common Interests and
(b) Contingent Value Rights, as set forth more fully in
Article IV.G and IV.H of the Plan of Reorganization.
c. The Company is in discussions with certain holders of
Junior Subordinated Note Claims whereby such holders would agree
to execute an agreement to vote their Junior Subordinated Notes
in favor of the
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Plan of Reorganization in exchange for modifying Class 13
treatment to increase to 1.5% the percentage of New Common
Interests distributable pro rata to holders of Junior
Subordinated Note Claims (which percentage shall be subject to
adjustment in accordance with the terms of the Plan of
Reorganization) in the event Class 12 and Class 13
accept the Plan of Reorganization. In the event the Company
reaches agreement with such holders, the percentage of New
Common Interests distributable to other holders under the Plan
of Reorganization will be ratably reduced, thereby reflecting
the increased distribution to holders of Junior Subordinated
Note Claims. The Company anticipates providing supplemental
disclosure prior to the Voting Deadline setting forth such
adjustments to treatment for classes receiving New Common
Interests.
14. Class 14 — Subordinated 510(b)
Claims
a. Claims in Class: Class 14 consists of
Subordinated 510(b) Claims.
b. Treatment: The legal, equitable and contractual
rights of holders of Subordinated 510(b) Claims are impaired
under the Plan of Reorganization. The holders of Subordinated
510(b) Claims shall not receive or retain any property under the
Plan of Reorganization on account of such Subordinated 510(b)
Claims.
15. Class 15 — Old Preferred Interests
a. Interests in Class: Class 15 consists of all
Old Preferred Interests.
b. Treatment: The legal, equitable, and contractual
rights of holders of Old Preferred Interests are Impaired under
the Plan of Reorganization. On the Effective Date, all Old
Preferred Interests shall be cancelled, terminated and
extinguished. However, each holder of an Old Preferred Interest
shall receive Contingent Value Rights, as set forth more fully
in Article IV.H of the Plan of Reorganization.
16. Class 16— Old Common Interests
a. Interests in Class: Class 16 consists of all
Old Common Interests.
b. Treatment: The legal, equitable and contractual
rights of the holders of Old Common Interests are Impaired by
the Plan of Reorganization. On the Effective Date, all Old
Common Interests shall be cancelled, terminated and extinguished.
17. Class 17— Old Delaware Funding
Interests
a. Interests in Class: Class 17 consists of all
Old Delaware Funding Interests.
b. Treatment: In the event that (i) the holders
of at least two-thirds in amount of the Allowed Canadian Senior
Note Claims actually voting in Class 7 have voted to accept
the Plan of Reorganization and (ii) the holders of more
than one-half in number of the Allowed Canadian Senior Note
Claims actually voting in Class 7 have voted to accept the
Plan of Reorganization, in each case not counting the vote of
any holder designated under section 1126(e) of the
Bankruptcy Code, the Old Delaware Funding Interests shall be
Reinstated.
18. Class 18— Other Equity Interests
(if any)
a. Interests in Class: Class 18 consists of all
Other Equity Interests.
b. Treatment: The legal, equitable and contractual
rights of the holders of Other Equity Interests (if any) are
Impaired by the Plan of Reorganization. On the Effective Date,
all Other Equity Interests shall be terminated, cancelled and
extinguished and each holder of Other Equity Interests shall not
be entitled to, and shall not receive or retain any property or
interest in property on account of, such Other Equity Interests.
Allowed
Claims
Notwithstanding any provision of the Plan of Reorganization to
the contrary, the Filing Entities
and/or the
Reorganized Debtors shall only make distributions to holders of
Allowed Claims. No holder of a Disputed
190
Claim will receive any distribution on account thereof until and
to the extent that its Disputed Claim becomes an Allowed Claim.
Postpetition
Interest
In accordance with section 502(b)(2) of the Bankruptcy
Code, the amount of all Claims against the Filing Entities shall
be calculated as of the Petition Date. Except as otherwise
explicitly provided in the Plan of Reorganization, in an order
of the Bankruptcy Court or required by the Bankruptcy Code, no
holder of a Claim shall be entitled to or receive Postpetition
Interest.
Special
Provision Regarding Unimpaired Claims
Except as otherwise provided in the Plan of Reorganization,
nothing shall affect the Filing Entities’ rights and
defenses, both legal and equitable, with respect to any
Unimpaired Claim (including Claims that are Allowed pursuant to
the Plan of Reorganization), including, without limitation, all
rights with respect to legal and equitable defenses to setoffs
or recoupments against Unimpaired Claims, and the Filing
Entities’ failure to object to such Claims in the
Chapter 11 Cases shall be without prejudice to the
Reorganized Debtors’ right to contest or defend against
such Claims in (i) any appropriate non-bankruptcy forum as
if such Chapter 11 Cases had not been commenced or
(ii) the Bankruptcy Court (such forum to be selected at the
Filing Entities’ option).
Means of
Implementation
Allocation
To Holders Of Canadian Senior Unsecured Note Claims
If Class 7 Canadian Senior Unsecured Note Claims vote to
accept the Plan of Reorganization, on, or as soon as reasonably
practicable after, the Effective Date and without the need for
any action by the holder of a Canadian Senior Unsecured Note
Claim or the Reorganized Debtors, each holder of a Canadian
Senior Unsecured Note Claim shall transfer and assign to the
Reorganized Debtors, all of such holder’s rights and
obligations under the Canadian Senior Unsecured Notes, free and
clear of any liens, claims, charges, security interests or other
legal or equitable encumbrances, limitations or restrictions
(collectively, “Liens”), and any promissory notes or
other evidence of indebtedness payable to each such holder of a
Canadian Senior Unsecured Note Claim under any Canadian Senior
Unsecured Notes shall thereafter be held of record by the
Reorganized Debtors. In exchange for such transfer and
assignment of the Canadian Senior Unsecured Notes held by each
holder of a Canadian Senior Unsecured Note Claim (the
“Canadian Senior Unsecured Note Exchange”), on account
of the approximately $2,188 million Allowed Canadian Senior
Unsecured Note Claims, on, or as soon as reasonably practicable
after, the Effective Date, each holder of an Allowed Canadian
Senior Unsecured Note Claim shall receive its pro rata share of
Series B Notes, equal to a distribution in the amount of
100% of such holder’s Allowed Canadian Senior Unsecured
Note Claim (which Allowed Claim constitutes principal plus
accrued but unpaid prepetition interest), in full settlement and
satisfaction of any Claims held by such holder of an Allowed
Canadian Senior Unsecured Note Claim. Following the Canadian
Senior Unsecured Note Exchange, all Canadian Senior Unsecured
Notes transferred and assigned to the Reorganized Debtors shall
no longer be outstanding and shall automatically be cancelled
and shall cease to exist.
If Class 7 Canadian Senior Unsecured Note Claims does not
vote to accept the Plan of Reorganization and the Plan of
Reorganization is nonetheless confirmed, on, or as soon as
reasonably practicable after, the Effective Date, each holder of
an Allowed Canadian Senior Unsecured Note Claim shall receive
its pro rata share of (a) Series A
Notes, equal to a distribution in the amount of 70% of such
holder’s Allowed Canadian Senior Unsecured Note Claim
(which Allowed Claim constitutes principal plus accrued but
unpaid prepetition interest) and (b) (i) 6.2% of New Common
Interests if Class 12 and Class 13 vote to accept the
Plan, (ii) 6.3% of New Common Interests if Class 12
votes to accept the Plan and Class 13 does not vote to
accept the Plan, (iii) 6.8% of New Common Interests if
Class 12 does not vote to accept the Plan and if
Class 13 votes to accept the Plan, and (iv) 6.8% of
New Common Interests if neither Class 12 nor Class 13
vote to accept the
191
Plan, allocated to 30% of such holder’s Allowed Canadian
Senior Unsecured Note Claim (which Allowed Claim constitutes
principal plus accrued but unpaid prepetition interest), each
(a) and (b) on account of the Canadian Senior
Unsecured Notes Guarantee Claim against CIT Group Inc.
If Class 7 Canadian Senior Unsecured Note Claims does
not vote to accept the Plan of Reorganization and the Plan of
Reorganization is nonetheless confirmed, the holders of Allowed
Canadian Senior Unsecured Note Claims shall retain their
Canadian Senior Unsecured Notes and Allowed Canadian Senior
Unsecured Note Claims against Delaware Funding, provided,
however that: (i) such holders may not, in
the aggregate, recover more than the Allowed amount of their
Canadian Senior Unsecured Note Claim on account of the combined
claims against CIT Group Inc. and Delaware Funding; and
(ii) the Debtors reserve the right to, among other things,
(w) not amend the Senior Credit Facility to remove Delaware
Funding as a guarantor of the Senior Credit Facility,
(x) estimate the holders’ claims against Delaware
Funding after receiving the distribution of Series A Notes
and New Common Interests, (y) extend the maturity of those
certain Intercompany Notes in accordance with the terms thereof
or (z) merge Delaware Funding into CIT Group Inc. in
accordance with the terms of the Canadian Senior Unsecured
Notes Indentures.
Allocation
Of New Notes And Issuance Of New Common Interests To Holders Of
Long-Dated Senior Unsecured Note Claims
On, or as soon as reasonably practicable after, the Effective
Date and without the need for any action by the holder of a
Long-Dated Senior Unsecured Note Claim or the Reorganized
Debtors, each Electing Long-Dated Senior Unsecured Note Claims
Holder shall transfer and assign to the Reorganized Debtors all
of such holder’s rights and obligations under the
Long-Dated Senior Unsecured Notes, free and clear of any Liens,
and any promissory notes or other evidence of indebtedness
payable to each such holder of a Long-Dated Senior Unsecured
Note Claim under any Long-Dated Senior Unsecured Notes shall
thereafter be held of record by the Reorganized Debtors. In
exchange for such transfer and assignment of the Long-Dated
Senior Unsecured Notes held by each holder of a Long-Dated
Senior Unsecured Note Claim (the “Long-Dated Senior
Unsecured Note Exchange”), on account of such Electing
Long-Dated Senior Unsecured Note Claims Holders’ Allowed
Long-Dated Senior Unsecured Note Claims, the Reorganized Debtors
shall allocate to each such holder its pro rata
share of (i) Series A Notes in the amount of 70% of
such holder’s Allowed Long-Dated Senior Unsecured Note
Claim (which Allowed Claim constitutes principal plus accrued
but unpaid prepetition interest) and (ii) New Common
Interests allocated to 30% of such holder’s Allowed
Long-Dated Senior Unsecured Note Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest) as follows: (A) if Class 7 Canadian Senior
Unsecured Note Claims votes to accept the Plan and (1) if
Class 12 and Class 13 vote to accept the Plan, 3.6% of
New Common Interests, (2) if Class 12 votes to accept
the Plan and Class 13 does not vote to accept the Plan,
3.6% of New Common Interests, (3) if Class 12 does not
vote to accept the Plan and if Class 13 votes to accept the
Plan, 3.9% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 3.9% of
New Common Interests or (B) if Class 7 Canadian Senior
Unsecured Note Claims does not vote to accept the Plan and
(1) if Class 12 and Class 13 vote to accept the
Plan, 3.4% of New Common Interests, (2) if Class 12
votes to accept the Plan and Class 13 does not vote to
accept the Plan, 3.4% of New Common Interests, (3) if
Class 12 does not vote to accept the Plan and if
Class 13 votes to accept the Plan, 3.7% of New Common
Interests, or (4) if neither Class 12 nor
Class 13 vote to accept the Plan, 3.7% of New Common
Interests, in full satisfaction and settlement of any Claims
held by such holder of an Allowed Long-Dated Senior Unsecured
Note Claim. Following the Long-Dated Senior Unsecured Note
Exchange, all Long-Dated Senior Unsecured Notes transferred and
assigned to the Reorganized Debtors shall no longer be
outstanding and shall automatically be cancelled and shall cease
to exist.
Allocation
Of New Notes And Issuance Of New Common Interests To Holders Of
Senior Unsecured Note Claims
On, or as soon as reasonably practicable after, the Effective
Date and without the need for any action by the holder of a
Senior Unsecured Note Claim or the Reorganized Debtors, each
holder of a Senior Unsecured Note Claim shall transfer and
assign to the Reorganized Debtors all of such holder’s
rights and obligations
192
under the Senior Unsecured Notes, free and clear of any Liens,
and any promissory notes or other evidence of indebtedness
payable to each such holder of a Senior Unsecured Note Claim
under any Senior Unsecured Notes shall thereafter be held of
record by the Reorganized Debtors. In exchange for such transfer
and assignment of the Senior Unsecured Notes held by each holder
of a Senior Unsecured Note Claim (the “Senior Unsecured
Note Exchange”), on account of the approximately
$25,504 million Allowed Senior Unsecured Note Claims, the
Reorganized Debtors shall allocate to each such holder its
pro rata share of (i) Series A Notes in
the amount of 70% of such holder’s Allowed Senior Unsecured
Note Claim (which Allowed Claim constitutes principal plus
accrued but unpaid prepetition interest) and (ii) New
Common Interests allocated to 30% of such holder’s Allowed
Senior Unsecured Note Claim (which Allowed Claim constitutes
principal plus accrued but unpaid prepetition interest) as
follows: (A) if Class 7 Canadian Senior Unsecured Note
Claims votes to accept the Plan and (1) if Class 12
and Class 13 vote to accept the Plan, 77.7% of New Common
Interests, (2) if Class 12 votes to accept the Plan
and Class 13 does not vote to accept the Plan, 78.3% of New
Common Interests, (3) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
84.7% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 84.7%
of New Common Interests or (B) if Class 7 Canadian
Senior Unsecured Note Claims does not vote to accept the Plan
and (1) if Class 12 and Class 13 vote to accept
the Plan, 72.5% of New Common Interests, (2) if
Class 12 votes to accept the Plan and Class 13 does
not vote to accept the Plan, 73.0% of New Common Interests,
(3) if Class 12 does not vote to accept the Plan and
if Class 13 votes to accept the Plan, 79.0% of New Common
Interests, or (4) if neither Class 12 nor
Class 13 vote to accept the Plan, 79.0% of New Common
Interests, in full satisfaction and settlement of any Claims
held by such holder of an Allowed Senior Unsecured Note Claim.
Following the Senior Unsecured Note Exchange, all Senior
Unsecured Notes transferred and assigned to the Reorganized
Debtors shall no longer be outstanding and shall automatically
be cancelled and shall cease to exist.
Allocation
Of New Notes And Issuance Of New Common Interests To Holders Of
Senior Unsecured Term Loan Claims
Claims in Classes 10 and 11 are pari passu and
shall be combined for voting purposes. On, or as soon as
reasonably practicable after, the Effective Date and without the
need for any action by the holder of a Senior Unsecured Term
Loan Claim or the Reorganized Debtors, each holder of a Senior
Unsecured Term Loan Claim shall transfer and assign to the
Reorganized Debtors all of such holder’s rights and
obligations under the Senior Unsecured Term Loans, free and
clear of any Liens, and any promissory notes or other evidence
of indebtedness payable to each such holder of a Senior
Unsecured Term Loan Claim under any Senior Unsecured Term Loans
shall thereafter be held of record by the Reorganized Debtors.
In exchange for such transfer and assignment of the Senior
Unsecured Term Loans held by each holder of a Senior Unsecured
Term Loan Claim (the “Senior Unsecured Term Loan
Exchange”), on account of the approximately
$321 million Allowed Senior Unsecured Term Loan Claims
(a) if Class 10 Senior Unsecured Term Loan Claims
votes to accept the Plan of Reorganization, on, or as soon as
reasonably practicable after, the Effective Date, each holder of
an Allowed Senior Unsecured Term Loan Claim shall receive its
pro rata share of (i) indebtedness under
credit facilities of Reorganized CIT on substantially the same
terms as the Series A Notes, in lieu of a distribution of
the Series A Notes, equal to a distribution in the amount
of 70% of such holder’s Allowed Senior Unsecured Term Loan
Claim (which Allowed Claim constitutes principal plus accrued
but unpaid prepetition interest) and (ii) New Common
Interests allocated to 30% of such holder’s Allowed Senior
Unsecured Term Loan Claim (which Allowed Claim constitutes
principal plus accrued but unpaid prepetition interest) as
follows: (A) if Class 7 Canadian Senior Unsecured Note
Claims votes to accept the Plan and (1) if Class 12
and Class 13 vote to accept the Plan, 1.0% of New Common
Interests, (2) if Class 12 votes to accept the Plan
and Class 13 does not vote to accept the Plan, 1.0% of New
Common Interests, (3) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
1.1% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 1.1% of
New Common Interests or (B) if Class 7 Canadian Senior
Unsecured Note Claims does not vote to accept the Plan and
(1) if Class 12 and Class 13 vote to accept the
Plan, 0.9% of New Common Interests, (2) if Class 12
votes to accept the Plan and Class 13 does not vote to
accept the Plan, 0.9% of New Common Interests, (3) if
Class 12 does not vote to accept the Plan and if
Class 13 votes to accept the Plan, 1.0% of New Common
Interests, or (4) if neither Class 12 nor
193
Class 13 vote to accept the Plan, 1.0% of New Common
Interests or (b) if Class 10 Senior Unsecured Term
Loan Claims does not vote to accept the Plan of Reorganization
and the Plan of Reorganization is nonetheless confirmed, on, or
as soon as reasonably practicable after, the Effective Date,
each holder of an Allowed Senior Unsecured Term Loan Claim shall
receive its pro rata share of (A) Series A Notes,
equal to a distribution in the amount of 70% of such
holder’s Allowed Senior Unsecured Term Loan Claim (which
Allowed Claim constitutes principal plus accrued but unpaid
prepetition interest) and (B) New Common Interests
allocated to 30% of such holder’s Allowed Senior Unsecured
Term Loan Claim (which Allowed Claim constitutes principal plus
accrued but unpaid prepetition interest) as follows: (1) if
Class 7 Canadian Senior Unsecured Note Claims votes to
accept the Plan and (A) if Class 12 and Class 13
vote to accept the Plan, 1.0% of New Common Interests,
(B) if Class 12 votes to accept the Plan and
Class 13 does not vote to accept the Plan, 1.0% of New
Common Interests, (C) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
1.1% of New Common Interests, or (D) if neither
Class 12 nor Class 13 vote to accept the Plan, 1.1% of
New Common Interests or (2) if Class 7 Canadian Senior
Unsecured Note Claims does not vote to accept the Plan and
(A) if Class 12 and Class 13 vote to accept the
Plan, 0.9% of New Common Interests, (B) if Class 12
votes to accept the Plan and Class 13 does not vote to
accept the Plan, 0.9% of New Common Interests, (C) if
Class 12 does not vote to accept the Plan and if
Class 13 votes to accept the Plan, 1.0% of New Common
Interests, or (D) if neither Class 12 nor
Class 13 vote to accept the Plan, 1.0% of New Common
Interests, in full satisfaction and settlement of any Claims
held by such holder of an Allowed Senior Unsecured Term Loan
Claim. Following the Senior Unsecured Term Loan Exchange, all
Senior Unsecured Term Loans transferred and assigned to the
Reorganized Debtors shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist.
Allocation
Of New Notes And Issuance Of New Common Interests To Holders Of
Senior Unsecured Credit Agreement Claims
Claims in Classes 10 and 11 are pari passu and
shall be combined for voting purposes. On, or as soon as
reasonably practicable after, the Effective Date and without the
need for any action by the holder of a Senior Unsecured Credit
Agreement Claim or the Reorganized Debtors, each holder of a
Senior Unsecured Credit Agreement Claim shall transfer and
assign to the Reorganized Debtors all of such holder’s
rights and obligations under the Senior Unsecured Credit
Agreements, free and clear of any Liens, and any promissory
notes or other evidence of indebtedness payable to each such
holder of a Senior Unsecured Credit Agreement Claim under any
Senior Unsecured Credit Agreements shall thereafter be held of
record by the Reorganized Debtors. In exchange for such transfer
and assignment of the Senior Unsecured Credit Agreements held by
each holder of a Senior Unsecured Credit Agreement Claim (the
“Senior Unsecured Credit Agreement Exchange”), on
account of the approximately $3,101 million Allowed Senior
Unsecured Credit Agreement Claims (a) if Class 11
Senior Unsecured Credit Agreement Claims votes to accept the
Plan of Reorganization, on, or as soon as reasonably practicable
after, the Effective Date, each holder of an Allowed Senior
Unsecured Credit Agreement Claim shall receive its pro
rata share of (i) indebtedness under credit
facilities of Reorganized CIT on substantially the same terms as
the Series A Notes, in lieu of a distribution of the
Series A Notes, equal to a distribution in the amount of
70% of such holder’s Allowed Senior Unsecured Credit
Agreement Claim (which Allowed Claim constitutes principal plus
accrued but unpaid prepetition interest) and (ii) New
Common Interests allocated to 30% of such holder’s Allowed
Senior Unsecured Credit Agreement Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest) as follows: (A) if Class 7 Canadian Senior
Unsecured Note Claims votes to accept the Plan and (1) if
Class 12 and Class 13 vote to accept the Plan, 9.4% of
New Common Interests, (2) if Class 12 votes to accept
the Plan and Class 13 does not vote to accept the Plan,
9.5% of New Common Interests, (3) if Class 12 does not
vote to accept the Plan and if Class 13 votes to accept the
Plan, 10.3% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 10.3%
of New Common Interests or (B) if Class 7 Canadian
Senior Unsecured Note Claims does not vote to accept the Plan
and (1) if Class 12 and Class 13 vote to accept
the Plan, 8.8% of New Common Interests, (2) if
Class 12 votes to accept the Plan and Class 13 does
not vote to accept the Plan, 8.9% of New Common Interests,
(3) if Class 12 does not vote to accept the Plan and
if Class 13 votes to accept the Plan, 9.6% of New Common
Interests, or (4) if neither Class 12 nor
Class 13 vote to accept the Plan, 9.6% of New Common
Interests or (b) if Class 11 Senior Unsecured Credit
Agreement Claims does not vote to accept the Plan of
Reorganization and the Plan of
194
Reorganization is nonetheless confirmed, on, or as soon as
reasonably practicable after, the Effective Date, each holder of
an Allowed Senior Unsecured Credit Agreement Claim shall receive
its pro rata share of (A) Series A Notes, equal to a
distribution in the amount of 70% of such holder’s Allowed
Senior Unsecured Credit Agreement Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest) and (B) New Common Interests allocated to 30% of
such holder’s Allowed Senior Unsecured Credit Agreement
Claim (which Allowed Claim constitutes principal plus accrued
but unpaid prepetition interest) as follows: (1) if
Class 7 Canadian Senior Unsecured Note Claims votes to
accept the Plan of Reorganization and (A) if Class 12
and Class 13 vote to accept the Plan of Reorganization,
9.4% of New Common Interests, (B) if Class 12 votes to
accept the Plan of Reorganization and Class 13 does not
vote to accept the Plan, 9.5% of New Common Interests,
(C) if Class 12 does not vote to accept the Plan of
Reorganization and if Class 13 votes to accept the Plan of
Reorganization, 10.3% of New Common Interests, or (D) if
neither Class 12 nor Class 13 vote to accept the Plan
of Reorganization, 10.3% of New Common Interests or (2) if
Class 7 Canadian Senior Unsecured Note Claims does not vote
to accept the Plan of Reorganization and (A) if
Class 12 and Class 13 vote to accept the Plan of
Reorganization, 8.8% of New Common Interests, (B) if
Class 12 votes to accept the Plan of Reorganization and
Class 13 does not vote to accept the Plan of
Reorganization, 8.9% of New Common Interests, (C) if
Class 12 does not vote to accept the Plan of Reorganization
and if Class 13 votes to accept the Plan of Reorganization,
9.6% of New Common Interests, and (D) if neither
Class 12 nor Class 13 votes to accept the Plan of
Reorganization, 9.6% of New Common Interests, in full
satisfaction and settlement of any Claims held by such holder of
an Allowed Senior Unsecured Term Loan Claim. Following the
Senior Unsecured Credit Agreement Exchange, all Senior Unsecured
Credit Agreements transferred and assigned to the Reorganized
Debtors shall no longer be outstanding and shall automatically
be cancelled and shall cease to exist.
Issuance
Of New Common Interests To Holders Of Senior Subordinated Note
Claims
On, or as soon as reasonably practicable after, the Effective
Date and without the need for any action by the holder of a
Senior Subordinated Note Claim or the Reorganized Debtors, each
holder of a Senior Subordinated Note Claim shall transfer and
assign to the Reorganized Debtors, all of such holder’s
rights and obligations under the Senior Subordinated Notes, free
and clear of any Liens, and any promissory notes or other
evidence of indebtedness payable to each such holder of a Senior
Subordinated Note Claim under the Senior Subordinated Notes
shall thereafter be held of record by the Reorganized Debtors.
In exchange for such transfer and assignment of the Senior
Subordinated Notes held by each holder of a Senior Subordinated
Note Claim (the “Senior Subordinated Notes Exchange”),
on account of the approximately $1,200 million Allowed
Senior Subordinated Note Claims, each holder of an Allowed
Senior Subordinated Note Claim shall receive its pro
rata share of (i)(A) 7.5% of New Common Interests if
Class 7 and Class 13 vote to accept the Plan of
Reorganization, (B) 7.6% of New Common Interests if
Class 7 votes to accept the Plan of Reorganization and
Class 13 does not vote to accept the Plan of
Reorganization, (C) 7.5% of New Common Interests if
Class 7 does not vote to accept the Plan of Reorganization
and Class 13 votes to accept the Plan of Reorganization and
(D) 7.6% of New Common Interests if Class 7 and
Class 13 do not vote to accept the Plan of Reorganization;
provided that Class 12 votes to accept the
Plan of Reorganization; provided further
however that in the event that Class 12 does not
vote to accept the Plan of Reorganization but the Plan of
Reorganization is nonetheless confirmed, no holder of an Allowed
Senior Subordinated Note Claim shall receive any shares of New
Common Interests, and (ii) Contingent Value Rights, in full
satisfaction and settlement of any Claims held by such holder of
an Allowed Senior Subordinated Note Claim. Following the Senior
Subordinated Notes Exchange, the Senior Subordinated Notes
transferred and assigned to the Reorganized Debtors shall no
longer be outstanding and shall automatically be cancelled and
shall cease to exist. The foregoing Class 12 treatment
shall not be adjusted in the event Class 13 receives the
treatment described in Article III.G.13.c of the Plan of
Reorganization.
Issuance
Of New Common Interests To Holders Of Junior Subordinated Note
Claims
On, or as soon as reasonably practicable after, the Effective
Date and without the need for any action by holders of a Junior
Subordinated Note Claim or the Reorganized Debtors, each holder
of a Junior Subordinated Note Claim shall transfer and assign to
the Reorganized Debtors, all of such holder’s rights and
obligations under the Junior Subordinated Notes, free and clear
of any Liens, and any promissory notes or other evidence
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of indebtedness payable to each such holder of a Junior
Subordinated Note Claim under the Junior Subordinated Notes
shall thereafter be held of record by the Reorganized Debtors.
In exchange for such transfer and assignment of the Junior
Subordinated Notes held by each holder of a Junior Subordinated
Note Claim (the “Junior Subordinated Notes Exchange”
and together with the Canadian Senior Unsecured Note Exchange,
the Long-Dated Senior Unsecured Note Exchange, the Senior
Unsecured Note Exchange, the Senior Unsecured Term Loan
Exchange, the Senior Unsecured Credit Agreement Exchange and the
Senior Subordinated Notes Exchange, the “Exchanges”),
on account of approximately $779 million of Allowed Junior
Subordinated Note Claims, each holder of an Allowed Junior
Subordinated Note Claim shall receive its pro rata
share of (a) 0.8% of New Common Interests if Class 7
and Class 12 vote to accept the Plan of Reorganization or
(b) 0.7% of New Common Interests if Class 7 does not
vote to accept the Plan of Reorganization and Class 12
votes to accept the Plan of Reorganization; provided
that Class 13 votes to accept the Plan of
Reorganization; provided further however
that if Class 12 and Class 13 do not vote to accept
the Plan of Reorganization but the Plan of Reorganization is
nonetheless confirmed, no holder of an Allowed Junior
Subordinated Note Claim shall receive any shares of New Common
Interests and (b) Contingent Value Rights, in full
satisfaction and settlement of any Claims held by such holder of
an Allowed Junior Subordinated Note Claim. Following the Junior
Subordinated Notes Exchange, the Junior Subordinated Notes
acquired by the Reorganized Debtors shall no longer be
outstanding and shall automatically be cancelled and shall cease
to exist.
CIT Group Inc. is in discussions with holders of Junior
Subordinated Note Claims whereby such holders would agree to
execute an agreement to vote their Junior Subordinated Notes in
favor of the Plan of Reorganization in exchange for modifying
Class 13 treatment to increase to 1.5% the percentage of
New Common Interests distributable pro rata to holders of Junior
Subordinated Note Claims (which percentage shall be subject to
adjustment in accordance with the terms of the Plan of
Reorganization) in the event Class 12 and Class 13
accept the Plan of Reorganization. As a result of this
agreement, the percentage of New Common Interests distributable
to other holders under the Plan of Reorganization will be
ratably reduced, thereby reflecting the increased distribution
to holders of Junior Subordinated Notes. The Filing Entities
anticipate providing supplemental disclosure prior to the Voting
Deadline setting forth such adjustments to treatment for classes
receiving New Common Interests.
Allocation
Of Contingent Value Rights
On, or as soon as reasonably practicable after, the Effective
Date and substantially contemporaneously with the Exchanges, the
Reorganized Debtors shall allocate non-transferable contingent
value rights (the “Contingent Value Rights” or
“CVRs”) to (i) holders of Senior Subordinated
Note Claims (the “Senior CVRs”) pro rata
based on each such holder’s share of the aggregate amount
of Senior Subordinated Note Claims, (ii) holders of Junior
Subordinated Note Claims (the “Junior CVR”) pro
rata based on each such holder’s share of the
aggregate amount of Junior Subordinated Note Claims, and
(iii) holders of Old Preferred Interests (the
“Preferred Stock CVRs”) pro rata based
on each such holder’s share of the aggregate combined
liquidation preference of the Old Preferred Interests, including
accrued and unpaid dividends thereon to the Petition Date. The
CVRs entitle holders of such Claims to a distribution under the
Plan of Reorganization in the form of New Common Interests under
certain circumstances, as described in more detail below.
CVR
Distributions
If, on the Measurement Date, the aggregate Fair Market Value of
the
Class 8-11
Securities exceeds the
Class 8-11
Par Recovery Amount (such excess, the
“Class 8-11
Excess Value Amount”), the Disbursing Agent shall, as soon
as reasonably practicable after the Measurement Date, distribute
or caused to be distributed to holders of CVRs, New Common
Interests in the following order of priority:
FIRST, pro rata to holders of Senior CVRs, an
amount of New Common Interests having an aggregate Fair Market
Value (as adjusted to take into account the dilutive impact of
any distribution required to be made on account of CVRs
hereunder) equal to the lesser of (i) an amount such that,
immediately after such distribution, the Class 8-11 Excess Value
Amount (as adjusted to take into account the dilutive impact of
any distribution required to be made on account of CVRs
hereunder) is reduced to
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zero and (ii) the excess of (x) the
Class 12 Par Recovery Amount over (y) the
aggregate Fair Market Value (as adjusted to take into account
the dilutive impact of any distribution required to be made on
account of CVRs hereunder) of the New Common Interests (if any)
received by holders of Senior Subordinated Note Claims in the
Senior Subordinated Notes Exchange;
SECOND, if, following any distribution required to be made on
account of Senior CVRs, the
Class 8-11
Excess Value Amount (as adjusted to take into account the
dilutive impact of any distribution required to be made on
account of CVRs hereunder) is greater than zero, pro
rata to holders of Junior CVRs, an amount of New Common
Interests having an aggregate Fair Market Value (as adjusted to
take into account the dilutive impact of any distribution
required to be made on account of CVRs hereunder) equal to the
lesser of (i) an amount such that, immediately after such
distribution and after giving effect to any distribution on
account of Senior CVRs, the
Class 8-11
Excess Value Amount (as adjusted to take into account the
dilutive impact of any distribution required to be made on
account of CVRs hereunder) is reduced to zero and (ii) the
excess of (A) the Class 13 Par Recovery Amount
over (B) the aggregate Fair Market Value (as
adjusted to take into account the dilutive impact of any
distribution required to be made on account of CVRs hereunder)
of the New Common Interests (if any) received by holders of
Junior Subordinated Note Claims in the Junior Subordinated Notes
Exchange; and
THIRD, if, following any distribution required to be made on
account of Junior CVRs, the
Class 8-11
Excess Value Amount (as adjusted to take into account the
dilutive impact of any distribution required to be made on
account of CVRs hereunder) is greater than zero, pro
rata to holders of Preferred Stock CVRs, an amount of New
Common Interests having an aggregate Fair Market Value (as
adjusted to take into account the dilutive impact of any
distribution required to be made on account of CVRs hereunder)
equal to the lesser of (i) an amount such that, immediately
after such distribution and after giving effect to any
distribution on account of Senior CVRs and Junior CVRs, the
Class 8-11
Excess Value Amount (as adjusted to take into account the
dilutive impact of any distribution required to be made on
account of CVRs hereunder) is reduced to zero and (ii) the
Class 15 Par Recovery Amount.
There shall be no distribution on account of CVRs if, as of the
Measurement Date, the aggregate Fair Market Value of the
Class 8-11
Securities is less than or equal to the
Class 8-11
Par Recovery Amount.
Termination
The CVRs shall terminate and cease to exist on the Measurement
Date unless a distribution is required to be made on account of
the CVRs, in which case the CVRs shall terminate and cease to
exist on the date such distribution is made.
Disbursement
Agent
The Disbursement Agent shall determine, in the exercise of its
reasonable good faith discretion after consultation with a
financial advisor, the amount of any distribution of New Common
Interests required to be made on account of CVRs pursuant to
Article IV.H of the Plan of Reorganization, including
without limitation, the anticipated impact of Fair Market Value
as a result of any distribution of New Common Interests required
to be made under the Plan of Reorganization on account of CVRs.
Each such determination by the Disbursement Agent shall be final
and binding.
Status
and Availability of New Common Interests
The Reorganized Debtors shall at all times during which the CVRs
remain outstanding reserve from its authorized capital a
sufficient amount of New Common Interests to provide
distributions in full to holders of CVRs pursuant to
Article IV.H of the Plan of Reorganization. If, at any time
prior to the time the CVRs terminate and cease to exist, the
Reorganized Debtors’ authorized capital shall not be
sufficient to permit distributions in full to holders of CVRs
pursuant to Article IV.H of the Plan of Reorganization,
Reorganized CIT will promptly take such corporate action as may
be necessary to increase its authorized capital to such amount
as shall be sufficient for such purposes.
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The Reorganized Debtors shall take all such action as may be
necessary to ensure that all New Common Interests distributed to
holders of CVRs pursuant to Article IV.H of the Plan of
Reorganization shall, at the time of distribution of such
securities, be duly and validly authorized, fully paid and
non-assessable.
Agreements
of CVR Holders
Each holder of CVRs, by receiving a distribution hereunder of
such CVRs, shall automatically be deemed to consent and agree
with the Reorganized Debtors and with each other holder of CVRs
that: (i) the CVRs are subject to the terms, provisions and
conditions of the Plan of Reorganization, including
Article IV.H of the Plan of Reorganization; (ii) the
CVRs will not be represented by any certificates and may not be
transferred or assigned; (iii) the CVRs do not bear any
stated rate of interest; and (iv) no holder of CVRs shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of any securities of the Reorganized Debtors
nor anything contained in the Plan of Reorganization be
construed to confer upon any holder of CVRs any of the rights of
a stockholder of the Reorganized Debtors or any right to vote
for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders, or to receive
subscription rights, or to exercise appraisal rights, or
otherwise.
Contingent
Nature of CVRs
The CVRs represent the right to receive contingent distributions
of value under the Plan of Reorganization in the form of New
Common Interests as provided in Article IV.H of the Plan of
Reorganization. Distributions on account of CVRs will be made
only to the extent required by Article IV.H of the Plan of
Reorganization and, if no such distributions are required to be
made hereunder, the CVRs will terminate and cease to exist and
holders thereof will receive no value on account of the CVRs.
Letters
of Credit Under JPM L/C Facility
JPM shall hold all cash collateral on hand as of the Petition
Date until the Effective Date, including any retainers
established for JPM counsel specified in any cash collateral
agreements between CIT Group Inc. and JPM.
JPM and the Filing Entities shall honor any and all draws under
the JPM L/C Facility in the ordinary course of business and
pursuant to the terms of the JPM L/C Facility Agreement. In the
event of any drawings, such drawings made after the Petition
Date but before the Effective Date, under any letter of credit
issued under the JPM L/C Facility (i) to the extent JPM
holds cash collateral supporting such drawn letter of credit,
JPM shall be authorized to apply such cash collateral to the
reimbursement obligation and the Filing Entities and JPM shall
stipulate, and the Filing Entities shall seek Bankruptcy Court
approval of any such stipulation, to lift the automatic stay to
allow JPM to so apply such cash collateral and (ii) to the
extent no cash collateral supports such drawn letter of credit,
Reorganized CIT shall pay the reimbursement obligation under
such drawn letter of credit in full on the Effective Date
(including any interest thereon as set forth in the JPM L/C
Facility Agreement). In no event shall JPM be permitted to
pursue, and JPM is hereby expressly enjoined from pursuing, any
non-Debtor applicant, account party or other third party for
satisfaction of a reimbursement obligation under any letter of
credit issued and drawn under the JPM L/C Facility and
JPM’s sole remedy for reimbursement of a letter of credit
issued and drawn under the JPM L/C Facility shall be against CIT
Group Inc.
and/or
Reorganized CIT as set forth in (i) and (ii) above;
provided that the foregoing forbearance is
entirely contractual and does not constitute any admission that
the automatic stay imposed by Bankruptcy Code section 362
or any other law requires such forbearance, and neither the
Filing Entities nor the Reorganized Debtors nor any of their
affiliates shall seek entry of an order during the
Chapter 11 Cases restraining JPM from so pursing any such
person or entity. JPM will not terminate any unexpired
outstanding letters of credit without consent of CIT Group Inc.
and any beneficiary thereunder, provided that the
foregoing shall not prevent JPM from issuing a notice of
non-renewal on any evergreen letter of credit for which such
renewal would cause the next renewal date to extend past the
expiry of the facility on May 14, 2010.
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If Class 6 JPM L/C Facility Claims votes to accept the
Plan, (i) on, or as soon as reasonably practicable after,
the Effective Date, Reorganized CIT shall provide JPM with the
Cash Collateralization and (ii) in exchange for the Cash
Collateralization, JPM shall not pursue any subsidiary or
affiliate of CIT Group Inc. or any other entity that JPM
contends may be co-liable with CIT Group Inc. under the JPM L/C
Facility or the JPM L/C Facility Agreement for any remedies,
claims or causes of action arising out of or relating to the JPM
L/C Facility or the JPM L/C Facility Agreement. All fees and
other charges arising under or in respect of the JPM L/C
Facility Agreement shall be paid on, or as soon as reasonably
practicable after, the Effective Date by Reorganized CIT. Upon
the Effective Date, each non-Debtor subsidiary and affiliate of
CIT Group Inc. that was or is a co-applicant or account party on
a letter of credit issued under the JPM L/C Facility shall
execute a release and waiver of any and all claims against JPM
and/or any
other lenders under the JPM L/C Facility in respect of the JPM
L/C Facility
and/or the
JPM L/C Facility Agreement arising prior to the Effective Date.
If Class 6 JPM L/C Facility Claims does not vote to accept
the Plan and the Plan is nonetheless confirmed,
(i) Reorganized CIT shall satisfy any Claims for
reimbursement under the JPM L/C Facility that arose during the
Chapter 11 Cases in full on, or as soon as reasonably
practicable after, the Effective Date and (ii) following
the Effective Date, Reorganized CIT shall pay all such Claims
for reimbursement under the JPM L/C Facility in the ordinary
course of business and upon the terms set forth in the JPM L/C
Facility Agreement. In exchange for Reorganized CIT maintaining
the reimbursement obligations in the immediately preceding
(i) and (ii), JPM shall not pursue any subsidiary or
affiliate of CIT Group Inc. or any other entity that JPM
contends may be co-liable with CIT Group Inc. under the JPM L/C
Facility Agreement for any remedies, claims or causes of action
arising out of or relating to the JPM L/C Facility or the JPM
L/C Facility Agreement.
JPM shall provide CIT Group Inc. and Reorganized CIT with
updated reports in accordance with existing procedures of the
amount of letters of credit outstanding and drawings, if any,
thereunder and JPM’s application of cash collateral against
CIT Group Inc.’s
and/or
Reorganized CIT’s reimbursement obligations. To the extent
that, due to letters of credit expiring undrawn, the amount of
cash collateral held by JPM shall at any time exceed the
amount(s) provided pursuant to the Cash Collateralization, JPM
shall release any such excess cash collateral to CIT Group Inc.
and/or
Reorganized CIT upon written request from CIT Group Inc.
and/or
Reorganized CIT.
No letters of credit shall be issued, renewed, extended or
amended under the JPM L/C Facility after the Petition Date.
Exit
Facility
On the Effective Date, the Reorganized Debtors shall
(a) enter into the Exit Facility together with all
guarantees evidencing obligations of the Reorganized Debtors
thereunder and security documents, (b) execute such
mortgages, certificates and other documentation and deliveries
as the agent under the Exit Facility reasonably requests, and
(c) deliver insurance and customary opinions (collectively,
the documents in (a) — (c), the “Exit Facility
Documents”), all of which such Exit Facility Documents
shall be in form and substance satisfactory to the Exit Facility
Lenders, and such documents and all other documents, instruments
and agreements to be entered into, delivered or contemplated
thereunder shall become effective in accordance with their terms
on the Effective Date. In the Confirmation Order, the Bankruptcy
Court shall approve the Exit Facility and authorize the
Reorganized Debtors to execute the same together with such other
documents as the Exit Facility Lenders may reasonably require in
order to effectuate the treatment afforded to such parties under
the Exit Facility.
Continued
Existence and Vesting of Assets in Reorganized Debtors
The Filing Entities shall continue to exist after the Effective
Date as separate corporate entities in accordance with the
applicable law for the State of Delaware and pursuant to their
certificate of incorporation and by laws and certificate of
formation, or other governing documents, as amended and restated
on the Effective Date. The Reorganized CIT Certificate of
Incorporation, the Reorganized Delaware Funding Amendment to
Certificate of Formation and the Reorganized Delaware Funding
Amendment to Limited
199
Liability Company Agreement are attached to the Plan of
Reorganization as
Exhibits A-1,
A-2 and
A-3,
respectively.
Among other things, the Filing Entities’ existing
certificates of incorporation or other governing documents, as
applicable, shall be amended to include a provision prohibiting
the issuance of nonvoting equity securities as required under
section 1123(a)(6) of the Bankruptcy Code.
On and after the Effective Date, all property of the Estate, and
all Litigation Claims, and any property acquired by the Filing
Entities under or in connection with the Plan of Reorganization,
shall vest in the Reorganized Debtors free and clear of all
Claims, Interests and Liens except as otherwise expressly
provided in the Plan of Reorganization. On and after the
Effective Date, the Reorganized Debtors may operate their
businesses and may use, acquire and dispose of property and
compromise or settle any Claims without supervision of or
approval by the Bankruptcy Court and free and clear of any
restrictions of the Bankruptcy Code or Bankruptcy Rules other
than restrictions expressly imposed by the Plan of
Reorganization or the Confirmation Order. Without limiting the
foregoing, the Reorganized Debtors may pay charges that they
incur on and after the Effective Date for professionals’
fees, disbursements, expenses or related support services
without application to the Bankruptcy Court.
Cancellation
of Interests and Agreements
On the Effective Date, except as otherwise expressly provided
for in the Plan of Reorganization, (i) the Canadian Senior
Unsecured Notes, the Long-Dated Senior Unsecured Notes, the
Senior Unsecured Notes, the Senior Unsecured Term Loans, the
Senior Unsecured Credit Agreements, the Senior Subordinated
Notes, the Junior Subordinated Notes, the Old Preferred
Interests, the Old Common Interests, and the Other Equity
Interests or other instrument or document evidencing or creating
any indebtedness or obligation of or ownership interest in the
Filing Entities, except such notes or other instruments
evidencing indebtedness or obligations of or Interests in the
Filing Entities that are Reinstated under the Plan of
Reorganization to the extent not already cancelled, shall be
deemed cancelled, terminated and of no further force or effect
without any further action on the part of the Bankruptcy Court
or any Person; provided however that
notwithstanding the entry of the Confirmation Order or the
occurrence of the Effective Date, the Canadian Senior Unsecured
Notes, the Long-Dated Senior Unsecured Notes, the Senior
Unsecured Notes, the Senior Unsecured Term Loans, the Senior
Unsecured Credit Agreements, the Senior Subordinated Notes and
the Junior Subordinated Notes shall be deemed to continue in
effect solely to the extent necessary to (1) allow holders
of such Canadian Senior Unsecured Notes, Long-Dated Senior
Unsecured Notes, Senior Unsecured Notes, Senior Unsecured Term
Loans, Senior Unsecured Credit Agreements, Senior Subordinated
Notes and/or
Junior Subordinated Notes to receive distributions, if any,
under the Plan of Reorganization and (2) allow the
Disbursing Agent(s) to make distributions under the Plan of
Reorganization as set forth therein, and (ii) the
obligations of the Filing Entities under the Canadian Senior
Unsecured Notes, the Long-Dated Senior Unsecured Notes, the
Senior Unsecured Notes, the Senior Unsecured Term Loans, the
Senior Unsecured Credit Agreements, the Senior Subordinated
Notes, the Junior Subordinated Notes, the Old Preferred
Interests, the Old Common Interests, and the Other Equity
Interests shall be discharged.
Board of
Directors
CIT Group Inc.’s Board of Directors (the “Board”)
(which as of the date of this Offering Memorandum and Disclosure
Statement has ten (10) members) has determined that the
appropriate size of the Board on and after the consummation of
the Plan of Reorganization would be thirteen
(13) directors. At the request of and in cooperation with
the Steering Committee, CIT Group Inc. has engaged Spencer
Stuart (“Spencer Stuart”), an internationally
recognized director search firm, to assist the Nominating and
Governance Committee of the Board (the “N&GC”) in
identifying, interviewing and selecting candidates for the
expanded Board
and/or
replacing members of the present Board who may decide to step
down from the Board. Spencer Stuart will identify candidates who
are independent of CIT Group Inc., not affiliated with, or
representatives of, any of the members of the Steering
Committee, and who possess the qualifications, skills and
experience specified by the N&GC.
200
The Steering Committee will recommend to the N&GC
candidates, for the Board from among the qualified individuals
identified by Spencer Stuart (the “Steering Committee
Nominees”). The candidates that are approved by the
N&GC will be reviewed with the Federal Reserve Bank of New
York and, to the extent approved by the Federal Reserve Bank of
New York, will be submitted to the full Board for consideration
and appointment to the Board. Upon the Effective Date of the
Plan of Reorganization, the Board will include five directors
that were recommended to the N&GC by the Steering
Committee. The Board will nominate a slate of at least
13 directors for election at the 2010 annual meeting of
stockholders which slate will not include more than five of the
directors serving as of the date hereof.
Certain
Corporate Governance Matters
On and after the Effective Date, Reorganized CIT will use its
commercially reasonable efforts to hold its next annual meeting
no later than May 31, 2010. CIT Group Inc. does not have a
staggered or classified board and, accordingly, all directors of
Reorganized CIT will be elected at the annual meeting. During
the Chapter 11 Cases, CIT Group Inc. will not implement a
stockholders’ rights plan other than (i) CIT Group
Inc.’s August 12, 2009 tax benefits preservation plan
or (ii) other actions CIT Group Inc. considers appropriate
to preserve the benefit of net operating losses. CIT Group Inc.
will not amend its certificate of incorporation during the
Chapter 11 Cases to create a staggered or classified board.
The Reorganized CIT Certificate of Incorporation will provide
that the chairman of the board or secretary of Reorganized CIT
shall call a special meeting of its stockholders at the request
in writing of stockholders possessing at least 25% of the voting
power of the issued and outstanding common stock of Reorganized
CIT entitled to vote generally for the election of directors.
Preservation
of Rights of Action; Settlement of Litigation Claims
Except as otherwise provided in the Plan of Reorganization, the
Confirmation Order or in any document, instrument, release or
other agreement entered into in connection with the Plan of
Reorganization, in accordance with section 1123(b) of the
Bankruptcy Code, the Reorganized Debtors will retain all of the
Litigation Claims, and may enforce, sue on, settle or compromise
(or decline to do any of the foregoing) any or all of such
Litigation Claims. The Filing Entities will file as a Plan
Supplement a non-exclusive list of claims or causes of action
that the Filing Entities hold or may hold either in pending or
potential litigation. The Filing Entities reserve their rights
to modify such list to add or delete parties or causes of
action, but disclaims any obligation to do so. The failure of
the Filing Entities to specifically list any claim, right of
action, suit or proceeding herein or in the Plan of
Reorganization does not, and will not be deemed to, constitute a
waiver or release by the Filing Entities of such claim, right of
action, suit or proceeding, and the Reorganized Debtors will
retain the right to pursue additional claims, rights of action,
suits or proceedings. In addition, at any time after the
Petition Date and before the Effective Date, notwithstanding
anything in the Plan of Reorganization to the contrary, the
Filing Entities may settle some or all of the Litigation Claims
with the approval of the Bankruptcy Court pursuant to Bankruptcy
Rule 9019.
Effectuating
Documents; Further Transactions
The chairman of the board of directors, president, chief
executive officer, chief financial officer or any other
appropriate officer of the Filing Entities shall be authorized
to execute, deliver, file or record such contracts, instruments,
releases, indentures and other agreements or documents, and take
such actions, as may be necessary or appropriate to effectuate
and further evidence the terms and conditions of the Plan of
Reorganization. The secretary or assistant secretary of the
Filing Entities shall be authorized to certify or attest to any
of the foregoing actions.
Exemption
from Certain Transfer Taxes
Pursuant to section 1146 of the Bankruptcy Code, the
issuance, transfer or exchange of debt and equity under the Plan
of Reorganization, the creation of any mortgage, deed of trust,
or other security interest, the making or assignment of any
contract, lease or sublease, or the making or delivery of any
deed or other instrument of transfer under, in furtherance of,
or in connection with the Plan of Reorganization shall be
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exempt from all taxes (including, without limitation, stamp tax
or similar taxes) to the fullest extent permitted by
section 1146 of the Bankruptcy Code, and the appropriate
state or local governmental officials or agents shall not
collect any such tax or governmental assessment and shall accept
for filing and recordation any of the foregoing instruments or
other documents without the payment of any such tax or
governmental assessment.
Release
of Liens
Except as otherwise expressly provided in the Plan of
Reorganization, in the Confirmation Order or in any document,
instrument or other agreement created in connection with the
Plan of Reorganization, on the Effective Date, all mortgages,
deeds of trust, liens or, other security interests against the
property of the Filing Entities or the Estate automatically
shall be released, and the holders of such mortgages, deeds of
trust, liens, or other security interests shall execute such
documents as may be necessary or desirable to reflect or
effectuate such releases.
Provisions
Governing Distributions
Distributions
for Claims Allowed as of the Effective Date
Except as otherwise provided in the Plan of Reorganization or as
ordered by the Bankruptcy Court, distributions to be made on
account of or in exchange for Claims that are Allowed Claims as
of the Effective Date shall be made on the Distribution Date.
All Cash distributions shall be made from available Cash of the
Reorganized Debtors. Any distribution under the Plan of
Reorganization of property other than Cash shall be made by the
Disbursing Agent in accordance with the terms of the Plan of
Reorganization.
Disbursing
Agent(s)
The Disbursing Agent(s) shall make all distributions required
under the Plan of Reorganization (subject to the provisions of
Articles II, III and IV of the Plan of
Reorganization); provided, however, that with
respect to a holder of a Claim whose distribution is governed by
an agent or other agreement which is administered by an
indenture trustee, agent or servicer, such distributions shall
be made at the direction of the appropriate agent or servicer,
or shall be deposited with the appropriate agent or servicer,
who shall then deliver such distributions to the holders of
Claims in accordance with the provisions of the Plan of
Reorganization and the terms of the relevant indenture or other
governing agreement.
Disbursing Agent(s) other than the Filing Entities including any
agent or servicer, shall receive, without further Bankruptcy
Court approval, reasonable compensation for distribution
services rendered pursuant to the Plan of Reorganization and
reimbursement of reasonable out-of-pocket expenses incurred in
connection with such services from the Reorganized Debtors on
terms acceptable to the Reorganized Debtors. No Disbursing Agent
shall be required to give any bond or surety or other security
for the performance of its duties unless otherwise ordered by
the Bankruptcy Court. If otherwise so ordered, all costs and
expenses of procuring any such bond shall be paid by the
Reorganized Debtors.
Calculation
of Distribution Amounts of New Common Interests and New
Notes
No fractional shares of New Common Interests or fractional
currencies of New Notes shall be issued or distributed under the
Plan of Reorganization or the Reorganized Debtors, or any
Disbursing Agent, agent or servicer. Each Person entitled to
receive New Common Interests or New Notes (collectively, the
“Securities”) shall receive the total number of whole
shares or currencies of New Securities to which such Person is
entitled. Whenever any distribution to a particular Person would
otherwise call for distribution of a fraction of a New Security,
the Reorganized Debtors, or any Disbursing Agent, agent or
servicer, shall allocate separately one whole share of New
Common Interests or one whole currency of New Notes, as
applicable, to such Person in order of the fractional portion of
its entitlements, starting with the largest such fractional
portion, until all remaining whole shares of New Common
Interests or currencies of New Notes have been allocated. Upon
the allocation of a whole share of New Common Interests or whole
currency of New Notes to a Person in respect
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of the fractional portion of its entitlement, such fractional
portion shall be deemed cancelled. If two or more Persons are
entitled to equal fractional entitlements and the number of
Persons so entitled exceeds the number of whole shares of New
Common Interests or whole currencies of New Notes which remain
to be allocated, the Reorganized Debtors, or any Disbursing
Agent, agent or servicer shall allocate the remaining whole
shares of New Common Interests or whole currencies of New Notes
to such holders by random lot or such other impartial method as
the Reorganized Debtors, or any Disbursing Agent, agent or
servicer deems fair. Upon the allocation of all of the whole
shares of New Common Interests or whole currencies of New Notes
authorized under the Plan of Reorganization, all remaining
fractional portions of the entitlements, if any, shall be
cancelled and shall be of no further force and effect. No shares
of New Common Interests or whole currencies of New Notes will be
issued and no other property will be distributed under the Plan
of Reorganization or by the Reorganized Debtors, or any
Disbursing Agent, agent or servicer on account of entitlements,
if any, to a fractional share of New Common Interests or
fractional currency of New Notes which fall below a threshold
level to be determined by the Reorganized Debtors, or any
Disbursing Agent, agent or servicer, after allocation of whole
shares of New Common Interests or whole currencies of New Notes
in respect of fractional entitlements as described above.
Accordingly, a Person who otherwise would be entitled to receive
a distribution of a fractional share of New Common Interests or
fraction of a currency of New Notes will not receive any such
distribution if the number of fractional share of New Common
Interests or fractional currency of New Notes such Person was to
receive falls below such threshold.
Delivery
of Distributions; Undeliverable or Unclaimed
Distributions
Distributions to holders of Allowed Claims shall be made by the
Disbursing Agent (i) at each holder’s address set
forth in the Filing Entities’ books and records, unless
such address is superseded by a proof of claim or interest or
transfer of claim filed pursuant to Bankruptcy Rule 3001 or
(ii) at the address in any written notice of address change
delivered to the Disbursing Agent, at the address set forth in
the Disbursing Agent’s system. If any holder’s
distribution is returned as undeliverable, no further
distributions to such holder shall be made, unless and until the
Disbursing Agent is notified of such holder’s then current
address, at which time all missed distributions shall be made to
such holder without interest. Amounts in respect of
undeliverable distributions made through the Disbursing Agent
shall be returned to the Reorganized Debtors until such
distributions are claimed. The Disbursing Agent shall deliver
any non-deliverable New Common Interests
and/or New
Notes to the Reorganized Debtors no later than ten
(10) Business Days following the first anniversary of the
Effective Date. All claims for undeliverable distributions must
be made within one year after the Effective Date, after which
date the claim of any holder or successor to such holder with
respect to such property will be discharged and forever barred.
In such cases, any Cash for distribution on account of or in
exchange for unclaimed or undeliverable distributions shall
become property of the Reorganized Debtors free of any
restrictions thereon and notwithstanding any federal or state
escheat laws to the contrary. Any New Common Interests or New
Notes held for distribution on account of such Claim shall be
cancelled and of no further force or effect. Nothing contained
in the Plan of Reorganization shall require any Disbursing
Agent, including, but not limited to the Reorganized Debtors, to
attempt to locate any holder of an Allowed Claim.
Withholding
and Reporting Requirements
In connection with the Plan of Reorganization and all
distributions thereunder, the Reorganized Debtors and the
Disbursing Agent shall comply with all withholding, payment, and
reporting requirements imposed by any federal, state, local or
foreign taxing authority, and all distributions shall be subject
to any such withholding, payment, and reporting requirements.
The Reorganized Debtors and the Disbursing Agent shall be
authorized to take any and all actions that may be necessary or
appropriate to comply with such withholding, payment, and
reporting requirements. All amounts properly withheld from
distributions of New Common Interests, New Notes, Contingent
Value Rights, or New Common Interests distributed pursuant to
the Contingent Value Rights, to a holder as required by
applicable law and paid over to the applicable taxing authority
for the account of such holder shall be treated as part of the
distributions to such holder. All persons holding Claims or
Interests shall be required to provide any information necessary
to effect information reporting, withholding, and payment of
such taxes. Notwithstanding any other provision of the Plan of
Reorganization, (i) each holder of an Allowed Claim that is
to receive a distribution of New Common
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Interests, New Notes or Contingent Value Rights pursuant to the
Plan of Reorganization, or a distribution of New Common
Interests pursuant to the Contingent Value Rights, shall have
sole and exclusive responsibility for the satisfaction and
payment of any tax obligations imposed by any governmental unit,
including income, withholding and other tax obligations, on
account of such distribution, and (ii) no distribution
shall be made to or on behalf of such holder pursuant to the
Plan of Reorganization unless and until such holder has made
arrangements satisfactory to the Reorganized Debtors and the
Disbursing Agent for the payment and satisfaction of such tax
obligations or has, to the Reorganized Debtors’ and the
Disbursing Agent’s satisfaction, established an exemption
therefrom. Any New Common Interests, New Notes or Contingent
Value Rights to be distributed pursuant to the Plan of
Reorganization, or New Common Interests distributed pursuant to
the Contingent Value Rights, shall, pending the implementation
of such arrangements or the establishment of such an exemption,
be treated as undeliverable pursuant to Article V.D of the
Plan of Reorganization.
Allocation
of Plan Distributions Between Principal and Interest
To the extent that any Allowed Claim entitled to a distribution
under the Plan of Reorganization of Reorganization is comprised
of indebtedness and accrued but unpaid interest thereon, such
distribution shall, for the U.S. federal income tax
purposes, be allocated to the principal amount of the Claim
first and then, to the extent the consideration exceeds the
principal amount of the Claim, to the portion of such Claim
representing accrued but unpaid interest.
Setoffs
Except as provided in the Plan of Reorganization, the Filing
Entities may, but shall not be required to, set off or offset
against any Claim, and the payments or other distributions to be
made pursuant to the Plan of Reorganization in respect of such
Claim, claims of any nature whatsoever that the Filing Entities
may have against the Claim’s holder; provided,
however, that neither the failure to do so nor the
allowance of any Claim hereunder shall constitute a waiver or
release by the Filing Entities of any claim that the Filing
Entities may have against such holder provided
further however that the Filing Entities shall not
set off or offset against the Canadian Senior Unsecured Notes,
the Long-Dated Senior Unsecured Notes, the Senior Unsecured
Notes, the Senior Credit Facility, Senior Unsecured Term Loans,
the Senior Unsecured Credit Agreements, the Senior Subordinated
Notes or the Junior Subordinated Notes. Nothing in the Plan of
Reorganization shall be deemed to expand rights to setoff under
applicable law.
Surrender
of Instruments or Securities
The Disbursing Agent(s)
and/or any
applicable broker or agent shall use reasonable best efforts to
obtain the surrender of all certificates or instruments relating
to the Canadian Senior Unsecured Notes (if Class 7 votes to
accept the Plan), the Long-Dated Senior Unsecured Notes, the
Senior Unsecured Notes, the Senior Unsecured Term Loans, the
Senior Unsecured Credit Agreements, the Senior Subordinated
Notes or the Junior Subordinated Notes to the Filing Entities,
the Reorganized Debtors or the Disbursing Agent and shall
execute such other documents as might be necessary to effectuate
the Plan of Reorganization. The Canadian Senior Unsecured Notes
(if Class 7 votes to accept the Plan), the Long-Dated
Senior Unsecured Notes, the Senior Unsecured Notes, the Senior
Unsecured Term Loans, the Senior Unsecured Credit Agreements,
the Senior Subordinated Notes and the Junior Subordinated Notes
shall be marked as cancelled on and as of the Effective Date,
regardless of whether the holder(s) of such Canadian Senior
Unsecured Notes, Long-Dated Senior Unsecured Notes, Senior
Unsecured Notes, Senior Unsecured Term Loans, Senior Unsecured
Credit Agreements, Senior Subordinated Notes and Junior
Subordinated Notes has surrendered its certificates and
instruments.
Any holder of Canadian Senior Unsecured Notes (if Class 7
votes to accept the Plan), Long-Dated Senior Unsecured Notes,
Senior Unsecured Notes, Senior Unsecured Term Loans, Senior
Unsecured Credit Agreements, Senior Subordinated Notes or Junior
Subordinated Notes who fails to surrender the applicable
Canadian Senior Unsecured Notes (if Class 7 votes to accept
the Plan), Senior Unsecured Notes, Senior Unsecured Term Loans,
Senior Unsecured Credit Agreements, Senior Subordinated Notes or
Junior Subordinated Notes required to be tendered under the Plan
of Reorganization or fails to deliver an affidavit of loss or
such other documents
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as might be required by the relevant trustee or agent, together
with an indemnity in the customary form within one (1) year
after the Effective Date shall have its Claim and its
distribution pursuant to the Plan of Reorganization on account
of such Canadian Senior Unsecured Note Claim (if Class 7
votes to accept the Plan), Long-Dated Senior Unsecured Notes,
Senior Unsecured Note Claim, Senior Unsecured Term Loan Claim,
Senior Unsecured Credit Agreement Claim, Senior Subordinated
Note Claim or Junior Subordinated Note Claim discharged and
forfeited and shall not participate in any distribution under
the Plan of Reorganization. Any property in respect of such
forfeited Claims would revert to the Reorganized Debtors.
Lost,
Stolen, Mutilated or Destroyed Securities or
Instruments
In addition to any requirements under the Canadian Senior
Unsecured Notes, the Long-Dated Senior Unsecured Notes, the
Senior Unsecured Notes, the Senior Unsecured Term Loans, the
Senior Unsecured Credit Agreements, the Senior Subordinated
Notes and the Junior Subordinated Notes or any other applicable
agreement, any holder of a Canadian Senior Unsecured Note (if
Class 7 votes to accept the Plan), a Long-Dated Senior
Unsecured Note, a Senior Unsecured Note, a Senior Unsecured Term
Loan, a Senior Unsecured Credit Agreement, a Senior Subordinated
Note or a Junior Subordinated Note that has been lost, stolen,
mutilated or destroyed shall, in lieu of surrendering such
Canadian Senior Unsecured Note (if Class 7 votes to accept
the Plan), Long-Dated Senior Unsecured Note, Senior Unsecured
Note, the Senior Unsecured Term Loan, the Senior Unsecured
Credit Agreement, Senior Subordinated Note or Junior
Subordinated Note in accordance with Article V.H of the
Plan of Reorganization, deliver to the Reorganized Debtors or
their agent: (i) evidence reasonably satisfactory to the
Reorganized Debtors of the loss, theft, mutilation or
destruction; and (ii) such security or indemnity as may be
required by the Reorganized Debtors to hold the Reorganized
Debtors harmless from any damages, liabilities or costs incurred
in treating such individual as a holder of an Allowed Claim.
Upon compliance with Article V.I of the Plan of
Reorganization by a holder of a claim evidenced by a Canadian
Senior Unsecured Note (if Class 7 votes to accept the
Plan), a Long-Dated Senior Unsecured Note, a Senior Unsecured
Note, a Senior Unsecured Term Loan, a Senior Unsecured Credit
Agreement, a Senior Subordinated Note or a Junior Subordinated
Note, such holder shall, for all purposes under the Plan of
Reorganization, be deemed to have surrendered such instrument.
Provisions
For Resolving Disputed, Contingent and Unliquidated
Claims
Resolution
of Disputed Claims
Except as provided otherwise in the Plan of Reorganization or by
order of the Bankruptcy Court, holders of Claims shall not be
required to file proofs of Claim with the Bankruptcy Court.
The amount and validity of any disputed, contingent
and/or
unliquidated Claim shall be determined, resolved or adjudicated,
as the case may be, in the manner in which such Claim would have
been determined, resolved or adjudicated if the Chapter 11
Cases had not been commenced; provided, however,
that the Filing Entities reserve the right to file with the
Bankruptcy Court, on or before the Claims Objection Deadline, an
objection to any Claim. The Filing Entities shall be authorized
to, and shall, resolve all Disputed Claims by withdrawing or
settling such objections thereto, or by litigating to judgment
in the Bankruptcy Court or such other court having jurisdiction
the validity, nature,
and/or
amount thereof.
Any Claim successfully subordinated pursuant to Bankruptcy Code
section 510(b) that is not otherwise included in
Class 14 Subordinated 510(b) Claims shall be classified in
that Class immediately below the Class in which such Claim was
classified prior to subordination under Bankruptcy Code
section 510(b).
In addition, the Filing Entities or the holder of a contingent
or unliquidated Claim may, at any time, request that the
Bankruptcy Court estimate any contingent or unliquidated Claim
pursuant to section 502(c) of the Bankruptcy Code
regardless of whether the Filing Entities have previously
objected to such Claim or whether the Bankruptcy Court has ruled
on any such objection, and the Bankruptcy Court will retain
jurisdiction to estimate any Claim at any time during litigation
concerning any objection to any Claim, including during the
pendency of any appeal relating to any such objection. In the
event the Bankruptcy Court estimates any contingent or
unliquidated Claim, that estimated amount will constitute either
the Allowed
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amount of such Claim or a maximum limitation on such Claim, as
determined by the Bankruptcy Court. If the estimated amount
constitutes a maximum limitation on such Claim, the Filing
Entities may elect to pursue any supplemental proceedings to
object to any ultimate payment on such Claim. All of the
aforementioned Claims objection, estimation and resolution
procedures are cumulative and are not necessarily exclusive of
one another. Claims may be estimated and thereafter resolved by
any permitted mechanism.
No
Distribution Pending Allowance
No payments or distributions, if any contemplated by the Plan of
Reorganization, will be made with respect to all or any portion
of a Disputed Claim unless and until all objections to such
Disputed Claim have been settled or withdrawn or have been
determined by Final Order, and the Disputed Claim, or some
portion thereof, has become an Allowed Claim.
Distributions
After Allowance
To the extent that a Disputed Claim ultimately becomes an
Allowed Claim, a distribution, if any, will be made to the
holder of such Allowed Claim in accordance with the provisions
of the Plan of Reorganization. As soon as reasonably practicable
after the date that the order or judgment of the Bankruptcy
Court or other applicable court of competent jurisdiction
allowing any Disputed Claim becomes a Final Order, or the date
upon which other final resolution has been reached to Allow such
Claim, the Disbursing Agent shall provide to the holder of such
Claim the distribution to which such holder is entitled under
the Plan of Reorganization. Notwithstanding the foregoing, the
Disbursing Agent shall not be required to make distributions
more frequently than once every ninety (90) days.
Reservation
of Right to Object to Allowance or Asserted Priority of
Claims
Nothing in the Plan of Reorganization will waive, prejudice or
otherwise affect the rights of the Filing Entities, the
Reorganized Debtors or the holders of any Claim to object at any
time, including after the Effective Date, to the allowance or
asserted priority of any Claim.
Treatment
of Contracts and Leases
Assumed
Contracts and Leases
Except as otherwise expressly provided in the Plan of
Reorganization or in any contract, instrument, release,
indenture or other agreement or document entered into in
connection with the Plan of Reorganization, as of the Effective
Date the Filing Entities shall be deemed to have assumed each
executory contract and unexpired lease to which a Filing Entity
is a party unless such contract or lease (i) previously was
assumed or rejected by the Filing Entities, (ii) previously
expired or terminated pursuant to its own terms, or
(iii) is the subject of a motion to assume or reject filed
on or before the Confirmation Date. The Filing Entities shall
further be deemed to assume as of the Effective Date all
indemnification obligations, whether arising by bylaws, other
constituent documents or otherwise, to the Filing Entities’
directors and officers and all such indemnification obligations
shall constitute assumed executory contracts. The Filing
Entities reserve the right, at any time prior to the
Confirmation Date, to seek to reject any executory contract or
unexpired lease to which a Filing Entity is a party (except as
provided in the preceding sentence). The Confirmation Order
shall constitute an order of the Bankruptcy Court under
sections 365 and 1123 of the Bankruptcy Code approving the
contract and lease assumptions described above as of the
Effective Date.
Each executory contract and unexpired lease that is assumed and
relates to the use, ability to acquire or occupancy of real
property shall include (i) all modifications, amendments,
supplements, restatements or other agreements made directly or
indirectly by any agreement, instrument or other document that
in any manner affect such executory contract or unexpired lease
and (ii) all executory contracts or unexpired leases
appurtenant to the premises, including all easements, licenses,
permits, rights, privileges, immunities, options, rights of
first refusal, powers, uses, usufructs, reciprocal easement
agreements, vaults, tunnel or bridge agreements or franchises,
and any other interests in real estate or rights in rem related
to such premises, unless
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any of the foregoing agreements has been rejected pursuant to an
order of the Bankruptcy Court or is the subject of a motion to
reject filed on or before the Confirmation Date.
Treatment
of Change of Control Provisions
The entry of the Confirmation Order, consummation of the Plan of
Reorganization, issuance of the New Common Interests
and/or New
Notes under the Plan of Reorganization
and/or any
other acts taken to implement the Plan of Reorganization shall
not constitute a “change in control” under any
provision of any contract, agreement or other document which
provides for the occurrence of any event, the granting of any
right, or any other change in the then-existing relationship
between the parties upon a “change in control” of the
Filing Entities.
Payments
Related to Assumption of Contracts and Leases
Any monetary amounts by which any executory contract or
unexpired lease to be assumed under the Plan of Reorganization
is in default shall be satisfied, under section 365(b)(1)
of the Bankruptcy Code, by Cure. If there is a dispute regarding
(i) the nature or amount of any Cure, (ii) the ability
of the Reorganized Debtors to provide “adequate assurance
of future performance” (within the meaning of
section 365 of the Bankruptcy Code) under the contract or
lease to be assumed or (iii) any other matter pertaining to
assumption, Cure shall occur following the entry of a Final
Order of the Bankruptcy Court resolving the dispute and
approving the assumption.
Claims
Based on Rejection of Executory Contracts or Unexpired
Leases
If the rejection by the Filing Entities, pursuant to the Plan of
Reorganization or otherwise, of an executory contract or
unexpired lease gives rise to a Claim, a proof of Claim must be
served upon the Filing Entities and their counsel within thirty
(30) days after the later of (i) notice of entry of
the Confirmation Order or (ii) other notice that the
executory contract or unexpired lease has been rejected,
provided that any such Claims arising from the
rejection of an unexpired lease of real property shall be
subject to the cap on rejection damages imposed by Bankruptcy
Code section 502(b)(6). Any Claims not served within such
time periods will be forever barred from assertion against the
Filing Entities, the Reorganized Debtors, the Estates, and their
property.
Claims
Based on Rejection of Employment Agreements
In the event that the Filing Entities determine to reject any
employment agreements to which the Filing Entities are party,
any rejection damages claims arising therefrom will be
classified as Class 5 General Unsecured Claims and will
likewise be Unimpaired, provided that the Filing
Entities
and/or the
Reorganized Debtors pay such non-Filing Entity party or parties
to such rejected employment agreement(s) the one-year’s
compensation under Bankruptcy Code section 502(b)(7) on
account of any rejection damages claim(s).
Compensation
and Benefit Plans and Treatment of Retirement Plan
Except as otherwise expressly provided in the Plan of
Reorganization or in any contract, instrument, release,
indenture or other agreement or document entered into in
connection with the Plan of Reorganization and subject to any
limitations under applicable law, all of the Filing
Entities’ programs, plans, agreements and arrangements
relating to employee compensation and benefits, including
programs, plans, agreements and arrangements subject to
sections 1114 and 1129(a)(13) of the Bankruptcy Code and
including, without limitation, all savings plans, retirement
plans, healthcare plans, disability plans, severance plans,
incentive plans, life, accidental death and dismemberment
insurance plans, and employment, severance, salary continuation
and retention agreements entered into before the Petition Date
and not since terminated, will be deemed to be, and will be
treated as though they are, executory contracts that are assumed
under Article VII.A of the Plan of Reorganization, and the
Filing Entities’ obligations under such programs, plans,
agreements and arrangements will survive confirmation of the
Plan of Reorganization, except for executory contracts or plans
that previously have been rejected, are the subject of a motion
to reject or have been specifically waived by
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the beneficiaries of any plans or contracts. In addition,
pursuant to the requirements of section 1129(a)(13) of the
Bankruptcy Code, the Plan of Reorganization provides for the
continuation of payment by the Filing Entities of all
“retiree benefits,” as defined in section 1114(a)
of the Bankruptcy Code, if any, at previously established levels.
By accepting distribution pursuant to the Plan of
Reorganization, each holder of an Allowed Claim receiving
distributions pursuant to the Plan of Reorganization shall be
deemed to have specifically consented to the discharge set forth
in Article XIII.E of the Plan of Reorganization.
Indemnification
of Directors and Officers
The Filing Entities’ indemnification obligations in favor
of their officers and directors contained in the certificate of
incorporation and bylaws of the Filing Entities as of the
Petition Date shall be included in the amended and restated
certificate of incorporation, amended and restated certificate
of formation and bylaws of the Reorganized Debtors. Unless
otherwise required by applicable law, all Claims of the Filing
Entities’ officers and directors for indemnity arising
prior to the Petition Date (including the D&O Claims) shall
be deemed to be Class 5 General Unsecured Claims hereunder,
and all Claims of the Filing Entities’ officers and
directors for indemnity arising on and after the Petition Date
shall be deemed to be Administrative Claims hereunder.
Securities
to be Issued in Connection with the Plan of
Reorganization
New
Common Interests
On the Effective Date, the Reorganized Debtors shall issue for
distribution, in accordance with the provisions of the Plan of
Reorganization, the New Common Interests required for
distribution pursuant to the provisions of the Plan of
Reorganization. All securities to be issued shall be deemed
issued as of the Effective Date regardless of the date on which
they are actually distributed. All stock issued by the
Reorganized Debtors pursuant to the provisions of the Plan of
Reorganization shall be deemed to be duly authorized and issued,
fully paid and nonassessable. The terms of the New Common
Interests are summarized in Exhibit B to the Plan of
Reorganization.
Exemption
from Registration
The (i) offer by the Filing Entities
and/or the
Reorganized Debtors of the New Notes and New Common Interests
issued under the Plan of Reorganization shall be exempt from the
registration requirements of the Securities Act and similar
state statutes pursuant to applicable securities law and
(ii) sale and issuance by the Reorganized Debtors of such
New Notes and New Common Interests shall be exempt from the
registration requirements of the Securities Act and similar
state statutes pursuant to section 1145 of the Bankruptcy
Code.
New
Notes
On the Effective Date, the Reorganized Debtors shall issue for
distribution in accordance with the provisions of the Plan of
Reorganization the New Notes required for distribution pursuant
to the provisions of the Plan of Reorganization. All New Notes
to be issued shall be deemed issued as of the Effective Date
regardless of the date on which they are actually distributed.
The terms of the New Notes are substantially set forth in the
Offering Memorandum and Disclosure Statement.
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Confirmation
and Consummation of the Plan of Reorganization
Conditions
Precedent to Confirmation of the Plan of
Reorganization
The following are conditions precedent to confirmation of the
Plan of Reorganization, each of which must be satisfied or
waived in accordance with the Plan of Reorganization:
1. The Bankruptcy Court shall have approved the Disclosure
Statement with respect to the Plan of Reorganization in form and
substance reasonably satisfactory to the Filing Entities and the
Steering Committee, which approval may be in the Confirmation
Order.
2. The proposed Confirmation Order shall be in form and
substance reasonably satisfactory to the Filing Entities and the
Steering Committee.
Conditions
Precedent to Effective Date of the Plan of
Reorganization
The following are conditions precedent to the occurrence of the
Effective Date, each of which must be satisfied or waived in
accordance with the Plan of Reorganization:
1. The Confirmation Order, in form and substance acceptable
to the Filing Entities and the Steering Committee, confirming
the Plan of Reorganization shall have been entered and must
provide, among other things, that:
a. the provisions of the Confirmation Order are
nonseverable and mutually dependent;
b. all executory contracts or unexpired leases assumed by
the Filing Entities during the Chapter 11 Cases or under
the Plan of Reorganization shall remain in full force and effect
for the benefit of the Reorganized Debtors or their assignee
notwithstanding any provision in such contract or lease
(including those described in sections 365(b)(2) and
(f) of the Bankruptcy Code) that prohibits such assignment
or transfer or that enables, permits or requires termination of
such contract or lease;
c. except as expressly provided in the Plan of
Reorganization or the Confirmation Order, the Filing Entities
are discharged effective upon the Confirmation Date, subject to
the occurrence of the Effective Date, from any “debt”
(as that term is defined in section 101(12) of the
Bankruptcy Code), and the Filing Entities’ liability in
respect thereof shall be extinguished completely, whether such
debt (i) is reduced to judgment or not, liquidated or
unliquidated, contingent or noncontingent, asserted or
unasserted, fixed or unfixed, matured or unmatured, disputed or
undisputed, legal or equitable, or known or unknown, or
(ii) arose from (a) any agreement of the Filing
Entities that has either been assumed or rejected in the
Chapter 11 Cases or pursuant to the Plan of Reorganization,
(b) any obligation the Filing Entities incurred before the
Confirmation Date or (c) any conduct of the Filing Entities
prior to the Confirmation Date, or that otherwise arose before
the Confirmation Date, including, without limitation, all
interest, if any, on any such debts, whether such interest
accrued before or after the Petition Date;
d. the Canadian Senior Unsecured Notes, the Long-Dated
Senior Unsecured Notes, the Senior Unsecured Notes, the Senior
Unsecured Term Loans, the Senior Unsecured Credit Agreements,
the Senior Subordinated Notes, and the Junior Subordinated Notes
transferred and assigned to the Reorganized Debtors pursuant to
the Plan of Reorganization, shall be deemed cancelled,
terminated and extinguished effective upon the Effective Date,
except as otherwise provided in the Plan of Reorganization, and
all Claims arising thereunder shall be deemed satisfied on the
Effective Date in exchange for (i) New Notes issued by the
Reorganized Debtors, (ii) New Common Interests issued by
the Reorganized Debtors,
and/or
(iii) the Contingent Value Rights, as applicable;
e. the Old Preferred Interests, the Old Common Interests
and the Other Equity Interests shall be deemed cancelled,
terminated and extinguished effective upon the Effective
Date; and
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f. the Reorganized Debtors’ offer of New Notes and New
Common Interests and New Notes issued under the Plan of
Reorganization is exempt from the registration requirements of
the Securities Act pursuant to applicable securities law and the
Reorganized Debtors’ issuance and sale of such New Notes
and New Common Interests and New Notes under the Plan of
Reorganization are exempt from the registration requirements of
the Securities Act and similar state statutes pursuant to
section 1145 of the Bankruptcy Code.
2. The Confirmation Order shall have become a Final Order
and shall not be the subject of an unresolved request for
revocation under section 1144 of the Bankruptcy Code.
3. The Reorganized CIT Certificate of Incorporation, the
Reorganized CIT Delaware Funding Certificate of Amendment to
Certificate of Formation and the Reorganization Delaware Funding
Amendment to Limited Liability Company Agreement in form and
substance reasonably satisfactory to the Filing Entities and the
Noteholder Steering Committee shall have been executed.
4. The Exchanges shall have been consummated and all
documents to be executed in connection therewith shall have been
executed and delivered, and all conditions precedent thereto
shall have been satisfied or waived by the parties thereto.
5. The Filing Entities shall have executed and delivered
all documents necessary to effectuate the issuance of New Notes
and other documentation necessary to effectuate the Plan of
Reorganization (including, without limitation, any material
refinancings, modifications or amendments to any subsidiary
level financing, conduits or securitizations) in form and
substance reasonably satisfactory to the Steering Committee.
6. The Filing Entities shall have executed and delivered
all documents necessary to effectuate the issuance of the New
Common Interests in form and substance reasonably satisfactory
to the Steering Committee.
7. All authorizations, consents and regulatory approvals
required, if any, in connection with the consummation of the
Plan of Reorganization shall have been obtained.
8. All other actions, documents and agreements necessary to
implement the Plan of Reorganization shall have been effected or
executed.
9. Nomination of the Steering Committee Nominees to the
N&GC.
Waiver of
Conditions
Each of the conditions (other than entry of orders) set forth in
Articles IX and X.A of the Plan of Reorganization may be
waived in whole or in part by the Filing Entities with the
consent of the Steering Committee, not to be unreasonably
withheld, conditioned or delayed, without any notice to other
parties in interest or the Bankruptcy Court and without a
hearing. The failure to satisfy or waive any condition to the
Effective Date may be asserted by the Filing Entities or the
Steering Committee regardless of the circumstances giving rise
to the failure of such condition to be satisfied. The failure of
the Filing Entities or the Steering Committee to exercise any of
the foregoing rights shall not be deemed a waiver of any other
rights, and each such right shall be deemed an ongoing right
that may be asserted at any time.
Effect of
Confirmation of Plan of Reorganization
Discharge
of Claims and Termination of Interests
Except as otherwise provided in the Plan of Reorganization or in
the Confirmation Order, all consideration distributed under the
Plan of Reorganization shall be in exchange for, and in complete
satisfaction, settlement, discharge, and release of, all Claims
and Interests (other than those Claims and Interests that are
Unimpaired under the Plan of Reorganization) of any nature
whatsoever against the Filing Entities or any of their assets or
properties, and regardless of whether any property shall have
been distributed or retained
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pursuant to the Plan of Reorganization on account of such Claims
and Interests. Upon the Effective Date, each of the Filing
Entities and the Reorganized Debtors shall be deemed discharged
and released under section 1141(d)(1) of the Bankruptcy
Code from any and all Claims and Interests (other than those
Claims and Interests that are not Impaired under the Plan of
Reorganization), including, but not limited to, demands and
liabilities that arose before the Confirmation Date, and all
debts of the kind specified in section 502(g), 502(h), or
502(i) of the Bankruptcy Code, and the Old Preferred Interests,
the Old Common Interests and the Other Equity Interests (if any)
shall be cancelled, terminated and extinguished.
Releases
Releases
by the Filing Entities
As of the Effective Date, for good and valuable
consideration, the adequacy of which is hereby confirmed, the
Filing Entities, their Estates and the Reorganized Debtors, and
any Person seeking to assert claims or exercise rights of any of
the foregoing, shall be deemed to forever release, waive and
discharge all claims, obligations, suits, judgments, damages,
demands, debts, rights, causes of action and liabilities (other
than the rights of the Filing Entities and the Reorganized
Debtors to enforce the Plan of Reorganization and the contracts,
instruments, releases, indentures and other agreements or
documents delivered thereunder), whether liquidated or
unliquidated, fixed or contingent, matured or unmatured, known
or unknown, foreseen or unforeseen, then existing or thereafter
arising, in law, equity or otherwise, that are based in whole or
in part on any act, omission, transaction, event or other
occurrence taking place on or prior to the Effective Date,
including, to the extent the underlying claims and causes of
action are property of Delaware Funding’s Estate, the
claims and causes of action asserted in the Canadian Senior
Unsecured Notes Litigation, in any way relating to the Filing
Entities, the Reorganized Debtors, the Chapter 11 Cases,
the Offering Memorandum, the Plan of Reorganization or the
Disclosure Statement, and that could have been asserted by or on
behalf of the Filing Entities, their Estates or the Reorganized
Debtors, as of the Effective Date against (i) the Filing
Entities’ or the Filing Entities’ subsidiaries’
members, members of boards of managers, directors and officers
(acting in such capacity or as the Filing Entities’ agents
or employees), employees, advisors, attorneys, agents or
representatives, in each case to the extent acting in any such
capacity since May 8, 2009, or any of their successors or
assigns (in each case acting in such capacity); (ii) the
Steering Committee (in such capacity) and its current members,
members of boards of managers, directors and officers (acting in
such capacity or as the Steering Committee’s agents or
employees), employees, equity holders, partners, affiliates,
advisors, attorneys, agents or representatives, or any of its
successors or assigns (in each case acting in such capacity);
and (iii) solely with respect to the JPM L/C Facility or
the JPM L/C Facility Agreement, JPM or any other lender under
the JPM Facility Agreement (in each case acting in such
capacity), provided that nothing in this paragraph shall be
deemed to operate as a waiver or release from any causes of
action based on willful misconduct, gross negligence, or
intentional fraud, in each case as determined by a final order
of a court of competent jurisdiction.
Releases
by Holders of Claims and Interests
As of the Effective Date, for good and valuable
consideration, the adequacy of which is hereby confirmed, each
holder of a Claim, solely in its capacity as such, each holder
of a Claim that affirmatively votes in favor of the Plan of
Reorganization shall have agreed to forever release, waive and
discharge all claims, defenses, obligations, suits, judgments,
damages, demands, debts, rights, causes of action and
liabilities (other than the rights to enforce the Plan of
Reorganization and the contracts, instruments, releases,
indentures and other agreements or documents delivered
thereunder) and including the claims and causes of action
asserted in the Canadian Senior Unsecured Notes Litigation
against any and all present or future defendants named in the
Canadian Senior Unsecured Notes Litigation, whether liquidated
or unliquidated, fixed or contingent, matured or unmatured,
known or unknown, foreseen or unforeseen, then existing or
thereafter arising, in law, equity or otherwise, that are based
in whole or in part on any act, omission, transaction, event or
other occurrence taking place on or prior to the Effective Date
in any way relating to the Filing Entities, the Reorganized
Debtors, the Chapter 11
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Cases, the Filing Entities’ prepetition restructuring
efforts, the Offering Memorandum, the Plan of Reorganization,
the Disclosure Statement or the JPM L/C Facility or the JPM L/C
Facility Agreement, against: (i) the Filing Entities and
the Reorganized Debtors and their respective subsidiaries;
(ii) the Filing Entities’ and their subsidiaries’
members, members of boards of managers, directors and employees,
advisors, attorneys, agents or representatives, and officers
(acting in such capacity or as the Filing Entities’ agents
or employees), in each case to the extent acting in any such
capacity since May 8, 2009, or any of their successors or
assigns (in each case acting in such capacity); and
(iii) the Steering Committee (in such capacity) and its
current members, members of boards of managers, directors and
officers, employees, advisors, attorneys, agents or
representatives (acting in such capacity or as the Steering
Committee’s agents or employees), or any of its successors
or assigns (in each case acting in such capacity), each as of
the Effective Date, provided that nothing in this
paragraph shall be deemed to operate as a waiver or release from
any causes of action based on willful misconduct, gross
negligence or intentional fraud, or in each case as determined
by a final order of a court of competent jurisdiction.
Injunction
Except as provided in the Plan of Reorganization or the
Confirmation Order, as of the Confirmation Date, subject to the
occurrence of the Effective Date, all Persons that have held,
currently hold or may hold a Claim or other debt or liability
that is discharged or an Interest or other right of an equity
security holder that is terminated pursuant to the terms of the
Plan of Reorganization are permanently enjoined from taking any
of the following actions against the Filing Entities or their
property on account of any such discharged Claims, debts or
liabilities or terminated Interests or rights:
(i) commencing or continuing, in any manner or in any
place, any action or other proceeding; (ii) enforcing,
attaching, collecting or recovering in any manner any judgment,
award, decree or order; (iii) creating, perfecting or
enforcing any Lien; (iv) asserting a setoff, right of
subrogation or recoupment of any kind against any debt,
liability or obligation due to the Filing Entities; and
(v) commencing or continuing any action, in each case in
any manner, in any place that does not comply with or is
inconsistent with the provisions of the Plan of Reorganization.
By accepting distribution pursuant to the Plan of
Reorganization, each holder of an Allowed Claim receiving
distributions pursuant to the Plan of Reorganization shall be
deemed to have specifically consented to the injunctions set
forth in Article XIII.I of the Plan of Reorganization.
Exculpation
and Limitation of Liability
The Reorganized Debtors, the Filing Entities, the Estate, their
subsidiaries, any Committee, the Steering Committee and any and
all of their respective current or former members, officers,
directors, members of boards of managers, employees, equity
holders, partners, affiliates, advisors, attorneys, agents or
representatives, or any of their successors or assigns, shall
not have or incur any liability to any holder of a Claim or an
Interest, or any other party in interest, or any of their
respective members, officers, directors, managers, employees,
equity holders, partners, affiliates, advisors, attorneys,
agents or representatives, or any of their successors or
assigns, for any act or omission in connection with, relating to
or arising out of, the administration of the Chapter 11
Case the negotiation of the terms of the Plan of Reorganization,
the solicitation of acceptances of the Plan of Reorganization,
the pursuit of confirmation of the Plan of Reorganization, the
consummation of the Plan of Reorganization, or the
administration of the Plan of Reorganization or the property to
be distributed under the Plan of Reorganization, except for
their willful misconduct, gross negligence or intentional fraud
as determined by a final order of a court of competent
jurisdiction, and in all respects shall be entitled to
reasonably rely upon the advice of counsel with respect to their
duties and responsibilities with respect to the Chapter 11
Cases and the Plan of Reorganization.
Notwithstanding any other provision of the Plan of
Reorganization, but without limiting the releases provided in
the Plan of Reorganization or affecting the status or treatment
of any Claim Allowed pursuant to the Plan of Reorganization, no
holder of a Claim or Interest, no other party in interest, none
of their respective members, officers, directors, managers,
employees, equity holders, partners, affiliates, subsidiaries,
advisors, attorneys, agents or representatives, and no
successors or assigns of the foregoing, shall have any right of
action against the Reorganized Debtors, the Filing Entities,
their Estates, their subsidiaries, any Committee, the Steering
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Committee or any of their respective current or former members,
officers, directors, managers, employees, equity holders,
partners, affiliates, subsidiaries, advisors, attorneys, agents
or representatives, or any of their successors or assigns, for
any act or omission in connection with, relating to or arising
out of, the administration of the Chapter 11 Cases, the
solicitation of acceptances of the Plan of Reorganization, the
pursuit of confirmation of the Plan of Reorganization, the
consummation of the Plan of Reorganization, or the
administration of the Plan of Reorganization or the property to
be distributed under the Plan of Reorganization, except for
their willful misconduct or gross negligence as determined by a
final order of a court of competent jurisdiction.
Enforcement
of Subordination
The classification and manner of satisfying all Claims and
Interests under the Plan of Reorganization takes into
consideration all subordination rights, if any, whether arising
by contract, under general principles of equitable
subordination, sections 510 or 1129(b)(2) of the Bankruptcy
Code, or otherwise. All holders in any class that votes to
accept the Plan shall have been deemed to have waived all such
subordination rights and shall be permanently enjoined and
estopped from enforcing such subordination rights. To the extent
that any such rights have not otherwise been expressly taken
into account by the Plan of Reorganization, all such rights are
not waived and are hereby expressly reserved.
Term of
Injunctions or Stays
Unless otherwise provided in the Plan of Reorganization or in
the Confirmation Order, all injunctions or stays in effect in
the Chapter 11 Cases under sections 105 or 362 of the
Bankruptcy Code or any order of the Bankruptcy Court, and extant
on the Confirmation Date (excluding any injunctions or stays
contained in the Plan of Reorganization or the Confirmation
Order), shall remain in full force and effect until the
Effective Date. All injunctions or stays contained in the Plan
of Reorganization or the Confirmation Order shall remain in full
force and effect in accordance with their terms.
Binding
Effect
The Plan of Reorganization shall be binding upon and inure to
the benefit of the Filing Entities, all present and former
holders of Claims against and Interests in the Filing Entities,
whether or not such holders will receive or retain any property
or interest in property under the Plan of Reorganization, their
respective successors and assigns, including, without
limitation, the Reorganized Debtors, and all other parties in
interest in the Chapter 11 Cases.
Summary
of Other Provisions of Plan of Reorganization
Modifications
or Amendments of Plan of Reorganization
The Filing Entities may alter, amend or modify the Plan of
Reorganization or any exhibits or schedules thereto under
section 1127(a) of the Bankruptcy Code at any time prior to
the Confirmation Date, with the consent of the Steering
Committee which consent shall not be unreasonably withheld,
conditioned or delayed. The Filing Entities reserve the right to
include any amended exhibits or schedules in the Plan
Supplement. After the Confirmation Date and prior to substantial
consummation of the Plan of Reorganization, as defined in
section 1101(2) of the Bankruptcy Code, the Filing Entities
may, under section 1127(b) of the Bankruptcy Code,
institute proceedings in the Bankruptcy Court to remedy any
defect or omission or reconcile any inconsistencies in the Plan
of Reorganization, the Disclosure Statement or the Confirmation
Order, and to accomplish such matters as may be necessary to
carry out the purposes and effects of the Plan of Reorganization
so long as such proceedings do not materially adversely affect
the treatment of holders of Claims under the Plan of
Reorganization; provided, however, that prior
notice of such proceedings shall be served in accordance with
the Bankruptcy Rules or order of the Bankruptcy Court.
Corporate
Action
Prior to, on or after the Effective Date (as appropriate), all
matters expressly provided for under the Plan of Reorganization
that would otherwise require approval of the interest holders,
managers or directors of the
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Filing Entities shall be deemed to have occurred and shall be in
effect prior to, on or after the Effective Date (as appropriate)
pursuant to the applicable limited liability company or general
corporation law of the State of Delaware without any requirement
of further action by the interest holders or directors of the
Filing Entities.
Professional
Fee Claims
All final requests for compensation or reimbursement of costs
and expenses pursuant to sections 327, 328, 330, 331,
503(b) or 1103 of the Bankruptcy Code for services rendered to
the Filing Entities or any Committee (if appointed) prior to the
Effective Date must be filed with the Bankruptcy Court and
served on the Reorganized Debtors and their counsel no later
than sixty (60) days after the Effective Date, unless
otherwise ordered by the Bankruptcy Court. Objections to
applications of such Professionals or other entities for
compensation or reimbursement of costs and expenses must be
filed and served on the Reorganized Debtors and their counsel
and the requesting Professional or other entity no later than
twenty-five (25) days (or such longer period as may be
allowed by order of the Bankruptcy Court) after the date on
which the applicable application for compensation or
reimbursement was served. The Reorganized Debtors may pay
charges that they incur on and after the Effective Date for
Professionals’ fees, disbursements, expenses or related
support services in the ordinary course of business and without
application to the Bankruptcy Court.
Confirmation
of Plan of Reorganization for Single Debtor
The Plan of Reorganization constitutes a separate plan of
reorganization for each of CIT Group Inc. and Delaware Funding.
In the event that the Plan of Reorganization cannot be confirmed
with respect to one of the Filing Entities, the Plan of
Reorganization may nonetheless be confirmed with respect to the
other Filing Entity at the request of such other Filing Entity.
Revocation,
Withdrawal or Non-Consummation
The Filing Entities reserve the right to revoke or withdraw the
Plan of Reorganization at any time prior to the Confirmation
Date and to file other plans of reorganization. If the Filing
Entities revoke or withdraw the Plan of Reorganization, or if
confirmation or consummation of the Plan of Reorganization does
not occur, then (i) the Plan of Reorganization shall be
null and void in all respects, any settlement or compromise
embodied in the Plan of Reorganization (including the fixing or
limiting to an amount any Claim or Class of Claims), assumption
or rejection of executory contracts or leases effected by the
Plan of Reorganization, and any document or agreement executed
pursuant to the Plan of Reorganization shall be deemed null and
void, and (ii) nothing contained in the Plan of
Reorganization, and no acts taken in preparation for
consummation of or statements made in the Plan of
Reorganization, shall (a) constitute or be deemed to
constitute a waiver or release of any Claims by or against, or
any Interests in, the Filing Entities or any other Person,
(b) prejudice in any manner the rights of the Filing
Entities or any Person in any further proceedings involving the
Filing Entities, or (c) constitute an admission of any sort
by the Filing Entities or any other Person. If the Plan of
Reorganization is not confirmed, then the treatment of the
Claims under the Plan of Reorganization (a) shall not be
deemed an admission of any kind by the holders of the Claims or
a waiver of any rights or claims by the holders of the Claims,
and (b) shall have no collateral estoppel, presumptive or
evidentiary effect of any kind in any other matter or proceeding
in the Chapter 11 Cases or in any Chapter 7
proceedings with respect to the Filing Entities.
Section 1125(e)
of the Bankruptcy Code
As of the Confirmation Date, the Filing Entities shall be deemed
to have solicited acceptances of the Plan of Reorganization in
good faith and in compliance with the applicable provisions of
the Bankruptcy Code. The Filing Entities and each of their
affiliates, agents, directors, officers, employees, investment
bankers, financial advisors, attorneys and other professionals
have participated in good faith and in compliance with the
applicable provisions of the Bankruptcy Code in the offer and
issuance of the New Notes, the New Common Interests and the
Contingent Value Rights under the Plan of Reorganization, and
therefore are not, and on account of such offer, issuance and
solicitation will not be, liable at any time for the violation
of any applicable law, rule or regulation governing the
solicitation of acceptances or rejections of the Plan of
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Reorganization or the offer and issuance of the New Notes, the
New Common Interests and the Contingent Value Rights under the
Plan of Reorganization.
The
Confirmation Hearing
If the Filing Entities commence the Chapter 11 Cases, the
Bankruptcy Court would schedule a hearing on the confirmation of
the Plan of Reorganization. At the Confirmation Hearing, the
Bankruptcy Court would consider whether the Plan of
Reorganization satisfies the various requirements of the
Bankruptcy Code, including whether the Plan of Reorganization is
feasible and whether the Plan of Reorganization is in the best
interests of the holders of Claims against and Interests in the
Filing Entities. At that time, the Filing Entities would submit
a report to the Bankruptcy Court concerning the votes for
acceptance or rejection of the Plan of Reorganization by the
parties entitled to vote thereon.
Section 1128(b) of the Bankruptcy Code provides that any
party in interest may object to confirmation of the Plan of
Reorganization. Any objection to confirmation of the Plan of
Reorganization would have to be made in writing and filed with
the Bankruptcy Court and served on all required parties by the
objection deadlines set by the Bankruptcy Court. Unless an
objection to confirmation is timely served and filed, it may not
be considered by the Bankruptcy Court.
Confirmation
At the Confirmation Hearing, the Bankruptcy Court could confirm
the Plan of Reorganization only if all of the requirements of
section 1129 of the Bankruptcy Code are met. Among the
requirements for confirmation of a plan of reorganization are
that the plan is (i) accepted by all impaired classes of
claims and equity interests or, if rejected by an impaired
class, that the plan “does not discriminate unfairly”
and is “fair and equitable” as to such class,
(ii) feasible and (iii) in the “best
interests” of creditors and interest holders that are
impaired under the plan of reorganization.
Confirmation
Without Acceptance of All Impaired Classes: The
“Cramdown” Alternative
Under the Plan of Reorganization, Classes 14, 15, 16 and 18
are deemed to have rejected the Plan of Reorganization. In view
of the deemed rejection by such Claim and Interest holders, the
Filing Entities will seek confirmation of the Plan of
Reorganization pursuant to the “cramdown” provisions
of the Bankruptcy Code.
Specifically, Bankruptcy Code section 1129(b) provides that
a plan can be confirmed even if the Plan of Reorganization is
not accepted by all impaired classes, as long as at least one
impaired class of claims has accepted it. A bankruptcy court may
confirm a Plan of Reorganization at the request of the debtors
if the plan “does not discriminate unfairly” and is
“fair and equitable” as to each impaired class that
has not accepted the Plan of Reorganization.
A plan does not discriminate unfairly within the meaning of the
Bankruptcy Code if a dissenting class is treated equally with
respect to other classes of equal rank.
A plan is fair and equitable as to a class of claims which
rejects a plan if the plan provides (a) for each holder of
a claim included in the rejecting class to receive or retain on
account of that claim property that has a value, as of the
effective date of the plan, equal to the allowed amount of such
claim; or (b) that the holder of any claim or interest that
is junior to the claims of such class will not receive or retain
on account of such junior claim or interest any property at all.
A plan is fair and equitable as to a class of equity interests
that rejects a plan if the plan provides (a) that each
holder of an interest included in the rejecting class receive or
retain on account of that interest property that has a value, as
of the effective date of the plan, equal to the greatest of the
allowed amount of any fixed liquidation preference to which such
holder is entitled, any fixed redemption price to which such
holder is entitled, or the value of such interest; or
(b) that the holder of any interest that is junior to the
interests of such class will not receive or retain any property
at all on account of such junior interest under the plan.
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Feasibility
of the Plan of Reorganization
The Bankruptcy Code requires that the Bankruptcy Court determine
that confirmation of the Plan of Reorganization is not likely to
be followed by liquidation or the need for further financial
reorganization of the Filing Entities. For purposes of showing
that the Plan of Reorganization meets this feasibility standard,
the Filing Entities have analyzed the ability of the Reorganized
Debtors to meet their obligations under the Plan of
Reorganization and retain sufficient liquidity and capital
resources to conduct their business.
The Filing Entities believe that with a deleveraged capital
structure and the Exchanges, the Filing Entities will be able to
support the financial projections set forth in Appendix A
to this Offering Memorandum and Disclosure Statement (the
“Projections”). Based on the terms of the Plan of
Reorganization, (it is assumed that the Effective Date will
occur on or about
30-60 days
following the Petition Date) at emergence the Reorganized
Debtors shall have been released from more than $10 billion
in debt obligations.
Holders of Claims against and Interests in the Filing Entities
are advised, however, that the Projections were not prepared
with a view toward compliance with the published guidelines of
the American Institute of Certified Public Accountants or any
other regulatory or professional agency or body or generally
accepted accounting principles. FURTHERMORE, THE FILING
ENTITIES’ INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS,
PRICEWATERHOUSECOOPERS LLP, HAVE NOT COMPILED, EXAMINED OR
PERFORMED ANY OTHER PROCEDURES TO THE PROJECTIONS AND
ACCORDINGLY DO NOT EXPRESS ANY OPINION OR ANY OTHER FORM OF
ASSURANCE WITH RESPECT THERETO AND ASSUME NO RESPONSIBILITY FOR
THE PROJECTIONS.
In addition to the assumptions footnoted in the Projections
themselves, the Projections also assume that (i) the Plan
of Reorganization will be confirmed and consummated in
accordance with its terms, (ii) there will be no material
adverse change in legislation or regulations, or the
administration thereof, including environmental legislation or,
regulations, that will have an unexpected effect on the
operations of Reorganized Debtors, (iii) there will be no
change in United States generally accepted accounting principles
that will have a material effect on the reported financial
results of Reorganized Debtors, and (iv) there will be no
material contingent or unliquidated litigation or indemnity
claims applicable to Reorganized Debtors. To the extent that the
assumptions inherent in the Projections are based upon future
business decisions and objectives, they are subject to change.
In addition, although they are presented with numerical
specificity and considered reasonable by the Filing Entities
when taken as a whole, the assumptions and estimates underlying
the Projections are subject to significant business, economic
and competitive uncertainties and contingencies, many of which
will be beyond the control of Reorganized Debtors.
Accordingly, the Projections are only estimates that are
necessarily speculative in nature. It can be expected that some
or all of the assumptions in the Projections will not be
realized and that actual results will vary from the Projections,
which variations may be material and are likely to increase over
time. The Projections should therefore not be regarded as a
representation by the Filing Entities or any other person that
the results set forth in the Projections will be achieved. In
light of the foregoing, readers are cautioned not to place undue
reliance on the Projections. The Projections should be read
together with the information in the sections of this Offering
Memorandum and Disclosure Statement entitled “Risk
Factors” and “The Plan of Reorganization —
Risks Associated with Plan of Reorganization” which set
forth important factors that could cause actual results to
differ from those in the Projections.
The Filing Entities do not intend to update or otherwise revise
the Projections, including any revisions to reflect events or
circumstances existing or arising after the date of this
Offering Memorandum and Disclosure Statement or to reflect the
occurrence of unanticipated events, even if any or all of the
underlying assumptions do not come to fruition. Furthermore, the
Filing Entities do not intend to update or revise the
Projections to reflect changes in general economic or industry
conditions. Whether actual results will conform to the
Projections is subject to a number of risks and uncertainties,
including:
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the high degree of competition in the Filing Entities’
business;
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the susceptibility of the Filing Entities’ business to
general economic conditions;
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discovery of unknown contingent liabilities;
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the interest rate environment;
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the ability to retain the client base;
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the effect of tightened liquidity markets on the Filing Entities
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future capital requirements.
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Best
Interests Test
With respect to each Impaired Class of Claims and Interests,
confirmation of the Plan of Reorganization requires that each
holder of a Claim or Interest either (a) accept the Plan of
Reorganization or (b) receive or retain under the Plan of
Reorganization property of a value, as of the Effective Date,
that is not less than the value such holder would receive or
retain if the Filing Entities were liquidated under
Chapter 7 of the Bankruptcy Code. To calculate the probable
distribution to holders of each Impaired Class of Claims and
Interests if the Filing Entities were liquidated under
Chapter 7, the Bankruptcy Court must first determine the
aggregate dollar amount that would be generated from the Filing
Entities’ assets if their Chapter 11 Cases were
converted to Chapter 7 cases under the Bankruptcy Code.
This “liquidation value” would consist primarily of
the proceeds from a forced sale of the Filing Entities’
assets by a Chapter 7 trustee.
The amount of liquidation value available to unsecured creditors
would be reduced by, first, the claims of secured creditors to
the extent of the value of their collateral, and, second, by the
costs and expenses of liquidation, as well as by other
administrative expenses and costs of both Chapter 7 cases
and Chapter 11 cases. Costs of liquidation under
Chapter 7 of the Bankruptcy Code would include the
compensation of a trustee, as well as of counsel and other
professionals retained by the trustee, asset disposition
expenses, all unpaid expenses incurred by the Filing Entities in
their Chapter 11 Cases (such as compensation of attorneys,
financial advisors and accountants) that are allowed in the
Chapter 7 cases, litigation costs, and claims arising from
the operations of the Filing Entities during the pendency of the
Chapter 11 Cases. The liquidation itself would trigger
certain Tax and Other Priority Claims (collectively,
“Priority Claims”) that otherwise would be due in the
ordinary course of business. Those Priority Claims would be paid
in full from the liquidation proceeds before the balance would
be made available to pay General Unsecured Claims or to make any
distribution in respect of equity interests. The liquidation
would also prompt the rejection of most, if not all, of the
Filing Entities’ executory contracts and unexpired leases,
thereby creating a significant increase in General Unsecured
Claims.
The Filing Entities believe that the Plan of Reorganization
meets the “best interests of creditors” test of
section 1129(a)(7) of the Bankruptcy Code. The Filing
Entities believe that the members of each of (i) Impaired
Classes 14, 16 and 18 will receive the same distribution
under the Plan of Reorganization as in a liquidation (i.e.,
zero) and (ii) Impaired Classes 7, 8, 9, 10, 11, 12,
13 and 15 will receive more under the Plan of Reorganization
than they would receive in a liquidation. The Liquidation
Analysis for each potential Chapter 7 liquidation scenario
is attached hereto as Appendix B-1 and B-2, provides that
in the event of a liquidation of CIT Group Inc. and/or Delaware
Funding as described therein, the proceeds available for holders
of Class 7, 8, 9, 10 and 11 Claims (all of whom would rank
pari passu in a Chapter 7 case for CIT Group
Inc.) would range from $2.05 billion to $13 billion,
with a recovery of only 5.9% to 37.2% for holders of such
Claims. See Appendix B-1. That Liquidation Analysis also
provides that there would be no recovery to holders of Senior
Subordinated Note Claims, Junior Subordinated Note Claims,
Subordinated 510(b) Claims, Old Preferred Interests, Old Common
Interests and Other Equity Interests. In addition, the separate
Liquidation Analysis for Delaware Funding provides that there
would be no recovery from the assets of Delaware Funding to
holders of Canadian Senior Unsecured Note Claims under either
(i) a complete liquidation of CIT Group Inc. and Delaware
Funding, see
Appendix B-2,
Exhibit B-2.2
or (ii) the consummation of the Plan of Reorganization for
CIT Group Inc. and the subsequent liquidation of Delaware
Funding, see
Appendix B-2,
Exhibit B-2.1.
In contrast, under the Plan of Reorganization, holders of
Allowed Class 6 Claims and Allowed Class 7 Claims
(assuming Class 7 votes to accept the Plan) will receive a
100% recovery; holders of Allowed Class 8, 9, 10 and 11
Claims will receive a 94.4% recovery (assuming Class 7,
Class 12 and Class 13 vote to accept
217
the Plan of Reorganization); holders of Allowed Class 12
Claims will receive a 50% recovery (assuming Class 7,
Class 12 and Class 13 Claims vote to accept the Plan
of Reorganization); and holders of Allowed Class 13 Claims
will receive a 8.1% recovery (assuming Class 7,
Class 12 and Class 13 Claims vote to accept the Plan
of Reorganization). Moreover, holders of Old Preferred Interests
will receive Contingent Value Rights under the Plan of
Reorganization. Holders of Subordinated 510(b) Claims, Old
Common Interests and Other Equity Interests receive nothing
under the Plan of Reorganization or in Chapter 7
liquidation. Therefore, holders of such Claims and such
Interests will receive substantially more (as to Class 6,
7, 8, 9, 10, 11, 12 and 13 Claims and Class 15 Interests)
or the same (as to Class 14 Claims and Class 16 and 18
Interests) under the Plan of Reorganization than in a
liquidation.
The foregoing recoveries assume that Series A Notes and
Series B Notes are valued at par and New Common Interests
are valued based on the mid-point of the equity value range set
forth in the section below titled “Equity Valuation
Analysis.”
Although the Filing Entities believe that the Plan of
Reorganization meets the “best interests test” of
section 1129(a)(7) of the Bankruptcy Code, there can be no
assurance that the Bankruptcy Court will determine that the Plan
of Reorganization meets this test. THESE ESTIMATES OF VALUE ARE
SUBJECT TO A NUMBER OF ASSUMPTIONS AND SIGNIFICANT QUALIFYING
CONDITIONS. ACTUAL VALUES AND RECOVERIES COULD VARY MATERIALLY
FROM THE ESTIMATES SET FORTH HEREIN. See “Plan of
Reorganization — Equity Valuation Analysis.”
Liquidation
Analysis
In order to determine the amount of liquidation value available
to creditors, the Filing Entities prepared a liquidation
analysis that provides an estimate of the proceeds that may be
generated as a result of a hypothetical Chapter 7
liquidation for CIT and Delaware Funding. While the Filing
Entities believe that the assumptions underlying the Liquidation
Analysis are reasonable, it is possible that certain of those
assumptions would not be realized in an actual liquidation. The
Liquidation Analysis is set forth as
Appendix B-1
and B-2 to
the Offering Memorandum and Disclosure Statement.
Notwithstanding the foregoing, the Filing Entities believe that
any liquidation analysis with respect to the Filing Entities is
inherently speculative. The liquidation analysis for the Filing
Entities necessarily contains estimates of the net proceeds that
would be received from a forced sale of assets
and/or
business units, as well as the amount of Claims that will
ultimately become Allowed Claims. The estimate of the amount of
Allowed Claims set forth in the liquidation analysis should not
be relied on for any other purpose, including, without
limitation, any determination of the value of any distribution
to be made on account of Allowed Claims under the Plan of
Reorganization.
Equity
Valuation Analysis
The Company has been advised by Morgan Stanley & Co.
Incorporated (“Morgan Stanley”) with respect to the
equity value of reorganized CIT Group Inc. (the “Common
Equity Value”). The Common Equity Value was estimated by
Morgan Stanley on September 30, 2009 to range from
approximately $5 billion to $11 billion as of an
assumed Effective Date of December 31, 2009. The foregoing
Common Equity Value range reflects, among other things, factors
discussed below, the current financial market conditions as of
September 30, 2009, and the inherent uncertainty as to the
achievement of the Projections. The Company also has asked for
Morgan Stanley’s view as to whether its estimate of the
Common Equity Value would materially change based on the
financial impact of: (i) the inclusion and treatment of the
Long-Dated Senior Unsecured Notes in the Plan, (ii) the
changes to the treatment of the Canadian Senior Unsecured Notes,
and (iii) the changes to the maturity schedule of the New
Notes, on the financial projections, assuming no other changes
to the various assumptions, financial projections or any other
information that formed a substantial basis for Morgan
Stanley’s estimate of the Common Equity Value on
September 30, 2009. Morgan Stanley confirmed to the
Company, that as of the date hereof, and without updating,
changing or independently verifying any of the assumptions,
financial projections or any other information that it had
previously considered and which formed a substantial basis for
Morgan Stanley’s views, the impact of: (i) the
inclusion and treatment of the Long-
218
Dated Senior Unsecured Notes in the Plan, (ii) the changes
to the treatment of the Canadian Senior Unsecured Notes, and
(iii) the changes to the maturity schedule of the New
Notes, on the financial projections would not materially change
its estimate of the Common Equity Value. The Company did not
request, and Morgan Stanley has not provided, an updated
estimate of the Common Equity Value as of the date hereof.
Morgan Stanley’s views reflect a number of assumptions,
including a successful reorganization of the Company’s
business and finances in a timely manner without significant
business disruptions, the availability and use of Fresh Start
Reporting and the Restructuring Plan becoming effective in
accordance with its terms on a basis consistent with the
estimates and the assumptions discussed herein. In preparing the
estimated Common Equity Value, Morgan Stanley: (a) reviewed
certain historical financial information of the Company for
recent years and interim periods; (b) reviewed certain
internal financial and operating data of the Company;
(c) reviewed certain financial projections prepared by the
management of the Company; (d) reviewed certain publicly
available information; (e) met with certain members of
senior management of the Company to discuss the Company’s
business plan, operations and future prospects;
(f) considered the market values of public companies that
Morgan Stanley deemed generally comparable to the Company;
(g) reviewed the financial terms, to the extent publicly
available, of certain acquisitions of companies that Morgan
Stanley believed were comparable to the operating businesses of
the Company’s operating business; and (h) conducted
such other analyses as Morgan Stanley deemed appropriate under
the circumstances.
Although Morgan Stanley conducted a review and analysis of the
Company’s business, assets and liabilities and business
plans, Morgan Stanley assumed and relied on the accuracy and
completeness of all financial and other information furnished to
it by the Company. With respect to the financial projections,
Morgan Stanley assumed, without independent verification, that
they had been reasonably prepared on bases reflecting the then
best currently available estimates and judgments of the
management of the Company of the future financial performance of
the Company. No independent evaluations or appraisals of the
Company’s assets were sought or were obtained in connection
therewith. Other than with respect to Morgan Stanley’s
views specifically set forth in the first paragraph of this
“Equity Valuation Analysis” section, Morgan
Stanley’s estimate of the Common Equity Value was
necessarily based on financial, economic, market and other
conditions, as in effect on September 30, 2009, the date on
which it provided its estimate, and the information made
available to Morgan Stanley as of such date, regarding an
assumed Effective Date of December 31, 2009. Events
occurring after the respective dates of Morgan Stanley’s
views may affect the Common Equity Value estimated by Morgan
Stanley and the assumptions used in preparing such views, and
Morgan Stanley did not assume any obligation to update or revise
its view of the Common Equity Value.
Estimates of Common Equity Value do not purport to be
appraisals, nor do they necessarily reflect the values which may
be realized if assets are sold. The estimates of Common Equity
Value prepared by Morgan Stanley assume that reorganized CIT
Group Inc. continues as the owner and operator of its businesses
and assets. Such estimates were developed solely for purposes of
formulation and negotiation of the Plan of Reorganization and
the analysis of the projected recoveries thereunder; therefore
the Common Equity Value prepared by Morgan Stanley should not be
relied upon or used for any other purpose. Such estimates
reflect computations of the estimated Common Equity Value of
reorganized CIT Group Inc. through the application of various
valuation techniques and do not purport to reflect or constitute
appraisals, liquidation values or estimates of the actual market
values that may be realized through the sale of any securities
to be issued pursuant to the Plan of Reorganization, which may
be significantly different from the amounts set forth herein.
The value of a business is subject to uncertainties and
contingencies that are difficult to predict and will fluctuate
with changes in factors affecting the financial conditions and
prospects of such a business. As a result, the estimate of
Common Equity Value set forth herein is not necessarily
indicative of actual outcomes, which may be significantly more
or less favorable than those set forth herein. Depending on the
results of the Company’s operations or changes in the
financial markets, Morgan Stanley’s valuation analysis as
of the Effective Date may differ from that disclosed herein.
In addition, the valuation of newly-issued securities is subject
to additional uncertainties and contingencies, all of which are
difficult to predict. Actual market prices of such securities at
issuance will depend upon, among other things, prevailing
interest rates; conditions in the financial markets; the
anticipated initial
219
securities holdings of prepetition creditors, some of which may
prefer to liquidate their investment rather than hold it on a
long-term basis; and other factors that generally influence the
prices of securities. Actual market prices of such securities
also may be affected by other factors not possible to predict.
Accordingly, the Common Equity Value estimated by Morgan Stanley
on September 30, 2009 does not necessarily reflect, and
should not be construed as reflecting, values that will be
attained in the public or private markets and does not
constitute any recommendations whether to tender, purchase or
sell any securities. The equity value ascribed in the analysis
does not purport to be an estimate of the post-reorganization
market trading value. Such trading value may be materially
different from the Common Equity Value ranges associated with
Morgan Stanley’s valuation analysis.
Application
of the ‘Best Interests’ of Creditors Test to the
Liquidation Analyses and the Valuation
Under the Plan of Reorganization, with respect to Class 6,
Class 7, Class 8, Class 9, Class 10,
Class 11, Class 12 and Class 13, it is impossible
to determine with any specificity the value that will be
distributed to holders of such Claims. This difficulty in
estimating the value of recoveries is due to the lack of any
public market for the New Common Interests
and/or the
New Notes.
Notwithstanding the difficulty in quantifying recoveries to
holders of Allowed Claims in Class 6, Class 7,
Class 8, Class 9, Class 10, Class 11,
Class 12 and Class 13 with precision, the Filing
Entities believe that the financial disclosures and Projections
contained herein imply a greater or equal recovery to holders of
Claims in Class 6, Class 7, Class 8,
Class 9, Class 10, Class 11, Class 12 and
Class 13 than the recovery available in a Chapter 7
liquidation. As set forth in the Liquidation Analysis for each
potential Chapter 7 scenario, holders of Allowed Claims in
Class 8, Class 9, Class 10 and Class 11 are
estimated to receive a recovery of 5.9% (low value) to 37.2%
(high value) in a Chapter 7 liquidation. See
Appendix B-1. Under the Plan of Reorganization and based on
the face amount and aggregate initial liquidation preference of
the New Common Interests such Class 8, Class 9,
Class 10 and Class 11 Claimholders are estimated to
receive a recovery of approximately 94.4%. The foregoing
recoveries assume that New Common Interests are valued based on
the mid-point of the equity value range set forth in the section
above titled “Equity Valuation Analysis.”
As set forth in the liquidation analysis, holders of Claims and
Interests in Classes 12, 13, 14, 15, 16 and 18 would
receive no recovery in a hypothetical Chapter 7 case.
In addition, the separate Liquidation Analysis for Delaware
Funding provides that there would be no recovery from the assets
of Delaware Funding to holders of Canadian Senior Unsecured Note
Claims under either (i) a complete liquidation of CIT Group
Inc. and Delaware Funding, see
Appendix B-2,
Exhibit B-2.2
or (ii) the consummation of the Plan of Reorganization for
CIT Group Inc. and the subsequent liquidation of Delaware
Funding, see
Appendix B-2,
Exhibit B-2.1.
Accordingly, the Filing Entities believe that the “best
interests” test of section 1129 of the Bankruptcy Code
is satisfied because the Filing Entities believe that the
members of each Impaired Class will receive greater or equal
value under the Plan of Reorganization than they would in a
liquidation. Although the Filing Entities believe that the Plan
of Reorganization meets the “best interests test” of
section 1129(a)(7) of the Bankruptcy Code, there can be no
assurance that the Bankruptcy Court will determine that the Plan
of Reorganization meets this test.
Risk
Factors Associated with Plan of Reorganization
Holders of Claims and Interests against the Filing Entities
should read and consider carefully the information set forth
below, as well as the other information set forth in this
Offering Memorandum and Disclosure Statement (and the documents
delivered together herewith
and/or
incorporated by reference), prior to voting to accept or reject
the Plan of Reorganization. This information, however, should
not be regarded as the only risks involved in connection with
the Plan of Reorganization
and/or its
implementation. In particular, please see “Risk
Factors,” including “Risk Factors — Risks
Related to the Plan of Reorganization.”
220
Certain
Bankruptcy Considerations
1. Failure to Satisfy Vote Requirement.
If the Offers are not consummated and the Filing Entities obtain
the requisite votes to accept the Plan of Reorganization in
accordance with the requirements of the Bankruptcy Code, the
Filing Entities may file voluntary petitions for reorganization
under Chapter 11 of the Bankruptcy Code and to seek, as
promptly as practicable thereafter, confirmation of the Plan of
Reorganization. In the event that sufficient votes are not
received, the Filing Entities may or may not file petitions for
relief under Chapter 11 or Chapter 7 of the Bankruptcy
Code. In such event, the Filing Entities may seek to accomplish
an alternative restructuring of their capitalization and their
obligations to creditors.
2. Non-Confirmation or Delay of Confirmation of the Plan of
Reorganization.
The Bankruptcy Court, which sits as a court of equity, may
exercise substantial discretion. Section 1129 of the
Bankruptcy Code sets forth the requirements for confirmation and
requires, among other things, that the confirmation of the Plan
of Reorganization not be followed by a need for further
financial reorganization and that the value of distributions to
dissenting creditors and shareholders not be less than the value
of distributions such creditors and shareholders would receive
if the Filing Entities were liquidated under Chapter 7 of
the Bankruptcy Code. Although the Filing Entities believe that
the Plan of Reorganization will meet such tests, there can be no
assurance that the Bankruptcy Court would reach the same
conclusion.
3. Risk of Non-Occurrence of the Effective Date.
Although the Filing Entities believe that the Effective Date
will occur reasonably soon after the Confirmation Date, there
can be no assurance as to such timing or as to whether it will
occur.
4. General Effect.
The filing of bankruptcy petitions by the Filing Entities, and
the publicity attendant thereto, may adversely affect the Filing
Entities’ business. The Filing Entities believe that any
such adverse effects may worsen during the pendency of
protracted Chapter 11 Cases if the Plan of Reorganization
is not confirmed as expected.
5. Effect of the Filing Entities’ Chapter 11
Cases on Relations with Clients and Borrowers.
Although the Filing Entities believe that they have good
relationships with their clients and borrowers and intend to
seek authority from the Bankruptcy Court on the Petition Date to
continue funding loan commitments, lines of credits, factoring,
receivable and collection management products and secured
financing to their clients by the Filing Entities and on behalf
of their non-Debtor operating affiliates, there can be no
assurance that such clients will continue to consummate
transactions with the Filing Entities after the commencement of
the Chapter 11 Cases. Therefore, the Chapter 11 Cases
may adversely affect the Filing Entities’ business and
cause certain customers to cease consummating transactions with
the Filing Entities.
6. Methods of Solicitation.
Section 1126(b) of the Bankruptcy Code provides that the
holder of a claim against, or interest in, a debtor who accepts
or rejects a plan of reorganization before the commencement of a
Chapter 11 case is deemed to have accepted or rejected such
plan under the Bankruptcy Code so long as the solicitation of
such acceptance was made in accordance with applicable
non-bankruptcy law governing the adequacy of disclosure in
connection with such solicitations, or, if such laws do not
exist, such acceptance was solicited after disclosure of
“adequate information,” as defined in
section 1125 of the Bankruptcy Code.
In addition, Bankruptcy Rule 3018(b) states that a holder
of a claim or interest who has accepted or rejected a plan
before the commencement of the case under the Bankruptcy Code
will not be deemed to have accepted or rejected the plan if the
court finds after notice and a hearing that the plan was not
transmitted in accordance with reasonable solicitation
procedures. Section 1126(b) of the Bankruptcy Code provides
that a holder of a claim or interest that has accepted or
rejected a plan before the commencement of a case under the
Bankruptcy Code is deemed to have accepted or rejected the plan
if (i) the solicitation of such acceptance or
221
rejection was in compliance with applicable non-bankruptcy law,
rule or regulation governing the adequacy of disclosure in
connection with such solicitation or (ii) there is no such
law, rule or regulation, and such acceptance or rejection was
solicited in accordance with section 1125(b) of the
Bankruptcy Code.
The Filing Entities believe that the use of the Offering
Memorandum and Disclosure Statement and Ballots for the purpose
of obtaining acceptances of the Plan of Reorganization and the
Filing Entities’ solicitation of the Plan of Reorganization
is in compliance with the Bankruptcy Code. However, there can be
no assurance that the Bankruptcy Court will decide that the
Filing Entities’ solicitation of the Plan of Reorganization
meets the requirements of section 1126(b) of the Bankruptcy
Code. If the Bankruptcy Court determines that the solicitation
does not comply with the requirements of section 1126(b) of
the Bankruptcy Code, the Filing Entities may seek to resolicit
acceptances, and, in such event, confirmation of the Plan of
Reorganization could be delayed and possibly jeopardized.
7. Classification and Treatment of Claims and Equity
Interests.
Section 1122 of the Bankruptcy Code requires that the Plan
of Reorganization classify Claims against, and Interests in, the
Filing Entities. The Bankruptcy Code also provides that the Plan
of Reorganization may place a Claim or Interest in a particular
Class only if such Claim or Interest is substantially similar to
the other Claims or Interests of such Class. The Filing Entities
believe that all Claims and Interests have been appropriately
classified in the Plan of Reorganization.
8. Risk of Non-Confirmation of the Plan of Reorganization
with Respect to Delaware Funding.
Delaware Funding believes that its only creditors are the
lenders under the Senior Credit Facility, of which Delaware
Funding is a guarantor, the holders of the Canadian Senior
Unsecured Note Claims and Intercompany Claims of its affiliates.
Claims under the Senior Credit Facility and Intercompany Claims
are Unimpaired under the Plan of Reorganization. Accordingly, in
order to comply with section 1129(a)(10) of the Bankruptcy
Code and confirm the Plan of Reorganization with respect to
Delaware Funding, Class 7 Canadian Senior Unsecured Note
Claims will have to vote in favor of the Plan of Reorganization.
Should Class 7 reject the Plan of Reorganization, Delaware
Funding reserves the right to liquidate its assets. As set forth
in the Liquidation Analysis attached hereto, liquidation of
Delaware Funding would result in no recovery to unsecured
creditors.
To the extent that the Bankruptcy Court finds that a different
classification is required for the Plan of Reorganization to be
confirmed, the Filing Entities presently anticipate that they
would seek (i) to modify the Plan of Reorganization to
provide for whatever classification might be required for
confirmation and (ii) to use the acceptances received from
any creditor pursuant to this solicitation for the purpose of
obtaining the approval of the Class or Classes of which such
creditor ultimately is deemed to be a member. Any such
reclassification of creditors, although subject to the notice
and hearing requirements of the Bankruptcy Code, could adversely
affect the Class in which such creditor was initially a member,
or any other Class under the Plan of Reorganization, by changing
the composition of such Class and the vote required for approval
of the Plan of Reorganization. There can be no assurance that
the Bankruptcy Court, after finding that a classification was
inappropriate and requiring a reclassification, would approve
the Plan of Reorganization based upon such reclassification.
Except to the extent that modification of classification in the
Plan of Reorganization requires resolicitation, the Filing
Entities will, in accordance with the Bankruptcy Code and the
Bankruptcy Rules, seek a determination by the Bankruptcy Court
that acceptance of the Plan of Reorganization of any holder of
Claims pursuant to this solicitation will constitute a consent
to the Plan of Reorganization’s treatment of such holder
regardless of the Class as to which such holder is ultimately
deemed to be a member. The Filing Entities believe that under
the Bankruptcy Rules the Filing Entities would be required to
resolicit votes for or against the Plan of Reorganization only
when a modification adversely affects the treatment of the Claim
of any creditor or equity holder.
The Bankruptcy Code also requires that the Plan of
Reorganization provide the same treatment for each Claim or
Interest of a particular Class unless the holder of a particular
Claim or Interest agrees to a less favorable treatment of its
Claim or Interest. The Filing Entities believe that they have
complied with the requirement of equal treatment. However, to
the extent that the Bankruptcy Court finds that the Plan of
222
Reorganization does not satisfy such requirement, the Bankruptcy
Court could deny confirmation of the Plan of Reorganization.
Issues or disputes relating to classification
and/or
treatment could result in a delay in the confirmation and
Effective Date of the Plan of Reorganization and could increase
the risk that the Plan of Reorganization will not be consummated.
Considerations
Regarding the Exchanges and the Contingent Value
Rights
The Company is highly leveraged relative to its cash flow, and
its liquidity position has been declining. There is a
significant risk that the Company will not be able to meet its
debt service obligations, and be unable to meet certain
financial covenants in its credit facilities. As of
August 31, 2009, the Company’s liquidity portfolio
(cash readily available to cover operating demands from across
our business operations and maturing obligations) totaled
$2.3 billion. The Company has approximately
$1.6 billion of unsecured long-term debt maturing during
the remainder of 2009, including approximately $0.8 billion
aggregate principal amount of notes due in the first week of
November. Additionally, the Company has estimated secured
facilities maturities (which are generally repaid in tandem with
underlying receivable maturities) of $5.3 billion for the
twelve months ending August 31, 2010.
As a result of the events described above and in effort to
improve the Company’s short-term liquidity and capital
structure and generally reduce the Company’s financial
risk, the Company has initiated restructuring efforts, as
described further in the section of this Offering Memorandum and
Disclosure Statement entitled “Summary —
Restructuring Plan” which include:
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conducting Offers for its outstanding unsecured notes to improve
financial flexibility by extending the maturities of such
indebtedness and reducing overall indebtedness. The Company is
offering eligible holders of Old Notes the ability to exchange
such notes for New Notes
and/or
shares of New Preferred Stock, as applicable, as described in
this Offering Memorandum and Disclosure Statement;
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holding discussions with noteholders concerning actions which
would result in improvements to the Company’s liquidity and
capital position; and
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negotiating the terms of the Exchanges, the Contingent Value
Rights, and the Plan of Reorganization.
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Even if the Company is successful in implementing all of the
actions described above, the Company will be required, in order
to satisfy liquidity needs and comply with anticipated covenants
to be included in new debt agreements requiring maintenance of
minimum cash balances, to consummate in the near term certain
asset sales or other capital generating actions over and above
normal activities. Moreover, the amount of liquidity needed may
be greater than currently anticipated as a result of additional
factors and events (such as interest rate fluctuations and
margin calls) that increase the Company’s cash needs
causing the Company to be unable to independently satisfy
near-term liquidity requirements.
The Filing Entities believe that the completion of the Exchanges
is critical to their continuing viability. If the Company is not
able to consummate the Plan of Reorganization and the Exchanges,
the Filing Entities may seek to accomplish an alternative
restructuring of their capitalization
and/or
commence cases under the Bankruptcy Code without the benefit of
the Plan of Reorganization. The Filing Entities cannot be sure
that any alternative restructuring arrangement or plan would
result in a successful reorganization of the Filing Entities or
that any reorganization would be on terms as favorable to the
holders of the Old Notes as the terms of the Offers or the Plan
of Reorganization.
Alternatives
to Confirmation and Consummation of the Plan of
Reorganization
The Filing Entities believe that the Plan of Reorganization
affords holders of Claims the potential for the greatest
recovery and, therefore, is in the best interests of such
holders. The Plan of Reorganization as presented is the result
of considerable negotiations among the Filing Entities and the
Steering Committee.
223
If, however, the requisite acceptances are not received, or the
Plan of Reorganization is not confirmed and consummated, the
theoretical alternatives include: (i) formulation of an
alternative plan of reorganization or (ii) liquidation of
the Filing Entities under Chapter 7 or 11 of the Bankruptcy
Code.
Alternative
Plan(s) of Reorganization
If the requisite acceptances are not received or if the Plan of
Reorganization is not confirmed, the Filing Entities may file
Chapter 11 petitions and attempt to formulate and propose a
different plan or plans of reorganization. Such a plan or
plan(s) might involve either a reorganization and continuation
of the Filing Entities’ businesses or an orderly
liquidation of assets.
The Filing Entities’ businesses could suffer from increased
costs, erosion of customer confidence and liquidity difficulties
if it remained debtor in possession during a lengthy
Chapter 11 process while trying to negotiate a plan of
reorganization.
The Filing Entities believe that the Plan of Reorganization,
which is the result of extensive negotiations between the Filing
Entities and the Noteholder Steering Committee, enables
creditors to realize the greatest possible value under the
circumstances and that, compared to any later alternative plan
of reorganization, the Plan of Reorganization has the greatest
chance to be confirmed and consummated.
Liquidation
Under Chapter 7 or Chapter 11
If no plan is confirmed, the Filing Entities may be forced to
liquidate under Chapter 7 of the Bankruptcy Code, pursuant
to which a trustee would be elected or appointed to liquidate
the Filing Entities’ assets for distribution to creditors
in accordance with the priorities established by the Bankruptcy
Code. It is impossible to predict precisely how the proceeds of
the liquidation would be distributed to the respective holders
of Claims against or Interests in the Filing Entities.
The Filing Entities believe that in a liquidation under
Chapter 7, before creditors received any distribution,
additional administrative expenses involved in the appointment
of a trustee or trustees and attorneys, accountants and other
professionals to assist such trustees would cause a substantial
diminution in the value of the Filing Entities’ Estate.
Outstanding letters of credit (if any) which would otherwise not
be drawn would be drawn. The assets available for distribution
to creditors would be reduced by such additional expenses and by
Claims, some of which would be entitled to priority, which would
arise by reason of the liquidation and from the rejection of
leases and other executory contracts in connection with the
cessation of operations and the failure to realize the greater
going concern value of the Filing Entities’ assets.
The Filing Entities could also be liquidated pursuant to the
provisions of a Chapter 11 plan of liquidation. In a
liquidation under Chapter 11, the Filing Entities’
assets could be sold in an orderly fashion over a more extended
period of time than in a liquidation under Chapter 7. Thus,
a Chapter 11 liquidation might result in larger recoveries
than in a Chapter 7 liquidation, but the delay in
distributions could result in lower present values received and
higher administrative costs. Because a trustee is not required
in a Chapter 11 case, expenses for professional fees could
be lower than in a Chapter 7 case, in which a trustee must
be appointed. Any distribution to the holders of Claims under a
Chapter 11 liquidation plan probably would be delayed
substantially.
The Filing Entities believe that any alternative liquidation
under Chapter 7 or Chapter 11 is a much less
attractive alternative to creditors than the Plan of
Reorganization because of the greater return the Filing Entities
believe is provided to creditors under the Plan of
Reorganization.
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PROCEDURES
FOR VOTING ON THE PLAN OF REORGANIZATION
Notice to
Holders of Claims
This Offering Memorandum and Disclosure Statement is being
transmitted to holders of Claims in Class 6, Class 7,
Class 8, Class 9, Class 10, Class 11,
Class 12 and Class 13. Pursuant to
section 1126(g) of the Bankruptcy Code, Claims in
Classes 1, 2, 3, 4 and 5 and Interests in Class 17 are
unimpaired and Claims in Class 14 and Interests in
Classes 15, 16 and 18 are impaired under the Plan, and
holders of such Claims and Interests are not entitled to vote on
the Plan of Reorganization. Accordingly, holders of Claims in
Class 6, Class 7, Class 8, Class 9,
Class 10, Class 11, Class 12 and Class 13
will be the only holders of Claims (or Interests) that will vote
on the Plan. The purpose of this Offering Memorandum and
Disclosure Statement is to provide adequate information to
enable such Claim holders to make a reasonably informed decision
with respect to the Plan of Reorganization prior to exercising
their right to vote to accept or reject the Plan of
Reorganization. Any capitalized terms used in this section and
not otherwise defined herein shall have the meanings ascribed to
such terms in the Plan of Reorganization.
ALL HOLDERS OF CLAIMS IN CLASS 6, CLASS 7,
CLASS 8, CLASS 9, CLASS 10, CLASS 11,
CLASS 12 AND CLASS 13 ARE ENCOURAGED TO READ THIS
OFFERING MEMORANDUM AND DISCLOSURE STATEMENT AND ITS APPENDICES
CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING TO VOTE EITHER
TO ACCEPT OR TO REJECT THE PLAN OF REORGANIZATION. This Offering
Memorandum and Disclosure Statement contains important
information about the Plan of Reorganization and considerations
pertinent to acceptance or rejection of the Plan of
Reorganization.
THIS OFFERING MEMORANDUM AND DISCLOSURE STATEMENT IS THE ONLY
DOCUMENT TO BE USED IN CONNECTION WITH THE SOLICITATION OF VOTES
ON THE PLAN OF REORGANIZATION. No solicitation of votes may be
made except after distribution of this Offering Memorandum and
Disclosure Statement, and no person has been authorized to
distribute any information concerning the Filing Entities other
than the information contained herein.
CERTAIN OF THE INFORMATION CONTAINED IN THIS OFFERING MEMORANDUM
AND DISCLOSURE STATEMENT IS BY ITS NATURE FORWARD LOOKING AND
CONTAINS ESTIMATES, ASSUMPTIONS, AND PROJECTIONS THAT MAY BE
MATERIALLY DIFFERENT FROM ACTUAL, FUTURE RESULTS. Except with
respect to the Projections and except as otherwise specifically
and expressly stated herein, this Offering Memorandum and
Disclosure Statement does not reflect any events that may occur
subsequent to the date hereof and that may have a material
impact on the information contained in this Offering Memorandum
and Disclosure Statement. The Filing Entities do not intend to
update the Projections; thus, the Projections will not reflect
the impact of any subsequent events not already accounted for in
the assumptions underlying the Projections. Further, the Filing
Entities do not anticipate that any amendments or supplements to
this Offering Memorandum and Disclosure Statement will be
distributed to reflect such occurrences. Accordingly, the
delivery of this Offering Memorandum and Disclosure Statement
will not under any circumstance imply that the information
herein is correct or complete as of any time subsequent to the
date hereof.
EXCEPT WHERE SPECIFICALLY NOTED, THE FINANCIAL INFORMATION
CONTAINED HEREIN HAS NOT BEEN AUDITED BY AN INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM AND HAS NOT BEEN PREPARED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
Solicitation
Package
In soliciting votes for the Plan of Reorganization pursuant to
this Offering Memorandum and Disclosure Statement from the
holders of Claims in Class 6, Class 7, Class 8,
Class 9, Class 10, Class 11, Class 12 and
Class 13, the Filing Entities are also sending copies of
the Plan of Reorganization and a ballot (a “Ballot”)
(together with the Offering Memorandum and Disclosure Statement,
the “Solicitation Package”) to such holders of claims.
225
Voting
Procedures and Ballots and Voting Deadline
The “Voting Record Date” for purposes of determining
noteholders that are eligible to vote on the Plan of
Reorganization is the Original Expiration Date or Long Term
Expiration Date, as applicable (as such expiration dates may be
extended by the Filing Entities). Any Beneficial Holder whose
Old Notes are registered or held of record in the name of his
broker, dealer, commercial bank, trust company or other Nominee
and who wishes to vote on the Plan of Reorganization should
provide their instructions with respect to the Offers and/or
Plan of Reorganization to their Nominee. The Nominee will need
to tender the underlying Old Notes on behalf of the Beneficial
Holder, in accordance with the Beneficial Holder’s
instructions.
There are three different voting choices in connection with the
Offers and Plan of Reorganization, which are outlined in greater
detail below. The Ballot (which is Appendix E to the
Offering Memorandum) was designed to assist Beneficial Holders
of Old Notes to understand the voting process and to provide the
correct instruction to their Nominee. Beneficial Holders of Old
Notes should not return the Ballot to their Nominee or the
Voting Agent to cast their vote. Instead, Beneficial Holders
will need to provide their instructions to their Nominee holding
their Old Notes in accordance with the directions provided by
their Nominee. By providing instructions to their Nominee
holding their Old Notes, Beneficial Holders of Old Notes are
requesting that their Nominee (1) tender the underlying Old
Notes on their behalf in accordance with the instructions
provided, and (2) execute a master ballot on the Beneficial
Holder’s behalf that reflects their instructions with
respect to the Plan of Reorganization. Beneficial Holder
instructions to their Nominee will have the same effect as if
such holder had completed and returned a physical ballot to
indicate their vote with respect to the Plan, provide certain
certifications, and consent to any other conditions contained
therein, including release and exculpation provisions.
Beneficial holders have three voting options, as follows:
OPTION 1. PARTICIPATE in the Offers; vote
to ACCEPT the Plan of Reorganization.
OPTION 2. NOT PARTICIPATE in the Offers;
vote to ACCEPT the Plan of Reorganization.
OPTION 3. NOT PARTICIPATE in the Offers;
vote to REJECT the Plan of Reorganization.
Beneficial holders may also instruct with respect to a fourth
option, which is the default option for those Beneficial Holders
that do not provide any instructions:
OPTION 4. Take no action; not participate
in Offers; not vote on the Plan of Reorganization.
Beneficial Holders that instruct their Nominee to take no
action, or fail to provide timely instructions, may nevertheless
be bound by the terms of the Plan of Reorganization and have the
relevant treatment applied to their Old Notes if the Plan of
Reorganization is consummated.
Please note that once a Beneficial Holder’s Old Notes have
been tendered, the Old Notes will not be able to be traded.
Withdrawals from the Offers and modifications to votes to accept
or reject the Plan will not be permitted after the Voting
Deadline. If the Offers are not successful and the company does
not commence their prepackaged bankruptcy cases, any Old Notes
tendered into Option 1, Option 2, or Option 3
will be returned to the broker, dealer, commercial bank, trust
company or other nominee that tendered the Old Notes.
Soon after commencement of their prepackaged bankruptcy cases
(if the Potential Debtors opt to commence such prepackaged
cases), any Old Notes (except for CIT Long Term Old Notes)
tendered into Option 1, Option 2, or Option 3
will be returned to the broker, dealer, commercial bank, trust
company or other nominee that tendered the Old Notes.
Holders of Old Notes that are privately held should follow
the instructions on their Letter of Transmittal/Ballot.
Parties
in Interest Entitled to Vote
Under section 1124 of the Bankruptcy Code, a class of
claims or interests is deemed to be “impaired” under a
plan of reorganization unless (i) the plan leaves unaltered
the legal, equitable, and contractual rights to
226
which such claim or interest entitles the holder thereof or
(ii) notwithstanding any legal right to an accelerated
payment of such claim or interest, the plan cures all existing
defaults (other than defaults resulting from the occurrence of
events of bankruptcy) and reinstates the maturity of such claim
or interest as it existed before the default.
In general, a holder of a claim or interest may vote to accept
or to reject a plan of reorganization if (i) the claim or
interest is “allowed,” which means generally that no
party in interest has objected to such claim or interest, and
(ii) the claim or interest is impaired by the plan. If a
claim or interest is not impaired by the plan, the Bankruptcy
Code deems the holder of such claim or interest to have accepted
the plan and, accordingly, holders of such claims and interests
are not entitled to vote on the plan. Claims in Classes 1,
2, 3, 4 and 5 and Interests in Class 17 are Unimpaired
under the Plan of Reorganization, and holders of such Claims are
therefore not entitled to vote. Claims in Class 14 and
Interests in Classes 15, 16 and 18 are Impaired under the Plan
of Reorganization, and holders of such Claims and Interests are
therefore not entitled to vote. Accordingly, only holders of
Claims in Classes 6, 7, 8, 9, 10, 11, 12 and 13 are
entitled to vote on the Plan of Reorganization.
By providing instructions to be included on a Master Ballot,
each holder of Claims in Classes 6, 7, 8, 9, 10, 11, 12 and
13 will be confirming that (i) such holder
and/or legal
and financial advisors acting on its behalf has had the
opportunity to ask questions of, and receive answers from, the
Filing Entities concerning the terms of the Plan of
Reorganization, the business of the Filing Entities and other
related matters, (ii) the Filing Entities have made
available to such holder or its agents all documents and
information relating to the Plan of Reorganization and related
matters reasonably requested by or on behalf of such holder and
(iii) except for information provided by the Filing
Entities in writing, and by their own agents, such holder has
not relied on any statements made or other information received
from any person with respect to the Plan of Reorganization.
By providing instructions to be included on a Master Ballot each
holder of a Claim in Classes 6, 7, 8, 9, 10, 11, 12 and 13
also acknowledges that the interests being offered pursuant to
the Plan of Reorganization are not being offered pursuant to a
registration statement filed with the Securities and Exchange
Commission and represents that any such securities will be
acquired for its own account and not with a view to any
distribution of such interests in violation of the Securities
Act. It is expected that when issued pursuant to the Plan of
Reorganization such interests will be exempt from the
registration requirements of the Securities Act by virtue of
section 1145 of the Bankruptcy Code and may be resold by
the holders thereof subject to the provisions of such
section 1145.
Waivers
of Defects, Irregularities, Etc.
Unless otherwise directed by the Bankruptcy Court, all questions
as to the validity, form, eligibility (including time of
receipt), acceptance, and revocation or withdrawal of Letters of
Transmittal/Ballots or Master Ballots will be determined by the
Filing Entities in their sole discretion, which determination
will be final and binding. As indicated below under
“Withdrawal of Instructions and Master Ballots;
Revocation,” effective withdrawals of Ballots must be
delivered via facsimile to the Filing Entities prior to the
Voting Deadline. The Filing Entities reserve the absolute right
to contest the validity of any such withdrawal. The Filing
Entities also reserve the right to reject any and all Ballots
not in proper form, the acceptance of which would, in the
opinion of the Filing Entities or their counsel, be unlawful.
The Filing Entities further reserve the right to waive any
defects or irregularities or conditions of delivery as to any
particular Ballot. The interpretation (including the Ballot and
the respective instructions thereto) by the Filing Entities,
unless otherwise directed by the Bankruptcy Court, will be final
and binding on all parties. Unless waived, any defects or
irregularities in connection with deliveries of Ballots must be
cured within such time as the Filing Entities (or the Bankruptcy
Court) determine. Neither the Filing Entities nor any other
person will be under any duty to provide notification of defects
or irregularities with respect to deliveries of Ballots nor will
any of them incur any liabilities for failure to provide such
notification. Unless otherwise directed by the Bankruptcy Court,
delivery of such Ballots will not be deemed to have been made
until such irregularities have been cured or waived. Ballots
previously furnished (and as to which any irregularities have
not theretofore been cured or waived) will be invalidated.
227
Withdrawal
of Instructions and Master Ballots; Revocation
Holders of Old Notes through a broker, dealer, commercial
bank, trust company or other nominee: Any party who has
delivered valid instructions with respect to the Exchange Offer
and Plan of Reorganization may withdraw such instruction by
requesting that the broker, dealer, commercial bank, trust
company or other nominee (a) withdraw their Old Notes and
(b) submit an appropriate amending and superseding Master
Ballot with respect to such Old Notes.
Holders of Old Notes that are privately held: Any party
who has delivered a Letter of Transmittal/Ballot with respect to
Old Notes for the tendering of Old Notes into the Exchange Offer
and acceptance or rejection of the Plan of Reorganization may
withdraw such acceptance or rejection by delivering a written
notice of withdrawal to the Voting Agent at any time prior to
the Voting Deadline.
Master Ballots: Any party who has delivered a Master
Ballot with respect to Old Notes for the tendering of Old Notes
into the Exchange Offer and acceptance or rejection of the Plan
of Reorganization may withdraw such Master Ballot by delivering
a written notice of withdrawal to the Voting Agent at any time
prior to the Voting Deadline AND withdrawing the related tender
of Old Notes.
A notice of withdrawal, to be valid, must (i) contain the
description of the Claim(s) to which it relates and the
aggregate principal amount represented by such Claim(s),
(ii) be signed by the withdrawing party in the same manner
as the Letter of Transmittal/Ballot or Master Ballot being
withdrawn, (iii) contain a certification that the
withdrawing party owns the Claim(s) and possesses the right to
withdraw the vote sought to be withdrawn and (iv) be
received by the Voting Agent in a timely manner at the address
set forth below. The Potential Debtors will determine whether
any withdrawals of Letters of Transmittal/Ballots or Master
Ballots were valid and expressly reserve the absolute right to
contest the validity of any such withdrawals of Letters of
Transmittal/Ballots or Master Ballots. Unless otherwise directed
by the Bankruptcy Court, a purported notice of withdrawal of a
Letter of Transmittal/Ballot or Master Ballot which is not
received in a timely manner by the Potential Debtors will not be
effective to withdraw a previously cast Letter of
Transmittal/Ballot or Master Ballot.
Any party who has previously submitted to the Voting Agent prior
to the Voting Deadline a properly completed Letter of
Transmittal/Ballot or Master Ballot may revoke such Letter of
Transmittal/Ballot or Master Ballot and change his or its vote
by submitting to the Potential Debtors prior to the Voting
Deadline a subsequent properly completed Letter of
Transmittal/Ballot or Master Ballot for acceptance or rejection
of the Plan of Reorganization, and effect the related tender of
the underlying security. In the case where more than one timely,
properly completed Letter of Transmittal/Ballot or Master Ballot
is received, only the Ballot which bears the latest date of
receipt by the Voting Agent will be counted for purposes of
determining whether the requisite acceptances have been received.
Further
Information; Additional Copies
If you have any questions or require further information about
the voting procedure for voting your Claim or about the packet
of material you received, please contact the information agent
toll free at (800) 758-5880 or +1 (212) 269-5550. If you wish to
obtain an additional copy of the Plan of Reorganization, the
Offering Memorandum and Disclosure Statement, or any exhibits or
appendices to such documents (at your own expense, unless
otherwise specifically required by Bankruptcy
Rule 3017(d)), please contact the exchange agent, whose
contact information is set forth on the back cover of this
Offering Memorandum and Disclosure Statement.
228
CERTAIN
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain U.S. federal income
tax considerations to eligible holders of Old Notes who
participate in the Offers and certain holders of Old Notes that
are entitled to vote on the Plan of Reorganization. This summary
only addresses tax considerations relevant to holders that hold
the Old Notes, and will hold the New Notes, New Preferred Stock,
New Common Interests, or Contingent Value Rights, as applicable,
as “capital assets” within the meaning of the Tax
Code. This summary is based on the Tax Code, Treasury
regulations promulgated thereunder, published rulings of the
U.S. Internal Revenue Service (the “IRS”) and
judicial and administrative interpretations thereof, in each
case as in effect and available as of the date hereof.
Subsequent developments in any of the foregoing, or changes in
how any of these authorities are interpreted, which may be
applied retroactively, could have a material effect on the
U.S. federal income tax consequences of participating in
the Offers or Plan of Reorganization, and of owning and
disposing of New Notes, New Preferred Stock, New Common
Interests, or Contingent Value Rights as described in this
summary. No ruling will be sought from the IRS with respect to
any statement or conclusion in this summary, and no assurance
can be given that the IRS will not challenge such statement or
conclusion in this summary or, if challenged, a court will
uphold such statement or conclusion.
This summary does not purport to address all tax consequences
that may be important to a particular holder in light of that
holder’s investment or other circumstances, or to certain
categories of investors that may be subject to special rules,
including, among others, financial institutions, insurance
companies, real estate investment trusts, regulated investment
companies, dealers or traders in securities or currencies,
tax-exempt entities, partnerships or other pass-through
entities, investors holding Old Notes, New Notes, New Preferred
Stock, New Common Interests, or Contingent Value Rights as part
of an “integrated,” “hedging” or
“conversion” transaction or as a position in a
“straddle” for U.S. federal income tax purposes,
grantor trusts, “U.S. Holders” (as defined below)
that have a “functional currency” other than the
U.S. dollar, holders that have a taxable year other than a
calendar year, U.S. expatriates, and holders subject to the
federal alternative minimum tax (the “AMT”). This
summary also does not address any tax consequences to secondary
purchasers of New Notes, New Preferred Stock, New Common
Interests, or Contingent Value Rights. In addition, this
discussion does not address any tax considerations arising under
the U.S. federal estate and gift tax laws, or the law of
any state, local, foreign or other taxing jurisdiction.
For U.S. federal income tax purposes, because Delaware
Funding is a disregarded entity wholly owned by CIT Leasing
Company of Delaware, the Delaware Funding Old Notes and
Series B Notes are treated as issued by CIT Leasing Company
of Delaware.
THIS SUMMARY OF CERTAIN U.S. FEDERAL INCOME TAX
CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX
ADVICE. EACH HOLDER IS URGED TO CONSULT ITS OWN TAX ADVISOR AS
TO THE PARTICULAR TAX CONSIDERATIONS TO SUCH HOLDER OF ACQUIRING
THE NEW NOTES, NEW PREFERRED STOCK, NEW COMMON INTERESTS, OR
CONTINGENT VALUE RIGHTS PURSUANT TO THE OFFERS OR PLAN OF
REORGANIZATION AND THE OWNERSHIP AND DISPOSITION OF THE NEW
NOTES, NEW PREFERRED STOCK, NEW COMMON INTERESTS, OR CONTINGENT
VALUE RIGHTS, INCLUDING THE APPLICABILITY OF U.S. FEDERAL,
STATE, OR LOCAL TAX LAWS OR
NON-U.S. TAX
LAWS.
For purposes of this summary, a “U.S. Holder”
means a beneficial owner of the Old Notes who or that is for
U.S. federal income tax purposes: (i) an individual
that is a citizen or resident of the United States, (ii) a
corporation, or other entity treated as a corporation for
U.S. federal income tax purposes, created or organized in
or under the laws of the United States, any state thereof or the
District of Columbia, (iii) an estate, the income of which
is subject to U.S. federal income taxation regardless of
its source, or (iv) a trust if (x) a court within the
United States is able to exercise primary supervision over its
administration and (y) one or more United States persons
have the authority to control all of the substantial decisions
of such trust.
For purposes of the following summary, a
“Non-U.S. Holder”
is a beneficial owner of Old Notes that is neither a partnership
(or other entity treated as a partnership for U.S. federal
income tax purposes) nor a U.S. Holder.
229
If a partnership (including any entity treated as a partnership
for U.S. federal income tax purposes) holds the Old Notes,
the U.S. federal income tax consequences to the partners of
such partnership will depend on the activities of the
partnership and the status of the partners. A partnership
considering participating in the Offers or Plan of
Reorganization should consult its own independent tax advisors
about the consequences to its partners of acquiring the New
Notes, New Preferred Stock, New Common Interests, or Contingent
Value Rights pursuant to the Offers or Plan of Reorganization
and the ownership or disposition of the New Notes, New Preferred
Stock, New Common Interests, or Contingent Value Rights by the
partnership.
TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230,
HOLDERS OF OLD NOTES ARE HEREBY NOTIFIED THAT: (A) ANY
DISCUSSION OF FEDERAL TAX ISSUES IN THE OFFERING MEMORANDUM AND
DISCLOSURE STATEMENT IS NOT INTENDED OR WRITTEN TO BE RELIED
UPON, AND CANNOT BE RELIED UPON, BY HOLDERS FOR THE PURPOSE OF
AVOIDING PENALTIES THAT MAY BE IMPOSED ON HOLDERS UNDER THE TAX
CODE; (B) SUCH DISCUSSION IS BEING USED IN CONNECTION WITH
THE PROMOTION OR MARKETING (WITHIN THE MEANING OF CIRCULAR
230) BY US OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN;
AND (C) HOLDERS SHOULD SEEK ADVICE BASED ON THEIR
PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
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I.
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U.S.
Federal Income Tax Consequences to U.S. Holders
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1. The Indenture Amendments
On October 1, 2009, and October 16, 2009 we amended
each of the indentures under which the Old Notes were issued to
provide guarantees by all of our current wholly-owned domestic
subsidiaries, with the exception of CIT Bank and other regulated
subsidiaries, special purpose entities and immaterial
subsidiaries. Generally, under applicable Treasury Regulations,
a “significant modification” of a debt instrument will
result in a deemed exchange of the “old” debt
instrument for a “new” debt instrument for
U.S. federal income tax purposes upon which gain or loss
may be recognized, even if no actual exchange of the debt
instrument occurs. A modification means any alteration,
including any deletion or addition of a legal obligation of the
issuer of a debt instrument. A modification is a significant
modification only if, based on all facts and circumstances and
taking into account all modifications of the debt instrument
collectively, the legal rights or obligations that are altered
and the degree to which they are altered are economically
significant. A modification that adds or otherwise alters a
substantial amount of the collateral for, a guarantee on, or
other form of credit enhancement for a recourse debt instrument
is a significant modification if the modification results in a
change in payment expectations. A change in payment expectations
occurs if there is a substantial enhancement of the
obligor’s capacity to meet the payment obligations under a
debt instrument and that capacity was primarily speculative
prior to the modification and is adequate after the
modification. We do not believe that the addition of the
guarantees will substantially enhance our capacity to meet our
payment obligations under the Old Notes.
Accordingly, we intend to treat the addition of the guarantees
as not causing a significant modification of the Old Notes under
the Treasury Regulations that would result in a deemed exchange
of the Old Notes for U.S. federal income tax purposes.
Based upon such position, the addition of the guarantees should
have no U.S. federal income tax consequences to
U.S. Holders. However, there can be no assurance that the
IRS will not challenge this position, in which case the addition
of the guarantees would result in a deemed exchange upon which
gain or loss would be recognized unless such exchange qualified
as a recapitalization as described below under
“— U.S. Federal Income Tax Consequences to
U.S. Holders — The Offers — The CIT
Offers — Tax-Free Recapitalization” below.
U.S. Holders should consult their tax advisors as to the
consequences of the addition of the guarantees.
2. The Offers
A. The CIT Offers
The U.S. federal income tax consequences resulting from the
CIT Offers to U.S. Holders of CIT Old Notes will vary
depending upon, among other things, whether such CIT Old Notes
and New Notes received in
230
exchange therefor constitute “securities” for
U.S. federal income tax purposes. Neither the Tax Code nor
the Treasury Regulations promulgated thereunder defines the term
“security.” Whether an instrument constitutes a
“security” for U.S. federal income tax purposes
is determined based on all of the facts and circumstances.
Certain authorities have held that the length of the initial
term of the debt instrument is an important factor in making
such a determination. Generally, these authorities have
indicated that an initial term of less than five years is
evidence that the instrument is not a security, whereas an
initial term of ten years or more is evidence that it is a
security. Nevertheless, there are numerous other factors that
may be taken into account in determining whether a debt
instrument is a security, including, but not limited to, whether
repayment is secured, the level of creditworthiness of the
obligor, whether or not the instrument is subordinated, whether
the holders have the right to vote or otherwise participate in
the management of the obligor, whether the instrument is
convertible into an equity interest, whether payments of
interest are fixed, variable or contingent and whether such
payments are made on a current basis or are accrued. Due to
the inherently factual nature of the determination,
U.S. Holders are urged to consult their own tax advisors
regarding the status of their CIT Old Notes and New Notes as
“securities” for U.S. federal income tax
purposes.
Tax-Free Recapitalization. If both the CIT Old
Notes and the New Notes constitute “securities” for
U.S. federal income tax purposes, the exchange of such CIT
Old Notes for New Notes
and/or New
Preferred Stock by a U.S. Holder pursuant to the CIT Offers
should constitute a “recapitalization” for
U.S. federal income tax purposes. As a result, a
U.S. Holder of CIT Old Notes should not recognize gain or
loss on the exchange of its CIT Old Notes for New Notes
and/or New
Preferred Stock. A U.S. Holder’s initial tax basis in
the New Notes and New Preferred Stock would equal the
holder’s adjusted tax basis in its CIT Old Notes, which
should be allocated among the New Notes and New Preferred Stock
based upon the relative fair market values thereof. The holding
period for the New Notes and New Preferred Stock will include
the holder’s holding period for the CIT Old Notes
surrendered pursuant to the CIT Offers. In addition, a
U.S. Holder will recognize interest income to the extent of
any payment of cash attributable to accrued but unpaid interest
not previously included in income.
Partially Taxable Recapitalization. If the CIT
Old Notes constitute “securities” for
U.S. federal income tax purposes but the New Notes do not,
the exchange of such CIT Old Notes for New Notes and New
Preferred Stock should constitute a partially taxable
recapitalization for U.S. federal income tax purposes. A
U.S. Holder of any such CIT Old Notes would generally
realize gain or loss for U.S. federal income tax purposes
in an amount equal to the difference between (1) the
“issue price” of the New Notes and the fair market
value of the New Preferred Stock on the Settlement Date received
in exchange for such CIT Old Notes and (2) the
holder’s adjusted tax basis in its CIT Old Notes. Gain
realized, if any, will be recognized (i.e., subject to
tax), but only to the extent such gain does not exceed the issue
price of the New Notes received by such U.S. Holder. Any
loss realized will not be recognized. In addition, a
U.S. Holder will recognize interest income to the extent of
any payment of cash attributable to accrued but unpaid interest
not previously included in income.
For these purposes the issue price of the New Notes (which will
be determined separately for the New Notes of each maturity
date) will equal (i) their fair market value on the
Settlement Date if the New Notes are considered to be
“publicly traded” for U.S. federal income tax
purposes or (ii) the fair market value of the CIT Old Notes
if the CIT Old Notes but not the New Notes are considered to be
publicly traded. If neither the CIT Old Notes nor the New Notes
are considered to be publicly traded, then the issue price of
the New Notes will be their principal amount. The New Notes will
generally be considered to be “publicly traded”
property if, at any time during the
60-day
period ending 30 days after the Settlement Date, they
appear on a system of general circulation that provides a
reasonable basis to determine the fair market value of the New
Notes by disseminating either (i) recent price quotations
(including rates, yields, or other pricing information) of one
or more identified brokers, dealers or traders or
(ii) actual prices (including rates, yields, or other
pricing information) of recent sales transactions. Although we
anticipate that the New Notes will be publicly traded, no
assurances can be given in this regard. The rules regarding the
determination of issue price are complex and highly detailed and
you should consult your tax advisor regarding the determination
of the issue price of the New Notes.
231
A U.S. Holder’s adjusted tax basis in a CIT Old Note
will be equal to the cost of the note to such U.S. Holder,
as reduced in the event that the U.S. Holder claimed a bad
debt deduction with respect to the CIT Old Note, increased by
any original issue discount previously included in income and
reduced by any cash payments received on the CIT Old Note other
than payments of “qualified stated interest.” If
applicable, a U.S. Holder’s tax basis in a CIT Old
Note will also be increased by any market discount previously
included in income by such U.S. Holder pursuant to an
election to include market discount in income currently as it
accrues and reduced by any amortizable bond premium which the
U.S. Holder has previously deducted.
In the case of a partially taxable recapitalization, a
U.S. Holder’s tax basis in the New Preferred Stock
received will generally be equal to the adjusted tax basis of
the CIT Old Notes exchanged therefor pursuant to the CIT Offers,
increased by the amount of gain recognized by such holder, and
decreased by the issue price of the New Notes. A
U.S. Holder’s tax basis in the New Notes received will
generally be equal to their issue price. The holding period of
the New Preferred Stock will include the holder’s holding
period for the CIT Old Notes surrendered pursuant to the CIT
Offers. The holding period for the New Notes should begin on the
day following the Settlement Date.
Fully Taxable Transaction. The exchange of a
CIT Old Note that does not constitute a “security” for
U.S. federal income tax purposes should constitute a fully
taxable exchange for U.S. federal income tax purposes. As a
result, a U.S. Holder of any such CIT Old Notes would
generally recognize gain or loss for U.S. federal income
tax purposes in an amount equal to the difference between
(1) the sum of the “issue price” of the New Notes
(as described under “— U.S. Federal Income
Tax Consequences to U.S. Holders — The
Offers — The CIT Offers — Partially Taxable
Recapitalization”)
and/or the
fair market value of the New Preferred Stock on the Settlement
Date and (2) the holder’s adjusted tax basis in its
CIT Old Notes (as described above under
“— U.S. Federal Income Tax Consequences to
U.S. Holders — The Offers — The CIT
Offers — Partially Taxable Recapitalization”). In
addition, a U.S. Holder will recognize interest income to
the extent of any payment of cash attributable to accrued but
unpaid interest not previously included in income.
In the case of a fully taxable exchange, a
U.S. Holder’s tax basis in the New Notes received will
generally be equal to their issue price and such holder’s
tax basis in the New Preferred Stock received will generally be
equal to its fair market value as determined on the Settlement
Date. The holding period in the New Notes and New Preferred
Stock should begin on the day following the Settlement Date.
Character of Gain or Loss. The character of
any gain or loss recognized, except as discussed below under
“— Market Discount,” will generally be
capital gain or loss and will generally be long-term capital
gain or loss if the U.S. Holder held the CIT Old Notes for
more than one year on the Settlement Date. Under current
U.S. federal income tax law (presently effective for
taxable years beginning before January 1, 2011), certain
non-corporate U.S. Holders (including individuals) are
eligible for preferential rates of U.S. federal income tax
on long-term capital gains. The deductibility of any capital
loss is subject to limitations.
Market Discount. The market discount
provisions of the Tax Code may apply to U.S. Holders of CIT
Old Notes. In general, a debt obligation other than a debt
obligation with a fixed maturity of one year or less that is
acquired by a U.S. Holder in the secondary market (or, in
certain circumstances, upon original issuance) is a “market
discount bond” as to that holder if its stated redemption
price at maturity (or, in the case of a debt obligation having
original issue discount, the adjusted issue price) exceeds the
tax basis of the bond in the holder’s hands immediately
after its acquisition. Any gain recognized by a U.S. Holder
with respect to CIT Old Notes that were acquired with market
discount will generally be subject to tax as ordinary income to
the extent of the market discount accrued during the period the
CIT Old Notes were held by such U.S. Holder. The rule
taxing recognized gain as ordinary income will not apply to a
U.S. Holder who previously has elected to include market
discount in income as it accrued for U.S. federal income
tax purposes. If the CIT Offers are treated as a tax-free
recapitalization with respect to a U.S. Holder, any accrued
market discount on the CIT Old Notes may carry over to the New
Notes and New Preferred Stock received by such holder.
U.S. Holders are urged to consult their own tax advisor
regarding the extent to which, if any, market discount will
carry over to the New Notes
and/or New
Preferred Stock.
Exchange of Foreign Currency CIT Old Notes. A
U.S. Holder’s adjusted tax basis in a CIT Old Note
denominated in a foreign currency will generally be equal to the
U.S. dollar value of the foreign currency
232
amount paid for such note based on the exchange rate in effect
on the date of the purchase of the CIT Old Note, increased by
the U.S. dollar value of any original issue discount
previously included in income and reduced by the
U.S. dollar value of foreign currency units received as
payments on the CIT Old Note other than payments of
“qualified stated interest.” If applicable, a
U.S. Holder’s adjusted tax basis in a CIT Old Note
will also be increased by the U.S. dollar value of any
market discount previously included in income by such
U.S. Holder pursuant to an election to include market
discount in gross income currently as it accrues and decreased
by any amortizable bond premium which the U.S. Holder has
previously deducted. Any gain or loss recognized upon the
exchange of a foreign currency CIT Old Note for New Notes
and/or New
Preferred Stock as a result of fluctuations in the value of the
foreign currency will be ordinary income or loss.
B. The Delaware Funding Offers
The U.S. federal income tax consequences resulting from the
Delaware Funding Offers to U.S. Holders of Delaware Funding
Old Notes will generally be the same as described in
“— U.S. Federal Income Tax Consequences to
U.S. Holders — The Offers — The CIT
Offers” above (substituting Delaware Funding Old Notes for
CIT Old Notes therein), except that holders of Delaware Funding
Old Notes will not receive New Preferred Stock pursuant to the
Delaware Funding Offers.
C. Consequences to Non-Participating U.S. Holders
U.S. Holders of Old Notes that do not participate in the
Offers should not have any U.S. federal income tax
consequences and should continue to have the same tax basis and
holding period with respect to the Old Notes as they had prior
to the Offers.
3. The Plan of Reorganization
In the event that the conditions to the Offers are not satisfied
or waived, to the extent they can be waived, and instead we
consummate the Plan of Reorganization, the following exchanges
will occur between CIT and holders of Old Notes:
(i) holders of Canadian Senior Unsecured Note Claims will
receive, in exchange for their Allowed Canadian Senior Unsecured
Note Claims, (a) if holders of Canadian Senior Unsecured
Note Claims as a class vote to accept the Plan of
Reorganization, New Notes or (b) if holders of Canadian
Senior Unsecured Note Claims as a class do not vote to accept
the Plan or Reorganization, New Notes and New Common Interests;
(ii) holders of Senior Unsecured Note Claims (except
holders of 2015 Hybrid Convertible/Equity Notes, hereinafter
referred to as “Equity Units”) and Electing Long-Dated
Senior Unsecured Note Claim Holders (the “Senior Unsecured
Claims”), will receive, in exchange for their Allowed
Senior Unsecured Claims, New Notes and New Common Interests;
(iii) holders of Equity Units will receive, in exchange for
their Allowed Equity Units, New Notes and New Common Interests;
and (iv) holders of Senior Subordinated Note Claims and
Junior Subordinated Note Claims will receive, in exchange for
their Allowed Senior Subordinated Note Claims and Allowed Junior
Subordinated Note Claims, depending on whether certain voting
thresholds are met, either (a) New Common Interests and
Contingent Value Rights or (b) Contingent Value Rights.
A. Holders of Canadian Senior Unsecured Note Claims
If holders of Canadian Senior Unsecured Note Claims as a class
vote to accept the Plan of Reorganization, the exchange of
Canadian Senior Unsecured Note Claims for New Notes should
constitute a fully taxable exchange for U.S. federal income
tax purposes because such claims are not indebtedness of CIT
Group, Inc. The U.S. federal income tax treatment of such
exchange will generally be the same as described in
“— U.S. Federal Income Tax Consequences to
U.S. Holders — The Offers — The CIT
Offers — Fully Taxable Transaction” above
(substituting Effective Date for Settlement Date therein).
If holders of Canadian Senior Unsecured Note Claims as a class
do not vote to accept the Plan of Reorganization, the
U.S. federal income tax treatment of the exchange of
Canadian Senior Unsecured Note Claims for New Notes and New
Common Interests is unclear. In general, Section 351(a) of
the Code provides that no gain or loss is recognized by
transferors of property to a corporation solely in exchange for
stock of the corporation if, immediately after the exchange, the
transferors as a group are in control of the corporation. If
property other than stock is received by the transferors, gain
is recognized to the extent of the fair market
233
value of the other property. Control means the ownership of
stock possessing at least 80% of the total combined voting power
of all classes of stock entitled to vote and at least 80% of the
total number of shares of all other classes of stock of the
corporation. It is possible that, as a result of the Plan of
Reorganization, holders of Old Notes may acquire control of CIT
for purposes of Section 351. A holder of CIT Old Notes will
count towards the control requirement only if such holder’s
Old Notes are “securities” for U.S. federal
income tax purposes as described in
“— U.S. Federal Income Tax Consequences to
U.S. Holders — The Offers — The CIT
Offers” above. If the exchange of a Canadian Senior
Unsecured Note Claim for New Notes and New Common Interests
qualifies as a transfer subject to Section 351, a
U.S. Holder of Canadian Senior Unsecured Note Claims
generally will not recognize any gain or loss for
U.S. federal income tax purposes in the exchange, except to
the extent of the issue price of New Notes received in the
exchange and as discussed above in
“— U.S. Federal Income Tax Consequences to
U.S. Holders — The Offers — The CIT
Offers — Market Discount” and below under
“— Accrued and Unpaid Interest.”
If the exchange of a Canadian Senior Unsecured Note Claim for
New Notes and New Common Interests does not qualify as a
transfer subject to Section 351 (for instance, because
holders of Old Notes do not acquire control of CIT for purposes
of Section 351), it should constitute a fully taxable
exchange for U.S. federal income tax purposes, the
treatment of which will generally be the same as described in
“— U.S. Federal Income Tax Consequences to
U.S. Holders — The Offers — The CIT
Offers — Fully Taxable Transaction” above
(substituting New Common Interests for New Preferred Stock
therein). Due to the inherently factual nature of the
determination, U.S. Holders of Canadian Senior Unsecured
Note Claims are urged to consult their own tax advisors
regarding the treatment of the exchange of such notes for
U.S. federal income tax purposes.
In addition, holders of Canadian Senior Unsecured Note Claims
should consult their tax advisors regarding the
U.S. federal income tax consequences of retaining their
Canadian Senior Unsecured Notes pursuant to the Plan of
Reorganization, including consequences with respect to the basis
and the holding period of their retained Canadian Senior
Unsecured Notes, New Notes, and New Common Interests.
B. Holders of Senior Unsecured Claims
The U.S. federal income tax consequences resulting from the
Plan of Reorganization to U.S. Holders of Senior Unsecured
Claims will vary depending upon, among other things, whether
such claims and the New Notes received in exchange therefor
constitute “securities” for U.S. federal income
tax purposes as described in “— U.S. Federal
Income Tax Consequences to U.S. Holders — The
Offers — The CIT Offers” above.
Tax-Free Recapitalization. If both the Senior
Unsecured Claim and the New Notes constitute
“securities” for U.S. federal income tax
purposes, the exchange of such Senior Unsecured Claim for New
Notes and New Common Interests by a U.S. Holder pursuant to
the Plan of Reorganization should constitute a
“recapitalization” for U.S. federal income tax
purposes, the treatment of which will generally be the same as
described in “— U.S. Federal Income Tax
Consequences to U.S. Holders — The
Offers — The CIT Offers — Tax-Free
Recapitalization” above (substituting New Common Interests
for New Preferred Stock and Effective Date for Settlement Date
therein).
Partially Taxable Recapitalization. If the
Senior Unsecured Claim constitutes a “security” for
U.S. federal income tax purposes but the New Notes do not,
the exchange of such Senior Unsecured Claim for New Notes and
New Common Interests pursuant to the Plan of Reorganization
should constitute a partially taxable recapitalization for
U.S. federal income tax purposes, the treatment of which
will generally be the same as described in
“— U.S. Federal Income Tax Consequences to
U.S. Holders — The Offers — The CIT
Offers — Partially Taxable Recapitalization”
above (substituting New Common Interests for New Preferred Stock
and Effective Date for Settlement Date therein).
Fully Taxable Transaction. The exchange of a
Senior Unsecured Claim that does not constitute a
“security” for U.S. federal income tax purposes
should constitute a fully taxable exchange for U.S. federal
income tax purposes, the treatment of which will generally be
the same as described in “— U.S. Federal
Income Tax Consequences to U.S. Holders — The
Offers — The CIT Offers — Fully Taxable
Transaction”
234
above (substituting New Common Interests for New Preferred Stock
and Effective Date for Settlement Date therein).
C. Holders of Equity Units
The U.S. federal income tax treatment of the exchange of an
Equity Unit for New Notes and New Common Interests is unclear.
Each Equity Unit consists of two components — an
undivided beneficial interest in an Old Note (the “Equity
Unit Note”) and a purchase contract to purchase shares of
our common stock (the “Purchase Contract”). We intend
to take the position that, for U.S. federal income tax
purposes, the exchange of an Equity Unit for New Notes and New
Common Interests should be treated as (1) a termination of
the Purchase Contract and (2) an exchange of the Equity
Unit Note for New Notes and New Common Interests, and a deemed
amount equal to the fair market value to the U.S. Holder of
being relieved of such holder’s obligation under the
Purchase Contract (“Other Property”). The foregoing
treatment is not definitively supported by existing authority,
and alternative characterizations of the exchange are possible.
No assurance can be given that the IRS will not challenge such
treatment. U.S. Holders of Equity Units are urged to
consult their tax advisors concerning the U.S. federal
income tax consequences of the receipt of New Notes and New
Common Interests in exchange for Equity Units. The following
discussion assumes that the exchange is characterized in
accordance with the treatment outlined above.
Termination of the Purchase Contract. A
U.S. Holder that purchased the Equity Unit upon original
issuance or when the Purchase Contract had positive value
generally should recognize a loss on the termination of the
Purchase Contract equal to the U.S. Holder’s adjusted
tax basis in the Purchase Contract, plus the fair market value
to the U.S. Holder of being relieved from such
holder’s obligations under the Purchase Contract. Such loss
should generally be capital loss and should be long term capital
loss if the U.S. Holder’s holding period for the
Purchase Contract is more than one year at the time of the
exchange. The deduction of capital losses for U.S. federal
income tax purposes is subject to limitations.
If a U.S. Holder purchased an Equity Unit when the Purchase
Contract had a negative value, the U.S. federal income tax
consequences of the termination of the Purchase Contract are not
clear. Depending upon how such U.S. Holder treated the
purchase of such Equity Unit, it is possible that the
termination of the Purchase Contract could give rise to a
capital gain or capital loss. Such U.S. Holder is urged to
consult its tax advisor regarding the U.S. federal income
tax consequences of the termination of the Purchase Contract
under such circumstances.
Exchange of Equity Unit Note. The
U.S. federal income tax consequences resulting from the
Plan of Reorganization to U.S. Holders of Equity Units will
vary depending upon, among other things, whether the Equity Unit
Notes and New Notes constitute “securities” for
U.S. federal income tax purposes as described in
“— U.S. Federal Income Tax Consequences to
U.S. Holders — The Offers — The CIT
Offers” above.
i. Equity Unit Notes and New Notes Are
“Securities”
If both the Equity Unit Notes and the New Notes constitute
“securities” for U.S. federal income tax
purposes, the exchange of the Equity Unit Notes for New Notes
and New Common Interests by a U.S. Holder pursuant to the
Plan of Reorganization should constitute a partially taxable
recapitalization for U.S. federal income tax purposes. A
U.S. Holder of any such Equity Unit Notes would generally
realize gain or loss for U.S. federal income tax purposes
in an amount equal to the difference between (1) the sum of
the issue price of the New Notes and the fair market value of
the New Common Interests and Other Property received on the
Effective Date and (2) the holder’s adjusted tax basis
in its Equity Unit Notes. Gain realized, if any, will be
recognized (i.e., subject to tax), but only to the extent
such gain does not exceed the fair market value of the Other
Property received by the U.S. Holder. Any loss realized
will not be recognized.
A U.S. Holder’s tax basis in the New Notes and New
Common Interests received will generally be equal to the
adjusted tax basis of the Equity Unit Notes exchanged therefor
pursuant to the Plan of Reorganization, increased by the amount
of gain recognized by such holder, and decreased by the fair
market value of Other Property received, which amount should be
allocated among the New Notes and New Common Interests based
upon the relative fair market values thereof. The holding period
of the New Notes and New Common Interests will include the
holder’s holding period for the CIT Notes surrendered
pursuant to the Offers.
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ii. Equity Unit Notes Are “Securities” and New
Notes Are Not “Securities”
If the Equity Unit Notes constitute “securities” for
U.S. federal income tax purposes but the New Notes do not,
the exchange of such Equity Unit Notes for New Notes and New
Common Interests pursuant to the Plan of Reorganization should
constitute a partially taxable recapitalization for
U.S. federal income tax purposes. A U.S. Holder of any
such Equity Unit Notes would generally realize gain or loss for
U.S. federal income tax purposes in an amount equal to the
difference between (1) the sum of the issue price of the
New Notes and the fair market value of the New Common Interests
and Other Property received on the Effective Date and
(2) the holder’s adjusted tax basis in its Equity Unit
Notes. Gain realized, if any, will be recognized (i.e.,
subject to tax), but only to the extent such gain does not
exceed the issue price of the New Notes and the fair market
value of the Other Property received by the U.S. Holder.
Any loss realized will not be recognized.
A U.S. Holder’s tax basis in the New Common Interests
received will generally be equal to the adjusted tax basis of
the Equity Unit Notes exchanged therefor pursuant to the Plan of
Reorganization, increased by the amount of gain recognized by
such holder, and decreased by the issue price of the New Notes
and the fair market value of the Other Property received. A
U.S. Holder’s tax basis in the New Notes received will
generally be equal to their issue price. The holding period of
the New Common Interests will include the holder’s holding
period for the Equity Unit Notes surrendered pursuant to the
Plan of Reorganization. The holding period for the New Notes
should begin on the day following the Effective Date.
iii. Equity Unit Notes Are Not Securities
The exchange of Equity Unit Notes that do not constitute
“securities” for U.S. federal income tax purposes
should constitute a fully taxable exchange for U.S. federal
income tax purposes. A U.S. Holder of any such Equity Unit
Notes would generally recognize gain or loss for
U.S. federal income tax purposes in an amount equal to the
difference between (1) the sum of the issue price of the
New Notes and the fair market value of the New Common Interests
and Other Property received on the Effective Date and
(2) the holder’s adjusted tax basis in its Equity Unit
Notes.
A U.S. Holder’s tax basis in the New Notes and New
Common Interests received will generally be equal to their fair
market values on the Effective Date. The U.S. Holder’s
holding period in the New Notes and New Common Interests
received should begin on the day following the Effective Date.
Character of Gain or Loss. The character of
any gain or loss recognized by a holder of Equity Units, except
as discussed above in “— U.S. Federal Income
Tax Consequences to U.S. Holders — The
Offers — The CIT Offers — Market
Discount” and below under “— Accrued and
Unpaid Interest,” will generally be capital gain or loss
and will generally be long-term capital gain or loss if the
U.S. Holder held the Equity Units for more than one year on
the Effective Date.
D. Holders of Senior Subordinated Note Claims and Junior
Subordinated Note Claims
The U.S. federal income tax consequences resulting from the
Plan of Reorganization to U.S. Holders of Senior
Subordinated Note Claims or Junior Subordinated Note Claims will
vary depending upon, among other things, whether such claims
constitute “securities” for U.S. federal income
tax purposes as described in “— U.S. Federal
Income Tax Consequences to U.S. Holders — The
Offers — The CIT Offers” above.
Tax-Free Recapitalization. If the Senior
Subordinated Note Claim or Junior Subordinated Note Claim
constitutes a “security” for U.S. federal income
tax purposes, the exchange of such claim for New Common
Interests and Contingent Value Rights by a U.S. Holder
pursuant to the Plan of Reorganization should constitute a
“recapitalization” for U.S. federal income tax
purposes. As a result, except as discussed below under
“— Accrued and Unpaid Interest” and
“— Imputed Interest,” a U.S. Holder of
Senior Subordinated Note Claims or Junior Subordinated Note
Claims should not recognize gain or loss on the exchange of such
claims for New Common Interests and Contingent Value Rights and
a U.S. Holder’s adjusted tax basis in the New Common
Interests received should be the same as the adjusted tax basis
of the Senior Subordinated Note Claims or Junior Subordinated
Note Claims exchanged therefor. In the case of any New Common
Interests received pursuant to the Contingent Value Rights, such
tax basis will be increased by any amount treated as imputed
interest as described below under “— Imputed
Interest.”
236
Until additional New Common Interests are distributed pursuant
to the Contingent Value Rights or such rights terminate without
distributions, the interim basis of the New Common Interests
received by each U.S. Holder in exchange for such
holder’s Senior Subordinated Note Claims or Junior
Subordinated Note Claims will be determined by assuming that
such holder will receive the maximum number of additional New
Common Interests that could be issued pursuant to the Contingent
Value Rights. Upon final determination of the number of New
Common Interests to be issued pursuant to the Contingent Value
Rights, the aggregate tax basis will be reallocated by the
U.S. Holder among the New Common Interests actually
received.
Except as described below under “— Imputed
Interest” and “— Accrued and Unpaid
Interest,” the holding period for the New Common Interests
(including any additional New Common Interests that are received
pursuant to the Contingent Value Rights) will include the
holder’s holding period for the Senior Subordinated Note
Claims or Junior Subordinated Note Claims exchanged therefor
pursuant to the Plan of Reorganization.
If a holder of Senior Subordinated Note Claims or Junior
Subordinated Note Claims that constitute “securities”
receives solely Contingent Value Rights in exchange for their
claims, it is possible that the U.S. federal income tax
treatment of the exchange will be the same as described under
“— Fully Taxable Exchange” below. As a
result, U.S. Holders are urged to consult their tax
advisors concerning the U.S. federal income tax
consequences of the receipt of Contingent Value Rights.
Fully Taxable Transaction. The
U.S. federal income tax treatment of U.S. Holders that
exchange a Senior Subordinated Note Claim or Junior Subordinated
Note Claim that does not constitute a “security” for
U.S. federal income tax purposes for New Common Interests
and/or Contingent Value Rights is not entirely clear. Such
treatment will depend in part on whether the receipt of New
Common Interests and/or Contingent Value Rights is a
“closed transaction” or an “open
transaction” for U.S. federal income tax purposes.
Open transaction treatment will apply only if the fair market
value of the Contingent Value Rights are not reasonably
ascertainable on the Effective Date. It is the position of the
IRS, as reflected in the applicable Treasury Regulations, that
only in “rare and extraordinary cases” is the value of
property not reasonably ascertainable such that open transaction
treatment is available. The discussion below assumes that closed
transaction treatment will apply to a U.S. Holder’s
receipt of Contingent Value Rights. U.S. Holders are urged
to consult their tax advisors regarding this issue.
A U.S. Holder of Senior Subordinated Note Claims or Junior
Subordinated Note Claims that do not constitute
“securities” for U.S. federal income tax purposes
would generally recognize gain or loss in an amount equal to the
difference between (1) the sum of the fair market value of
the New Common Interests and/or fair market value of the
Contingent Value Rights on the Effective Date and (2) the
holder’s adjusted tax basis in its Senior Subordinated Note
Claims or Junior Subordinated Note Claims. The character of any
gain or loss recognized, except as discussed above in
“— U.S. Federal Income Tax Consequences to
U.S. Holders — The Offers — The CIT
Offers — Market Discount” and below under
“— Accrued and Unpaid Interest” and
“— Imputed Interest,” will generally be
capital gain or loss.
A U.S. Holder’s tax basis in the New Common Interests
and/or Contingent Value Rights received will generally be equal
to their fair market values on the Effective Date. The
U.S. Holder’s holding period in the New Common
Interests and Contingent Value Rights received should begin on
the day following the Effective Date.
If a payment of New Common Interests is made in the future with
respect to the Contingent Value Rights, each U.S. Holder of
Contingent Value Rights will recognize gain in the amount by
which the fair market value of the New Common Interests (other
than the portion characterized as interest as described below
under “— Imputed Interest”) exceeds the
holder’s tax basis in the Contingent Value Rights. If no
payment is made, or if the payment is less than the
Holder’s tax basis in the Contingent Value Rights, the
Holder will recognize a loss. It is unclear under current law
whether such gain or loss would be capital or ordinary in
nature. As a result, U.S. Holders are urged to consult
their tax advisors concerning the U.S. federal income tax
consequences of the receipt of New Common Interests pursuant to
the Contingent Value Rights.
237
Imputed Interest. Under current law, the
deferred receipt of additional New Common Interests pursuant to
the Contingent Value Rights could result in a portion of such
additional New Common Interests being treated as interest income
if the some or all of the New Common Interests are issued more
than one year after the Effective Date. Where there is no
express provision for interest, as is the case here, under the
current regulations interest will be imputed under
Section 483 of the Tax Code. Thus, if the additional New
Common Interests become payable more than one year after the
Effective Date, a portion of such New Common Interests will
constitute ordinary interest income. The amount of such interest
income will be calculated by taking the fair market value of any
additional New Common Interests issued and discounting such
amount from the date of issuance back to the Effective Date
using the imputed interest rate under the Tax Code. The imputed
interest rate will be the “applicable federal rate”
provided under Section 1274(d) of the Tax Code as of the
Effective Date. Thus, the longer the period of time until the
additional New Common Interests are received, the greater the
proportion of such interests that will be treated as ordinary
interest income. Each additional New Common Interest received
will be deemed to represent its pro rata share of
the interest income. The basis of any additional New Common
Interests received pursuant to a Contingent Value Right that is
treated as imputed interest would equal the fair market value of
such New Common Interest when received and the holding period
for such New Common Interest would begin on the day following
receipt.
E. Accrued and Unpaid Interest
In general, to the extent that any consideration received
pursuant to the Plan of Reorganization by a U.S. Holder of
claims is received in satisfaction of accrued interest during
the U.S. Holder’s holding period, such amount will be
taxable to the U.S. Holder as interest income (if not
previously included in the U.S. Holder’s income).
Conversely, such a holder generally recognizes a deductible loss
to the extent that any accrued interest or amortized original
issue discount was previously included in its gross income and
is not paid in full.
The extent to which property received by a holder of a claim
will be attributable to accrued but unpaid interest is unclear.
Pursuant to the Plan of Reorganization, all distributions or
transfers in respect of any claim will be allocated first to the
principal amount of such claim and thereafter to accrued but
unpaid interest, if any. However, there is no assurance that
such allocation will be respected by the IRS for
U.S. federal income tax purposes. The basis in any property
received in exchange for a claim that is attributable to accrued
interest would equal the fair market value of such property when
received and the holding period for such property would begin on
the day following the Effective Date. U.S. Holders of
claims are urged to consult their own tax advisors regarding the
particular U.S. federal income tax consequences to them of
the allocation of consideration and the deductibility of
previously included unpaid interest and original issue discount
for tax purposes, as well as the character of any loss claimed
with respect to accrued but unpaid interest previously included
in gross income.
4. Ownership and Disposition of New Notes
Stated Interest. The stated interest on a New
Note generally will be taxable as ordinary interest income in
accordance with the U.S. Holder’s regular method of
accounting at the time such payments are accrued or received.
Original Issue Discount. We expect that the
New Notes will be issued with original issue discount
(“OID”) for U.S. federal income tax purposes. In
general, the amount of OID with respect to a New Note will be
equal to the excess of the “stated redemption price at
maturity” of the note (i.e., the face amount of the
New Note) over its “issue price” as described above in
“— U.S. Federal Income Tax Consequences to
U.S. Holders — The Offers — The CIT
Offers — Fully Taxable Transaction.”
For U.S. federal income tax purposes, each U.S. Holder
(regardless of its accounting method) generally must include in
gross income a portion of the OID in each taxable year during
which a New Note is held in an amount equal to the OID that
accrues during such period, determined using a constant yield to
maturity method that reflects compounding of interest. This
means that each U.S. Holder will be required to include
amounts in gross income without a corresponding receipt of cash
attributable to such income. A U.S. Holder’s
238
tax basis in a New Note will be increased by the amount of OID
includible in the U.S. Holder’s gross income as it
accrues.
Acquisition Premium or Amortizable Bond Premium on New
Notes. If a U.S. Holder’s initial tax
basis in the New Notes is greater than their issue price and
less than or equal to their stated redemption price at maturity,
the New Notes will be considered to have been issued to such
holder at an “acquisition premium.” Under the
acquisition premium rules, the amount of OID that a
U.S. Holder must include in income with respect to the New
Notes for any taxable year will be reduced by the portion of the
acquisition premium properly allocable to that year. If a
U.S. Holder’s initial tax basis in its New Notes is
greater than their stated redemption price at maturity, a
U.S. Holder will be considered to have acquired the New
Notes with “amortizable bond premium” and a
U.S. Holder will not be required to include any OID in
income. A U.S. Holder generally may elect to amortize the
premium over the remaining term of the New Notes on a constant
yield method as an offset to interest when includible in income
under a U.S. Holder’s regular accounting method. If a
U.S. Holder does not elect to amortize the premium, that
premium will decrease the gain or increase the loss a
U.S. Holder would otherwise recognize on disposition of the
New Notes.
Sale or Other Disposition of New Notes. When a
U.S. Holder sells or otherwise disposes of a New Note in a
taxable transaction, the U.S. Holder will generally
recognize gain or loss for U.S. federal income tax purposes
in an amount equal to the difference, if any, between
(1) the amount realized on the disposition, less any amount
attributable to accrued interest, which will be taxable as such;
and (2) the U.S. Holder’s adjusted tax basis in
the New Note. The U.S. Holder’s adjusted tax basis in
a New Note generally equals the issue price of the New Note,
increased by accrued OID with respect to a New Note, and
decreased by payments on the New Note other than payments of
“qualified stated interest.” Subject to the treatment
of a portion of any gain as ordinary income to the extent of any
market discount accrued on the New Notes or carried over to the
New Notes from the Old Notes, such gain or loss will generally
be capital gain or loss.
Foreign
Currency New Notes
i. Interest on New Notes
Interest paid on New Notes denominated in foreign currency will
be includible in income by a U.S. Holder in an amount equal
to the U.S. dollar value of the payment, regardless of
whether the payment is in fact converted to U.S. dollars at
that time. If such U.S. Holder uses the cash method of
accounting for tax purposes, the U.S. dollar value of such
payment is determined using the spot rate at the time such
payment is received. Such U.S. Holder will not recognize
any exchange gain or loss with respect to the receipt of the
interest payment.
If a U.S. Holder uses the accrual method of accounting for
tax purposes, the U.S. dollar value of such payment is
determined using the average exchange rate during the relevant
accrual period (or partial accrual period with respect to
interest paid in a subsequent taxable year) or, if elected, the
spot rate (a) on the last day of the relevant accrual
period (or partial accrual period) or (b) on the payment
date, if such date is within five business days of the last day
of the accrual period or taxable year. U.S. Holders using
the accrual method of accounting will recognize foreign currency
gain or loss on the receipt of an interest payment in foreign
currency if the exchange rate in effect on the date the payment
is received differs from the rate applicable to a previous
accrual of that interest income. The foreign currency gain or
loss will generally be treated as ordinary income or loss for
U.S. federal income tax purposes, and generally will not be
treated as an adjustment to interest income received on such New
Notes.
ii. Original Issue Discount
The amount of OID on a New Note denominated in foreign currency
will be determined for any accrual period using the foreign
currency in which the New Note is denominated and then
translated into U.S. dollars in the same manner as interest
income accrued by a U.S. Holder on the accrual basis, as
described above, whether the U.S. Holder is a cash method
taxpayer or an accrual method taxpayer. A U.S. Holder will
generally recognize exchange gain or loss when the OID is paid
(including a payment attributable to OID upon the sale or other
disposition of a New Note denominated in foreign currency) to
the extent of the
239
difference between the U.S. dollar value of such payment,
determined based on the spot rate for the foreign currency on
the date of payment, and the U.S. dollar value of the
accrued OID, determined in the same manner as for accrued
interest.
iii. Sale, Redemption or Retirement of Foreign Currency
New Notes
Upon the sale, exchange, retirement or repayment of a New Note
denominated in foreign currency, a U.S. Holder will also
recognize exchange gain or loss to the extent that the rate of
exchange on the date of retirement or disposition differs from
the rate of exchange on the date such New Note was acquired, or
deemed acquired. Exchange gain or loss is recognized, however,
only to the extent of total gain or loss on the transaction. For
purposes of determining the total gain or loss on the
transaction, a U.S. Holder’s tax basis in New Note
denominated in foreign currency will generally be the same as
described in “— U.S. Federal Income Tax
Consequences to U.S. Holders — The
Offers — The CIT Offers — Exchange of
Foreign Currency CIT Old Notes” above.
5. Ownership and Disposition of New Preferred Stock
Distributions. A distribution and the amount
of any constructive distribution under Section 305(c) of
the Tax Code (as described below under
“— Redemption Premium”) paid by us in
respect of New Preferred Stock will generally constitute a
dividend for U.S. federal income tax purposes to the extent
the distribution is paid out of our current or accumulated
earnings and profits, as determined under U.S. federal
income tax principles. The gross amount of any such dividend to
a U.S. Holder will be included in the income of the
U.S. Holder, as ordinary dividend income from
U.S. sources. In general, distributions in excess of our
current or accumulated earnings and profits will not be taxable
to a U.S. Holder to the extent that such distributions to
the U.S. Holder do not exceed the U.S. Holder’s
adjusted tax basis in the shares of New Preferred Stock with
respect to which the distribution is paid, but rather will
reduce the U.S. Holder’s adjusted tax basis in such
New Preferred Stock (but not below zero). To the extent that
distributions exceed our current and accumulated earnings and
profits as well as the U.S. Holder’s adjusted tax
basis in the New Preferred Stock, such distributions generally
will be taxable as capital gain realized in respect of the New
Preferred Stock.
Under current U.S. federal income tax law (presently
effective for taxable years beginning before January 1,
2011), dividends paid to certain non-corporate
U.S. Holders, including individuals, generally will
constitute qualified dividend income eligible for preferential
rates of U.S. federal income tax, with a maximum rate of
15 percent, provided certain conditions and requirements
are satisfied, such as minimum holding period requirements.
U.S. Holders that are corporations may be eligible for a
partial dividends-received deduction with respect to dividend
distributions that are paid in respect of New Preferred Stock,
subject to certain conditions and requirements, such as minimum
holding period requirements. There can be no assurance that we
will have sufficient current or accumulated earnings and profits
for distributions in respect of New Preferred Stock to qualify
as dividends for U.S. federal income tax purposes.
Further, U.S. Holders that are corporations should be aware
that under certain circumstances, a corporation that receives an
“extraordinary dividend” (as defined in
section 1059 of the Tax Code) is required to reduce its
stock basis by the portion of such dividend that is not taxed
because of the dividends received deduction. U.S. Holders
who are individuals and who receive an “extraordinary
dividend” would be required to treat any losses on the sale
of New Preferred Stock as long-term capital losses to the extent
such dividends received by them qualify for the reduced
15 percent tax rate. Investors should consult their tax
advisers with respect to the potential application of the
extraordinary dividend rules to an investment in our New
Preferred Stock.
Redemption Premium. If the New Preferred
Stock constitutes “preferred stock” for purposes of
Section 305(c) of the Tax Code and we are treated as more
likely than not to exercise our right to redeem the New
Preferred Stock, the excess of the redemption price of the New
Preferred Stock over its issue price (generally, its fair market
value at the time it is issued) may be treated as a constructive
distribution of additional stock on the New Preferred Stock that
is included in income over the term of the New Preferred Stock
as a series of constructive distributions under principles
similar to the OID provisions of the Tax Code. For purposes of
Section 305(c), “preferred stock” generally means
stock that enjoys limited rights and
240
privileges in relation to other classes of stock outstanding,
and does not participate in corporate growth to any significant
extent. Because (i) we anticipate that any future
appreciation in the value of our assets will significantly, if
not entirely, inure to the benefit of the New Preferred Stock
and (ii) under the Treasury Regulations, it is likely that
our right to redeem the New Preferred Stock would not be treated
as more likely than not to occur, we intend to take the position
that Section 305(c) of the Tax Code does not apply to the
New Preferred Stock, although no assurances can be given in this
regard. You should consult your tax advisor regarding the
treatment of redemption premium and the application of
Section 305(c) of the Tax Code to the New Preferred Stock
in light of your particular circumstances.
Sale or Other Disposition of New Preferred
Stock. In general, a U.S. Holder will
recognize gain or loss upon the sale or other taxable
disposition of New Preferred Stock in an amount equal to the
difference between the sum of the fair market value of any
property and the amount of cash received in such disposition and
such U.S. Holder’s adjusted tax basis in the New
Preferred Stock at the time of the disposition. Subject to the
treatment of a portion of any gain as ordinary income to the
extent of any market discount carried over to the New Preferred
Stock from the Old Notes, such gain or loss will generally be
capital gain or loss.
Redemptions of Preferred Stock. A redemption
of shares of New Preferred Stock generally will be treated under
section 302 of the Tax Code as a distribution with respect
to the New Preferred Stock unless the redemption satisfies one
of the tests set forth in section 302(b) of the Tax Code
and is therefore treated as a sale or exchange of the New
Preferred Stock that is redeemed. If a redemption of shares of
New Preferred Stock is treated as a sale or exchange, the
redemption will be taxable as described under
“— Sale or Other Disposition of New Preferred
Stock” above, except that an amount received in respect of
declared but unpaid dividends generally will be taxable as a
dividend if we have sufficient current or accumulated earnings
and profits, as described above under
“— Distributions.”
A redemption will be treated as a sale or exchange if it
(i) results in a “complete termination” of a
U.S. Holder’s interest in us, (ii) is
“substantially disproportionate” with respect to a
U.S. Holder, or (iii) is not “essentially
equivalent to a dividend” with respect to a
U.S. Holder, all within the meaning of Section 302(b)
of the Tax Code. In determining whether any of these tests has
been met, shares of CIT stock deemed owned by a U.S. Holder
by reason of certain constructive ownership rules, as well as
shares actually owned by such U.S. Holder, must be taken
into account. A redemption of shares of New Preferred Stock held
by a U.S. Holder generally will qualify for sale or
exchange treatment if the U.S. Holder does not own
(actually or constructively) any shares of any classes of our
stock following the redemption, or if the U.S. Holder owns
(actually or constructively) only an insubstantial percentage of
our stock, the redemption has the effect of decreasing such
ownership percentage and the U.S. Holder does not
participate in our control or management. However, the
determination as to whether any of the tests of
section 302(b) of the Tax Code will be satisfied with
respect to any particular U.S. Holder depends upon the
facts and circumstances at the time of the redemption.
If a redemption of shares of New Preferred Stock is treated as a
distribution, the entire amount received will be taxable as
described under “— Distributions” above. In
such case, a U.S. Holder’s adjusted tax basis in the
redeemed shares of New Preferred Stock generally will be
transferred to any remaining shares of our stock held by such
U.S. Holder immediately after the redemption. If a
U.S. Holder does not own any other shares of our stock
immediately after the redemption, such tax basis may, under
certain circumstances, be transferred to shares of stock held by
a person related to such U.S. Holder, or the tax basis may
be entirely lost.
Holders of Old Notes considering the Offers should consult their
own tax advisors for purposes of determining the tax
consequences resulting from redemption of shares of New
Preferred Stock in their particular circumstances.
6. Ownership and Disposition of New Common Interests
U.S. Holders who receive New Common Interests pursuant to
the Plan of Reorganization will generally be subject to the same
U.S. federal income tax treatment with respect to such New
Common Interests as described under “— Ownership
and Disposition of New Preferred Stock —
Distributions” above, and to the
241
same consequences of sale or other disposition of such New
Common Interests as described in “— Ownership and
Disposition of New Preferred Stock — Sale or other
Disposition of New Preferred Stock” above.
7. Backup Withholding
In general, a U.S. Holder (other than corporations and
other exempt holders) will be subject to information reporting
requirements with respect to (i) payments made in
connection with the Offers or Plan of Reorganization,
(ii) payments of principal, premium, and interest
(including OID, if any) paid in respect of, and the proceeds
from a sale, redemption or other disposition before maturity of,
the New Notes, (iii) dividends and other taxable
distributions paid in respect of, and the proceeds from a sale,
redemption or other disposition of, the New Preferred Stock, and
(iv) imputed interest on the Contingent Value Rights. In
addition, such a U.S. Holder may be subject to backup
withholding on such payments if the U.S. Holder
(i) fails to provide an accurate taxpayer identification
number to the payor; (ii) has been notified by the IRS of a
failure to report all interest or dividends required to be shown
on its U.S. federal income tax returns; or (iii) in
certain circumstances, fails to comply with applicable
certification requirements.
Any amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against a
U.S. Holder’s U.S. federal income tax liability
provided the required information is furnished to the IRS on a
timely basis. U.S. Holders should consult their tax
advisors regarding the application of information reporting and
backup withholding rules in their particular situations, the
availability of an exemption therefrom, and the procedure for
obtaining such an exemption, if applicable.
|
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II.
|
U.S.
Federal Income Tax Consequences to
Non-U.S.
Holders
|
1. The Indenture Amendments
On October 1, 2009 and October 16, 2009, we amended
each of the indentures under which the Old Notes were issued to
provide guarantees by all of our current and domestic wholly
owned subsidiaries, with the exception of CIT Bank and other
regulated subsidiaries, special purpose entities and immaterial
subsidiaries. The addition of the guarantees should not cause
any U.S. federal income tax consequences to
Non-U.S. Holders
of Old Notes, provided that the modification does not constitute
a “significant modification” of the Old Notes that
would result in a deemed exchange of the Old Notes for
U.S. federal income tax purposes, as described under
“— U.S. Federal Income Tax Consequences to
U.S. Holders — The Indenture Amendments.”
2. The Offers
A
Non-U.S. Holder
generally will not be subject to U.S. federal income tax on
any gain or loss realized in the Offers (other than any gain
attributable to accrued but unpaid interest, which will be
taxable in the same manner as described below under
“— Ownership and Disposition of New
Notes — Interest”) unless the Offers are not
treated as a tax-free recapitalization (as discussed above) and
(i) the gain is effectively connected with such
Non-U.S. Holder’s
conduct of a trade or business within the United States (and, in
the case of an applicable tax treaty, is attributable to a
permanent establishment maintained by the
Non-U.S. Holder
in the United States) or (ii) the
Non-U.S. Holder
is an individual who is present in the United States for 183 or
more days in the taxable year of the Settlement Date or has a
“tax home” in the United States and certain conditions
are satisfied.
To the extent that gain recognized is effectively connected with
the
Non-U.S. Holder’s
conduct of a U.S. trade or business (and, in the case of an
applicable tax treaty, is attributable to a permanent
establishment maintained by the
Non-U.S. Holder
in the United States), as described under
“— U.S. Federal Income Tax Consequences to
Non-U.S. Holders —
Income Effectively Connected with a U.S. Trade or
Business,” the
Non-U.S. Holder
will be subject to U.S. federal income tax on a net basis
and, if it is a foreign corporation, may also be subject to an
additional 30 percent U.S. branch profits tax (or
lower applicable treaty rate).
Non-U.S. Holders
of Old Notes that do not participate in the Offers should not
have any U.S. federal income tax consequences and should
continue to have the same tax basis and holding period with
respect to the Old Notes as they had prior to the Offers.
242
3. The Plan of Reorganization
The U.S. federal income tax consequences arising from the
Plan of Reorganization to
Non-U.S. Holders
will generally be the same as described in
“— U.S. Federal Income Tax Consequences to
Non-U.S. Holders —
The Offers” above, except that imputed interest with
respect to the Contingent Value Rights will be taxable in the
same manner as described below in “— Ownership
and Disposition of New Notes — Interest”).
4. Ownership and Disposition of New Notes
Interest. Subject to the discussion of
withholding and backup withholding below, all payments of
interest (including OID, if any) on the New Notes made to a
Non-U.S. Holder
generally will be exempt from U.S. federal income and
withholding tax provided that (i) such
Non-U.S. Holder
does not own, actually or constructively, 10 percent or
more of the total combined voting power of all classes of our
stock entitled to vote, (ii) such
Non-U.S. Holder
is not a controlled foreign corporation related, directly or
indirectly, to us through stock ownership, (iii) the
beneficial owner of the notes certifies, under penalties of
perjury, to us or our paying agent on IRS
Form W-8BEN
(or appropriate substitute form) that it is not a
U.S. person and provides its name, address and certain
other required information or certain other certification
requirements are satisfied, and (iv) the interest is not
effectively connected with such
Non-U.S. Holder’s
conduct of a trade or business within the United States (and, in
the case of an applicable tax treaty, is not attributable to a
permanent establishment maintained by the
Non-U.S. Holder
in the United States).
If a
Non-U.S. Holder
cannot satisfy requirements (i)-(iii) above, payments of
interest (including OID) made to the
Non-U.S. Holder
will be subject to 30 percent U.S. federal
withholding tax, unless the
Non-U.S. Holder
qualifies for a reduced rate of withholding, or is able to claim
a valid exemption, under a tax treaty (generally, by providing
an IRS
Form W-8BEN
claiming treaty benefits) or by establishing that such interest
is not subject to withholding tax because it is effectively
connected with the
Non-U.S. Holder’s
conduct of a trade or business in the United States (generally,
by providing an IRS
Form W-8ECI).
To the extent that such interest is effectively connected with
the
Non-U.S. Holder’s
conduct of a U.S. trade or business, as described under
“— U.S. Federal Income Tax Consequences to
Non-U.S. Holders —
Income Effectively Connected with a U.S. Trade or
Business,” the
Non-U.S. Holder
will be subject to U.S. federal income tax on a net basis
and, if it is a foreign corporation, may also be subject to an
additional 30 percent U.S. branch profits tax (or
lower applicable treaty rate).
Sale or Other Disposition of New Notes. A
Non-U.S. Holder
generally will not be subject to U.S. federal income tax on
any gain recognized on the sale or other taxable disposition of
a New Note (other than any amount attributable to accrued but
unpaid interest, which will be taxable as described in
“— Interest” above) unless (i) the gain
is effectively connected with such
Non-U.S. Holder’s
conduct of a trade or business within the United States (and, in
the case of an applicable tax treaty, is attributable to a
permanent establishment maintained by the
Non-U.S. Holder
in the United States) or (ii) the
Non-U.S. Holder
is an individual who is present in the United States for 183 or
more days in the taxable year of the disposition or has a
“tax home” in the United States and certain conditions
are satisfied.
To the extent that such gain is effectively connected with the
Non-U.S. Holder’s
conduct of a U.S. trade or business (and, in the case of an
applicable tax treaty, is attributable to a permanent
establishment maintained by the
Non-U.S. Holder
in the United States), as described under
“— U.S. Federal Income Tax Consequences to
Non-U.S. Holders —
Income Effectively Connected with a U.S. Trade or
Business,” the
Non-U.S. Holder
will be subject to U.S. federal income tax on a net basis
and, if it is a foreign corporation, may also be subject to an
additional 30 percent U.S. branch profits tax (or
lower applicable treaty rate).
5. Ownership and Disposition of New Preferred Stock
Distributions. Except as described below,
dividends, including the amount of any constructive
distributions under Section 305(c) of the Tax Code (as
described below under
“— Redemption Premium”) paid to a
Non-U.S. Holder
in respect of the New Preferred Stock generally will be subject
to U.S. federal withholding tax at a 30 percent rate,
or such lower rate as may be specified by an applicable tax
treaty. In order to claim the benefits of an applicable tax
treaty, a
Non-U.S. Holder
will be required to satisfy applicable certification (for
example, IRS
Form W-8BEN
or other applicable form) and other requirements prior to the
distribution
243
date.
Non-U.S. Holders
eligible for a reduced rate of U.S. federal withholding tax
under an applicable tax treaty may obtain a refund of any
amounts withheld in excess of that rate by filing a refund claim
with the IRS.
Non-U.S. Holders
should consult their own tax advisors regarding their
entitlement to benefits under an applicable income tax treaty
and the requirements for claiming any such benefits.
To the extent that dividends on the New Preferred Stock are
effectively connected with the
Non-U.S. Holder’s
conduct of a U.S. trade or business (and, in the case of an
applicable tax treaty, is attributable to a permanent
establishment maintained by the
Non-U.S. Holder
in the United States), as described under
“— U.S. Federal Income Tax Consequences to
Non-U.S.
Holders — Income Effectively Connected with a
U.S. Trade or Business,” the
Non-U.S. Holder
will be subject to U.S. federal income tax on a net basis
and, if it is a foreign corporation, may also be subject to an
additional 30 percent U.S. branch profits tax (or
lower applicable treaty rate).
Redemption Premium. If the New Preferred
Stock constitutes “preferred stock” for purposes of
Section 305(c) of the Tax Code and we are treated as more
likely than not to exercise our right to redeem the New
Preferred Stock, the excess of the redemption price of the New
Preferred Stock over its issue price may be treated as a
constructive distribution of additional stock on the New
Preferred Stock that is included in income over the term of the
New Preferred Stock as a series of constructive distributions
under principles similar to the OID provisions of the Tax Code.
A constructive distribution deemed received by a
Non-U.S. Holder
would not give rise to any cash from which any applicable
U.S. federal withholding tax could be satisfied. We intend
to take the position that Section 305(c) of the Tax Code
does not apply to the New Preferred Stock, although no
assurances can be given in this regard (see
“— U.S. Federal Income Tax Consequences to
U.S. Holders — Ownership and Disposition of New
Preferred Stock — Redemption Premium”). You
should consult your tax advisor regarding the treatment of
redemption premium and the application of Section 305(c) of
the Tax Code to the New Preferred Stock in light of your
particular circumstances.
Sale or Other Disposition of New Preferred
Stock. A
Non-U.S. Holder
generally will not be subject to U.S. federal income tax on
gain recognized on a sale or other taxable disposition of New
Preferred Stock unless (i) the gain is effectively
connected with such
Non-U.S. Holder’s
conduct of a trade or business within the United States (and, in
the case of an applicable tax treaty, is attributable to a
permanent establishment maintained by the
Non-U.S. Holder
in the United States); (ii) the
Non-U.S. Holder
is an individual who is present in the United States for 183 or
more days in the taxable year of the disposition or has a
“tax home” in the United States and certain conditions
are satisfied; or (iii) we are or have been a
U.S. real property holding corporation for
U.S. federal income tax purposes at any time during the
five year period (or shorter holding period for the New
Preferred Stock) ending on the date of the disposition. We have
not been, are not and do not anticipate becoming a
U.S. real property holding corporation for
U.S. federal income tax purposes.
To the extent that gain recognized is effectively connected with
the
Non-U.S. Holder’s
conduct of a U.S. trade or business (and, in the case of an
applicable tax treaty, is attributable to a permanent
establishment maintained by the
Non-U.S. Holder
in the United States), as described under
“— U.S. Federal Income Tax Consequences to
Non-U.S. Holders —
Income Effectively Connected with a U.S. Trade or
Business,” the
Non-U.S. Holder
will be subject to U.S. federal income tax on a net basis
and, if it is a foreign corporation, may also be subject to an
additional 30 percent U.S. branch profits tax (or
lower applicable treaty rate).
6. Ownership and Disposition of New Common Interests
Non-U.S. Holders
who receive New Common Interests pursuant to the Plan of
Reorganization will generally be subject to the same
consequences of distributions with respect to such New Common
Interests as described in “— U.S. Federal
Income Tax Consequences to
Non-U.S. Holders —
Ownership and Disposition of New Preferred Stock —
Distributions” above, and to the same consequences of sale
or other disposition of such New Common Interests as described
in “— U.S. Federal Income Tax Consequences
to
Non-U.S. Holders —
Ownership and Disposition of New Preferred Stock —
Sale or Other Disposition of New Preferred Stock” above.
244
7. Income Effectively Connected with a U.S. Trade or
Business
If a
Non-U.S. Holder
is engaged in a trade or business within the United States and
interest, dividends, gain or any other income with respect to
the New Notes, New Preferred Stock, New Common Interests, or
Contingent Value Rights that is effectively connected with the
conduct of the
Non-U.S. Holder’s
trade or business, and, if a U.S. income tax treaty
applies, the
Non-U.S. Holder
maintains a U.S. “permanent establishment” to
which the interest, gain or other income is generally
attributable, the
Non-U.S. Holder
will generally be subject to U.S. federal income tax on a
net income basis on such interest, dividends, gain or other
income. Nevertheless, interest or dividends that are effectively
connected with a U.S. trade or business (and, if an income
tax treaty applies, attributable to a permanent establishment),
and therefore included in the income of a
Non-U.S. Holder,
will be subject to the 30 percent withholding tax unless
the holder claims exemption from withholding. To claim exemption
from withholding, the holder must certify its qualification,
which can be done by filing a properly executed IRS
Form W-8ECI.
In addition, if such a
Non-U.S. Holder
is a foreign corporation, such holder may be subject to a branch
profits tax equal to 30 percent (or such lower rate
provided by an applicable income tax treaty) of its effectively
connected earnings and profits for the taxable year, subject to
certain adjustments.
8. Backup Withholding and Information Reporting
In general, we or our paying agent must report to the IRS and to
a
Non-U.S. Holder
the amount of certain payments made in connection with the
Offers or Plan of Reorganization, as well as the amount of
interest (including OID) on the New Notes and imputed interest
on the Contingent Value Rights, and dividends on the New
Preferred Stock or New Common Interests, paid to the
Non-U.S. Holder
and the amount of U.S. federal withholding tax, if any,
deducted from those payments. Copies of the information returns
reporting such interest and dividend payments and any associated
U.S. federal withholding tax also may be made available to
the tax authorities in the country in which the
Non-U.S. Holder
resides under the provisions of an applicable tax treaty. A
Non-U.S. Holder
generally will not be subject to backup withholding with respect
to payments that we make in connection with the Offers or Plan
of Reorganization, or payments on the New Notes, New Preferred
Stock, New Common Interests, or Contingent Value Rights provided
that we or our paying agent do not have actual knowledge or
reason to know that the
Non-U.S. Holder
is a U.S. person (as defined under the Tax Code), and we or
our paying agent has received from the
Non-U.S. Holder
an appropriate certification of
non-U.S. status
(i.e., IRS
Form W-8BEN
or other applicable IRS
Form W-8).
Information reporting and, depending on the circumstances,
backup withholding will apply to the payment of the proceeds
from the Offers or Plan of Reorganization, or from a New Note,
New Preferred Stock or New Common Interests, as the case may be,
that is effected within the United States or effected outside
the United States through certain
U.S.-related
financial intermediaries, unless the
Non-U.S. Holder
certifies under penalty of perjury as to its
non-U.S. status,
and the payor does not have actual knowledge or reason to know
that the beneficial owner is a U.S. person, or the
Non-U.S. Holder
otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules may be
allowed as a refund or a credit against a
Non-U.S. Holder’s
U.S. federal income tax liability provided the required
information is furnished to the IRS on a timely basis.
Non-U.S. Holders
of Old Notes, New Notes, New Preferred Stock, New Common
Interests, or Contingent Value Rights should consult their tax
advisers regarding the application of information reporting and
backup withholding in their particular situations, the
availability of an exemption therefrom, and the procedure for
obtaining an exemption, if applicable.
III. U.S.
Federal Income Tax Consequences to the Company
For U.S. federal income tax purposes, many of our
subsidiaries are members of an affiliated group of corporations
of which CIT is the common parent, and file a single
consolidated U.S. federal income tax return. We have
consolidated NOL carryforwards for U.S. federal income tax
purposes of approximately $3.6 billion as of the end of
2008. In addition, as of September 30, 2009, we estimate
that we have incurred additional net operating losses of
approximately $2.4 billion and expect to incur additional
losses for the current taxable year ending December 31,
2009. The amount of any such losses remains subject to audit and
adjustment by the IRS.
As discussed below, in connection with the Offers or the Plan of
Reorganization, as applicable, the amount of our consolidated
NOL carryforwards as well as other tax attributes may be
significantly reduced or eliminated.
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1. Cancellation of Indebtedness Income
In general, the Tax Code provides that the amount of any COD
income of a solvent taxpayer is included in income. The amount
of COD income realized is generally the excess of the amount of
indebtedness discharged over the value of any consideration
given in exchange therefor. Certain statutory or judicial
exceptions may apply to limit the amount of COD incurred for
U.S. federal income tax purposes. In addition, COD income
is excluded from income if a taxpayer is insolvent (but only to
the extent of the taxpayer’s insolvency) or if the COD
income is realized pursuant to a confirmed plan of
reorganization or court order in a Chapter 11 bankruptcy
case, such as the Plan of Reorganization.
When the insolvency or bankruptcy exception to income inclusion
applies, the Tax Code provides that a taxpayer must reduce
certain of its tax attributes — such as NOLs, capital
losses, tax credits, and tax basis in assets — by the
amount of any COD excluded from income. The taxpayer can elect
to reduce the basis of depreciable property prior to any
reduction in its NOLs or other tax attributes. Where the
taxpayer joins in the filing of a consolidated U.S. federal
income tax return, applicable Treasury Regulations require, in
certain circumstances, that certain tax attributes of the
consolidated subsidiaries of the taxpayer and other members of
the group be reduced. Any reduction in tax attributes in respect
of excluded COD income does not occur until after the
determination of the taxpayer’s income or loss for the
taxable year in which the COD income is realized.
We expect to realize a substantial amount of COD income as a
result of restructuring our debt obligations. The amount of COD
we realize will depend on the issue price of the New Notes and
the value of the New Preferred Stock, New Common Interests, and
Contingent Value Rights issued in satisfaction of our debt
obligations. If the Offers are consummated, and we are
considered solvent for U.S. federal income tax purposes
immediately prior to the completion of the Offers, it is
possible that the COD income that will be recognized by us
pursuant to the Offers will be in excess of our NOLs and other
tax attributes available to offset such income and, therefore,
we could incur a current tax liability.
The American Recovery and Reinvestment Act of 2009 permits us to
elect to defer the inclusion of any portion of the COD income
resulting from the restructuring of our debt obligations, with
the amount of COD income so deferred becoming includible in our
income ratably over a five-taxable year period beginning in
2014. This election would also require us to defer the deduction
of a portion of the OID on the New Notes over a similar period,
although the tax consequences to holders would not be affected.
The collateral tax consequences of making this election are
complex and, currently, we are analyzing whether and to what
extent the deferral election would be advantageous to us.
Depending on, among other things, the amount of COD income we
recognize as a result of the Offers and the ultimate amount of
our NOLs and other tax attributes available to offset such
income, we may determine to make the deferral election with
respect to some or all of our Old Notes.
Alternatively, to the extent we are considered insolvent for
U.S. federal income tax purposes immediately prior to the
consummation of the Offers, or, if the Offers are not completed
and we instead consummate the Plan of Reorganization pursuant to
a confirmed Chapter 11 bankruptcy case, we will not be
required to include COD in income. Instead, we will be required
to reduce our tax attributes (including NOLs, the tax basis in
our assets and the attributes and tax basis of our subsidiaries)
by the amount of COD that would otherwise have been required to
be included in income. If the amount of COD income exceeds our
available NOLs and other tax attributes, such excess is
permanently excluded from income.
In addition, in connection with our separation from Tyco
International, Ltd. (“Tyco”) and its sale of all of
the shares of our capital stock that it beneficially owned in an
underwritten initial public offering, we entered into a Tax
Agreement which contains provisions governing the allocation of
certain pre-separation tax liabilities and tax attributes
between Tyco and us, indemnification for certain tax
liabilities, responsibility for preparing and filing tax
returns, and other tax-related matters. Pursuant to the Tax
Agreement, we may be required to pay to Tyco a portion of the
cash tax savings we realize through the use of our NOLs in
connection with COD income or attribute reduction resulting from
the Offers or Plan of Reorganization. In the event the Offers
are not completed and we instead consummate the Plan of
Reorganization, we believe that Tyco’s claims under the Tax
Agreement are subject to subordination pursuant to Bankruptcy
Code section 510(b) and, accordingly, Tyco would receive no
distribution under the Plan of Reorganization, but no
246
assurances can be given in this regard. In the event claims
under the Tax Agreement are not subordinated, they may be
classified as Class 5 General Unsecured Claims.
2. AHYDO
Certain of the New Notes may be considered “applicable high
yield discount obligations” (“AHYDOs”) for
U.S. federal income tax purposes. In general, an AHYDO is
any debt instrument with “significant original issue
discount,” a maturity date that is more than five years
from the issue date, and a yield to maturity that is at least
five percentage points higher than the applicable federal rate
on its issue date. If the New Notes with a maturity of more than
five years are treated as AHYDOs, we may permanently be denied a
deduction for a portion of the OID on such notes and may claim
an interest deduction as to the remainder of the OID only when
such portion is paid as cash. The tax consequences to holders
generally will not be affected, except that for purposes of the
dividends received deduction, corporate holders of the New Notes
may be required to treat the disallowed portion of the OID as a
dividend paid by us to the extent of our current and accumulated
earnings and profits.
The American Recovery and Reinvestment Act of 2009 suspends
application of the AHYDO rules to debt instruments issued by a
borrower during the period beginning on September 1, 2008
and ending on December 31, 2009 in exchange for debt
instruments issued by the same borrower that are not AHYDOs.
Provided that the New Notes are issued on or before
December 31, 2009, we anticipate that any New Notes that
are AHYDOs which are issued in exchange for CIT Notes will be
eligible for this suspension of the AHYDO rules. New Notes that
are AHYDOs which are exchanged for Canadian Senior Unsecured
Notes, however, may not be eligible for this suspension because
the Canadian Senior Unsecured Notes for which they are being
exchanged were not issued by CIT Group Inc.
3. Net Operating Losses-Section 382
We believe that all or substantially all of our NOLs and certain
other tax attributes could be utilized as a result of COD income
realized as a result of the Offers or the Plan of
Reorganization. Our ability to utilize any remaining NOLs or
other tax attributes after consummation of the Offers or Plan of
Reorganization to offset our expected future taxable income is
likely to be limited as a result of Section 382 of the Tax
Code (or, as discussed below, our NOLs are likely to be reduced
under a special exception applicable in bankruptcy). In general,
and subject to certain adjustments, under Section 382 of
the Tax Code, whenever there is a more than fifty percent
ownership change of a corporation during a three-year testing
period (an “ownership change”), the ability of the
corporation to utilize its NOLs and certain other tax attributes
to offset future taxable income is subject to an annual
limitation, equal to the product of (i) the “long-term
tax-exempt rate” (for example, 4.48 percent for
ownership changes occurring during the month of October
2009) and (ii) the fair market value of the stock of
the corporation immediately before the ownership change occurs.
We anticipate that we will experience an ownership change as a
result of the issuance of equity pursuant to the Offers or the
Plan of Reorganization.
The Offers. As discussed above, if the Offers
are completed, our ability to use pre-Settlement Date NOLs and
other tax attributes to offset our income in any post-Settlement
Date taxable year (and in the portion of the taxable year of the
ownership change following the Settlement Date) to which such a
carryforward is made generally (subject to various exceptions
and adjustments, some of which are described below) will be
limited to the sum of (a) an annual limitation (prorated
for the portion of the taxable year of the ownership change
following the Settlement Date), and (b) any carryforward of
unused amounts described in (a) from prior years. Moreover,
our NOLs and other tax attributes will be subject to further
limitations if we experience additional future ownership changes
or if we do not continue our business enterprise for at least
two years following the Settlement Date. If we have a “net
unrealized built-in loss,” at the time of an ownership
change, Section 382 may also limit our ability to use
“built-in losses” (i.e., losses and deductions
that have economically accrued prior to, but remain unrecognized
as of, the date of the ownership change) to offset future
taxable income (but only up to the amount of the net unrealized
built-in loss at the time of the ownership change). On the other
hand, if we have a “net unrealized built-in gain” at
the time of an ownership change, any “built-in gains”
recognized during the following five years generally will
increase the Section 382 annual limitation in the year
recognized (but only up to the amount of the net unrealized
built-in gain at the
247
time of the ownership change), such that we would be permitted
to use our pre-change losses against such built-in gain income
in addition to our regular annual allowance. Whether we will
benefit from the adjustment for “built-in” gains or be
subject to the limitation for “built-in” losses will
depend, inter alia, upon the adjusted tax basis and value
of our assets immediately before the Settlement Date, which we
are currently determining.
The Plan of Reorganization. In the event that
the Offers are not completed and we instead consummate the Plan
of Reorganization pursuant to a confirmed Chapter 11
bankruptcy case, certain special relief provisions provided in
Section 382(l)(5) may be available and the application of
Section 382 could be materially different from that
described above. In that case, our ability to utilize our
pre-Effective Date NOLs would not be limited as described in the
preceding paragraph. Section 382(l)(5) will not apply
unless existing stockholders and qualified creditors of a debtor
(generally trade creditors and those who held the debt for at
least 18 months prior to the bankruptcy filing) receive, in
exchange for their stock and debt claims, at least
50 percent of the vote and value of the stock of the
reorganized debtor pursuant to a confirmed Chapter 11
bankruptcy case. However, several other limitations would apply
to us under Section 382(l)(5), including (a) our NOLs
would be calculated without taking into account deductions for
interest paid or accrued in the portion of the current tax year
prior to and including the Effective Date and all other tax
years ending during the three-year period prior to the current
tax year with respect to the Old Notes that are exchanged for
equity pursuant to the Plan of Reorganization, and (b) if
we undergo another ownership change within two years after the
Effective Date, our Section 382 limitation with respect to
that ownership change will be zero. It is uncertain whether the
provisions of Section 382(l)(5) would be available in the
case of the ownership change that is expected to occur as a
result of the consummation of the Plan of Reorganization. If we
qualify for the special rule under Section 382(l)(5), the
use of our NOLs will be subject to Section 382(l)(5) unless
we affirmatively elect for the provisions not to apply. We have
not yet determined whether we would seek to have the
Section 382(l)(5) rules apply to the ownership change
arising from the consummation of the Plan of Reorganization.
If we do not qualify for, or elect not to apply, the special
rules under Section 382(l)(5) for corporations in
bankruptcy described above, a different rule under
Section 382 applicable to corporations under the
jurisdiction of a bankruptcy court will apply in calculating our
annual Section 382 limitation. Under
Section 382(l)(6), the limitation will be calculated by
reference to the lesser of the value of our equity (with certain
adjustments) immediately after the ownership change or the value
of our assets (determined without regard to liabilities)
immediately before the ownership change. Although such
calculation may substantially increase our annual
Section 382 limitation, our use of any NOLs or other tax
attributes remaining after implementation of the Plan of
Reorganization may still be substantially limited after an
ownership change.
4. Federal Alternative Minimum Tax
A corporation may incur alternative minimum tax
(“AMT”) liability even if its NOL carryovers and other
tax attributes are sufficient to eliminate its taxable income as
computed under the regular corporate income tax. In general, the
AMT is imposed on a corporation’s alternative minimum
taxable income at a 20 percent rate to the extent that such
tax exceeds the corporation’s regular U.S. federal
income tax. For purposes of computing taxable income for AMT
purposes, certain tax deductions and other beneficial allowances
are modified or eliminated. In particular, even though a
corporation otherwise might be able to offset all of its taxable
income for regular tax purposes by available NOL carryforwards,
only 90 percent of a corporation’s taxable income for
AMT purposes may be offset by available NOL carryforwards (as
computed for AMT purposes). If the Offers are completed, to the
extent we are considered solvent for U.S. federal income
tax purposes immediately prior to the completion of the offers
(as discussed above), we may be liable for the AMT as a result
of the utilization of our NOLs and other tax attributes to
offset COD income recognized in the Offers.
In addition, if, as expected, we undergo an “ownership
change” within the meaning of Section 382 of the Tax
Code, and have a net unrealized built-in loss (as determined for
AMT purposes) on the date of the ownership change, our aggregate
tax basis in our assets would be reduced for certain AMT
purposes to reflect the fair market value of such assets as of
the change date.
248
SECURITIES
LAW MATTERS
This section discusses certain securities law matters that are
raised by the Offers and the Plan of Reorganization. This
section should not be considered applicable to all situations or
to all holders of Old Notes. Holders of Old Notes should consult
their own legal counsel with respect to these and other issues.
The
Offers
We are relying on Section 3(a)(9) of the Securities Act to
exempt the Offers from the registration requirements of the
Securities Act. Section 3(a)(9) provides that the
registration requirements of the Securities Act will not apply
to “any security exchanged by the issuer with its existing
security holders exclusively where no commission or other
remuneration is paid or given directly or indirectly for
soliciting such exchange.” The Offers are also, pursuant to
Section 18(b)(4)(C) of the Securities Act, exempt from
state securities law requirements. Section 18(b)(4)(C)
provides, among other things, that state securities laws will
not apply to securities that are exempt from federal
registration under Section 3(a)(9). We do not have any
contract, arrangement, or understanding relating to, and will
not, directly or indirectly, pay any commission or other
remuneration to any broker, dealer, salesperson, agent, or any
other person for soliciting votes to accept or reject the
Offers. We have received assurances that no person will provide
any information to holders of Old Notes relating to the Offers
other than to refer the holders of Old Notes to the information
contained in this Offering Memorandum and Disclosure Statement.
In addition, no broker, dealer, salesperson, agent, or any other
person, is engaged or authorized to express any statement,
opinion, recommendation, or judgment with respect to the
relative merits and risks of the Offers.
Issuance
and Resale of the New Notes and New Preferred Stock
In the event that the conditions to the Offers are satisfied and
we consummate the Offers, we will rely on Sections 3(a)(9)
and 18(b)(4)(C) of the Securities Act to exempt the issuance of
the New Notes and New Common Interests from federal and state
registration requirements with respect to resale. The New
Preferred Stock and the New Notes will not be restricted
securities. Under current SEC interpretations, securities that
are obtained in a Section 3(a)(9) exchange assume the same
character (i.e. restricted or unrestricted) as the securities
that have been surrendered. In this case, all of the Old Notes
are unrestricted securities. The New Notes and the New
Preferred Stock will therefore also be unrestricted and
recipients who are not our “affiliates” (as such term
is defined in Rule 144 under the Securities Act) will
therefore be able to resell the New Notes and New Preferred
Stock without registration. Recipients who are our affiliates
may resell their New Notes and New Preferred Stock subject to
the provisions of Rule 144, absent registration or another
appropriate exemption.
Issuance
and Resale of the New Notes and New Common Interests Under the
Plan of Reorganization
In the event that we complete a restructuring pursuant to the
Plan of Reorganization under Chapter 11 of the Bankruptcy
Code, we also will rely on Section 1145 of the Bankruptcy
Code, to the extent it is applicable, to exempt the issuance of
the New Notes and New Common Interests from the registration
requirements of the Securities Act (and of any state securities
or “blue sky” laws). Section 1145 exempts from
registration the sale of a debtor’s securities under a
Chapter 11 plan if such securities are offered or sold in
exchange for a claim against, or equity interest in, or a claim
for an administrative expense in a case concerning, such debtor.
In reliance upon this exemption, the New Notes and New Common
Interests generally will be exempt from the registration
requirements of the Securities Act. Accordingly, recipients will
be able to resell the New Notes and New Common Interests without
registration under the Securities Act or other federal
securities laws, unless the recipient is an
“underwriter” with respect to such securities, within
the meaning of Section 1145(b) of the Bankruptcy Code.
Section 1145(b) of the Bankruptcy Code defines
“underwriter” as one who (a) purchases a claim
with a view to distribution of any security to be received in
exchange for the claim, or (b) offers to sell securities
issued under a plan for the holders of such securities, or
(c) offers to buy securities issued under a plan from
persons receiving such securities, if the offer to buy is made
with a view to distribution, or (d) is an
“issuer” of the relevant security, as such term is
used in Section 2(11) of the Securities Act.
Notwithstanding the foregoing, statutory underwriters may be
able to sell securities without registration pursuant to the
resale limitations of Rule 144 under the Securities Act.
Parties which believe they may be statutory underwriters as
defined in Section 1145 of the Bankruptcy Code are advised
to consult with their own counsel as to the availability of the
exemption provided by Rule 144.
249
LEGAL
MATTERS
Certain legal matters with respect to the New Notes and shares
of New Preferred Stock offered hereby will be passed upon for
CIT by Skadden, Arps, Slate, Meagher & Flom LLP.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The consolidated financial statements as of December 31,
2008 and 2007 and for each of the three years in the period
ended December 31, 2008, incorporated in this Offering
Memorandum and Disclosure Statement by references to CIT Group
Inc.’s Current Report on Form 8-K dated
October 1, 2009, and the effectiveness of internal control
over financial reporting as of December 31, 2008, have been
audited by PricewaterhouseCoopers LLP, an independent registered
public accounting firm, as stated in their report (which
contains an explanatory paragraph relating to CIT Group
Inc.’s ability to continue as a going concern as described
in Note 28 to the consolidated financial statements)
appearing therein.
250
APPENDIX A
PROJECTIONS
OF CERTAIN FINANCIAL DATA FOLLOWING CONSUMMATION OF PLAN OF
REORGANIZATION
In connection with a possible restructuring in Bankruptcy Court,
CIT’s management analyzed the ability of CIT to meet its
obligations upon consummation of such restructuring with
sufficient liquidity and capital resources to conduct its
businesses. CIT’s management also has developed CIT’s
business plan and prepared certain projections of CIT’s
operating profit, cash flow and certain other items for the
fiscal years 2010 through 2014 (the “Projection
Period”). Such projections, summarized below, are based
upon assumptions and have been adjusted to reflect the terms of
a possible restructuring in Bankruptcy Court, including the Plan
of Reorganization, certain subsequent events and additional
assumptions, including those set forth below (as adjusted, the
“Projections”).
CIT DOES NOT, AS A MATTER OF COURSE, PUBLISH ITS BUSINESS
PLANS, BUDGETS OR STRATEGIES OR MAKE EXTERNAL PROJECTIONS OR
FORECASTS OF ITS ANTICIPATED FINANCIAL POSITIONS OR RESULTS OF
OPERATIONS. ACCORDINGLY, CIT DOES NOT ANTICIPATE THAT IT WILL,
AND DISCLAIMS ANY OBLIGATION TO, FURNISH UPDATED BUSINESS PLANS,
BUDGETS OR PROJECTIONS TO CREDITORS PRIOR TO THE EFFECTIVE DATE
OF ANY PLAN OF REORGANIZATION OR TO INCLUDE SUCH INFORMATION IN
DOCUMENTS REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION (“SEC”) OR OTHERWISE MAKE SUCH INFORMATION
PUBLICLY AVAILABLE.
The following Projections were not prepared with a view toward
compliance with published rules of the SEC or the American
Institute of Certified Public Accountants regarding projections.
The prospective financial information included in this offering
document has been prepared by, and is the responsibility of, the
Company’s management. The Company and its management
believe that the following Projections have been prepared on a
reasonable basis, reflecting management’s best estimates
and judgments, and represent, to the best of management’s
knowledge and opinion, the Company’s expected course of
action. However, because this information is highly subjective,
it should not be relied on as necessarily indicative of future
results.
PricewaterhouseCoopers LLP has neither examined, compiled nor
performed any procedures with respect to the prospective
financial information contained in this appendix and,
accordingly, PricewaterhouseCoopers LLP does not express an
opinion or any other form of assurance on such information or
its achievability. PricewaterhouseCoopers LLP assumes no
responsibility for and denies any association with the
prospective financial information.
The PricewaterhouseCoopers LLP report on the consolidated
financial statements of the Company as of December 31, 2008
incorporated by reference in this offering document refers
exclusively to the Company’s historical financial
information as of December 31, 2008. PricewaterhouseCoopers
LLP report does not cover any other information in this offering
and should not be read to do so.
The Projections should be read in conjunction with the
assumptions, qualifications and explanations set forth herein
and the “Summary,” “Risk Factors,” and
“Selected Historical Consolidated Financial Data,”
included in this Offering Memorandum and Disclosure Statement.
Principal
Assumptions for the Projections
The Projections are based on, and assume the successful
implementation of, CIT’s business plan and Plan of
Reorganization. Both the business plan and the Projections
reflect numerous assumptions, including various assumptions
regarding the anticipated future performance of CIT, industry
performance, general business and economic conditions, and other
matters, many of which are beyond the control of CIT. In
addition, the assumptions do not take into account the
uncertainty and disruption of business that may accompany a
restructuring in Bankruptcy Court. Further, the Projections do
not include the potential transfer of CIT’s origination
platforms for the Trade Finance and Vendor Finance operating
segments or the Small Business Lending operations of CIT’s
Corporate Finance segment into CIT Bank, which may result in a
lower cost of funding for such businesses. Therefore, although
the Projections are necessarily presented with numerical
A-1
specificity, the actual results achieved during the Projection
Period will likely vary from the projected results. These
variations may be material. Accordingly, no representation can
be or is being made with respect to the accuracy of the
Projections or the ability of CIT or Reorganized CIT to achieve
the projected results of operations. PRICEWATERHOUSECOOPERS LLP,
THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR CIT, HAS
NOT EXAMINED, COMPILED, OR OTHERWISE APPLIED PROCEDURES TO THE
PROJECTIONS AND, CONSEQUENTLY, DOES NOT EXPRESS AN OPINION OR
ANY OTHER FORM OR ASSURANCE WITH RESPECT TO THE
PROJECTIONS. See “Risk Factors”.
Although CIT management believes that the assumptions underlying
the Projections, when considered on an overall basis, are
reasonable in light of current circumstances, no assurance can
be or is given that the Projections will be realized. In
deciding whether to vote to accept or reject the proposed Plan
of Reorganization, creditors must make their own determinations
as to the reasonableness of such assumptions and the reliability
of the Projections. See “Risk Factors.” Moreover, the
Projections were prepared solely in connection with a possible
restructuring in Bankruptcy Court. The assumptions underlying
the expected future results of operations in a restructuring in
Bankruptcy Court may not necessarily apply in an out-of-court
restructuring.
Additional information relating to the principal assumptions
used in preparing the Projections is set forth below:
General Economic Conditions: The Projections
take into account the current difficult economic environment
which is negatively impacting CIT. The Projections assume that
the general weakness in economic activity will continue to
affect CIT’s near term financial performance. Thereafter,
the Projections assume a return to a more favorable economic
climate and more normalized level of provisions, non-accruals
and charge-offs.
Expansion Facility Financing: The Projections
assume that CIT raises incremental financing. This assumption is
subject to factors that cannot solely be controlled by CIT,
including the ability to access the debt markets, the interest
rate that a capital provider would charge, and other factors. In
addition, CIT has not yet determined exactly how much capital
would need to be raised or how the proceeds would be used, but
CIT has no intention of raising more than $6.4 billion of
incremental first lien debt. As a result, the Projections
include the following assumptions: (a) first lien debt has
been increased by $1.5 billion and pays an all-in interest
rate of 10%; and (b) the interest expense charged on
secured borrowings has been increased by $150 million
annually from 2010 through 2012 to reflect increased borrowing
costs. The Projections, which include Fresh Start Reporting
(defined below), may be impacted based on how much capital is
raised and how is it utilized.
General Operating Segment
Assumptions: Assumptions regarding each of
CIT’s operating segments are set forth below and may
materially impact the Projections.
The Corporate Finance segment, consisting of middle-market
corporate cash flow loans and other asset-based lending, is
assumed to utilize the CIT Bank funding platform and continue
funding high credit quality loans within CIT Bank. Other than
CIT’s Small Business Lending operations, the remaining
portfolio of loans and leases outside of CIT Bank will be
managed with limited future originations. CIT will continue to
fund Small Business Administration loans within CIT Bank or
outside the bank.
The Trade Finance segment, consisting of factoring services and
client lending, is assumed to focus on core factoring services
with key clients. The Projections reflect recent operations
which were impacted by customer withdrawal amid concerns
regarding liquidity restrictions.
The Vendor Finance segment, consisting of leasing programs
domestically and internationally, is assumed to focus on core
vendor programs. The Projections reflect lower origination
volumes and contract expiration for non-core vendor programs.
The Transportation segment, consisting of aerospace and rail
operating and capital leases, is assumed to continue honoring
existing commitments. Management expects to continue ordinary
course activities in the aerospace segment, including
concentration and risk management of the respective fleets
partially achieved through asset sales. The Projections reflect
a recent drop in utilization for rail assets given
A-2
macroeconomic disruptions in the domestic rail market, and
assume that utilization rates will begin to rebound in 2012.
The Consumer segment, consisting primarily of student loans, is
currently running off as CIT ceased offering government
guaranteed loans in 2008. The Projections assume the student
loan portfolio continues to run-off with no future originations.
Net Interest Revenue: The Projections assume,
given a successful Plan of Reorganization, that CIT will have
less outstanding debt and subsequently generate positive net
interest income during the Projection Period, including the
positive impact of non-cash accretion of the fair value
adjustments from Fresh Start Reporting (defined below). As
explained below, rental income on operating lease equipment is
reflected in other income, while interest expense includes the
carrying cost of the equipment, resulting in negative interest
revenue in selected periods.
Other Income: Other income includes rental
income on operating leases, as well as fees, commissions, and
other non-spread revenue. The Projections assume the rail
utilization trends discussed above and a gradual improvement
from current capital market conditions.
Credit and Loan Loss Reserves: Credit quality
of assets is projected to improve with a general improvement in
macroeconomic conditions. The Projections incorporate an
increased focus on core clients with higher credit quality and
fewer renewals of loans to non core clients with lower credit
quality. This will result in a decline in charge-offs,
non-accruals, and provisions. Provisions and reserves for loan
and lease losses and other non specific charges are eliminated
as of December 31, 2009 since the related assets are
adjusted to fair value in compliance with Fresh Start Reporting
(defined below).
Operating Expenses: CIT has been through
multiple rounds of headcount reductions, and the Projections
incorporate continued rationalization of operating expenses
consistent with projected asset and origination levels.
Additional headcount reductions are projected to further
streamline CIT’s business.
Income Taxes: The Projections incorporate
U.S. federal, foreign, state and local taxes as applicable.
It is assumed that CIT’s tax attributes will be reduced to
the extent of debt forgiveness income (against which, a
valuation allowance has historically been provided). As a
result, CIT has calculated that the deferred tax asset is fully
offset by deferred tax liabilities and valuation allowance. A
change in these assumptions may materially impact the deferred
tax implications to CIT.
Optional Debt Prepayments: The Projections
assume that CIT utilizes excess cash flows from asset run-off to
prepay first lien debt and portions of the new indebtedness
under credit facilities and New Notes at its own option in the
Projection Period. Specifically, the Projections assume that CIT
can fully prepay the $4.5 billion of first lien by 2011 and
begin prepaying portions of the new indebtedness under credit
facilities and New Notes in 2011. Prepayments of the first lien
debt and New Notes are assumed to be at CIT’s option and
are not based on the Cash Sweep and Required Cash Sweep Payments
as set forth in the Description of New Notes.
The pathway to profitability is contingent on a successful Plan
of Reorganization and restructuring of unsecured debt, which in
conjunction with Fresh Start Reporting will allow CIT to
generate positive net interest margins. The Projections assume a
gradual improvement in capital markets, which will allow CIT to
utilize their origination platform to generate incremental fees.
Furthermore, as earning asset levels decline over a
three year horizon to approximately $39 billion, CIT
expects to further streamline their operating expenses to
“right size” their expense load and align it with the
earning asset base. The Projections assume that the weighted
average life of the assets varies significantly across the
operating segments and ranges from less than one year to greater
than fifteen years. At the shorter end of the range, assets in
the Trade Finance segment are assumed to have a weighted average
life of less than one year and assets in Vendor Finance segment
are assumed at approximately two years. Assets in Corporate
Finance segment have a wide ranging expected life and a weighted
average life of approximately five years. Assets in the
Transportation and Consumer segments are assumed to have
weighted average lives of greater than fifteen years. The
Projections also assume that charge off levels return to more
historical levels by the end of 2012 and fall below
100 basis points. An
A-3
improvement in asset quality and the lessening of credit
provisions and subsequent reduction in reserve requirements
enhances profitability in the Projections.
The Projections currently assume that yields associated with new
originations range from 7.5% in the Corporate Finance segment to
approximately 10% in Vendor Finance segment. The Projections do
not anticipate the sale of businesses or assets outside the
ordinary course of business. The Projections currently assume
that the interest rate environment is stable and the majority of
debt has a fixed rate after a Plan of Reorganization. A
potential increase in interest rates within the Projections may
improve profitability estimates.
Upon confirmation of a Plan of Reorganization, CIT may pursue
platform transfers, which are not assumed in the Projections.
Platform transfers would consist of moving the Small Business
Lending operations, Trade Finance segment and the domestic
Vendor Finance segment into CIT Bank beginning in 2010. Platform
transfers may further enhance profitability as interest expense
costs may decrease and CIT may have the ability to pursue
incremental new business.
Projected
Consolidated Balance Sheet Assumptions
U.S. Generally Accepted Accounting Principles
(“GAAP”) require companies emerging from bankruptcy
that meet certain criteria to apply fresh start reporting upon
emergence in accordance with American Institute of Certified
Public Accountants Statement of Position
90-7,
Financial Reporting by Entities in Reorganization under the
Bankruptcy Code (“Fresh Start Reporting”). The main
principles of Fresh Start Reporting include the allocation of
the entity’s reorganization value to each of the
entity’s assets in conformity with the procedures specified
by Statement of Financial Accounting Standards
(“SFAS”) No. 141, Business Combinations. Any
portion of the reorganization value that cannot be attributed to
specific tangible or identified intangible assets of the
emerging entity should be reported as goodwill in accordance
with SFAS No. 142, Goodwill and Other Intangible
Assets.
For purposes of the Projections, the equity value of Reorganized
CIT is assumed to be $8 billion, which is the mid-point of
the $5 billion to $11 billion range of estimated
equity values of Reorganized CIT provided by Morgan Stanley as
of September 30, 2009 in connection with its equity
valuation analysis. The actual reorganization value that will be
used by CIT after implementing Fresh Start Reporting may differ
materially from this estimate. Likewise, the allocation of the
reorganization value to individual assets and liabilities is
based upon preliminary estimates by CIT management, is subject
to change upon the formal implementation of Fresh Start
Reporting, and could result in material differences to the
allocated values included in these Projections.
Pre-Restructuring
Assumptions:
The Projections are based on an Effective Date of
December 31, 2009 and assume no disruptions to the business
during the pendency of a bankruptcy filing. For the period
between the company’s last published
10-Q as of
June 30, 2009 and the Effective Date of December 31,
2009 (“Interim Period”), CIT management made
assumptions in development of the Projections, which are set
forth below:
Total assets pursuant to CIT’s consolidated balance sheet
are assumed to decline by $4.5 billion in the Interim
Period. The decline in the total assets is primarily
attributable to $5.3 billion less in net finance
receivables due to principal repayments in the Interim Period
and a significant reduction in new origination volumes. An
additional $428 million of the decline in total assets is
due to depreciation on operating lease equipment. The assumed
$5.7 billion decline in net finance receivables and
operating lease equipment is partially offset by an assumed
$1.4 billion increase in the cash balance and amounts due
from banks. The $1.4 billion increase in cash is
attributable to the $3.0 billion Senior Credit Facility
funded in July 2009 net of payments for unsecured debt
maturities in the Interim Period.
A-4
Total liabilities pursuant to CIT’s consolidated balance
sheet declined by $2.3 billion in the Interim Period as a
result of a significant refinancing and credit balance draws by
customers. Specifically, the $2.3 billion decline in total
liabilities is attributable to the following activity:
Deposits at CIT Bank are assumed to decline by
$1.7 billion, as a result of maturing brokered deposits
that are not replaced with new deposit issuances and the use of
alternative funding sources within CIT Bank.
Secured borrowings are assumed to decline by
$2.1 billion, as a result of net pay-downs on
securitizations and secured lines of credit based on principal
payments on the underlying collateral supporting the secured
borrowings and the assumptions on the Expansion Facility
Financing.
First lien debt is assumed to be $4.5 billion as of
December 31, 2009, to reflect CIT’s receipt of
$3.0 billion from the Senior Credit Facility in July 2009
and an additional $1.5 billion in first lien debt, as
mentioned in the Expansion Facility Financing.
Senior unsecured notes are assumed to decline by
$1.4 billion, as a result of contractual note repayments
paid between June 30, 2009 and October 31, 2009. CIT
assumes that note repayments scheduled between November 2,
2009 and December 31, 2009 are not made.
Credit balances of factoring clients are assumed to
decline by $1.8 billion, due to clients reducing their
credit balances and a reduction in factoring volumes.
The significant projected consolidated balance sheet adjustments
reflected in the Projections and assumed at the Effective Date
are summarized as follows:
Fresh
Start Adjustments:
The estimated fair values for loans and leases utilized in Fresh
Start Reporting are based on management’s estimates and an
approximation of appraised values. The estimated fair value of
the secured borrowings and Senior Unsecured Notes are based on
management’s estimates developed largely utilizing a
discounted cash flow analysis. In addition, estimated fair value
adjustments are made to the indebtedness under credit facilities
and New Notes, Series A Notes and Series B Notes,
based upon management’s estimate of market price upon
emergence.
CIT’s Old Common Interests are cancelled for no
consideration at the Effective Date.
New Common Interests issued by CIT Group Inc. valued at
$8 billion, based upon the mid-point of the estimated range
of equity values provided by Morgan Stanley as of
September 30, 2009 in connection with its equity valuation
analysis, are issued to certain creditors, pursuant to the Plan
of Reorganization and is described below.
CIT’s Old Preferred Interests are cancelled for no
consideration at the Effective Date.
The accumulated deficit and accumulated other comprehensive loss
are eliminated in accordance with Fresh Start Reporting.
Reorganization
Adjustments:
Reorganization Adjustments include the impact of Exchanges, as
well as, estimates of expenses as a result of a Chapter 11
proceeding which include professional fees,
debtor-in-possession
financing fees, and other costs directly attributable to the
reorganization. See “Risk Factors Related to the
Projections” below for a description of potential adverse
events that are not factored into the Projections.
Exchanges:
The Projections assume that Class 7, Class 8,
Class 9, Class 10, and Class 11 vote in favor of
the Plan of Reorganization. Specifically, the Projections assume
that 100% of the Long-Dated Senior Unsecured Notes elect to be
included in Class 8(a).
A-5
The Senior Unsecured Credit Agreements in the principal amount
of $3.1 billion are assumed to be discharged in return for
issuance of new indebtedness and New Common Interests. For each
$1,000 of principal amount discharged, $700 in principal amount
discharged in indebtedness under credit facilities of
Reorganized CIT on substantially the same terms as the
Series A Notes and $300 in principal amount discharged in
New Common Interests.
The Senior Unsecured Term Loans in the principal amount of
$320 million are assumed to be discharged in return for
issuance of new indebtedness and New Common Interests. For each
$1,000 of principal amount discharged, $700 in principal amount
discharged in indebtedness under credit facilities of
Reorganized CIT on substantially the same terms as the
Series A Notes and $300 in principal amount discharged in
New Common Interests.
The Senior Unsecured Notes, excluding the 2015 Hybrid
Convertible/Equity Notes, in the principal amount of
$24.9 billion are assumed to be discharged in return for
issuance of New Notes and New Common Interests. For each $1,000
of principal amount discharged, $700 in principal amount
discharged in Series A Notes and $300 in principal amount
discharged in New Common Interests.
The Long-Dated Senior Unsecured Notes in the principal amount of
$1.2 billion are assumed to be discharged in return for
issuance of New Notes and New Common Interests. For each $1,000
of principal amount discharged, $700 in principal amount
discharged in Series A Notes and $300 in principal amount
discharged in New Common Interests.
Australian Senior Unsecured Notes in the principal amount of
$262 million are assumed to be re-instated at 100% of par
value.
The Canadian Senior Unsecured Notes in the principal amount of
$2.1 billion are assumed to be discharged in return for
issuance of New Notes. For each $1,000 of principal amount
discharged, $1,000 in principal of Series B Notes is issued.
The 2015 Hybrid Convertible/Equity Notes in the principal amount
of $200 million are assumed to be discharged in return for
the issuance of New Notes and New Common Interests. For each
$1,000 of principal amount discharged, $700 in principal amount
discharged in Series A Notes and $300 in principal amount
discharged in New Common Interests.
The Senior Subordinated Notes in the principal amount of
$1.1 billion are assumed to be discharged in return for the
issuance of New Common Interests and Contingent Value Rights.
The Junior Subordinated Notes in the principal amount of
$750 million are assumed to be discharged in return for the
issuance of New Common Interests and Contingent Value Rights.
The Old Preferred Interests are assumed to be discharged and
each holder shall receive Contingent Value Rights.
The secured borrowings will not be impacted by the Plan of
Reorganization.
Risk
Factors Related to the Projections
A potential impact of Chapter 11 not incorporated into the
Projections are risks associated with certain senior secured
credit facilities. The holders of these facilities may be
entitled to make-whole payments and may have the ability to
seize and liquidate the collateral supporting these facilities
and for their benefit. If this were to occur, there is risk of
reduction or elimination of the realizable collateral asset
value in excess of these secured borrowings. The potential
impact of this reduction could be as high as $3 to
$5 billion; however, as outlined in the Expansion Facility
Financing note, CIT is taking steps to mitigate this impact by
working to arrange new financings to refinance the existing
facilities, if needed. If mitigation strategies are successful,
the actual impact could be less than $3 to $5 billion.
Another potential impact of a Chapter 11 filing, which is
not incorporated into the Projections, is the potential seizure
of CIT Bank by the FDIC which could result in a loss of CIT
Bank’s equity value of
A-6
approximately $1.6 billion as of June 30, 2009 and use
of CIT Bank as a future funding source for the business, which
is an important component of CIT’s transformation to a
deposit funded institution.
The foregoing assumptions and resulting computations were made
solely for purposes of preparing the Projections. Upon emergence
from any Chapter 11 proceeding, CIT would be required to
determine the amount by which its reorganization value as of the
Effective Date exceeds, or is less than, the fair value of its
assets as of the Effective Date. Such determination would be
based upon the fair values at that time, which may be based on,
among other things, a different methodology with respect to the
valuation of CIT’s value. In any event, such valuations, as
well as the determination of the fair value of CIT’s assets
and liabilities, would be made as of the Effective Date. The
changes between the amounts of any or all of the foregoing items
as assumed in the Projections and the actual amounts thereof as
of the Effective Date may be material.
Projections
The Projections set forth below have been prepared based on the
assumption that the Effective Date is December 31, 2009.
Although CIT will seek the Effective Date to occur as soon as
practicable, there would be no assurance as to when the
Effective Date actually will occur. The CIT Projected
Consolidated Balance Sheets as of December 31, 2009 set
forth below present: (a) the projected pre-restructuring
financial position as of December 31, 2009;
(b) Reorganization Adjustments; (c) Fresh Start
Adjustments; and (d) the projected post-restructuring
consolidated financial position of CIT after giving effect to
the Reorganization and Fresh Start Adjustments, as of
December 31, 2009. The Balance Sheet Adjustments set forth
in the columns captioned “Reorganization Adjustments,”
and “Fresh Start Adjustments” reflect the assumed
effects of confirmation and significant re-financing
contemplated by a Plan of Reorganization, including the
settlement of various liabilities and related securities
issuances, cash payments, and borrowings.
CIT’s Consolidated Financial Statements, including Balance
Sheet, Statement of Operation and Statement of Cash Flow for the
Projection Period set forth on the following pages present the
projected consolidated position of CIT after giving effect to
confirmation and the consummation of the transactions
contemplated by the Plan of Reorganization, as of the end of
each fiscal year in the Projection Period.
PRICEWATERHOUSECOOPERS LLP, THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR CIT, HAS NOT EXAMINED, COMPILED, OR
OTHERWISE APPLIED PROCEDURES TO THE PROJECTIONS AND,
CONSEQUENTLY, DOES NOT EXPRESS AN OPINION OR ANY OTHER
FORM OR ASSURANCE WITH RESPECT TO THE PROJECTIONS.
A-7
PROJECTED
CONSOLIDATED BALANCE SHEET ADJUSTMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Restructuring
|
|
|
Reorganization
|
|
|
Fresh Start
|
|
|
Post-Restructuring
|
|
|
|
December 31, 2009
|
|
|
Adjustments(1)
|
|
|
Adjustments
|
|
|
December 31, 2009
|
|
|
|
(Dollars in Millions)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from Banks
|
|
$
|
3,884
|
|
|
$
|
(500
|
)
|
|
$
|
—
|
|
|
$
|
3,384
|
|
Restricted Cash
|
|
|
2,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,000
|
|
Finance Receivables, (Net of Reserves)
|
|
|
41,891
|
|
|
|
—
|
|
|
|
(9,122
|
)
|
|
|
32,769
|
|
Operating Lease Equipment, Net
|
|
|
12,952
|
|
|
|
—
|
|
|
|
(3,056
|
)
|
|
|
9,896
|
|
Other Assets
|
|
|
5,822
|
|
|
|
—
|
|
|
|
(291
|
)
|
|
|
5,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
66,549
|
|
|
$
|
(500
|
)
|
|
$
|
(12,469
|
)
|
|
$
|
53,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
3,672
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,672
|
|
Secured Borrowings
|
|
|
15,532
|
|
|
|
—
|
|
|
|
(2,034
|
)
|
|
|
13,498
|
|
First Lien Debt
|
|
|
4,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,500
|
|
Second Lien Debt
|
|
|
—
|
|
|
|
23,267
|
|
|
|
(4,457
|
)
|
|
|
18,810
|
|
Senior Unsecured Notes
|
|
|
29,881
|
|
|
|
(28,583
|
)
|
|
|
—
|
|
|
|
1,298
|
|
Bank Credit Facilities
|
|
|
3,100
|
|
|
|
(3,100
|
)
|
|
|
—
|
|
|
|
—
|
|
Credit Balances of Factoring Clients
|
|
|
891
|
|
|
|
—
|
|
|
|
—
|
|
|
|
891
|
|
Junior, Subordinated Notes and Convertible Equity Units
|
|
|
2,099
|
|
|
|
(2,099
|
)
|
|
|
—
|
|
|
|
—
|
|
Other Liabilities
|
|
|
2,911
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
$
|
62,586
|
|
|
$
|
(10,515
|
)
|
|
$
|
(6,491
|
)
|
|
$
|
45,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Equity
|
|
$
|
3,171
|
|
|
$
|
(3,171
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Common Equity/Additional Paid in Capital
|
|
|
11,274
|
|
|
|
—
|
|
|
|
(3,274
|
)
|
|
|
8,000
|
|
Retained Earnings
|
|
|
(10,521
|
)
|
|
|
13,186
|
|
|
|
(2,665
|
)
|
|
|
—
|
|
Noncontrolling Interests
|
|
|
39
|
|
|
|
—
|
|
|
|
(39
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity
|
|
$
|
3,963
|
|
|
$
|
10,015
|
|
|
$
|
(5,978
|
)
|
|
$
|
8,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity
|
|
$
|
66,549
|
|
|
$
|
(500
|
)
|
|
$
|
(12,469
|
)
|
|
$
|
53,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
(1) |
|
- Reorganization Adjustments include costs related to the Plan
of Reorganization and the Offers. |
A-8
PROJECTED
CONSOLIDATED SUMMARY BALANCE SHEET DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
|
(Dollars in Millions)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from Banks
|
|
$
|
3,384
|
|
|
$
|
3,406
|
|
|
$
|
3,341
|
|
|
$
|
3,517
|
|
|
$
|
3,847
|
|
|
$
|
3,696
|
|
Restricted Cash
|
|
|
2,000
|
|
|
|
1,686
|
|
|
|
1,501
|
|
|
|
1,267
|
|
|
|
1,031
|
|
|
|
933
|
|
Finance Receivables, (Net of Reserves)
|
|
|
32,769
|
|
|
|
29,621
|
|
|
|
29,431
|
|
|
|
28,575
|
|
|
|
27,199
|
|
|
|
27,264
|
|
Operating Lease Equipment, Net
|
|
|
9,896
|
|
|
|
10,090
|
|
|
|
10,301
|
|
|
|
10,057
|
|
|
|
9,694
|
|
|
|
9,148
|
|
Other Assets
|
|
|
5,531
|
|
|
|
5,466
|
|
|
|
5,310
|
|
|
|
4,798
|
|
|
|
4,354
|
|
|
|
4,277
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
53,580
|
|
|
$
|
50,269
|
|
|
$
|
49,884
|
|
|
$
|
48,214
|
|
|
$
|
46,125
|
|
|
$
|
45,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
3,672
|
|
|
$
|
3,650
|
|
|
$
|
4,843
|
|
|
$
|
5,776
|
|
|
$
|
5,410
|
|
|
$
|
6,580
|
|
Secured Borrowings
|
|
|
13,498
|
|
|
|
11,500
|
|
|
|
11,778
|
|
|
|
10,920
|
|
|
|
10,053
|
|
|
|
8,929
|
|
First Lien Debt
|
|
|
4,500
|
|
|
|
2,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Second Lien Debt
|
|
|
18,810
|
|
|
|
19,479
|
|
|
|
19,171
|
|
|
|
17,352
|
|
|
|
15,218
|
|
|
|
14,259
|
|
Senior Unsecured Notes
|
|
|
1,298
|
|
|
|
986
|
|
|
|
724
|
|
|
|
724
|
|
|
|
724
|
|
|
|
324
|
|
Credit Balances of Factoring Clients
|
|
|
891
|
|
|
|
282
|
|
|
|
333
|
|
|
|
363
|
|
|
|
384
|
|
|
|
408
|
|
Other Liabilities
|
|
|
2,911
|
|
|
|
3,647
|
|
|
|
3,883
|
|
|
|
3,503
|
|
|
|
4,223
|
|
|
|
4,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
$
|
45,580
|
|
|
$
|
41,544
|
|
|
$
|
40,732
|
|
|
$
|
38,638
|
|
|
$
|
36,012
|
|
|
$
|
34,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Equity/Additional Paid in Capital
|
|
$
|
8,000
|
|
|
$
|
8,000
|
|
|
$
|
8,000
|
|
|
$
|
8,000
|
|
|
$
|
8,000
|
|
|
$
|
8,000
|
|
Retained Earnings
|
|
|
—
|
|
|
|
725
|
|
|
|
1,152
|
|
|
|
1,576
|
|
|
|
2,113
|
|
|
|
2,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity
|
|
$
|
8,000
|
|
|
$
|
8,725
|
|
|
$
|
9,152
|
|
|
$
|
9,576
|
|
|
$
|
10,113
|
|
|
$
|
10,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity
|
|
$
|
53,580
|
|
|
$
|
50,269
|
|
|
$
|
49,884
|
|
|
$
|
48,214
|
|
|
$
|
46,125
|
|
|
$
|
45,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROJECTED
CONSOLIDATED SUMMARY STATEMENT OF INCOME DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ending
|
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
|
(Dollars in Millions)
|
|
|
Interest Income
|
|
$
|
2,112
|
|
|
$
|
1,966
|
|
|
$
|
1,856
|
|
|
$
|
1,959
|
|
|
$
|
2,018
|
|
Interest income accretion on finance receivables-fresh start
adjustments
|
|
|
2,279
|
|
|
|
1,432
|
|
|
|
1,135
|
|
|
|
898
|
|
|
|
584
|
|
Interest Expense
|
|
|
(2,759
|
)
|
|
|
(2,500
|
)
|
|
|
(2,308
|
)
|
|
|
(1,988
|
)
|
|
|
(1,847
|
)
|
Interest expense accretion on debt-fresh start adjustments
|
|
|
(1,053
|
)
|
|
|
(1,020
|
)
|
|
|
(973
|
)
|
|
|
(827
|
)
|
|
|
(664
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Revenue
|
|
|
579
|
|
|
|
(122
|
)
|
|
|
(290
|
)
|
|
|
42
|
|
|
|
91
|
|
Provision for Credit Losses
|
|
|
(189
|
)
|
|
|
(92
|
)
|
|
|
(86
|
)
|
|
|
(96
|
)
|
|
|
(115
|
)
|
Other Income
|
|
|
2,127
|
|
|
|
2,179
|
|
|
|
2,260
|
|
|
|
2,073
|
|
|
|
1,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Net Revenues
|
|
|
2,517
|
|
|
|
1,965
|
|
|
|
1,884
|
|
|
|
2,019
|
|
|
|
1,973
|
|
Other Expense
|
|
|
(865
|
)
|
|
|
(791
|
)
|
|
|
(723
|
)
|
|
|
(688
|
)
|
|
|
(671
|
)
|
Depreciation on Operating Lease Equipment
|
|
|
(947
|
)
|
|
|
(903
|
)
|
|
|
(849
|
)
|
|
|
(798
|
)
|
|
|
(775
|
)
|
Depreciation expense reduction on operating lease
equipment-fresh start adjustments
|
|
|
397
|
|
|
|
341
|
|
|
|
296
|
|
|
|
261
|
|
|
|
228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Income Taxes
|
|
|
1,102
|
|
|
|
612
|
|
|
|
608
|
|
|
|
794
|
|
|
|
755
|
|
Provision for Income Taxes
|
|
|
(377
|
)
|
|
|
(185
|
)
|
|
|
(184
|
)
|
|
|
(257
|
)
|
|
|
(241
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Available to Common Stockholders
|
|
$
|
725
|
|
|
$
|
427
|
|
|
$
|
424
|
|
|
$
|
537
|
|
|
$
|
514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A-9
PROJECTED
CONSOLIDATED SUMMARY STATEMENT OF CASH FLOW DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ending
|
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
|
(Dollars in Millions)
|
|
|
Cash Flow from Operations
|
|
$
|
333
|
|
|
$
|
610
|
|
|
$
|
1,070
|
|
|
$
|
1,572
|
|
|
$
|
1,281
|
|
Cash Flow from Investing Activities
|
|
|
4,458
|
|
|
|
782
|
|
|
|
1,628
|
|
|
|
1,652
|
|
|
|
247
|
|
Cash Flow from Financing Activities
|
|
|
(5,083
|
)
|
|
|
(1,642
|
)
|
|
|
(2,756
|
)
|
|
|
(3,130
|
)
|
|
|
(1,777
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increases / (Decreases) in Cash
|
|
$
|
(292
|
)
|
|
$
|
(250
|
)
|
|
$
|
(58
|
)
|
|
$
|
94
|
|
|
$
|
(249
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of Period Cash
|
|
$
|
5,384
|
|
|
$
|
5,092
|
|
|
$
|
4,842
|
|
|
$
|
4,784
|
|
|
$
|
4,878
|
|
Increase/(Decrease) in Cash
|
|
|
(292
|
)
|
|
|
(250
|
)
|
|
|
(58
|
)
|
|
|
94
|
|
|
|
(249
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of Period Cash
|
|
$
|
5,092
|
|
|
$
|
4,842
|
|
|
$
|
4,784
|
|
|
$
|
4,878
|
|
|
$
|
4,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A-10
APPENDIX B-1
LIQUIDATION
ANALYSIS
CIT GROUP
INC.
The Bankruptcy Code requires that each holder of an Impaired
Claim or Interest either (a) accept the Plan of
Reorganization or (b) receive or retain property of a
value, as of the Effective Date, that is not less than the value
such holder would receive or retain if CIT Group Inc.
(“CIT” or the “Debtor”) were liquidated
under Chapter 7 of the Bankruptcy Code on December 31,
2009. The first step in determining whether this test has been
met is to determine the estimated amount that would be generated
from the liquidation of the Debtor’s assets and properties
in the context of the Chapter 7 liquidation case. The gross
amount of cash available to the holders of Impaired Claims or
Interests would be the sum of the proceeds from the disposition
of the Debtor’s assets through the liquidation proceedings
and the cash held by the Debtor at the time of the commencement
of the Chapter 7 case. This gross amount of cash available
is reduced by the amount of any Claims secured by the
estate’s assets, the costs and expenses of the liquidation,
and additional administrative expenses that may result from the
termination of the Debtor’s businesses and the use of
Chapter 7 for the purposes of liquidation. Any remaining
net cash would be allocated to creditors and shareholders in
strict priority in accordance with Section 726 of the
Bankruptcy Code. For purposes of this liquidation analysis, it
is assumed that the assets of CIT Group Inc. are liquidated for
the benefit of CIT’s creditors. A general summary of the
assumptions used by CIT management in preparing this liquidation
analysis follows. The more specific assumptions are discussed
below.
Estimate
of Net Proceeds
Estimates were made of the cash proceeds which might be realized
from the liquidation of the Debtor’s assets. The
Chapter 7 liquidation period is assumed to commence on
December 31, 2009 and to last twelve months following the
appointment of a Chapter 7 trustee. Recoveries to creditors
are presented on an undiscounted basis. For purposes of the
analysis, estimated asset balances as of June 30, 2009 with
certain proforma adjustments were used to estimate recoveries.
There can be no assurance that the liquidation would be
completed in a limited time frame, nor is there any assurance
that the recoveries assigned to the assets would in fact be
realized. Under Section 704 of the Bankruptcy Code, an
appointed trustee must, among other duties, collect and convert
the property of the estate as expeditiously (generally at
distressed prices) as is compatible with the best interests of
the
parties-in-interest.
The liquidation analysis assumes that there would be pressure to
complete the sales process within twelve months. In addition, it
is assumed that CIT Bank, a direct subsidiary of CIT Group Inc.,
would be seized by the FDIC and therefore contributes neither
proceeds nor costs to the estate.
Estimate
of Costs
The Debtor’s cost of liquidation under Chapter 7 would
include fees payable to a Chapter 7 trustee, as well as
those which might be payable to attorneys and other
professionals that such a trustee may engage. Further, costs of
liquidation would include any obligations and unpaid expenses
incurred by the Debtor until conclusion of the Chapter 7
case.
Additional Claims would arise by reason of the breach or
rejection of obligations incurred under executory contracts, or
leases entered into by the Debtor. It is possible that in a
Chapter 7 case, the wind-down expenses may be greater or
less than the estimated amount. Such expenses are in part
dependent on the length of time of the liquidation.
Distribution
of Net Proceeds under Absolute Priority
The costs, expenses, fees and such other Claims that may arise
and constitute necessary costs and expenses in a liquidation
case would be paid in full from the liquidation proceeds before
the balance of those proceeds would be made available to General
Unsecured Claims and the Senior Subordinated Note Claims and the
Junior Subordinated Note Claims (together, the
“Subordinated Unsecured Claims”). Under the absolute
B-1
priority rule, no junior creditor would receive any distribution
until all senior creditors are paid in full. The Debtor believes
that in the Chapter 7 case, general unsecured creditors of
CIT may receive a recovery within the range of 5% to 38%.The
Debtor further believes that subordinated unsecured creditors
will likely receive no recovery.
After consideration of the effects that a Chapter 7
liquidation would have on the ultimate proceeds available for
distribution to creditors, including (i) the increased
costs and expenses of a liquidation under Chapter 7 arising
from fees payable to a trustee in a bankruptcy and professional
advisors to such trustee, (ii) an erosion in the value of
assets in the Chapter 7 case in the context of the
expeditious liquidation required under Chapter 7 and the
forced sales atmosphere that would likely prevail, and
(iii) the substantial increase in Claims that would need to
be satisfied on a priority basis. THE DEBTOR HAS DETERMINED, AS
SUMMARIZED ON THE FOLLOWING CHART, THAT CONFIRMATION OF THE PLAN
OF REORGANIZATION WILL PROVIDE EACH CREDITOR AND EQUITY HOLDER
WITH A RECOVERY EQUAL OR GREATER THAN IT WOULD RECEIVE PURSUANT
TO A LIQUIDATION OF THE DEBTOR UNDER CHAPTER 7 OF THE
BANKRUPTCY CODE.
THE DEBTOR’S LIQUIDATION ANALYSIS IS AN ESTIMATE OF THE
PROCEEDS THAT MAY BE GENERATED AS A RESULT OF A HYPOTHETICAL
CHAPTER 7 LIQUIDATION OF THE ASSETS OF THE DEBTOR.
Underlying the liquidation analysis are a number of estimates
and assumptions that are inherently subject to significant
economic, competitive, and operational uncertainties, and
contingencies beyond the control of the Debtor or a
Chapter 7 trustee. In addition, various liquidation
decisions upon which certain assumptions are based are subject
to change. Therefore, there can be no assurance that the
assumptions and estimates employed in determining the
liquidation values of the assets will result in an accurate
estimate of the proceeds that would be realized were the Debtor
to undergo an actual liquidation. The actual amounts of Claims
against the estate could vary significantly from the estimate
set forth herein, depending on the Claims asserted during the
pendency of the Chapter 7 case. Moreover, this liquidation
analysis does not include liabilities that may arise as a result
of litigation, certain new tax assessments, or other potential
Claims. This analysis also does not include potential recoveries
from avoidance actions. No value was assigned to additional
proceeds that might result from the sale of certain items with
intangible value. Therefore, the actual liquidation value of the
Debtor could vary materially from the estimates provided herein.
THE LIQUIDATION ANALYSIS SET FORTH HEREIN WAS BASED ON THE
VALUES OF DEBTOR’S ASSETS ON JUNE 30, 2009 WITH CERTAIN
PROFORMA ADJUSTMENTS. TO THE EXTENT THAT OPERATIONS THROUGH SUCH
DATE WERE DIFFERENT THAN ESTIMATED, THE ASSET VALUES MAY CHANGE.
PRICEWATERHOUSECOOPERS LLP, THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR CIT, HAS NOT EXAMINED, COMPILED OR OTHERWISE
APPLIED PROCEDURES TO THESE VALUES AND, CONSEQUENTLY, DOES NOT
EXPRESS AN OPINION OR ANY OTHER FORM OF ASSURANCE WITH
RESPECT TO THE VALUES IN THE LIQUIDATION ANALYSIS.
Estimated net proceeds may be realized from the liquidation of
CIT’s subsidiaries. The method of liquidation may vary
greatly from subsidiary to subsidiary depending on the
jurisdiction or country in which it resides or was formed. The
obligations are assumed to be satisfied at the individual entity
level, and the excess would then flow upward to the next
ownership level and ultimately to CIT Group Inc., to the extent
available.
B-2
CIT Group
Inc.
LIQUIDATION
ANALYSIS(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low
|
|
|
High
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
I Proceeds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
2,030
|
|
|
$
|
2,030
|
|
|
|
|
|
|
|
|
|
Equity Investments in Subsidiaries
|
|
|
2,681
|
|
|
|
14,072
|
|
|
|
|
|
|
|
|
|
Finance Receivables
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
Operating Lease Equipment
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
Other
Assets(2)
|
|
|
4,162
|
|
|
|
4,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proceeds
|
|
|
8,873
|
|
|
|
20,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wind-Down Operating Costs
|
|
|
(160
|
)
|
|
|
(240
|
)
|
|
|
|
|
|
|
|
|
Trustee Fees
|
|
|
(266
|
)
|
|
|
(610
|
)
|
|
|
|
|
|
|
|
|
Professional Fees
|
|
|
(75
|
)
|
|
|
(150
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds Available for Distributions to Secured Claims
|
|
|
8,372
|
|
|
|
19,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery
|
|
|
Percentage Recovery
|
|
|
|
Claim
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
II Secured Claims:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
Borrowings(3)
|
|
|
6,000
|
|
|
|
6,000
|
|
|
|
6,000
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds Available for Distributions to Priority Unsecured Claims
|
|
|
|
|
|
|
2,372
|
|
|
|
13,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery
|
|
|
Percentage Recovery
|
|
|
|
Claim
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
III Priority Unsecured Claims:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes
|
|
|
246
|
|
|
|
246
|
|
|
|
246
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Other Priority Claims
|
|
|
76
|
|
|
|
76
|
|
|
|
76
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
322
|
|
|
|
322
|
|
|
|
322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds Available for Distributions to General Unsecured Claims
|
|
|
|
|
|
|
2,050
|
|
|
|
13,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery
|
|
|
Percentage Recovery
|
|
|
|
Claim
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
IV General Unsecured
Claims:(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canadian Senior Unsecured Note Guarantee
|
|
|
2,188
|
|
|
|
128
|
|
|
|
815
|
|
|
|
5.9
|
%
|
|
|
37.2
|
%
|
Long-Dated Senior Unsecured Note Claims
|
|
|
1,189
|
|
|
|
70
|
|
|
|
443
|
|
|
|
5.9
|
%
|
|
|
37.2
|
%
|
Senior Unsecured Note Claims
|
|
|
25,869
|
|
|
|
1,518
|
|
|
|
9,634
|
|
|
|
5.9
|
%
|
|
|
37.2
|
%
|
Senior Unsecured Term Loan Claims
|
|
|
321
|
|
|
|
19
|
|
|
|
119
|
|
|
|
5.9
|
%
|
|
|
37.2
|
%
|
Senior Unsecured Credit Agreement Claims
|
|
|
3,101
|
|
|
|
182
|
|
|
|
1,155
|
|
|
|
5.9
|
%
|
|
|
37.2
|
%
|
Deficiency Payments on Make Whole
|
|
|
250
|
|
|
|
15
|
|
|
|
93
|
|
|
|
5.9
|
%
|
|
|
37.2
|
%
|
Other Unsecured Liabilities
|
|
|
954
|
|
|
|
56
|
|
|
|
355
|
|
|
|
5.9
|
%
|
|
|
37.2
|
%
|
Accrued Liabilities & Accounts Payable
|
|
|
1,052
|
|
|
|
62
|
|
|
|
392
|
|
|
|
5.9
|
%
|
|
|
37.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
34,924
|
|
|
|
2,050
|
|
|
|
13,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds Available for Distributions to Subordinated Unsecured
Claims
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery
|
|
|
Percentage Recovery
|
|
|
|
Claim
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
V Subordinated Unsecured
Claims:(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Subordinated Notes
|
|
|
1,200
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
Junior Subordinated Notes
|
|
|
779
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,979
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds Available for Distribution to Residual Stakeholders
|
|
|
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
This analysis assumes liquidation
commences on January 1, 2010 and lasts 12 months.
|
|
(2)
|
|
Asset balance includes incremental
assets secured from $3 billion Senior Secured Facility.
|
|
(3)
|
|
The secured borrowing amount
reflects $3 billion of additional borrowings anticipated to
be drawn under an expansion facility presently being negotiated.
|
|
(4)
|
|
JPM Letter of Credit facility is
assumed to be either undrawn or satisfied by the Company or one
of its subsidiaries.
|
|
(5)
|
|
The Senior and Junior Subordinated
Notes are contractually subordinated and therefore would not
receive any distribution.
|
B-3
Proceeds
Cash
Cash consists of all unrestricted cash in banks or operating
accounts and cash held at divisions as of June 30, 2009. In
addition, CIT’s cash balance includes proforma adjustments
from cash received from the July 2009 new debt facility. Cash is
assumed to be fully recoverable. The cash recovered may be
materially different if financial institutions have rights of
off-set against cash, or if cash is unrecoverable from the
non-US subsidiaries.
Equity
Investments in Subsidiaries
All of the finance receivables and operating leases owned by CIT
on a consolidated basis are held by CIT’s subsidiary
entities. Certain of those assets held by CIT’s subsidiary
entities are subject to liens securing prior financings, such as
securitization transactions, conduit facilities, secured loans
and other forms of secured financing. In addition, certain of
CIT’s subsidiary entities owe unsecured debts and
liabilities that must be satisfied before the assets of such
entities can be used to satisfy the liabilities of their parent
entities. CIT’s equity investments in subsidiaries
represent the assets remaining at all subsidiary entities after
these entities have fully satisfied their subsidiary-level debts
and liabilities. Recovery of these excess assets may be
adversely impacted in a Chapter 7 liquidation by the same
risks described in the cash, finance receivables, operating
leases, and other assets sections.
Finance
Receivables
The Debtor’s finance receivables primarily consist of
various loans and capital leases extended to customers in the
form of asset and cash flow based loans, capital leases,
factored receivables and other types of recourse and non
recourse loans, among others. The effect of a Chapter 7
liquidation and the specific direct costs that would have to be
incurred to collect on receivables would adversely impact the
recovery on receivables. As such, an estimated recovery of 38%
to 80% is applied (with an average blended recovery of 50%), to
the estimated amount outstanding at June 30, 2009 that
pertains to these assets. All of the finance receivables are
held at CIT’s subsidiary entities.
Operating
Leases
The Debtor’s operating leases are contracts primarily
extended to customers that allow the use of an asset, but do not
convey the rights of ownership to the customer. The largest
concentrations of accounts are primarily with companies in the
transportation industries. The effect of a Chapter 7
liquidation, and the specific direct costs that would have to be
incurred to collect on operating leases, would adversely impact
the recovery on operating leases. As such, an estimated recovery
of 48% to 75% is applied (with an average blended recovery of
62%), to the estimated amount outstanding at June 30, 2009
that pertains to these assets. All of the operating leases are
held at CIT’s subsidiary entities.
Other
Assets
Other assets primarily include miscellaneous receivables,
receivables from derivative counterparties, interest bearing
deposits, and investments. The effect of a Chapter 7
liquidation, and the specific direct costs that would have to be
incurred in order to monetize these assets, would adversely
impact the recovery on these assets. As such, an estimated
recovery of 0% to 100% is applied (with an average blended
recovery of 40%) to the estimated amount outstanding at
June 30, 2009 that pertains to these assets. Other assets
are held at CIT and its subsidiaries. Additionally, the asset
balance includes incremental assets secured from an estimated
$3.0 billion expansion facility.
Wind-down
Operating Costs
Ongoing operating expenses consist of corporate overhead and
occupancy costs to be incurred during the Chapter 7
liquidation period. The Debtor assumes that the liquidation
would occur over a twelve-month period
B-4
and that such expenses, costs and overhead would decrease over
time, especially after January 2011 when agreements are assumed
to be reached for the sale of all of the assets. Any positive
income from operating businesses generated during this time was
assumed to offset wind-down operating costs.
Trustee &
Professional Fees
Based on CIT management’s review of the nature of these
costs and the outcomes of similar liquidations, fees were
estimated at $341 million to $760 million in total for
the Debtor. This figure is comprised of approximately
$266 million to $610 million of trustee fees (3.0% of
the proceeds available for distribution based on the Bankruptcy
Code) and $75 million to $150 million of other
professional fees. The amount of professional fees is related to
the large size and complexity of the liquidation.
Secured
Claims
Secured Claims are given priority under the Bankruptcy Rules and
are entitled to payment prior to any payment on unsecured claims.
Priority
Unsecured Claims
Priority Unsecured Claims are given priority under the
Bankruptcy Rules and are entitled to payment prior to any
payment on most other unsecured claims. Federal taxes, sales and
local income taxes, and foreign taxes are included in this
category.
General
Unsecured Claims
General Unsecured Claims consist of $2.2 billion of
Canadian Senior Unsecured Note Guarantee, $1.2 billion of
Long-Dated Senior Unsecured Note Claims, $25.9 billion of
Senior Unsecured Note Claims, $321 million of Senior
Unsecured Term Loan Claims, $3.1 billion of Senior
Unsecured Credit Agreement Claims, $250 million of make
whole deficiency payments on the Goldman Sachs and Wells
facilities,1
$1.0 billion of Other Unsecured Liabilities, and
$1.1 billion of Accrued Liabilities and Accounts Payable.
General Unsecured Claims were adjusted from the June 30,
2009 balances to reflect the most current amounts and
allocations of all outstanding debt loans and notes.
Subordinated
Unsecured Claims
Subordinated Unsecured Claims includes $779 million of
Junior Subordinated Note Claims and $1.2 billion of Senior
Subordinated Note Claims. Subordinated Unsecured Claims were
adjusted from the June 30, 2009 balances to reflect the
most current amounts and allocations of outstanding debt loans
and notes.
The Debtor believes that the value of any distributions from the
liquidation proceeds to each class of Allowed Claims in a
Chapter 7 liquidation may not occur for a substantial
period of time. In this regard, it is possible that distribution
of the proceeds of the liquidation could be delayed for a year
or more after the completion of such liquidation in order to
resolve the Claims and prepare for distributions. In the event
litigation was necessary to resolve Claims asserted in the
Chapter 7 case, the delay could be further prolonged and
administrative expenses further increased. The effects of this
delay on the value of distributions under the hypothetical
liquidation have not been considered.
THE DEBTOR’S LIQUIDATION ANALYSIS IS AN ESTIMATE OF THE
PROCEEDS THAT MAY BE GENERATED AS A RESULT OF A HYPOTHETICAL
CHAPTER 7 LIQUIDATION OF THE ASSETS OF THE DEBTOR.
Underlying the liquidation analysis is a number of estimates and
assumptions that are inherently subject to significant economic,
competitive, and operational uncertainties and contingencies
beyond the control of the Debtor or a Chapter 7 trustee. In
addition, various liquidation decisions upon which certain
assumptions are based are subject to change. Therefore, there
can be no assurance that the assumptions and
1 Payments
on make whole represent an estimate of the contractual
obligations associated with early termination of certain
facilities.
B-5
estimates employed in determining the liquidation values of the
Debtor will result in an accurate estimate of the proceeds that
would be realized were the Debtor to undergo an actual
liquidation. General Unsecured Claims and Subordinated Unsecured
Claims to the estate could vary significantly from the estimates
set forth herein, depending on the Claims asserted during the
pendency of the Chapter 7 case. Moreover, this liquidation
analysis does not include liabilities that may arise as a result
of litigation, certain new tax assessments, or other potential
Claims. This analysis also does not include potential recoveries
from avoidance actions. No value was assigned to additional
proceeds that might result from the sale of certain items with
intangible value. Therefore, the actual liquidation value of the
Debtor could vary materially from the estimates provided herein.
B-6
APPENDIX B-2
LIQUIDATION
ANALYSIS
CIT GROUP
FUNDING COMPANY OF DELAWARE LLC
The Bankruptcy Code requires that each holder of an Impaired
Claim or Interest either (a) accepts the Plan of
Reorganization or (b) receive or retain property of a
value, as of the Effective Date, that is not less than the value
such holder would receive or retain if CIT Group Funding Company
of Delaware LLC (“Delaware Funding” or the
“Debtor”) was liquidated under Chapter 7 of the
Bankruptcy Code on the Effective Date. The first step in
determining whether this test has been met is to determine the
estimated amount that would be generated from the liquidation of
the Debtor’s assets and properties in the context of the
Chapter 7 liquidation case. The gross amount of cash
available to the holders of Impaired Claims or Interests would
be the sum of the proceeds from the disposition of Debtor’s
assets through the liquidation proceedings and the cash held by
the Debtor at the time of the commencement of the Chapter 7
case. This gross amount of cash available is reduced by the
amount of any Claims secured by the estate’s assets, the
costs and expenses of the liquidation, and additional
administrative expenses that may result from the termination of
the Debtor’s businesses and the use of Chapter 7 for
the purposes of liquidation. Any remaining net cash would be
allocated to creditors and shareholders in strict priority in
accordance with Section 726 of the Bankruptcy Code. For
purposes of this liquidation analysis, it is assumed that the
assets of Delaware Funding are liquidated for the benefit of the
creditors of Delaware Funding. In addition, this analysis
presents two scenarios. The first scenario assumes that the
pre-packaged plan for CIT Group, Inc. is consummated and
Delaware Funding commences a liquidation under Chapter 7
immediately thereafter. See Exhibit B — 2.1. The
second scenario assumes a liquidation of CIT Group Inc. and
Delaware Funding. See Exhibit B — 2.2. A general
summary of the assumptions used by management in preparing this
liquidation analysis follows. The more specific assumptions are
discussed below.
Exhibit B —
2.1
Estimate
of Net Proceeds
Estimates were made of the cash proceeds that might be realized
from the liquidation of the Debtor’s assets. This analysis
assumes the consummation of the Prepackaged Plan of
Reorganization for CIT Group Inc. on December 31, 2009 and
that Delaware Funding commences Chapter 7 liquidation on
January 1, 2010 that lasts for 12 months following the
appointment of a Chapter 7 trustee. Recoveries to creditors
are presented on an undiscounted basis. For purposes of the
analysis, the Intercompany Note proceeds reflect potential
payments to Delaware Funding pursuant to the five Intercompany
Notes issued by CIT Financial Ltd. (“CFL”)
contemporaneously with the issuance of the Canadian Senior
Unsecured Notes. The low value incorporates an estimate of
proceeds that may be available to Delaware Funding in the event
that CFL is unable to meet its debts as they become due and
determines to commence liquidation or insolvency proceedings in
Canada; the high value of proceeds incorporates the face amount
of the Intercompany Notes. There can be no assurance that the
liquidation would be completed in a limited time frame, nor is
there any assurance that the recoveries assigned to the assets
would in fact be realized. Under Section 704 of the
Bankruptcy Code, an appointed trustee must, among other duties,
collect and convert the property of the estate as expeditiously
(generally at distressed prices) as is compatible with the best
interests of the
parties-in-interest.
The liquidation analysis assumes that there would be pressure to
complete the sales process within twelve months.
Estimate
of Costs
The Debtor’s cost of liquidation under Chapter 7 would
include fees payable to a Chapter 7 trustee, as well as
those which might be payable to attorneys and other
professionals that such a trustee may engage. Further, costs of
liquidation would include any obligations and unpaid expenses
incurred by the Debtor until conclusion of the Chapter 7
case.
B-7
Secured
Claims
Secured Claims are given priority under the Bankruptcy Rules and
are entitled to payment prior to any payment on unsecured
claims. The Secured Claims are $2.2 billion and reflect the
amount of secured obligations under the CIT Funding Security
Agreements pursuant to which a security interest was granted to
CIT Barbados in each of five Intercompany Notes. The CIT Funding
Security Agreements consist of three security agreements dated
as of July 5, 2005 and two security agreements dated as of
November 1, 2006.
Priority
Unsecured Claims
Priority Unsecured Claims are given priority under the
Bankruptcy Rules and are entitled to payment prior to any
payment on most other unsecured claims. Federal taxes, sales and
local income taxes, and foreign taxes are included in this
category.
General
Unsecured Claims
At Delaware Funding, General Unsecured Claims consist of
$160 million of Remaining Canadian Senior Unsecured Note
Claims and $23 million of Accrued Liabilities and Accounts
Payable.
Subrogated
Claims
Subrogated Claims include $2.0 billion of CIT Group Inc.
subrogated claims on account of guarantee payments made on
behalf of Delaware Funding by CIT Group Inc.
B-8
CIT Group
Funding Company of Delaware LLC
LIQUIDATION
ANALYSIS(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low
|
|
|
High
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
I Proceeds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
1
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
Equity Investments in Subsidiaries
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
Finance Receivables
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
Operating Lease Equipment
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
Intercompany Note
Proceeds(2)
|
|
|
551
|
|
|
|
2,207
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
4
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proceeds
|
|
|
556
|
|
|
|
2,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wind-Down Operating Costs
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
Trustee Fees
|
|
|
(17
|
)
|
|
|
(66
|
)
|
|
|
|
|
|
|
|
|
Professional Fees
|
|
|
(2
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds Available for Distributions to Secured Claims
|
|
|
536
|
|
|
|
2,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery
|
|
|
Percentage Recovery
|
|
|
|
Claim
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
II Secured
Claims:(3)
|
|
|
2,188
|
|
|
|
536
|
|
|
|
2,143
|
|
|
|
24.5
|
%
|
|
|
97.9
|
%
|
III Priority Unsecured Claims:
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,188
|
|
|
|
536
|
|
|
|
2,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds Available for Distributions to General Unsecured Claims
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery
|
|
|
Percentage Recovery
|
|
|
|
Claim
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
IV General Unsecured Claims:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining Canadian Senior Unsecured Note
Claim(4)
|
|
|
160
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
Accrued Liabilities & Accounts Payable
|
|
|
23
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
183
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds Available for Distributions to Subrogated Claims
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery
|
|
|
Percentage Recovery
|
|
|
|
Claim
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
V Subrogated Claims:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIT Group Subrogated Claim on Account of Guarantee Payment
|
|
|
2,028
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,028
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds Available for Distributions to Residual Stakeholders
|
|
|
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
This analysis assumes the
consummation of the Prepackaged Plan of Reorganization for CIT
Group Inc. on December 31, 2009 and that CIT Group Funding
Company of Delaware commences Chapter 7 liquidation on
January 1, 2010 that lasts for 12 months.
|
|
(2)
|
|
The Intercompany Note proceeds
reflect potential payments to Delaware Funding pursuant to the
five Intercompany Notes issued by CIT Financial Ltd. in
connection with the issuance of the Canadian Senior Unsecured
Notes. This analysis assumes that CFL is unable to satisfy its
obligations on two Intercompany Notes due in July 2010 in the
approximate amount of $1 billion. As a result of that
failure, CFL is assumed to commence insolvency or other
liquidation proceedings in Canada, and, as a result, Delaware
Funding is forced to convert its case into a Chapter 7
liquidation. The liquidation is assumed to last 12 months
and presumes that Delaware Funding will also proceed from the
liquidation of the two Intercompany Notes due in July 2010 as
well as three additional Intercompany Notes in the aggregate
face amount of $1.2 billion within the following
12 month period. The low value is an estimate of proceeds
that may be available to Delaware Funding in the event that CIT
Financial Ltd. is unable to meet its debts as they become due
and determines to commence liquidation or insolvency proceedings
in Canada; the high value reflects the face amount of the
Intercompany Notes.
|
|
(3)
|
|
The amount of secured obligations
under the CIT Funding Security Agreements pursuant to which a
security interest was granted to CIT Barbados in each of the
Intercompany Notes; three such security agreements are dated as
of July 5, 2005 and two security agreements are dated as of
November 1, 2006.
|
|
(4)
|
|
This amount constitutes the value
of the Canadian Senior Unsecured Note Claims remaining after
holders receive the projected Class distribution of 92.7% under
the CIT Group Prepackaged Plan which recovery reflects the
dilution effect of the Canadian Senior Unsecured Note Claims
receiving distribution from Class 7 (see
Exhibit C — Article III.G.7).
|
B-9
Exhibit B —
2.2
Estimate
of Net Proceeds
Estimates were made of the cash proceeds which might be realized
from the liquidation of the Debtor’s assets. This analysis
assumes that CIT Group Inc. and its subsidiaries as well as
Delaware Funding commence a Chapter 7 liquidation on
January 1, 2010 that lasts for 12 months following the
appointment of a Chapter 7 trustee. Recoveries to creditors
are presented on an undiscounted basis. There can be no
assurance that the liquidation would be completed in a limited
time frame, nor is there any assurance that the recoveries
assigned to the assets would in fact be realized. Under
Section 704 of the Bankruptcy Code, an appointed trustee
must, among other duties, collect and convert the property of
the estate as expeditiously (generally at distressed prices) as
is compatible with the best interests of the
parties-in-interest.
The liquidation analysis assumes that there would be pressure to
complete the sales process within twelve months.
Estimate
of Costs
The Debtor’s cost of liquidation under Chapter 7 would
include fees payable to a Chapter 7 trustee, as well as
those which might be payable to attorneys and other
professionals that such a trustee may engage. Further, costs of
liquidation would include any obligations and unpaid expenses
incurred by the Debtor until conclusion of the Chapter 7
case.
Secured
Claims
The amount of the Canadian Senior Unsecured Note claims
remaining after CIT Group Inc. makes a distribution on such
claims in the amount of the estimated recoveries set forth in
the liquidation analysis in
Appendix B-1.
Because this analysis also includes estimates for the separate,
assumed liquidation of CFL, the estimated liquidation
percentages recoveries in
Appendix B-1
are higher by a de minimis amount.
Priority
Unsecured Claims
Priority Unsecured Claims are given priority under the
Bankruptcy Rules and are entitled to payment prior to any
payment on most other unsecured claims. Federal taxes, sales and
local income taxes, and foreign taxes are included in this
category.
General
Unsecured Claims
At Delaware Funding, General Unsecured Claims consist of a range
of Canadian Senior Unsecured Note Claims from $1.4 billion
to $2.1 billion, and $23 million of Accrued
Liabilities and Accounts Payable
Subrogated
Claims
Subrogated Claims include a range of $128 million to
$815 million of CIT Group Inc. subrogated claims on account
of guarantee payments made on behalf of Delaware Funding at CIT
Group Inc.
B-10
CIT Group
Funding Company of Delaware LLC
LIQUIDATION
ANALYSIS(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low
|
|
|
High
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
I Proceeds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
1
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
Equity Investments in Subsidiaries
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
Finance Receivables
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
Operating Lease Equipment
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
Intercompany Note
Proceeds(2)
|
|
|
551
|
|
|
|
1,229
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
4
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proceeds
|
|
|
556
|
|
|
|
1,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wind-Down Operating Costs
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
Trustee Fees
|
|
|
(17
|
)
|
|
|
(37
|
)
|
|
|
|
|
|
|
|
|
Professional Fees
|
|
|
(2
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds Available for Distributions to Secured Claims
|
|
|
536
|
|
|
|
1,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery
|
|
|
Percentage Recovery
|
|
|
|
|
|
|
Claim
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
II Secured
Claims:(3)
|
|
|
2,188
|
|
|
|
536
|
|
|
|
1,194
|
|
|
|
24.5
|
%
|
|
|
54.6
|
%
|
III Priority Unsecured Claims:
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,188
|
|
|
|
536
|
|
|
|
1,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds Available for Distributions to General Unsecured Claims
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery
|
|
|
Percentage Recovery
|
|
|
|
Claims Range
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
IV General Unsecured Claims:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining Canadian Senior Unsecured Note
Claim(4)
|
|
|
2,060
|
|
|
|
1,373
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
Accrued Liabilities & Accounts Payable
|
|
|
23
|
|
|
|
23
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,083
|
|
|
|
1,396
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds Available for Distributions to Subrogated Claims
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery
|
|
|
Percentage Recovery
|
|
|
|
Claims Range
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
V Subrogated Claims:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIT Group Subrogated Claim on Account of Guarantee Payment
|
|
|
128
|
|
|
|
815
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
128
|
|
|
|
815
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds Available for Distributions to Residual Stakeholders
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
This analysis assumes liquidation
commences on December 31, 2009 and lasts 12 months.
|
|
(2)
|
|
This analysis assumes that CIT
Financial Ltd. is unable to satisfy its obligations on two
Intercompany Notes due in July 2010 in the approximate amount of
$1 Billion. As a result of that failure, CIT Financial Ltd. is
assumed to commence insolvency or other liquidation proceedings
in Canada, and, as a result, Delaware Funding is forced to
convert its case into a Chapter 7 liquidation. The
liquidation is assumed to last 12 months and presumes that
Delaware Funding will also receive proceeds from the liquidation
of three additional Intercompany Notes in the aggregate face
amount of $1.2 Billion within the following
12-month
period.
|
|
(3)
|
|
The amount of the Canadian Senior
Unsecured Note claims remaining after CIT Group Inc. makes a
distribution on such claims in the amount of the estimated
recoveries set forth in the liquidation analysis in
Appendix B-1.
Because this analysis also includes estimates for the separate,
assumed liquidation of CFL, the estimated liquidation
percentages recoveries in
Appendix B-1
are higher by a de minimis amount.
|
|
(4)
|
|
Amount remaining after CIT Group
Inc. pays Canadian Senior Unsecured Note Guarantee Claim.
|
B-11
Additional Claims would arise by reason of the breach or
rejections of obligations incurred under executory contracts or
leases entered into by the Debtor. It is possible that in a
Chapter 7 case, the wind-down expenses may be greater or
less than the estimated amount. Such expenses are in part
dependent on the length of time of the liquidation.
Distribution
of Net Proceeds under Absolute Priority
The foregoing types of Claims, costs, expenses, fees and such
other Claims that may arise in a liquidation case would provide
partial to full payment from the liquidation proceeds before the
balance of those proceeds would be made available to General
Unsecured Claims and the Subrogated Claims. Under the absolute
priority rule, no junior creditor would receive any distribution
until all senior creditors are paid in full. The Debtor believes
that in the Chapter 7 case, general unsecured creditors at
Delaware Funding may receive a de minimis recovery.
After consideration of the effects that a Chapter 7
liquidation would have on the ultimate proceeds available for
distribution to creditors, including (i) the increased
costs and expenses of a liquidation under Chapter 7 arising
from fees payable to a trustee in a bankruptcy and professional
advisors to such trustee, (ii) the erosion in value of
assets in the Chapter 7 case in the context of the
expeditious liquidation required under Chapter 7 and the
forced sales atmosphere that would likely prevail, and
(iii) the substantial increase in Claims which would be
satisfied on a priority basis, THE DEBTOR HAS DETERMINED THAT
CONFIRMATION OF THE PLAN OF REORGANIZATION WILL PROVIDE EACH
CREDITOR AND EQUITY HOLDER WITH A RECOVERY EQUAL OR GREATER THAN
IT WOULD RECEIVE PURSUANT TO A LIQUIDATION OF THE DEBTOR UNDER
CHAPTER 7 OF THE BANKRUPTCY CODE.
THE DEBTOR’S LIQUIDATION ANALYSIS IS AN ESTIMATE OF THE
PROCEEDS THAT MAY BE GENERATED AS A RESULT OF A HYPOTHETICAL
CHAPTER 7 LIQUIDATION OF THE ASSETS OF THE DEBTOR.
Underlying the liquidation analysis are a number of estimates
and assumptions that are inherently subject to significant
economic, competitive and operational uncertainties and
contingencies beyond the control of the Debtor or a
Chapter 7 trustee. In addition, various liquidation
decisions upon which certain assumptions are based are subject
to change. Therefore, there can be no assurance that the
assumptions and estimates employed in determining the
liquidation values of the assets will result in an accurate
estimate of the proceeds that would be realized were the Debtor
to undergo an actual liquidation. The actual amounts of Claims
against the estate could vary significantly from the estimate
set forth herein, depending on the Claims asserted during the
pendency of the Chapter 7 case. Moreover, this liquidation
analysis does not include liabilities that may arise as a result
of litigation, certain new tax assessments, or other potential
Claims. This analysis also does not include potential recoveries
from avoidance actions. No value was assigned to additional
proceeds that might result from the sale of certain items with
intangible value. Therefore, the actual liquidation value of the
Debtor could vary materially from the estimates provided herein.
THE LIQUIDATION ANALYSIS SET FORTH HEREIN WAS BASED ON THE
VALUES OF DEBTOR’S ASSETS ON JANUARY 1, 2010 WITH CERTAIN
PROFORMA ADJUSTMENTS. TO THE EXTENT THAT OPERATIONS THROUGH SUCH
DATE WERE DIFFERENT THAN ESTIMATED, THE ASSET VALUES MAY CHANGE.
PRICEWATERHOUSECOOPERS LLP, THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR CIT, HAS NOT EXAMINED, COMPILED OR OTHERWISE
APPLIED PROCEDURES TO THESE VALUES AND, CONSEQUENTLY, DOES NOT
EXPRESS AN OPINION OR ANY OTHER FORM OF ASSURANCE WITH
RESPECT TO THE VALUES IN THE LIQUIDATION ANALYSIS.
The Debtor believes that the value of any distributions from the
liquidation proceeds to each class of Allowed Claims in a
Chapter 7 liquidation may not occur for a substantial
period of time. In this regard, it is possible that distribution
of the proceeds of the liquidation could be delayed for a year
or more after the completion of such liquidation in order to
resolve the Claims and prepare for distributions. In the event
litigation were necessary to resolve Claims asserted in the
Chapter 7 case, the delay could be further prolonged and
administrative expenses further increased. The effects of this
delay on the value of distributions under the hypothetical
liquidation have not been considered.
B-12
APPENDIX C
Gregg M. Galardi, Esq.
J. Gregory St. Clair, Esq.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP
Four Times Square
New York, New York 10036
(212) 735-3000
— and —
Chris L. Dickerson, Esq.
Jessica Kumar, Esq.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP
333 West Wacker Drive
Chicago, Illinois 60606
(312) 407-0700
Proposed Counsel for the Debtors and
Debtors in Possession
UNITED
STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
|
|
|
|
|
|
|
X
|
|
|
In re:
|
|
:
|
|
Chapter 11
|
|
|
:
|
|
|
CIT Group Inc. (Tax ID 65-xxx1192)
|
|
:
|
|
Case No. 09-
|
CIT Group Funding Company of
|
|
:
|
|
|
Delaware LLC (Tax ID 98-xxx9146)
|
|
:
|
|
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Debtors.
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X
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FIRST
AMENDED PREPACKAGED REORGANIZATION PLAN
OF CIT GROUP INC.
AND CIT GROUP FUNDING COMPANY OF DELAWARE LLC
Dated: New York, New York
October 16, 2009
TABLE OF
CONTENTS
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Page
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ARTICLE I DEFINITIONS, RULES OF INTERPRETATION
AND COMPUTATION OF TIME
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C-1
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A.
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Scope of Definitions; Rules of Construction
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C-1
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B.
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Definitions
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C-1
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C.
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Rules of Interpretation
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C-11
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D.
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Computation of Time
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C-11
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E.
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Exhibits
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C-11
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ARTICLE II TREATMENT OF UNCLASSIFIED CLAIMS
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C-11
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A.
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DIP Facility Claims
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C-11
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B.
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Administrative Claims
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C-12
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C.
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Priority Tax Claims
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C-12
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ARTICLE III CLASSIFICATION AND TREATMENT OF CLAIMS
AND INTERESTS
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C-12
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A.
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Introduction
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C-12
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B.
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Summary of Classified Claims and Interests
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C-13
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C.
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Acceptance by Impaired Classes
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C-13
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D.
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Cramdown
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C-13
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E.
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Elimination Of Classes
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C-14
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F.
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Non-Confirmation Of Plan For Delaware Funding
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C-14
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G.
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Treatment of Classes
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C-14
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1. Class 1— Other Priority Claims
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C-14
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2. Class 2 — Other Secured
Claims
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C-14
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3. Class 3 — Other Unsecured Debt
Claims and Guarantee Claims
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C-14
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4. Class 4 — Intercompany Claims
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C-15
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5. Class 5 — General Unsecured
Claims
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C-15
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6. Class 6 — JPM L/C Facility
Claims
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C-15
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7. Class 7 — Canadian Senior
Unsecured Note Claims
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C-15
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8. Class 8 — Long-Dated Senior
Unsecured Note Claims
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C-16
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9. Class 9 — Senior Unsecured
Note Claims
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C-17
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10. Class 10 — Senior Unsecured Term
Loan Claims
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C-18
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11. Class 11 — Senior Unsecured Credit
Agreement Claims
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C-19
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12. Class 12 — Senior Subordinated Note
Claims
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C-19
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13. Class 13 — Junior Subordinated Note
Claims
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C-20
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14. Class 14 — Subordinated 510(b)
Claims
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C-20
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15. Class 15 — Old Preferred
Interests
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C-20
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16. Class 16 — Old Common Interests
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C-20
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17. Class 17 — Old Delaware Funding
Interests
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C-21
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18. Class 18 — Other Equity Interests
(if any)
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C-21
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H.
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Allowed Claims
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C-21
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I.
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Postpetition Interest
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C-21
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J.
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Special Provision Regarding Unimpaired Claims
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C-21
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i
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Page
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ARTICLE IV MEANS FOR IMPLEMENTATION OF THE
PLAN
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C-21
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A.
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Allocation Of New Notes To Holders Of Canadian Senior Unsecured
Note Claims
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C-21
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B.
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Allocation Of New Notes And Issuance Of New Common Interests To
Holders Of Long-Dated Senior Unsecured Note Claims
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C-22
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C.
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Allocation Of New Notes And Issuance Of New Common Interests To
Holders Of Senior Unsecured Note Claims
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C-23
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D.
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Allocation Of New Notes And Issuance Of New Common Interests To
Holders Of Senior Unsecured Term Loan Claims
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C-23
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E.
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Allocation Of New Notes And Issuance Of New Common Interests To
Holders Of Senior Unsecured Credit Agreement Claims
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C-24
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F.
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Issuance Of New Common Interests To Holders Of Senior
Subordinated Note Claims
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C-25
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G.
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Issuance Of New Common Interests To Holders Of Junior
Subordinated Note Claims
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C-26
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H.
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Allocation Of Contingent Value Rights
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C-26
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I.
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Letters of Credit Under JPM L/C Facility
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C-28
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J.
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Exit Facility
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C-29
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K.
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Continued Existence and Vesting of Assets in Reorganized
Debtors
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C-30
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L.
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Cancellation of Interests and Agreements
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C-30
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M.
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Board of Directors
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C-31
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N.
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Certain Corporate Governance Matters
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C-31
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O.
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Preservation of Rights of Action; Settlement of Litigation
Claims
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C-31
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P.
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Effectuating Documents; Further Transactions
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C-31
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Q.
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Exemption from Certain Transfer Taxes
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C-32
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R.
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Release of Liens
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C-32
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ARTICLE V PROVISIONS GOVERNING DISTRIBUTIONS
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C-32
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A.
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Distributions for Claims Allowed as of the Effective Date
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C-32
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B.
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Disbursing Agent(s)
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C-32
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C.
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Calculation of Distribution Amounts of New Common Interests and
New Notes
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C-33
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D.
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Delivery of Distributions; Undeliverable or Unclaimed
Distributions
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C-33
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E.
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Withholding and Reporting Requirements
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C-34
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F.
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Allocation of Plan Distributions Between Principal and
Interest
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C-34
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G.
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Setoffs
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C-34
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H.
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Surrender of Instruments or Securities
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C-34
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I.
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Lost, Stolen, Mutilated or Destroyed Securities or
Instruments
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C-35
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ARTICLE VI PROCEDURES FOR RESOLVING DISPUTED,
CONTINGENT AND UNLIQUIDATED CLAIMS
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C-35
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A.
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Resolution of Disputed Claims
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C-35
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B.
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No Distribution Pending Allowance
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C-36
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C.
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Distributions After Allowance
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C-36
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D.
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Reservation of Right to Object to Allowance or Asserted Priority
of Claims
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C-36
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ii
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Page
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ARTICLE VII TREATMENT OF CONTRACTS AND
LEASES
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C-36
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A.
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Assumed Contracts and Leases
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C-36
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B.
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Treatment of Change of Control Provisions
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C-37
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C.
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Payments Related to Assumption of Contracts and Leases
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C-37
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D.
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Claims Based on Rejection of Executory Contracts or Unexpired
Leases
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C-37
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E.
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Claims Based on Rejection of Employment Agreements
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C-37
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F.
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Compensation and Benefit Plans and Treatment of Retirement
Plan
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C-37
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G.
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Indemnification of Directors and Officers
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C-38
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ARTICLE VIII SECURITIES TO BE ISSUED IN CONNECTION
WITH THE PLAN
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C-38
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A.
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New Common Interests
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C-38
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B.
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Exemption from Registration
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C-38
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C.
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New Notes
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C-38
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ARTICLE IX CONDITIONS PRECEDENT TO THE PLAN’S
CONFIRMATION
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C-39
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ARTICLE X CONDITIONS PRECEDENT TO EFFECTIVE
DATE
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C-39
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A.
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Conditions to Effective Date
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C-39
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B.
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Waiver of Conditions
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C-40
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ARTICLE XI MODIFICATIONS AND AMENDMENTS
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C-40
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ARTICLE XII RETENTION OF JURISDICTION
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C-41
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ARTICLE XIII MISCELLANEOUS PROVISIONS
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C-42
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A.
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Corporate Action
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C-42
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B.
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Professional Fee Claims
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C-42
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C.
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Payment of Statutory Fees
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C-42
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D.
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Confirmation of Plan for Single Debtor
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C-42
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E.
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Severability of Plan Provisions
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C-42
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F.
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Successors and Assigns
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C-43
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G.
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Discharge of Claims and Termination of Interests
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C-43
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H.
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Releases
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C-43
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1. Releases by the Debtors
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C-44
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2. Releases by Holders of Claims and Interests
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C-44
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I.
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Injunction
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C-44
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J.
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Exculpation and Limitation of Liability
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C-44
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K.
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Waiver of Enforcement of Subordination
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C-45
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L.
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Term of Injunctions or Stays
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C-45
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M.
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Binding Effect
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C-45
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N.
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Revocation, Withdrawal or Non-Consummation
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C-45
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O.
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Committees
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C-46
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P.
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Plan Supplement
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C-46
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Q.
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Notices to Debtors, the Steering Committee
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C-46
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R.
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Governing Law
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C-47
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S.
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Prepayment
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C-47
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T.
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Section 1125(e) of the Bankruptcy Code
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C-47
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iii
TABLE OF
EXHIBITS
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Exhibit A-1
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Reorganized CIT Certificate of Incorporation
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Exhibit A-2
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Reorganized Delaware Funding Certificate of Amendment to
Certificate of Formation
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Exhibit A-3
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Reorganized Delaware Funding Amendment to Limited Liability
Company Agreement
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Exhibit B
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Description of New Common Interests
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TABLE OF
SCHEDULES
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Schedule 1
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List of Senior Unsecured Notes (excluding 2015 Hybrid
Convertible/Equity Notes)
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Schedule 2
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List of Long-Dated Senior Unsecured Notes
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iv
INTRODUCTION
CIT Group Inc. and CIT Group Funding Company of Delaware each
propose the following plan of reorganization under
chapter 11 of the Bankruptcy Code (as defined below). In
the event that Delaware Funding does not obtain sufficient votes
to confirm the plan of reorganization, Delaware Funding
expressly reserves the right to forgo filing a petition for
relief under the Bankruptcy Code (as defined herein), to
withdraw the Plan solely with respect to Delaware Funding, to
dismiss or convert any pending bankruptcy case of Delaware
Funding or any other appropriate actions and the plan of
reorganization, to the extent confirmed, shall be solely with
respect to CIT Group Inc.
ARTICLE I
DEFINITIONS,
RULES OF INTERPRETATION
AND COMPUTATION OF TIME
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A.
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Scope of
Definitions; Rules of Construction
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Except as expressly provided or unless the context otherwise
requires, capitalized terms not otherwise defined in this Plan
shall have the meanings ascribed to them in this Article I.
Any term used in the Plan that is not defined herein, but is
defined in the Bankruptcy Code or the Bankruptcy Rules (as
defined below), shall have the meaning ascribed to it therein.
Where the context requires, any definition applies to the plural
as well as the singular number.
1.1 “2005
5-Year
Unsecured Credit Agreement” means the
5-Year
Credit Agreement, dated as of April 13, 2005, by and among
CIT Group Inc., Citigroup Global Markets Inc., as joint lead
arranger and bookrunner, Banc of America Securities LLC, as
joint lead arranger and bookrunner, Citibank, N.A., as
administrative agent, Bank of America, N.A. and JPMorgan Chase
Bank, N.A., as syndication agents, Barclays Bank plc, as
documentation agent and the Lenders party thereto.
1.2 “2005 Syndicated Term Loan Agreement”
means the JPY 20 Billion Syndicated Term Loan Agreement, dated
as of September 30, 2005, by and among CIT Group Inc.,
Mizuho Corporate Bank, Ltd. as arranger, initial lender and
agent and the Lenders party thereto.
1.3 “2006
5-Year
Unsecured Credit Agreement” means the
5-Year
Credit Agreement, dated as of December 6, 2006, by and
among CIT Group Inc., Citigroup Global Markets Inc., as joint
lead arranger and bookrunner, Barclays Capital, as joint lead
arranger and bookrunner, Citibank, N.A., as administrative
agent, Barclays Bank plc, as syndication agent, Bank of America,
N.A., and JPMorgan Chase Bank, N.A., as co-documentation agents
and the Lenders party thereto.
1.4 “2006
5-Year Term
Loan Agreement” means the $100,000,000 Five-Year Term
Loan Agreement, dated as of September 29, 2006, by and
among CIT Group Inc., Mizuho Corporate Bank, Ltd. as arranger,
initial lender and agent and the Lenders party thereto.
1.5 “2010 Canadian Senior Unsecured Notes”
means the 4.65% Notes due July 1, 2010, issued by CIT
Group Funding Company of Canada (n/k/a Delaware Funding) and
guaranteed by CIT Group Inc., pursuant to the Indenture dated as
of May 31, 2005.
1.6 “2011 Canadian Senior Unsecured Notes”
means the 5.60% Notes due November 2, 2011, issued by
CIT Group Funding Company of Canada (n/k/a Delaware Funding) and
guaranteed by CIT Group Inc., pursuant to the Indenture dated as
of November 1, 2006.
1.7 “2015 Canadian Senior Unsecured Notes”
means the 5.20% Notes due June 1, 2015, issued by CIT
Group Funding Company of Canada (n/k/a Delaware Funding) and
guaranteed by CIT Group Inc., pursuant to the Indenture dated as
of May 31, 2005.
1.8 “2015 Hybrid Convertible/Equity Notes”
means the equity units offered by CIT Group Inc. with a stated
amount of $25, which equity units consist of a forward purchase
contract issued by CIT Group Inc. and,
C-1
initially, a
1/40
undivided beneficial ownership interest in a $1,000 principal
amount senior note due November 15, 2015 issued by CIT
Group Inc.
1.9 “Administrative Claim” means a Claim
arising under Bankruptcy Code section 507(a)(2) for costs
and expenses of administration of the Chapter 11 Cases
under Bankruptcy Code sections 503(b), 507(b), or
1114(e)(2), including (a) any actual and necessary costs
and expenses, incurred after the Petition Date, of preserving
the Estate and operating the business of the Debtors (such as
wages, salaries and commissions for services and payments for
goods, leased equipment and premises) and (b) all other
claims entitled to administrative claim status pursuant to a
Final Order of the Bankruptcy Court, including Professional Fee
Claims.
1.10 “Allowed” means, with respect to a
Claim within a particular Class, an Allowed Claim of the type
described in such Class.
1.11 “Allowed Claim” means a Claim
(i) as to which no objection or request for estimation has
been filed on or before the Claims Objection Deadline or the
expiration of such other applicable period fixed by the
Bankruptcy Court or the Plan; (ii) as to which any
objection has been settled, waived, withdrawn or denied by a
Final Order or in accordance with the Plan; or (iii) that
is allowed (a) by a Final Order, (b) by an agreement
between the holder of such Claim and the Debtors or the
Reorganized Debtors or (c) pursuant to the terms of the
Plan; provided, however, that,
notwithstanding anything herein to the contrary, by treating a
Claim as an “Allowed Claim” under (i) above (the
expiration of the Claims Objection Deadline or other applicable
deadline), the Debtors do not waive their rights to contest the
amount and validity of any disputed, contingent
and/or
unliquidated Claim in the time, manner and venue in which such
Claim would have been determined, resolved or adjudicated if the
Chapter 11 Cases had not been commenced. An Allowed Claim
(i) includes a Disputed Claim to the extent such Disputed
Claim becomes Allowed after the Effective Date and
(ii) shall be net of any valid setoff exercised with
respect to such Claim pursuant to the provisions of the
Bankruptcy Code and applicable law. Unless otherwise specified
herein, in section 506(b) of the Bankruptcy Code or by
Final Order of the Bankruptcy Court, “Allowed Claim”
shall not, for purposes of distributions under the Plan, include
interest on such Claim accruing from and after the Petition Date.
1.12 “Australian Senior Unsecured Notes”
means (i) those certain 6.00% fixed rate notes due
March 3, 2011 issued by CIT Group (Australia) Limited and
guaranteed by CIT Group Inc. and (ii) those certain
3 month BBSW plus 34 bp Floating Rate Notes due
March 3, 2011 issued by CIT Group (Australia) Limited and
guaranteed by CIT Group Inc.
1.13 “Australian Senior Unsecured Note
Claim” means a Claim on account of the Australian
Senior Unsecured Notes.
1.14 “Ballot(s)” means each of the ballot
forms distributed to each Holder of a Claim or Interest entitled
to vote to accept or reject this Plan.
1.15 “Bankruptcy Code” means title 11
of the United States Code, 11 U.S.C.
§§ 101-1532,
as now in effect or hereafter amended.
1.16 “Bankruptcy Court” means the United
States Bankruptcy Court for the Southern District of New York or
any other court with jurisdiction over the Chapter 11 Cases.
1.17 “Bankruptcy Rules” means,
collectively, the Federal Rules of Bankruptcy Procedure, the
Official Bankruptcy Forms, the Federal Rules of Civil Procedure,
and the Local Rules of Bankruptcy Practice and Procedure of the
United States Bankruptcy Court for the Southern District of New
York, as now in effect or hereafter amended, as applicable to
the Chapter 11 Cases or proceedings therein, as the case
may be.
1.18 “Board” shall have the meaning set
forth in Article IV.M hereof.
1.19 “Business Day” means any day,
excluding Saturdays, Sundays or “legal holidays” (as
defined in Bankruptcy Rule 9006(a)), on which commercial
banks are open for business in New York, New York.
1.20 “Canadian Senior Unsecured Notes”
means the 2010 Canadian Senior Unsecured Notes, the 2011
Canadian Senior Unsecured Notes and the 2015 Canadian Senior
Unsecured Notes.
C-2
1.21 “Canadian Senior Unsecured Note
Claim” means a Claim on account of the Canadian Senior
Unsecured Notes.
1.22 “Canadian Senior Unsecured Note
Exchange” shall have the meaning ascribed to it in
Article IV.A hereof.
1.23 “Canadian Senior Unsecured Note Guarantee
Claim” means a Claim on account of CIT Group
Inc.’s guarantee of the Canadian Senior Unsecured Notes.
“Canadian Senior Unsecured Note Indentures”
means (1) the Indenture by and between CIT Group
Funding Company of Canada, as Issuer, CIT Group Inc., as
Guarantor, and JPMorgan Chase Bank, N.A., as Trustee, dated as
of May 31, 2005 (as amended and supplemented), under which
the 4.65% Senior Notes due July 1, 2010 and the
5.20% Senior Notes due June 1, 2015 were issued, and
(2) the Indenture by and between CIT Group Funding Company
of Canada, as Issuer, CIT Group Inc., as Guarantor, and Bank of
New York, as Trustee, dated as of November 1, 2006 (as
amended and supplemented), under which the 5.60% Senior
Notes due November 2, 2011 were issued.
1.24 “Canadian Senior Unsecured Note
Litigation” means (i) that certain litigation
instituted in the United States District Court for the Southern
District of New York, captioned ACP Master, Ltd. et al. v.
CIT Group Funding Company of Delaware, LLC, Civil Action
No. 09 CIV 8144 and filed on or about September 23,
2009 and (ii) that certain litigation instituted in the
Court of Chancery of the State of Delaware, captioned Aurelius
Capital Master, Ltd. et al. v. Votek et al., Case
No. 4914-
and filed on or about September 23, 2009 by certain holders
of Canadian Senior Unsecured Notes.
1.25 “Cash” means legal tender of the
United States or equivalents thereof.
1.26 “Cash Collateralization” shall have
the meaning set forth in Article III.G.6 hereof.
1.27 “Chapter 11 Cases” means the
chapter 11 cases of the Debtors.
1.28 “Claim” means a claim, as defined in
section 101(5) of the Bankruptcy Code, against the Debtors.
1.29 “Claims Objection Deadline” means the
first Business Day that is the latest of (i) the Effective
Date; (ii) as to a particular Claim, 180 days after
the filing of a proof of claim, or request for payment of, such
Claim; or (iii) such other date as may be established by
the Bankruptcy Court.
1.30 “Class” means one of the classes of
Claims or Interests listed in Article III below.
1.31 “Class 8-11
Excess Value Amount” shall have the meaning ascribed to
it in Article IV.H hereof.
1.32 “Class 8-11
Par Recovery Amount” means the amount, measured as
of the Petition Date, that would imply a recovery to holders of
Long-Dated Senior Unsecured Note Claims, Senior Unsecured Note
Claims, Senior Unsecured Term Loan Claims and Senior Unsecured
Credit Agreement Claims equal to one hundred percent (100%) of
the amount of Allowed Claims of all such Classes in the
aggregate.
1.33 “Class 8-11
Securities” means New Notes and New Common Interests
distributed to holders of Long-Dated Senior Unsecured Note
Claims, Senior Unsecured Note Claims, Senior Unsecured Term Loan
Claims and Senior Unsecured Credit Agreement Claims pursuant to
Articles III.G.8, III.G.9, III.G.10 and III.G.11
and Articles IV.B, IV.C, IV.D and IV.E hereof.
1.34 “Class 12 Par Recovery
Amount” means the amount, measured as of the Petition
Date, that would imply a recovery to holders of Senior
Subordinated Note Claims equal to one hundred percent (100%) of
the amount of the Allowed Claim of such Class.
1.35 “Class 13 Par Recovery
Amount” means the amount, measured as of the Petition
Date, that would imply a recovery to holders of Junior
Subordinated Note Claims equal to one hundred percent (100%) of
the amount of the Allowed Claim of such Class.
1.36 “Class 15 Par Recovery Amount”
means the amount, measured as of the Petition Date, equal to the
aggregate combined liquidation preference of the Old Preferred
Interests, plus accrued and unpaid dividends thereon.
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1.37 “Collateral” means any property or
interest in property of the Estate subject to a lien or security
interest to secure the payment or performance of a Claim, which
lien or security interest is not subject to avoidance under the
Bankruptcy Code or otherwise invalid under the Bankruptcy Code
or applicable law.
1.38 “Committee” means any official
committee appointed in the Chapter 11 Cases, as such
committee may be reconstituted from time to time.
1.39 “Confirmation Date” means the date of
entry of the Confirmation Order on the docket of the Bankruptcy
Court.
1.40 “Confirmation Hearing” means the
Bankruptcy Court’s hearing to consider confirmation of the
Plan, as such hearing may be adjourned or continued from time to
time.
1.41 “Confirmation Order” means the
Bankruptcy Court’s order confirming the Plan under
section 1129 of the Bankruptcy Code.
1.42 “Contingent Value Rights” shall have
the meaning ascribed to it in Article IV.H hereof.
1.43 “Cure” means the payment of Cash by
the Debtors, or the distribution of other property (as the
parties may agree or the Bankruptcy Court may order), as
necessary to cure defaults under an executory contract or
unexpired lease of one or more of the Debtors and to permit the
Debtors to assume that contract or lease under
section 365(a) of the Bankruptcy Code.
1.44 “CVRs” shall have the meaning
ascribed to it in Article IV.H hereof.
1.45 “D&O Claims” means any Claim
arising from the Debtors’ indemnification obligations under
their constituent documents or other written agreements
and/or
pursuant to applicable general corporation law or other
applicable business organization law, including those Claims
described in Article VII.G hereof.
1.46 “Debtors” means CIT Group Inc. and
Delaware Funding in their capacities as debtors and debtors in
possession under sections 1107 and 1108 of the Bankruptcy
Code and, as to acts or rights on or after the Effective Date or
when the context otherwise so requires, the post-confirmation
entities reorganized hereunder.
1.47 “Delaware Funding” means CIT Group
Funding Company of Delaware LLC (f/k/a CIT Group Funding Company
of Canada).
1.48 “DIP Facility” means any postpetition
debtor-in-possession
credit facility provided to the Debtors during the
Chapter 11 Cases pursuant to the DIP Facility Agreement.
1.49 “DIP Facility Agreement” means the
credit agreement and related security agreements, mortgages and
similar documents governing the DIP Facility by and between the
Debtors and the DIP Lender.
1.50 “DIP Facility Claim” means a Claim
arising under or as a result of the DIP Facility.
1.51 “DIP Lender” means the lender(s)
under the DIP Facility Agreement.
1.52 “Disallowed Claim” means any Claim
against the Debtors which has been disallowed, in whole or in
part, by Final Order or written agreement between the Debtors
and the holder of such Claim, to the extent of such disallowance.
1.53 “Disbursing Agent” means the
Reorganized Debtors or any party designated by the Reorganized
Debtors, in their sole discretion, to serve as disbursing agent
under the Plan.
1.54 “Disclosure Statement” means the
written disclosure statement that relates to the Plan, as
amended, supplemented or modified from time to time, embodied in
the Offering Memorandum and that is prepared and distributed in
accordance with section 1125 of the Bankruptcy Code and
Bankruptcy Rule 3018.
1.55 “Disputed Claim” means any Claim, or
any portion thereof, that is not an Allowed Claim or a
Disallowed Claim.
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1.56 “Distribution Date” means the date,
occurring as soon as practicable after the Effective Date (but
in no event more than ten (10) Business Days thereafter),
on which the Disbursing Agent first makes distributions to
holders of Allowed Claims as provided in Article V hereof.
1.57 “Early Electing Long-Dated Senior Unsecured
Note Claims Holder(s)” means a holder of a Long-Dated
Senior Unsecured Note Claim who makes election to either
(i) participate in the transactions contemplated by the
Offering Memorandum or (ii) receive the treatment set forth
in Article III.G.8.b.A hereof by the Early Election Date.
1.58 “Early Election Date” means the
expiration date of the Offering Memorandum, which is currently
October 29, 2009 but is subject to extension.
1.59 “Electing Long-Dated Senior Unsecured Note
Claims Holder(s)” means a holder of a Long-Dated Senior
Unsecured Note Claim who makes election to either
(i) participate in the transactions contemplated by the
Offering Memorandum or (ii) receive the treatment set forth
in Article III.G.8.b.A hereof by either the Early Election
Date or the Late Election Date.
1.60 “Effective Date” means a date
selected by the Debtors, which date shall be on or after the
first Business Day on which all conditions to the consummation
of the Plan set forth in Article X.A hereof have been
satisfied or waived.
1.61 “Estate” means the estate of each of
the Debtors in the Chapter 11 Cases, as created under
section 541 of the Bankruptcy Code.
1.62 “Exchanges” shall have the meaning
ascribed to it in Article IV.G hereof.
1.63 “Exit Facility” means any exit credit
facility provided to Reorganized CIT on the Effective Date
pursuant to the Exit Facility Agreement.
1.64 “Exit Facility Agreement” means the
credit agreement and related security agreements, mortgages and
similar documents governing the Exit Facility by and between
Reorganized CIT and the Exit Facility Lender.
1.65 “Exit Facility Documents” shall have
the meaning set forth in Article IV.J hereof.
1.66 “Exit Facility Lender” means the
lender(s) under the Exit Facility Agreement.
1.67 “Fair Market Value” means, with
respect to any security as of the applicable Measurement Date,
(i) in the case of New Common Interests, (x) if such
security is listed or traded on a national securities exchange
for at least 10 consecutive Trading Days, the daily
volume-weighted average price of such security for the 10
consecutive Trading Days immediately preceding the Measurement
Date as reported by Bloomberg, L.P. (or, if no such price is
reported by Bloomberg, L.P. for any particular Trading Day
during such 10-Trading Day period, the daily volume-weighted
average price of such security as officially reported for such
Trading Day on the principal securities exchange on which such
security is then listed or admitted to trading shall be used for
purposes of calculating such
10-day
volume-weighted average price), or (y) if such security is
not listed or admitted to trading on any national securities
exchange for at least 10 consecutive Trading Days, the fair
market value of such security as reasonably determined by the
Disbursing Agent, after consultation with a financial advisor,
on the basis of such information as it considers appropriate
(without regard to any illiquidity or minority discounts) and
(ii) in the case of the New Notes, (A) if bid and ask
quotations for such security are readily available and the
Disbursing Agent, after consultation with a financial advisor,
determines such quotations are a reliable indicator of the value
of such security, the average of the daily bid and ask
quotations of such securities for the 10 consecutive Trading
Days immediately preceding the applicable Measurement Date, or
(B) if bid and ask quotations for such security are not
readily available or the Disbursing Agent, after consultation
with a financial advisor, determines such quotations are not a
reliable indicator of value, the fair market value of such
security as reasonably determined by the Disbursing Agent, after
consultation with a financial advisor, on the basis of such
information as it considers appropriate.
1.68 “Federal Reserve” shall have the
meaning ascribed to it in Article IV.M hereof.
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1.69 “Final Order” means an order or
judgment, entered by the Bankruptcy Court or other court of
competent jurisdiction, that has not been amended, modified or
reversed, and as to which (i) no stay is in effect,
(ii) the time to seek rehearing, file a notice of appeal or
petition for certiorari has expired and (iii) no appeal,
request for a stay, petition seeking certiorari, or other review
is pending; provided, however, that the
possibility that a motion under section 502(j) of the
Bankruptcy Code, Rule 59 or 60 of the Federal Rules of
Civil Procedure, or any analogous rule (whether federal or
state) may be but has not then been filed with respect to such
order shall not cause such order not to be a Final Order.
1.70 “General Unsecured Claim” means a
Claim that is not a DIP Facility Claim, Administrative Claim,
Priority Tax Claim, Other Priority Claim, Other Secured Debt
Claim, Guarantee Claim, Canadian Senior Unsecured Note Claim,
Canadian Senior Unsecured Note Guarantee Claim, Long-Dated
Senior Unsecured Note Claim, Senior Unsecured Note Claim, Senior
Unsecured Term Loan Claim, Senior Unsecured Credit Agreement
Claim, Senior Subordinated Note Claim, Junior Subordinated Note
Claim, or Subordinated 510(b) Claim.
1.71 “Guarantee” means a guarantee of
collection, payment, or performance, including a servicer
performance guaranty, made by the Debtors as to the obligations
of an affiliate or subsidiary of CIT Group Inc. but not
including CIT Group Inc.’s guarantee of the Canadian Senior
Unsecured Notes.
1.72 “Guarantee Claim” means a Claim
against the Debtors on account of a Guarantee (other than the
Canadian Senior Unsecured Note Guarantee Claim).
1.73 “Impaired” means, when used with
reference to a Claim or Interest, a Claim or Interest that is
impaired within the meaning of section 1124 of the
Bankruptcy Code.
1.74 “Intercompany Claim” means a
prepetition Claim by a Debtor or a non-Debtor affiliate against
another Debtor or non-Debtor affiliate.
1.75 “Intercompany Notes” means
(i) those three promissory notes issued, executed and
delivered by CIT Financial Ltd. to Delaware Funding (f/k/a
(f/k/a CIT Group Funding Company of Canada) as payee and dated
July 5, 2005 in the amounts of $502,588,633, $502,588,633
and $703,624,085 and (ii) those two promissory notes
issued, executed and delivered by CIT Financial Ltd. to Delaware
Funding (f/k/a (f/k/a CIT Group Funding Company of Canada) as
payee and dated November 1, 2006 each in the amount of
$249,052,500.
1.76 “Interest” means the legal,
equitable, contractual and other rights of any Person (including
any 401(k) plan or plan participant) with respect to the Old
Common Interests, the Old Preferred Interests or any Other
Equity Rights of the Debtors, whether or not transferable, and
the legal, equitable, contractual or other rights of any Person
to acquire or receive any of the foregoing.
1.77 “JPM” means JPMorgan Chase Bank, N.A.
solely in its capacity as administrative agent and issuing bank
under the JPM L/C Facility Agreement.
1.78 “JPM L/C Facility” means the letter
of credit facility or facilities established pursuant to the JPM
L/C Facility
Agreement.
1.79 “JPM L/C Facility Agreement” means
the 2005
5-Year
Letter of Credit Issuance and Reimbursement Agreement, dated as
of May 23, 2005, by and among CIT Group, Inc.,
J.P. Morgan Securities Inc. as Sole Lead Arranger and
Bookrunner, JPMorgan Chase Bank, N.A. as Administrative Agent
and Issuing Bank, Barclays Bank PLC as Syndication Agent and
Bank of America, N.A. and Citibank, N.A. as Documentation Agents
and the Lenders as party thereto.
1.80 “JPM L/C Facility Claim” means a
Claim on account of amounts issued and outstanding under the JPM
L/C Facility.
1.81 “Junior CVRs” shall have the meaning
ascribed to it in Article IV.H hereof.
1.82 “Junior Subordinated Notes” means the
6.10% Junior Subordinated Notes due March 15, 2067 issued
by CIT Group Inc. pursuant to the Indenture dated as of
January 20, 2006 and the First Supplemental Indenture dated
as of January 31, 2007 with CUSIP number 125577AX4.
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1.83 “Junior Subordinated Note Claim”
means a Claim on account of the Junior Subordinated Notes.
1.84 “Junior Subordinated Notes Exchange”
shall have the meaning ascribed to it in Article IV.G
hereof.
1.85 “Liens” shall have the meaning set
forth in Article IV.A hereof.
1.86 “Late Electing Long-Dated Senior Unsecured Note
Claims Holder(s)” means a holder of a Long-Dated Senior
Unsecured Note Claim who makes election to either
(i) participate in the transactions contemplated by the
Offering Memorandum or (ii) receive the treatment set forth
in Article III.G.8.b.A hereof after the Early Election Date
but before the Late Election Date.
1.87 “Late Election Date” means the date that
is ten (10) Business Days after the Early Election Date.
1.88 “Litigation Claims” means all claims,
rights of action, suits or proceedings, whether in law or in
equity, whether known or unknown, that the Debtors or their
Estates may hold against any Person, except such claims that are
released under the Plan or the Confirmation Order.
1.89 “Long-Dated Senior Unsecured Notes”
means the senior unsecured notes listed on Schedule 2
hereto.
1.90 “Long-Dated Senior Unsecured Note
Claim” means a Claim on account of the Long-Dated
Senior Unsecured Notes.
1.91 “Long-Dated Senior Unsecured Note
Exchange” shall have the meaning ascribed to it in
Article IV.B hereof.
1.92 “Measurement Date” means the date
that is sixty (60) days after the Effective Date,
provided that if such date is not a Business Day,
the Measurement Date shall be the first Business Day following
such date.
1.93 “N&GC” shall have the meaning
set forth in Article IV.M hereof.
1.94 “New Common Interests” means the
shares of common interests in Reorganized CIT authorized under
the Plan and Reorganized CIT’s bylaws as of the Effective
Date.
1.95 “New Notes” means collectively the
Series A Notes and the Series B Notes as described in
the Offering Memorandum.
1.96 “New Notes Indenture” means that
certain New Notes indenture documentation, to be filed by the
Debtors as a Plan Supplement prior to the Confirmation Hearing.
1.97 “New Securities” shall have the
meaning set forth in Article V.C. hereof.
1.98 “Non-Electing Long-Dated Senior Unsecured Note
Claims Holder(s)” means a holder of a Long-Dated Senior
Unsecured Note Claim who (a) does not make an election to
either (i) participate in the transactions contemplated by
the Offering Memorandum or (ii) receive the treatment set
forth in Article III.G.8.b.A by the Late Election Date or
(b) who votes against the Plan.
1.99 “Offering Memorandum” means that
certain document entitled “CIT Group Inc. Offers to
Exchange Relating to Any and All of Their Respective Outstanding
Notes Listed Below and Solicitation of Acceptances of a
Prepackaged Plan of Reorganization” as amended on
October 15, 2009.
1.100 “Old Common Interests” means the
shares of common stock of CIT Group Inc. issued and outstanding
immediately prior to the Effective Date.
1.101 “Old Delaware Funding Interests”
means the equity interests in Delaware Funding outstanding
immediately prior to the Effective Date.
1.102 “Old Interests” means collectively
the Old Common Interests, the Old Preferred Interests and the
Old Delaware Funding Interests.
1.103 “Old Preferred Interests” means the
shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred
Stock of CIT Group Inc. issued and outstanding immediately prior
to the Effective Date.
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1.104 “Other Equity Interests” means the
Interests represented by the Other Equity Rights.
1.105 “Other Equity Rights” means,
collectively, any options, warrants, conversion rights, rights
of first refusal, finders fee arrangements, or other rights,
contractual or otherwise, to acquire, subscribe for, receive or
cause to be redeemed any common interests or preferred interests
of the Debtors, or other ownership interests in the Debtors, and
any contracts, subscriptions, commitments or agreements pursuant
to which any non-Debtor party was or could have been entitled to
receive or cause to be redeemed shares, securities or other
ownership interests in the Debtors.
1.106 “Other Priority Claim” means a Claim
entitled to priority under section 507(a) of the Bankruptcy
Code other than a DIP Facility Claim, Administrative Claim or
Priority Tax Claim.
1.107 “Other Secured Claim” means a Claim
that is secured by a valid, duly perfected lien as of the
Petition Date on property in which the Estate has an interest or
that is subject to setoff under section 553 of the
Bankruptcy Code, to the extent of the value of the Claim
holder’s interest in the Estate’s interest in such
property or to the extent of the amount subject to setoff, as
applicable, as determined pursuant to section 506(a) of the
Bankruptcy Code or, in the case of setoff, pursuant to
section 553 of the Bankruptcy Code.
1.108 “Other Unsecured Debt Claims” means
the Australian Senior Unsecured Note Claims and any senior
unsecured notes that are not listed on Schedule 1 or
Schedule 2 hereto to which the Debtors are borrowers or
issuers.
1.109 “Person” means an individual,
corporation, partnership, joint venture, association, joint
stock company, limited liability company, limited liability
partnership, trust, estate, unincorporated organization,
governmental unit or other entity as defined in
section 101(15) of the Bankruptcy Code.
1.108 “Petition Date” means the date on
which the Debtors filed their petition for relief commencing the
Chapter 11 Cases.
1.109 “Plan” means this plan of
reorganization and all exhibits and schedules hereto, as
amended, modified or supplemented from time to time as permitted
hereunder and by the Bankruptcy Code.
1.110 “Plan Supplement” means the
compilation of documents, including any exhibits to the Plan not
included herewith, in form and substance reasonably satisfactory
to the Debtors and the Steering Committee, that the Debtors
shall file with the Bankruptcy Court on or before the date that
is five (5) days prior to the Confirmation Hearing.
1.111 “Postpetition Interest” means
interest accruing on and after the Petition Date on a Claim.
1.112 “Preferred Stock CVRs” shall have
the meaning ascribed to it in Article IV.H of the Plan of
Reorganization.
1.113 “Priority Tax Claim” means a Claim
that is entitled to priority under section 507(a)(8) of the
Bankruptcy Code.
1.114 “Pro Rata” means with reference to
any distribution on account of or in exchange for any Claim in
any Class, the proportion that the amount of a Claim (numerator)
bears to the aggregate amount of all Claims (including Disputed
Claims, but excluding Disallowed Claims) (denominator) in such
Class.
1.115 “Professional” means any
professional employed in the Chapter 11 Cases pursuant to
section 327 or 1103 of the Bankruptcy Code.
1.116 “Professional Fee Claim” means a
Claim of a Professional for compensation or reimbursement of
costs and expenses relating to services incurred after the
Petition Date and prior to and including the Effective Date.
1.117 “Reinstate,”
“Reinstated” or
“Reinstatement” means (i) leaving
unaltered the legal, equitable and contractual rights to which a
Claim entitles the holder of such Claim so as to leave such
Claim unimpaired in accordance with section 1124 of the
Bankruptcy Code or (ii) notwithstanding any contractual
provision or applicable law that entitles the holder of such
Claim to demand or receive accelerated payment of such Claim
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after the occurrence of a default, (a) curing any such
default that occurred before or after the Petition Date, other
than a default of a kind specified in section 365(b)(2) of
the Bankruptcy Code; (b) reinstating the maturity of such
Claim as such maturity existed before such default;
(c) compensating the holder of such Claim for any damages
incurred as a result of any reasonable reliance by such holder
on such contractual provision or such applicable law; and
(d) not otherwise altering the legal, equitable or
contractual rights to which such Claim entitles the holder of
such Claim; provided, however, that other than
contractual rights set forth in the Senior Credit Facility, any
contractual right that does not pertain to the payment when due
of principal and interest on the obligation on which such Claim
is based, including, but not limited to, financial covenant
ratios, negative pledge covenants, covenants or restrictions on
merger or consolidation, and affirmative covenants regarding
corporate existence, prohibiting certain transactions or actions
contemplated by the Plan, or conditioning such transactions or
actions on certain factors, shall not be required to be
reinstated in order to accomplish Reinstatement and shall be
deemed cured on the Effective Date.
1.118 “Reorganized CIT” means CIT Group
Inc. on and after the Effective Date.
1.119 “Reorganized CIT Certificate of
Incorporation” means the certificate of incorporation
of Reorganized CIT in effect under the laws of the State of
Delaware, as amended by the Plan, substantially in the form
annexed hereto as
Exhibit A-1.
1.120 “Reorganized Debtors” means
Reorganized CIT and Reorganized Delaware Funding.
1.121 “Reorganized Delaware Funding” means
CIT Group Funding Company of Delaware LLC on and after the
Effective Date.
1.122 “Reorganized Delaware Funding Amendment to
Limited Liability Company Agreement” means the
amendment to Reorganized Delaware Funding’s limited
liability company agreement in effect under the laws of the
State of Delaware, as amended by the Plan, substantially in the
form annexed hereto as
Exhibit A-3.
1.123 “Reorganized Delaware Funding Certificate of
Amendment to Certificate of Formation” means the
certificate of amendment to the certificate of formation of
Reorganized Delaware Funding in effect under the laws of the
State of Delaware, as amended by the Plan, substantially in the
form annexed hereto as
Exhibit A-2.
1.124 “Security” shall have the meaning
ascribed to it in Section 101(49) of the Bankruptcy Code.
1.125 “Senior Credit Facility” means that
certain Amended and Restated Credit and Guaranty Agreement dated
as of July 29, 2009 (as amended, supplemented or otherwise
modified from time to time) by and among CIT Group Inc., a
Delaware corporation, certain subsidiaries of Company listed on
the signature pages thereto, Barclays Bank PLC, as
administrative agent and collateral agent, and the banks and
other financial institutions from time to time party thereto as
agents and lenders together with all collateral and loan
documents contemplated thereby or executed in connection
therewith.
1.126 “Senior CVRs” shall have the meaning
ascribed to it in Article IV.H hereof.
1.127 “Senior Subordinated Notes” means
the 12.00% Subordinated Notes due December 18, 2018
issued by CIT Group Inc. pursuant to the Indenture dated as of
January 20, 2006 and the Second Supplemental Indenture
dated as of December 24, 2008 with CUSIP numbers 125581FS2
and U17186AF1.
1.128 “Senior Subordinated Note Claim”
means a Claim on account of the Senior Subordinated Notes.
1.129 “Senior Subordinated Notes Exchange”
shall have the meaning ascribed to it in Article IV.F
hereof.
1.130 “Senior Unsecured Credit Agreement
Claim” means a Claim on account of the Senior Unsecured
Credit Agreements.
1.131 “Senior Unsecured Credit Agreement
Exchange” shall have the meaning ascribed to it in
Article IV.E hereof.
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1.132 “Senior Unsecured Credit Agreements”
means the 2005
5-Year
Unsecured Credit Agreement and the 2006
5-Year
Unsecured Credit Agreement.
1.133 “Senior Unsecured Note Claim” means
a Claim on account of the Senior Unsecured Notes.
1.134 “Senior Unsecured Note Exchange”
shall have the meaning ascribed to it in Article IV.C
hereof.
1.135 “Senior Unsecured Notes” means
(i) the senior unsecured notes listed on Schedule 1
hereto and (ii) the 2015 Hybrid Convertible/Equity Notes.
1.136 “Senior Unsecured Term Loan Claim”
means a Claim on account of the Senior Unsecured Term Loans.
1.137 “Senior Unsecured Term Loan
Exchange” shall have the meaning ascribed to it in
Article IV.D hereof.
1.138 “Senior Unsecured Term Loans” means
the 2006
5-Year Term
Loan Agreement and the 2005 Syndicated Term Loan Agreement.
1.139 “Series A Notes” means the
“Series A” secured notes issued by CIT Group Inc.
and guaranteed by certain of its affiliates (but not guaranteed
by Delaware Funding) pursuant to the New Notes Indenture and as
described in the Offering Memorandum and as amended from time to
time pursuant hereto.
1.140 “Series A Preferred Stock”
means those 14 million shares of non-voting preferred stock
issued by CIT Group Inc. on July 26, 2005, with a par value
of $0.01 per share, which shares are redeemable at the
Debtors’ option after September 15, 2010 at $25 per
share.
1.141 “Series B Notes” means the
“Series B” secured notes issued by Delaware
Funding and guaranteed by CIT Group Inc., on an unsecured basis
(except for the lien CIT Group Inc. may grant on substantially
all its personal property with certain exclusions), and on a
secured basis by all current and future domestic wholly owned
subsidiaries of CIT Group Inc., with the exception of Delaware
Funding, CIT Bank and other regulated subsidiaries, special
purpose entities and immaterial subsidiaries, pursuant to the
New Notes Indenture and as described in the Offering Memorandum
and as amended from time to time pursuant hereto.
1.142 “Series B Preferred Stock”
means those 1.5 million shares of non-voting preferred
stock issued by CIT Group Inc. on July 26, 2005, with a par
value of $0.01 per share, which shares are redeemable at the
Debtors’ option after September 15, 2010 at $100 per
share.
1.143 “Series C Preferred Stock”
means those 11.5 million shares of non-voting, convertible
preferred stock issued by CIT Group Inc. between April 21,
2008 and April 23, 2008, with a par value of $0.01 per
share, which shares have a liquidation preference of $50 per
share.
1.144 “Series D Preferred Stock”
means those 2.33 million shares of preferred stock issued
by CIT Group Inc. on December 31, 2008 to the United States
Department of Treasury, with a par value of $0.01 per share,
which shares have a liquidation preference of $1,000 per share.
1.145 “Steering Committee” means
(a) as long as the Senior Credit Facility remains in
effect, the Lenders Steering Committee as defined therein and
(b) if the Senior Credit Facility no longer remains in
effect, an ad hoc committee of those noteholders consisting of
the members of the Lenders Steering Committee as defined therein
that voted to approve the Plan of Reorganization and continue to
be represented by Paul, Weiss, Rifkind, Wharton &
Garrison LLP and Houlihan Lokey Howard & Zukin Capital
in each of cases (a) and (b), acting where applicable by
vote of a majority of the members thereof.
1.146 “Steering Committee Nominees” shall
have the meaning set forth in Article IV.M hereof.
1.147 “Subordinated 510(b) Claim” means
any Claim subordinated pursuant to Bankruptcy Code
section 510(b), which shall include any Claim arising from
the rescission of a purchase or sale of Old Interests, any Claim
for damages arising from the purchase or sale of any Old
Interests, or any Claim for reimbursement, contribution or
indemnification on account of any such Claim.
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1.148 “Trading Day” means, with respect to
any security listed or traded on a securities exchange or other
quotations system, a day on which such security is traded or
quoted on the principal securities exchange or quotation system
on which such security is then listed or quoted.
1.149 “Unimpaired” means, with reference
to a Claim or Interest, a Claim or Interest that is not impaired
within the meaning of section 1124 of the Bankruptcy Code.
1.150 “Voting Deadline” means
October 29, 2009 at 11:59 p.m. New York City time.
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C.
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Rules of
Interpretation
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In the Plan (a) any reference to a contract, instrument,
release, indenture or other agreement or document as being in a
particular form or on particular terms and conditions means that
such document shall be substantially in such form or on such
terms and conditions, (b) any reference to an existing
document or exhibit filed or to be filed means such document or
exhibit as it may have been or may be amended, modified or
supplemented, (c) unless otherwise specified, all
references to Sections, Articles, Schedules and Exhibits are
references to Sections, Articles, Schedules and Exhibits of or
to the Plan, (d) the words “herein” and
“hereto” refer to the Plan in its entirety rather than
to a particular portion of the Plan, (e) captions and
headings to Articles and Sections are for convenience of
reference only and are not intended to be a part of or to affect
the interpretation of the Plan, and (f) the rules of
construction in section 102 of the Bankruptcy Code and in
the Bankruptcy Rules shall apply.
In computing any period of time prescribed or allowed by the
Plan, the provisions of Bankruptcy Rule 9006(a) shall apply.
All exhibits (as amended from time to time following their
initial filing with the Bankruptcy Court) are incorporated into
and are a part of the Plan as if set forth in full herein, and,
to the extent not attached hereto, such exhibits shall be filed
with the Bankruptcy Court as part of the Plan Supplement. To the
extent any exhibit contradicts the non-exhibit portion of the
Plan, unless otherwise ordered by the Bankruptcy Court the
non-exhibit portion of the Plan shall control.
ARTICLE II
TREATMENT
OF UNCLASSIFIED CLAIMS
In accordance with section 1123(a)(1) of the Bankruptcy
Code, DIP Facility Claims, Administrative Claims and Priority
Tax Claims are not classified and holders of such Claims are not
entitled to vote on the Plan.
Each holder of an Allowed DIP Facility Claim shall receive, in
full satisfaction, settlement, release and discharge of and in
exchange for such Allowed DIP Facility Claim, on the later of
the Effective Date or the date on which such DIP Facility Claim
becomes payable pursuant to any agreement between the Debtors
and the holder of such DIP Facility Claim, (i) Cash equal
to the full amount of such holder’s Allowed DIP Facility
Claim or (ii) such other treatment as to which the Debtors
and such holder shall have agreed upon in writing. The holder(s)
of DIP Facility Claims shall be deemed to have an Allowed Claim
as of the Effective Date in such amount as may be
(i) agreed upon by such Claimholder(s) and the Debtors or
(ii) fixed by the Bankruptcy Court.
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Each holder of an Allowed Administrative Claim shall receive, in
full satisfaction, settlement, release and discharge of and in
exchange for its Administrative Claim, on the latest of
(i) the Distribution Date, (ii) the date on which its
Administrative Claim becomes an Allowed Administrative Claim,
(iii) the date on which its Administrative Claim becomes
payable under any agreement with the Debtors relating thereto,
(iv) in respect of liabilities incurred in the ordinary
course of business, the date upon which such liabilities are
payable in the ordinary course of the Debtors’ business,
consistent with past practice or (v) such other date as may
be agreed upon between the holder of such Allowed Administrative
Claim and the Debtors or the Reorganized Debtors, as the case
may be, Cash equal to the unpaid portion of its Allowed
Administrative Claim.
The legal and equitable rights of the holders of Priority Tax
Claims are Unimpaired by the Plan. Unless the holder of such
claim and the Debtors agree to a different treatment, on the
Effective Date each holder of an Allowed Priority Tax Claim
shall have its Claim Reinstated.
ARTICLE III
CLASSIFICATION
AND TREATMENT OF CLAIMS AND INTERESTS
The Plan places all Claims and Interests, except Unclassified
Claims provided for in Article II, in the Classes listed
below. A Claim or Interest is placed in a particular Class only
to the extent that it falls within the description of that
Class, and is classified in other Classes to the extent that any
portion thereof falls within the description of other Classes. A
Claim or Interest is also placed in a particular Class for the
purpose of receiving Distributions pursuant to the Plan only to
the extent that such Claim or Interest is an Allowed Claim in
that Class and such Claim or Interest has not been paid,
released, or otherwise settled prior to the Effective Date. The
Classes listed below are comprised of Claims against or
Interests in one or more Debtors. The Debtors reserve the right
to file a motion with the Bankruptcy Court to combine
Classes 7, 8 and 9.
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B.
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Summary
of Classified Claims and Interests
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Class
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Impaired/Unimpaired; Entitlement to Vote
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Class 1 — Other Priority Claims
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Unimpaired — Conclusively presumed to have accepted
the Plan and, therefore, not entitled to vote
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Class 2 — Other Secured Claims
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Unimpaired — Conclusively presumed to have accepted
the Plan and, therefore, not entitled to vote
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Class 3 — Other Unsecured Debt Claims and
Guarantee Claims
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Unimpaired — Conclusively presumed to have accepted
the Plan and, therefore, not entitled to vote
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Class 4 — Intercompany Claims
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Unimpaired — Conclusively presumed to have accepted
the Plan and, therefore, not entitled to vote
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Class 5 — General Unsecured Claims
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Unimpaired — Conclusively presumed to have accepted
the Plan and, therefore, not entitled to vote
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Class 6 — JPM L/C Facility Claims
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Impaired — Entitled to vote
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Class 7 — Canadian Senior Unsecured Note Claims
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Impaired — Entitled to vote
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Class 8 — Long-Dated Senior Unsecured Note Claims
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Entitled to vote — Impaired if holders vote to accept
the Plan; Unimpaired if holders vote to reject or do not vote on
the Plan
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Class 9 — Senior Unsecured Note Claims
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Impaired — Entitled to vote
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Class 10 — Senior Unsecured Term Loan Claims
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Impaired — Entitled to vote
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Class 11 — Senior Unsecured Credit Agreement
Claims
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Impaired — Entitled to vote
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Class 12 — Senior Subordinated Note Claims
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Impaired — Entitled to vote
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Class 13 — Junior Subordinated Note Claims
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Impaired — Entitled to vote
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Class 14 — Subordinated 510(b) Claims
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Impaired — Deemed to have rejected the Plan and,
therefore, not entitled to vote
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Class 15 — Old Preferred Interests
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Impaired — Deemed to have rejected the Plan and,
therefore, not entitled to vote
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Class 16 — Old Common Interests
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Impaired — Deemed to have rejected the Plan and,
therefore, not entitled to vote
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Class 17 — Old Delaware Funding Interests
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Unimpaired — Conclusively presumed to have accepted
the Plan and, therefore, not entitled to vote
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Class 18 — Other Equity Interests (if any)
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Impaired — Deemed to have rejected the Plan and,
therefore, not entitled to vote
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C.
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Acceptance
by Impaired Classes
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Impaired Class 6, Impaired Class 7, Impaired
Class 8, Impaired Class 9, Impaired Class 10,
Impaired Class 11, Impaired Class 12 and Impaired
Class 13 shall have accepted the Plan if (i) the
holders of at least two-thirds in amount of the Allowed Claims
actually voting in such classes have voted to accept the Plan
and (ii) the holders of more than one-half in number of the
Allowed Claims actually voting in such classes have voted to
accept the Plan, in each case not counting the vote of any
holder designated under section 1126(e) of the Bankruptcy
Code.
The Debtors will request confirmation of the Plan, as it may be
modified from time to time, under section 1129(b) of the
Bankruptcy Code. The Debtors reserve the right to modify the
Plan to the extent, if any, that confirmation pursuant to
section 1129(b) of the Bankruptcy Code requires
modification.
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E.
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Elimination
Of Classes
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Any Class that does not contain any Allowed Claims or any Claims
temporarily allowed for voting purposes under Bankruptcy
Rule 3018, as of the date of the commencement of the
Confirmation Hearing, shall be deemed to have been deleted from
the Plan for purposes of (a) voting to accept or reject the
Plan and (b) determining whether it has accepted or
rejected the Plan under section 1129(a)(8) of the
Bankruptcy Code.
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F.
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Non-Confirmation
Of Plan For Delaware Funding
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In the event that Class 7 Canadian Senior Unsecured Note
Claims do not vote to accept the Plan, the Debtors shall seek to
confirm the Plan only with respect to CIT Group Inc. Upon such
non-confirmation of the Plan solely with respect to Delaware
Funding, all references herein to “the Debtors” and
“the Reorganized Debtors” shall refer only to CIT
Group Inc. and Reorganized CIT.
Pursuant to the terms of the Plan, each of the holders of Claims
and Interests in Classes 1 through 18 will receive the
treatment described below.
Please note that the estimated recoveries for Class 7, 8,
9, 10 and 11 do not necessarily reflect the market value of the
Series A and Series B Notes.
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1.
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Class 1 — Other
Priority Claims
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a. Claims in Class: Class 1 consists
of all Other Priority Claims against the Debtors.
b. Treatment: The legal, equitable and
contractual rights of the holders of Other Priority Claims are
Unimpaired by the Plan. Unless the holder of such Claim and the
Debtors agree to a different treatment, on the Effective Date,
each holder of an Allowed Other Priority Claim shall have its
Claim Reinstated.
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2.
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Class 2 — Other
Secured Claims
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a. Claims in Class: Class 2 consists
of Other Secured Claims against the Debtors.
b. Treatment: The legal, equitable and
contractual rights of the holders of Other Secured Claims are
Unimpaired by the Plan. Unless the holder of such Claim and the
Debtors agree to a different treatment, on the Effective Date,
each holder of an Allowed Other Secured Claim shall
(i) have its Claim Reinstated, or (ii) receive, in
full satisfaction, settlement, release, and discharge of, and in
exchange for, such Other Secured Claim, either (w) Cash in
the full amount of such Allowed Other Secured Claim, including
any postpetition interest accrued pursuant to
section 506(b) of the Bankruptcy Code, (x) the
proceeds of the sale or disposition of the collateral securing
such Allowed Other Secured Claim to the extent of the value of
the holder’s secured interest in such collateral,
(y) the collateral securing such Allowed Other Secured
Claim and any interest on such Allowed Other Secured Claim
required to be paid pursuant to section 506(b) of the
Bankruptcy Code, or (z) such other distribution as
necessary to satisfy the requirements of section 1129 of
the Bankruptcy Code. If the Claim of a holder of an Other
Secured Claim exceeds the value of the Collateral that secures
it, such holder will have an Other Secured Claim equal to the
Collateral’s value and a General Unsecured Claim for the
deficiency.
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3.
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Class 3 — Other
Unsecured Debt Claims and Guarantee Claims
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a. Claims in Class: Class 3 consists
of Other Unsecured Debt Claims and Guarantee Claims against the
Debtors.
b. Treatment: The legal, equitable and
contractual rights of the holders of Other Unsecured Debt Claims
and Guarantee Claims are Unimpaired by the Plan. Unless the
holder of such Claim and the Debtors agree to a different
treatment, on the Effective Date, each holder of an Allowed
Other Unsecured Debt Claim or an Allowed Guaranteed Claim shall
have its Claim Reinstated.
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4.
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Class 4 —
Intercompany Claims
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a. Claims in Class: Class 4 consists
of all Intercompany Claims.
b. Treatment: The legal, equitable and
contractual rights of the holders of Intercompany Claims are
Unimpaired by the Plan. Unless the holder of such claim and the
Debtors agree to different treatment, on the Effective Date,
each holder of an Allowed Intercompany Claim shall have its
Claim Reinstated.
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5.
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Class 5 — General
Unsecured Claims
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a. Claims in Class: Class 5 consists
of all General Unsecured Claims.
b. Treatment: The legal, equitable and
contractual rights of the holders of General Unsecured Claims
are Unimpaired by the Plan. Unless the holder of such claim and
the Debtors agree to different treatment, on the Effective Date,
each holder of an Allowed General Unsecured Claim shall have its
Claim Reinstated.
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6.
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Class 6 —
JPM L/C Facility Claims
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a. Claims in Class: Class 6 consists
of JPM L/C Facility Claims in the Allowed amount of
approximately $261 million.
b. Treatment: The legal, equitable and
contractual rights of holders of JPM L/C Facility Claims are
Impaired by the Plan.
(A) If Class 6 JPM L/C Facility Claims votes to accept
the Plan, (i) on, or as soon as reasonably practicable
after, the Effective Date, Reorganized CIT shall provide JPM
with cash collateral on account of all outstanding undrawn
letters of credit issued under the JPM L/C Facility in the
percentages specified in the JPM L/C Facility Agreement
generally and no less than 103% of the face amount of such
outstanding undrawn letters of credit and JPM may apply such
cash collateral to any subsequently arising reimbursement
obligations under the JPM L/C Facility Agreement (the “Cash
Collateralization”) and (ii) in exchange for the Cash
Collateralization, JPM shall not pursue any subsidiary or
affiliate of CIT Group Inc. or any other entity that JPM
contends may be co-liable with CIT Group Inc. under the JPM
L/C Facility
Agreement for any remedies, claims or causes of action arising
out of or relating to the JPM
L/C Facility
or the JPM L/C Facility Agreement, as set forth in more detail
in Article IV.I herein. All fees and other charges arising
under or in respect of the JPM L/C Facility Agreement shall be
paid on, or as soon as reasonably practicable after, the
Effective Date by Reorganized CIT. Upon the Effective Date, each
non-Debtor subsidiary and affiliate of CIT Group Inc. that was
or is a co-applicant or account party on a letter of credit
issued under the JPM L/C Facility shall execute a release and
waiver of any and all claims against JPM
and/or any
other lenders under the JPM L/C Facility in respect of the JPM
L/C Facility
and/or the
JPM L/C Facility Agreement arising prior to the Effective Date.
(B) If Class 6 JPM L/C Facility Claims does not vote
to accept the Plan and the Plan is nonetheless confirmed,
(i) Reorganized CIT shall satisfy any Claims for
reimbursement under the JPM L/C Facility that arose during the
Chapter 11 Cases in full on, or as soon as reasonably
practicable after, the Effective Date and (ii) following
the Effective Date, Reorganized CIT shall pay all such Claims
for reimbursement under the JPM L/C Facility in the ordinary
course of business and upon the terms set forth in the JPM
L/C Facility
Agreement, as set forth in more detail in Article IV.I
herein. In exchange for Reorganized CIT maintaining the
reimbursement obligations in the immediately preceding
(i) and (ii), JPM shall not pursue any subsidiary or
affiliate of CIT Group Inc. or any other entity that JPM
contends may be co-liable with CIT Group Inc. under the JPM L/C
Facility Agreement for any remedies, claims or causes of action
arising out of or relating to the JPM L/C Facility or the JPM
L/C Facility Agreement, as set forth in more detail in
Article IV.I herein.
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7.
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Class 7 — Canadian
Senior Unsecured Note Claims
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a. Claims in Class: Class 7 consists
of Canadian Senior Unsecured Note Claims in the Allowed amount
of approximately $2,188 million, which constitutes
principal plus accrued but unpaid prepetition interest.
C-15
b. Treatment: The legal, equitable, and
contractual rights of holders of Canadian Senior Unsecured Note
Claims are Impaired by the Plan.
(A) If Class 7 Canadian Senior Unsecured Note Claims
votes to accept the Plan, on, or as soon as reasonably
practicable after, the Effective Date, each holder of an Allowed
Canadian Senior Unsecured Note Claim shall receive its
pro rata share of Series B Notes, equal to a
distribution in the amount of 100% of such holder’s Allowed
Canadian Senior Unsecured Note Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest), as set forth more fully in Article IV.A herein.
(B) If Class 7 Canadian Senior Unsecured Note Claims
does not vote to accept the Plan and the Plan is nonetheless
confirmed, on, or as soon as reasonably practicable after, the
Effective Date, each holder of an Allowed Canadian Senior
Unsecured Note Claim shall receive its pro rata
share of (i) Series A Notes, equal to a distribution
in the amount of 70% of such holder’s Allowed Canadian
Senior Unsecured Note Claim (which Allowed Claim constitutes
principal plus accrued but unpaid prepetition interest) and (ii)
(a) 6.2% of New Common Interests if Class 12 and
Class 13 vote to accept the Plan, (b) 6.3% of New
Common Interests if Class 12 votes to accept the Plan and
Class 13 does not vote to accept the Plan, (c) 6.8% of
New Common Interests if Class 12 does not vote to accept the
Plan and if Class 13 votes to accept the Plan, and
(d) 6.8% of New Common Interests if neither Class 12
nor Class 13 vote to accept the Plan, allocated to 30% of
such holder’s Allowed Canadian Senior Unsecured Note Claim
(which Allowed Claim constitutes principal plus accrued but
unpaid prepetition interest), each (i) and (ii) on
account of the Canadian Senior Unsecured Notes Guarantee Claim
against CIT Group Inc., as set forth more fully in
Article IV.A herein.
(C) If Class 7 Canadian Senior Unsecured Note Claims
do not vote to accept the Plan and the Plan is nonetheless
confirmed, the holders of Allowed Canadian Senior Unsecured Note
Claims shall retain their Canadian Senior Unsecured Notes and
Allowed Canadian Senior Unsecured Note Claims against Delaware
Funding, provided, however that:
(i) such holders may not, in the aggregate, recover more
than the Allowed amount of their Canadian Senior Unsecured Note
Claim on account of the combined claims against CIT Group Inc.
and Delaware Funding; and
(ii) the Debtors reserve the right to, among other things,
(w) not amend the Senior Credit Facility to remove Delaware
Funding as a guarantor of the Senior Credit Facility,
(x) estimate such holders’ claims against Delaware
Funding after receiving the distribution of Series A Notes
and New Common Interests, (y) extend the maturity of those
certain Intercompany Notes in accordance with the terms thereof
or (z) merge Delaware Funding into CIT Group Inc. in
accordance with the terms of the Canadian Senior Unsecured Note
Indentures.
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8.
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Class 8 — Long-Dated
Senior Unsecured Note Claims
|
a. Claims in Class: Class 8 consists
of Long-Dated Senior Unsecured Note Claims in the Allowed amount
of approximately $1,189 million, which constitutes
principal plus accrued but unpaid prepetition interest. For
purposes of determining the principal amount of Allowed
Long-Dated Senior Unsecured Note Claims with respect to the
non-U.S. dollar
denominated Long-Dated Senior Unsecured Notes, an equivalent
U.S.-dollar
principal amount of each such series of Long-Dated Senior
Unsecured Notes will be determined by multiplying the principal
amount of such Long-Dated Senior Unsecured Notes by the weekly
average of the applicable currency exchange rate in the most
recent Federal Reserve Statistical Release H.10 which has become
available prior to the Voting Deadline. Such equivalent
U.S. dollar principal amount will be used in all cases when
determining the consideration to be received pursuant to the
Long-Dated Senior Unsecured Note Exchange per $1,000 principal
amount of Long-Dated Senior Unsecured Notes so exchanged.
b. Treatment:
(A) Each Electing Long-Dated Senior Unsecured Note Claims
Holder shall be included in Class 8A and on, or as soon as
reasonably practicable after, the Effective Date, such holder of
an Allowed Long-
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Dated Senior Unsecured Note Claim shall receive its pro
rata share of (i) Series A Notes, equal to a
distribution in the amount of 70% of such holder’s Allowed
Long-Dated Senior Unsecured Note Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest) and (ii) New Common Interests allocated to 30% of
such holder’s Allowed Long-Dated Senior Unsecured Note
Claim (which Allowed Claim constitutes principal plus accrued
but unpaid prepetition interest) as follows: (A) if
Class 7 Canadian Senior Unsecured Note Claims votes to
accept the Plan and (1) if Class 12 and Class 13
vote to accept the Plan, 3.6% of New Common Interests,
(2) if Class 12 votes to accept the Plan and
Class 13 does not vote to accept the Plan, 3.6% of New
Common Interests, (3) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
3.9% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 3.9% of
New Common Interests or (B) if Class 7 Canadian Senior
Unsecured Note Claims does not vote to accept the Plan and
(1) if Class 12 and Class 13 vote to accept the
Plan, 3.4% of New Common Interests, (2) if Class 12
votes to accept the Plan and Class 13 does not vote to
accept the Plan, 3.4% of New Common Interests, (3) if
Class 12 does not vote to accept the Plan and if Class 13
votes to accept the Plan, 3.7% of New Common Interests, or
(4) if neither Class 12 nor Class 13 vote to
accept the Plan, 3.7% of New Common Interests, as set forth more
fully in Article IV.B herein.
(B) Each Non-Electing Long-Dated Senior Unsecured Note
Claims Holder shall be included in Class 8B and the legal,
equitable, and contractual rights of the holders of the
Non-Electing Long-Dated Senior Unsecured Note Claims are
Unimpaired by the Plan and such holders shall have their Claims
Reinstated.
(C) Only the votes of Early Electing Long-Dated Senior
Unsecured Note Claims Holders shall be counted with respect to
acceptance or rejection of the Plan.
(D) Only Electing Long-Dated Senior Unsecured Note Claims
Holders shall receive the treatment specified in
Article III.G.8.b.A herein.
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9.
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Class 9 — Senior
Unsecured Note Claims
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a. Claims in Class: Class 9 consists
of Senior Unsecured Note Claims in the Allowed amount of
approximately $25,504 million, which constitutes principal
plus accrued but unpaid prepetition interest. For purposes of
determining the principal amount of Allowed Senior Unsecured
Note Claims with respect to the
non-U.S. dollar
denominated Senior Unsecured Notes, an equivalent
U.S.-dollar
principal amount of each such series of Senior Unsecured Notes
will be determined by multiplying the principal amount of such
Senior Unsecured Notes by the weekly average of the applicable
currency exchange rate in the most recent Federal Reserve
Statistical Release H.10 which has become available prior to the
Voting Deadline. Such equivalent U.S. dollar principal
amount will be used in all cases when determining the
consideration to be received pursuant to the Senior Unsecured
Note Exchange per $1,000 principal amount of Senior Unsecured
Notes so exchanged.
b. Treatment: The legal, equitable, and
contractual rights of holders of Senior Unsecured Note Claims
are Impaired by the Plan. On, or as soon as reasonably
practicable after, the Effective Date, each holder of an Allowed
Senior Unsecured Note Claim shall receive its pro
rata share of (i) Series A Notes, equal to a
distribution in the amount of 70% of such holder’s Allowed
Senior Unsecured Note Claim (which Allowed Claim constitutes
principal plus accrued but unpaid prepetition interest) and
(ii) New Common Interests allocated to 30% of such
holder’s Allowed Senior Unsecured Note Claim (which Allowed
Claim constitutes principal plus accrued but unpaid prepetition
interest) as follows: (A) if Class 7 Canadian Senior
Unsecured Note Claims votes to accept the Plan and (1) if
Class 12 and Class 13 vote to accept the Plan, 77.7%
of New Common Interests, (2) if Class 12 votes to
accept the Plan and Class 13 does not vote to accept the
Plan, 78.3% of New Common Interests, (3) if Class 12
does not vote to accept the Plan and if Class 13 votes to
accept the Plan, 84.7% of New Common Interests, or (4) if
neither Class 12 nor Class 13 vote to accept the Plan,
84.7% of New Common Interests or (B) if Class 7
Canadian Senior Unsecured Note Claims does not vote to accept
the Plan and (1) if Class 12 and Class 13 vote to
accept the Plan, 72.5% of New Common Interests, (2) if
Class 12 votes to accept the Plan and Class 13 does
not vote to accept the Plan, 73.0% of New
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Common Interests, (3) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
79.0% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 79.0%
of New Common Interests, as set forth more fully in
Article IV.C herein.
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10.
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Class 10 — Senior
Unsecured Term Loan Claims
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a. Claims in Class: Class 10
consists of Senior Unsecured Term Loan Claims in the Allowed
amount of approximately $321 million, which constitutes
principal plus accrued but unpaid prepetition interest. Claims
in Classes 10 and 11 are pari passu and shall
be combined for voting purposes. The Debtors reserve the right
to seek Bankruptcy Court approval of a merger of Class 10
and Class 11.
b. Treatment: The legal, equitable, and
contractual rights of holders of Senior Unsecured Term Loan
Claims are Impaired by the Plan.
(A) If Class 10 Senior Unsecured Term Loan Claims
votes to accept the Plan, on, or as soon as reasonably
practicable after, the Effective Date, each holder of an Allowed
Senior Unsecured Term Loan Claim shall receive its pro
rata share of (i) indebtedness under credit
facilities of Reorganized CIT on substantially the same terms as
the Series A Notes in lieu of a distribution of the
Series A Notes, equal to a distribution in the amount of
70% of such holder’s Allowed Senior Unsecured Term Loan
Claim (which Allowed Claim constitutes principal plus accrued
but unpaid prepetition interest) and (ii) New Common
Interests allocated to 30% of such holder’s Allowed Senior
Unsecured Term Loan Claim (which Allowed Claim constitutes
principal plus accrued but unpaid prepetition interest) as
follows: (A) if Class 7 Canadian Senior Unsecured Note
Claims votes to accept the Plan and (1) if Class 12
and Class 13 vote to accept the Plan, 1.0% of New Common
Interests, (2) if Class 12 votes to accept the Plan
and Class 13 does not vote to accept the Plan, 1.0% of New
Common Interests, (3) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
1.1% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 1.1% of
New Common Interests or (B) if Class 7 Canadian Senior
Unsecured Note Claims does not vote to accept the Plan and
(1) if Class 12 and Class 13 vote to accept the
Plan, 0.9% of New Common Interests, (2) if Class 12
votes to accept the Plan and Class 13 does not vote to
accept the Plan, 0.9% of New Common Interests, (3) if
Class 12 does not vote to accept the Plan and if Class 13
votes to accept the Plan, 1.0% of New Common Interests, or
(4) if neither Class 12 nor Class 13 vote to
accept the Plan, 1.0% of New Common Interests, as set forth more
fully in Article IV.D herein.
(B) If Class 10 Senior Unsecured Term Loan Claims does
not vote to accept the Plan and the Plan is nonetheless
confirmed, on, or as soon as reasonably practicable after, the
Effective Date, each holder of an Allowed Senior Unsecured Term
Loan Claim shall receive its pro rata share of
(i) Series A Notes, equal to a distribution in the
amount of 70% of such holder’s Allowed Senior Unsecured
Term Loan Claim (which Allowed Claim constitutes principal plus
accrued but unpaid prepetition interest) and (ii) New
Common Interests allocated to 30% of such holder’s Allowed
Senior Unsecured Term Loan Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest) as follows: (A) if Class 7 Canadian Senior
Unsecured Note Claims votes to accept the Plan and (1) if
Class 12 and Class 13 vote to accept the Plan, 1.0% of
New Common Interests, (2) if Class 12 votes to accept
the Plan and Class 13 does not vote to accept the Plan,
1.0% of New Common Interests, (3) if Class 12 does not
vote to accept the Plan and if Class 13 votes to accept the
Plan, 1.1% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 1.1% of
New Common Interests or (B) if Class 7 Canadian Senior
Unsecured Note Claims does not vote to accept the Plan and
(1) if Class 12 and Class 13 vote to accept the
Plan, 0.9% of New Common Interests, (2) if Class 12
votes to accept the Plan and Class 13 does not vote to
accept the Plan, 0.9% of New Common Interests, (3) if
Class 12 does not vote to accept the Plan and if
Class 13 votes to accept the Plan, 1.0% of New Common
Interests, or (4) if neither Class 12 nor
Class 13 vote to accept the Plan, 1.0% of New Common
Interests, as set forth more fully in Article IV.D herein.
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11.
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Class 11 — Senior
Unsecured Credit Agreement Claims
|
a. Claims in Class: Class 11
consists of Senior Unsecured Credit Agreement Claims in the
Allowed amount of approximately $3,101 million, which
constitutes principal plus accrued but unpaid prepetition
interest. Claims in Classes 10 and 11 are pari
passu and shall be combined for voting purposes. The
Debtors reserve the right to seek Bankruptcy Court approval of a
merger of Class 10 and Class 11.
b. Treatment: The legal, equitable, and
contractual rights of holders of Senior Unsecured Credit
Agreement Claims are Impaired by the Plan.
(A) If Class 11 Senior Unsecured Credit Agreement
Claims votes to accept the Plan, on, or as soon as reasonably
practicable after, the Effective Date, each holder of an Allowed
Senior Unsecured Credit Agreement Claim shall receive its
pro rata share of (a) indebtedness under
credit facilities of Reorganized CIT on substantially the same
terms as the Series A Notes in lieu of a distribution of
the Series A Notes, equal to a distribution in the amount
of 70% of such holder’s Allowed Senior Unsecured Credit
Agreement Claim (which Allowed Claim constitutes principal plus
accrued but unpaid prepetition interest) and (b) New Common
Interests allocated to 30% of such holder’s Allowed Senior
Unsecured Credit Agreement Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest) as follows: (A) if Class 7 Canadian Senior
Unsecured Note Claims votes to accept the Plan and (1) if
Class 12 and Class 13 vote to accept the Plan, 9.4% of
New Common Interests, (2) if Class 12 votes to accept
the Plan and Class 13 does not vote to accept the Plan,
9.5% of New Common Interests, (3) if Class 12 does not
vote to accept the Plan and if Class 13 votes to accept the
Plan, 10.3% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 10.3%
of New Common Interests or (B) if Class 7 Canadian
Senior Unsecured Note Claims does not vote to accept the Plan
and (1) if Class 12 and Class 13 vote to accept
the Plan, 8.8% of New Common Interests, (2) if
Class 12 votes to accept the Plan and Class 13 does
not vote to accept the Plan, 8.9% of New Common Interests,
(3) if Class 12 does not vote to accept the Plan and if
Class 13 votes to accept the Plan, 9.6% of New Common
Interests, or (4) if neither Class 12 nor
Class 13 vote to accept the Plan, 9.6% of New Common
Interests, as set forth more fully in Article IV.E herein.
(B) If Class 11 Senior Unsecured Credit Agreement
Claims does not vote to accept the Plan and the Plan is
nonetheless confirmed, on, or as soon as reasonably practicable
after, the Effective Date, each holder of an Allowed Senior
Unsecured Credit Agreement Claim shall receive its pro
rata share of (i) Series A Notes, equal to a
distribution in the amount of 70% of such holder’s Allowed
Senior Unsecured Credit Agreement Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest) and (ii) New Common Interests allocated to 30% of
such holder’s Allowed Senior Unsecured Credit Agreement
Claim (which Allowed Claim constitutes principal plus accrued
but unpaid prepetition interest) as follows: (A) if
Class 7 Canadian Senior Unsecured Note Claims votes to
accept the Plan and (1) if Class 12 and Class 13
vote to accept the Plan, 9.4% of New Common Interests,
(2) if Class 12 votes to accept the Plan and
Class 13 does not vote to accept the Plan, 9.5% of New
Common Interests, (3) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
10.3% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 10.3%
of New Common Interests or (B) if Class 7 Canadian
Senior Unsecured Note Claims does not vote to accept the Plan
and (1) if Class 12 and Class 13 vote to accept
the Plan, 8.8% of New Common Interests, (2) if
Class 12 votes to accept the Plan and Class 13 does
not vote to accept the Plan, 8.9% of New Common Interests,
(3) if Class 12 does not vote to accept the Plan and
if Class 13 votes to accept the Plan, 9.6% of New Common
Interests, or (4) if neither Class 12 nor
Class 13 vote to accept the Plan, 9.6% of New Common
Interests as set forth more fully in Article IV.E herein.
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12.
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Class 12 —
Senior Subordinated Note Claims
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a. Claims in Class: Class 12
consists of Senior Subordinated Note Claims in the Allowed
amount of approximately $1,200 million, which constitutes
principal plus accrued but unpaid prepetition interest.
b. Treatment: The legal, equitable, and
contractual rights of holders of Senior Subordinated Note Claims
are Impaired under the Plan. On, or as soon as reasonably
practicable after, the Effective Date, each holder of
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an Allowed Senior Subordinated Note Claim shall receive its
pro rata share of (i) (A) 7.5% of New
Common Interests if Class 7 and Class 13 vote to
accept the Plan, (B) 7.6% of New Common Interests in
Class 7 votes to accept the Plan and Class 13 does not
vote to accept the Plan, (C) 7.5% of New Common Interests
if Class 7 does not vote to accept the Plan and
Class 13 votes to accept the Plan, and (D) 7.6% of New
Common Interests if Class 7 and Class 13 do not vote
to accept the Plan; provided that Class 12
votes to accept the Plan; provided further
however that in the event that Class 12 does not
vote to accept the Plan but the Plan is nonetheless confirmed,
no holder of an Allowed Senior Subordinated Note Claim shall
receive any shares of New Common Interests, and
(ii) Contingent Value Rights, as set forth more fully in
Article IV.F and Article IV.H herein. The foregoing
Class 12 treatment shall not be adjusted in the event
Class 13 receives the treatment described in
Article III.G.13.c herein.
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13.
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Class 13 —
Junior Subordinated Note Claims
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a. Claims in Class: Class 13
consists of Junior Subordinated Note Claims in the Allowed
amount of approximately $779 million, which constitutes
principal plus accrued but unpaid prepetition interest.
b. Treatment: The legal, equitable, and
contractual rights of holders of Junior Subordinated Note Claims
are Impaired under the Plan. On, or as soon as reasonably
practicable after, the Effective Date, each holder of an Allowed
Junior Subordinated Note Claim shall receive its pro
rata share of (a) 0.8% of New Common Interests if
Class 7 and Class 12 vote to accept the Plan or
(b) 0.7% of New Common Interests if Class 7 does not
vote to accept the Plan and Class 12 votes to accept the
Plan; provided that Class 12 and 13 vote to
accept the Plan; provided further however
that if Class 12 and Class 13 do not vote to accept
the Plan but the Plan is nonetheless confirmed, no holder of an
Allowed Junior Subordinated Note Claim shall receive any shares
of New Common Interests and (b) Contingent Value Rights, as
set forth more fully in Article IV.G and IV.H herein.
c. CIT Group Inc. is in discussions with certain
holders of Junior Subordinated Note Claims whereby such holders
would agree to execute an agreement to vote their Junior
Subordinated Notes in favor of the Plan of Reorganization in
exchange for modifying Class 13 treatment to increase to
1.5% the percentage of New Common Interests distributable pro
rata to holders of Junior Subordinated Note Claims (which
percentage shall be subject to adjustment in accordance with the
terms of the Plan of Reorganization) in the event Class 12
and Class 13 accept the Plan of Reorganization. In the
event CIT Group Inc. reaches agreement with such holders, the
percentage of New Common Interests distributable to other
holders under the Plan of Reorganization will be ratably
reduced, thereby reflecting the increased distribution to
holders of Junior Subordinated Note Claims. The Company
anticipates providing supplemental disclosure prior to the
Voting Deadline setting forth such adjustments to treatment for
classes receiving New Common Interests.
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14.
|
Class 14 — Subordinated
510(b) Claims
|
a. Claims in Class: Class 14
consists of Subordinated 510(b) Claims.
b. Treatment: The legal, equitable and
contractual rights of holders of Subordinated 510(b) claims
are impaired under the Plan. The holders of Subordinated 510(b)
Claims shall not receive or retain any property under the Plan
on account of such Subordinated 510(b) Claims.
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15.
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Class 15 — Old
Preferred Interests
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a. Interests in Class: Class 15
consists of all Old Preferred Interests.
b. Treatment: The legal, equitable, and
contractual rights of holders of Old Preferred Interests are
Impaired under the Plan. On the Effective Date, all Old
Preferred Interests shall be cancelled, terminated and
extinguished. However, each holder of an Old Preferred Interest
shall receive Contingent Value Rights, as set forth more fully
in Article IV.H herein.
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16.
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Class 16 — Old
Common Interests
|
a. Interests in Class: Class 16
consists of all Old Common Interests.
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b. Treatment: The legal, equitable and
contractual rights of the holders of Old Common Interests are
Impaired by the Plan. On the Effective Date, all Old Common
Interests shall be cancelled, terminated and extinguished.
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17.
|
Class 17 — Old
Delaware Funding Interests
|
a. Interests in Class: Class 17
consists of all Old Delaware Funding Interests.
b. Treatment: In the event that
(i) the holders of at least two-thirds in amount of the
Allowed Canadian Senior Note Claims actually voting in
Class 7 have voted to accept the Plan and (ii) the
holders of more than one-half in number of the Allowed Canadian
Senior Note Claims actually voting in Class 7 have voted to
accept the Plan, in each case not counting the vote of any
holder designated under section 1126(e) of the Bankruptcy
Code, the Old Delaware Funding Interests shall be Reinstated.
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18.
|
Class 18 — Other
Equity Interests (if any)
|
a. Interests in Class: Class 18
consists of all Other Equity Interests.
b. Treatment: The legal, equitable and
contractual rights of the holders of Other Equity Interests (if
any) are Impaired by the Plan. On the Effective Date, all Other
Equity Interests shall be terminated, cancelled and extinguished
and each holder of Other Equity Interests shall not be entitled
to, and shall not receive or retain any property or interest in
property on account of, such Other Equity Interests.
Notwithstanding any provision herein to the contrary, the
Debtors
and/or the
Reorganized Debtors shall only make distributions to holders of
Allowed Claims. No holder of a Disputed Claim will receive any
distribution on account thereof until and to the extent that its
Disputed Claim becomes an Allowed Claim.
In accordance with section 502(b)(2) of the Bankruptcy
Code, the amount of all Claims against the Debtors shall be
calculated as of the Petition Date. Except as otherwise
explicitly provided herein, in an order of the Bankruptcy Court
or required by the Bankruptcy Code, no holder of a Claim shall
be entitled to or receive Postpetition Interest.
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J.
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Special
Provision Regarding Unimpaired Claims
|
Except as otherwise provided in the Plan, nothing shall affect
the Debtors’ rights and defenses, both legal and equitable,
with respect to any Unimpaired Claim (including Claims that are
Allowed pursuant to the Plan), including, without limitation,
all rights with respect to legal and equitable defenses to
setoffs or recoupments against Unimpaired Claims, and the
Debtors’ failure to object to such Claims in the
Chapter 11 Cases shall be without prejudice to the
Reorganized Debtors’ right to contest or defend against
such Claims in (i) any appropriate non-bankruptcy forum as
if such Chapter 11 Cases had not been commenced or
(ii) the Bankruptcy Court (such forum to be selected at the
Debtors’ option).
ARTICLE IV
MEANS FOR
IMPLEMENTATION OF THE PLAN
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A.
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Allocation
To Holders Of Canadian Senior Unsecured Note Claims
|
If Class 7 Canadian Senior Unsecured Note Claims vote to
accept the Plan, on, or as soon as reasonably practicable after,
the Effective Date and without the need for any action by the
holder of a Canadian Senior Unsecured Note Claim or the
Reorganized Debtors, each holder of a Canadian Senior Unsecured
Note Claim shall transfer and assign to the Reorganized Debtors
all of such holder’s rights and obligations under the
Canadian Senior Unsecured Notes, free and clear of any liens,
claims, charges, security interests or other legal
C-21
or equitable encumbrances, limitations or restrictions
(collectively, “Liens”), and any promissory notes or
other evidence of indebtedness payable to each such holder of a
Canadian Senior Unsecured Note Claim under any Canadian Senior
Unsecured Notes shall thereafter be held of record by the
Reorganized Debtors. In exchange for such transfer and
assignment of the Canadian Senior Unsecured Notes held by each
holder of a Canadian Senior Unsecured Note Claim (the
“Canadian Senior Unsecured Note Exchange”), on account
of the approximately $2,188 million Allowed Canadian Senior
Unsecured Note Claims, on, or as soon as reasonably practicable
after, the Effective Date, each holder of an Allowed Canadian
Senior Unsecured Note Claim shall receive its pro
rata share of Series B Notes, equal to a
distribution in the amount of 100% of such holder’s Allowed
Canadian Senior Unsecured Note Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest), in full settlement and satisfaction of any Claims
held by such holder of an Allowed Canadian Senior Unsecured Note
Claim. Following the Canadian Senior Unsecured Note Exchange,
all Canadian Senior Unsecured Notes transferred and assigned to
the Reorganized Debtors shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist.
If Class 7 Canadian Senior Unsecured Note Claims does not
vote to accept the Plan and the Plan is nonetheless confirmed,
on, or as soon as reasonably practicable after, the Effective
Date, each holder of an Allowed Canadian Senior Unsecured Note
Claim shall receive its pro rata share of
(a) Series A Notes, equal to a distribution in the
amount of 70% of such holder’s Allowed Canadian Senior
Unsecured Note Claim (which Allowed Claim constitutes principal
plus accrued but unpaid prepetition interest) and (b)
(i) 6.2% of New Common Interests if Class 12 and
Class 13 vote to accept the Plan, (ii) 6.3% of New
Common Interests if Class 12 votes to accept the Plan and
Class 13 does not vote to accept the Plan, (iii) 6.8%
of New Common Interests if Class 12 does not vote to accept
the Plan and if Class 13 votes to accept the Plan, and
(iv) 6.8% of New Common Interests if neither Class 12
nor Class 13 vote to accept the Plan, allocated to 30% of
such holder’s Allowed Canadian Senior Unsecured Note Claim
(which Allowed Claim constitutes principal plus accrued but
unpaid prepetition interest), each (a) and (b) on account of the
Canadian Senior Unsecured Notes Guarantee Claim against CIT
Group Inc.
If Class 7 Canadian Senior Unsecured Note Claims do not
vote to accept the Plan and the Plan is nonetheless confirmed,
the holders of Allowed Canadian Senior Unsecured Note Claims
shall retain their Canadian Senior Unsecured Notes and Allowed
Canadian Senior Unsecured Note Claims against Delaware Funding,
provided, however that: (i) such
holders may not, in the aggregate, recover more than the Allowed
amount of their Canadian Senior Unsecured Note Claim on account
of the combined claims against CIT Group Inc. and Delaware
Funding; and (ii) the Debtors reserve the right to, among
other things, (w) not amend the Senior Credit Facility to
remove Delaware Funding as a guarantor of the Senior Credit
Facility, (x) estimate such holders’ claims against
Delaware Funding after receiving the distribution of
Series A Notes and New Common Interests, (y) extend
the maturity of those certain Intercompany Notes in accordance
with the terms thereof or (z) merge Delaware Funding into
CIT Group Inc. in accordance with the terms of the Canadian
Senior Unsecured Note Indentures.
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B.
|
Allocation
Of New Notes And Issuance Of New Common Interests To Holders Of
Long-Dated Senior Unsecured Note Claims
|
On, or as soon as reasonably practicable after, the Effective
Date and without the need for any action by the holder of a
Long-Dated Senior Unsecured Note Claim or the Reorganized
Debtors, each Electing Long-Dated Senior Unsecured Note Claims
Holder shall transfer and assign to the Reorganized Debtors all
of such holder’s rights and obligations under the
Long-Dated Senior Unsecured Notes, free and clear of any Liens,
and any promissory notes or other evidence of indebtedness
payable to each such holder of a Long-Dated Senior Unsecured
Note Claim under any Long-Dated Senior Unsecured Notes shall
thereafter be held of record by the Reorganized Debtors. In
exchange for such transfer and assignment of the Long-Dated
Senior Unsecured Notes held by each holder of a Long-Dated
Senior Unsecured Note Claim (the “Long-Dated Senior
Unsecured Note Exchange”), on account of such Electing
Long-Dated Senior Unsecured Note Claims Holders’ Allowed
Long-Dated Senior Unsecured Note Claims, the Reorganized Debtors
shall allocate to each such holder its pro rata
share of (i) Series A Notes in the amount of 70% of
such holder’s Allowed Long-Dated Senior Unsecured
C-22
Note Claim (which Allowed Claim constitutes principal plus
accrued but unpaid prepetition interest) and (ii) New
Common Interests allocated to 30% of such holder’s Allowed
Long-Dated Senior Unsecured Note Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest) as follows: (A) if Class 7 Canadian Senior
Unsecured Note Claims votes to accept the Plan and (1) if
Class 12 and Class 13 vote to accept the Plan, 3.6% of
New Common Interests, (2) if Class 12 votes to accept
the Plan and Class 13 does not vote to accept the Plan,
3.6% of New Common Interests, (3) if Class 12 does not
vote to accept the Plan and if Class 13 votes to accept the
Plan, 3.9% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 3.9% of
New Common Interests or (B) if Class 7 Canadian Senior
Unsecured Note Claims does not vote to accept the Plan and
(1) if Class 12 and Class 13 vote to accept the
Plan, 3.4% of New Common Interests, (2) if Class 12
votes to accept the Plan and Class 13 does not vote to
accept the Plan, 3.4% of New Common Interests, (3) if
Class 12 does not vote to accept the Plan and if
Class 13 votes to accept the Plan, 3.7% of New Common
Interests, or (4) if neither Class 12 nor
Class 13 vote to accept the Plan, 3.7% of New Common
Interests, in full satisfaction and settlement of any Claims
held by such holder of an Allowed Long-Dated Senior Unsecured
Note Claim. Following the Long-Dated Senior Unsecured Note
Exchange, all Long-Dated Senior Unsecured Notes transferred and
assigned to the Reorganized Debtors shall no longer be
outstanding and shall automatically be cancelled and shall cease
to exist.
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C.
|
Allocation
Of New Notes And Issuance Of New Common Interests To Holders Of
Senior Unsecured Note Claims
|
On, or as soon as reasonably practicable after, the Effective
Date and without the need for any action by the holder of a
Senior Unsecured Note Claim or the Reorganized Debtors, each
holder of a Senior Unsecured Note Claim shall transfer and
assign to the Reorganized Debtors all of such holder’s
rights and obligations under the Senior Unsecured Notes, free
and clear of any Liens, and any promissory notes or other
evidence of indebtedness payable to each such holder of a Senior
Unsecured Note Claim under any Senior Unsecured Notes shall
thereafter be held of record by the Reorganized Debtors. In
exchange for such transfer and assignment of the Senior
Unsecured Notes held by each holder of a Senior Unsecured Note
Claim (the “Senior Unsecured Note Exchange”), on
account of the approximately $25,504 million Allowed Senior
Unsecured Note Claims, the Reorganized Debtors shall allocate to
each such holder its pro rata share of
(i) Series A Notes in the amount of 70% of such
holder’s Allowed Senior Unsecured Note Claim (which Allowed
Claim constitutes principal plus accrued but unpaid prepetition
interest) and (ii) New Common Interests allocated to 30% of
such holder’s Allowed Senior Unsecured Note Claim (which
Allowed Claim constitutes principal plus accrued but unpaid
prepetition interest) as follows: (A) if Class 7
Canadian Senior Unsecured Note Claims votes to accept the Plan
and (1) if Class 12 and Class 13 vote to accept
the Plan, 77.7% of New Common Interests, (2) if
Class 12 votes to accept the Plan and Class 13 does
not vote to accept the Plan, 78.3% of New Common Interests,
(3) if Class 12 does not vote to accept the Plan and
if Class 13 votes to accept the Plan, 84.7% of New Common
Interests, or (4) if neither Class 12 nor
Class 13 vote to accept the Plan, 84.7% of New Common
Interests or (B) if Class 7 Canadian Senior Unsecured
Note Claims does not vote to accept the Plan and (1) if
Class 12 and Class 13 vote to accept the Plan, 72.5%
of New Common Interests, (2) if Class 12 votes to
accept the Plan and Class 13 does not vote to accept the
Plan, 73.0% of New Common Interests, (3) if Class 12
does not vote to accept the Plan and if Class 13 votes to
accept the Plan, 79.0% of New Common Interests, or (4) if
neither Class 12 nor Class 13 vote to accept the Plan,
79.0% of New Common Interests, in full satisfaction and
settlement of any Claims held by such holder of an Allowed
Senior Unsecured Note Claim. Following the Senior Unsecured Note
Exchange, all Senior Unsecured Notes transferred and assigned to
the Reorganized Debtors shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist.
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D.
|
Allocation
Of New Notes And Issuance Of New Common Interests To Holders Of
Senior Unsecured Term Loan Claims
|
Claims in Classes 10 and 11 are pari passu
and shall be combined for voting purposes. On, or as soon as
reasonably practicable after, the Effective Date and without the
need for any action by the holder of a Senior Unsecured Term
Loan Claim or the Reorganized Debtors, each holder of a Senior
Unsecured Term Loan
C-23
Claim shall transfer and assign to the Reorganized Debtors all
of such holder’s rights and obligations under the Senior
Unsecured Term Loans, free and clear of any Liens, and any
promissory notes or other evidence of indebtedness payable to
each such holder of a Senior Unsecured Term Loan Claim under any
Senior Unsecured Term Loans shall thereafter be held of record
by the Reorganized Debtors. In exchange for such transfer and
assignment of the Senior Unsecured Term Loans held by each
holder of a Senior Unsecured Term Loan Claim (the “Senior
Unsecured Term Loan Exchange”), on account of the
approximately $321 million Allowed Senior Unsecured Term
Loan Claims (a) if Class 10 Senior Unsecured Term Loan
Claims votes to accept the Plan, on, or as soon as reasonably
practicable after, the Effective Date, each holder of an Allowed
Senior Unsecured Term Loan Claim shall receive its pro
rata share of (i) indebtedness under credit
facilities of Reorganized CIT on substantially the same terms as
the Series A Notes, in lieu of a distribution of the
Series A Notes, equal to a distribution in the amount of
70% of such holder’s Allowed Senior Unsecured Term Loan
Claim (which Allowed Claim constitutes principal plus accrued
but unpaid prepetition interest) and (ii) New Common
Interests allocated to 30% of such holder’s Allowed Senior
Unsecured Term Loan Claim (which Allowed Claim constitutes
principal plus accrued but unpaid prepetition interest) as
follows: (A) if Class 7 Canadian Senior Unsecured Note
Claims votes to accept the Plan and (1) if Class 12
and Class 13 vote to accept the Plan, 1.0% of New Common
Interests, (2) if Class 12 votes to accept the Plan
and Class 13 does not vote to accept the Plan, 1.0% of New
Common Interests, (3) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
1.1% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 1.1% of
New Common Interests or (B) if Class 7 Canadian Senior
Unsecured Note Claims does not vote to accept the Plan and
(1) if Class 12 and Class 13 vote to accept the
Plan, 0.9% of New Common Interests, (2) if Class 12
votes to accept the Plan and Class 13 does not vote to
accept the Plan, 0.9% of New Common Interests, (3) if
Class 12 does not vote to accept the Plan and if
Class 13 votes to accept the Plan, 1.0% of New Common
Interests, or (4) if neither Class 12 nor
Class 13 vote to accept the Plan, 1.0% of New Common
Interests or (b) if Class 10 Senior Unsecured Term
Loan Claims does not vote to accept the Plan and the Plan is
nonetheless confirmed, on, or as soon as reasonably practicable
after, the Effective Date, each holder of an Allowed Senior
Unsecured Term Loan Claim shall receive its pro
rata share of (A) Series A Notes, equal to a
distribution in the amount of 70% of such holder’s Allowed
Senior Unsecured Term Loan Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest) and (B) New Common Interests allocated to 30% of
such holder’s Allowed Senior Unsecured Term Loan Claim
(which Allowed Claim constitutes principal plus accrued but
unpaid prepetition interest) as follows: (1) if
Class 7 Canadian Senior Unsecured Note Claims votes to
accept the Plan and (A) if Class 12 and Class 13
vote to accept the Plan, 1.0% of New Common Interests,
(B) if Class 12 votes to accept the Plan and
Class 13 does not vote to accept the Plan, 1.0% of New
Common Interests, (C) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
1.1% of New Common Interests, or (D) if neither
Class 12 nor Class 13 vote to accept the Plan, 1.1% of
New Common Interests or (2) if Class 7 Canadian Senior
Unsecured Note Claims does not vote to accept the Plan and
(A) if Class 12 and Class 13 vote to accept the
Plan, 0.9% of New Common Interests, (B) if Class 12
votes to accept the Plan and Class 13 does not vote to
accept the Plan, 0.9% of New Common Interests, (C) if
Class 12 does not vote to accept the Plan and if
Class 13 votes to accept the Plan, 1.0% of New Common
Interests, or (D) if neither Class 12 nor
Class 13 vote to accept the Plan, 1.0% of New Common
Interests, in full satisfaction and settlement of any Claims
held by such holder of an Allowed Senior Unsecured Term Loan
Claim. Following the Senior Unsecured Term Loan Exchange, all
Senior Unsecured Term Loans transferred and assigned to the
Reorganized Debtors shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist.
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E.
|
Allocation
Of New Notes And Issuance Of New Common Interests To Holders Of
Senior Unsecured Credit Agreement Claims
|
Claims in Classes 10 and 11 are pari passu, and
shall be combined for voting purposes. On, or as soon as
reasonably practicable after, the Effective Date and without the
need for any action by the holder of a Senior Unsecured Credit
Agreement Claim or the Reorganized Debtors, each holder of a
Senior Unsecured Credit Agreement Claim shall transfer and
assign to the Reorganized Debtors all of such holder’s
rights and obligations under the Senior Unsecured Credit
Agreements, free and clear of any Liens, and any promissory
C-24
notes or other evidence of indebtedness payable to each such
holder of a Senior Unsecured Credit Agreement Claim under any
Senior Unsecured Credit Agreements shall thereafter be held of
record by the Reorganized Debtors. In exchange for such transfer
and assignment of the Senior Unsecured Credit Agreements held by
each holder of a Senior Unsecured Credit Agreement Claim (the
“Senior Unsecured Credit Agreement Exchange”), on
account of the approximately $3,101 million Allowed Senior
Unsecured Credit Agreement Claims (a) if Class 11
Senior Unsecured Credit Agreement Claims votes to accept the
Plan, on, or as soon as reasonably practicable after, the
Effective Date, each holder of an Allowed Senior Unsecured
Credit Agreement Claim shall receive its pro rata
share of (i) indebtedness under credit facilities of
Reorganized CIT on substantially the same terms as the
Series A Notes, in lieu of a distribution of the
Series A Notes, equal to a distribution in the amount of
70% of such holder’s Allowed Senior Unsecured Credit
Agreement Claim (which Allowed Claim constitutes principal plus
accrued but unpaid prepetition interest) and (ii) New
Common Interests allocated to 30% of such holder’s Allowed
Senior Unsecured Credit Agreement Claim (which Allowed Claim
constitutes principal plus accrued but unpaid prepetition
interest) as follows: (A) if Class 7 Canadian Senior
Unsecured Note Claims votes to accept the Plan and (1) if
Class 12 and Class 13 vote to accept the Plan, 9.4% of
New Common Interests, (2) if Class 12 votes to accept
the Plan and Class 13 does not vote to accept the Plan,
9.5% of New Common Interests, (3) if Class 12 does not
vote to accept the Plan and if Class 13 votes to accept the
Plan, 10.3% of New Common Interests, or (4) if neither
Class 12 nor Class 13 vote to accept the Plan, 10.3%
of New Common Interests or (B) if Class 7 Canadian
Senior Unsecured Note Claims does not vote to accept the Plan
and (1) if Class 12 and Class 13 vote to accept
the Plan, 8.8% of New Common Interests, (2) if
Class 12 votes to accept the Plan and Class 13 does
not vote to accept the Plan, 8.9% of New Common Interests,
(3) if Class 12 does not vote to accept the Plan and
if Class 13 votes to accept the Plan, 9.6% of New Common
Interests, or (4) if neither Class 12 nor
Class 13 vote to accept the Plan, 9.6% of New Common
Interests or (b) if Class 11 Senior Unsecured Credit
Agreement Claims does not vote to accept the Plan and the Plan
is nonetheless confirmed, on, or as soon as reasonably
practicable after, the Effective Date, each holder of an Allowed
Senior Unsecured Credit Agreement Claim shall receive its
pro rata share of (A) Series A Notes,
equal to a distribution in the amount of 70% of such
holder’s Allowed Senior Unsecured Credit Agreement Claim
(which Allowed Claim constitutes principal plus accrued but
unpaid prepetition interest) and (B) New Common Interests
allocated to 30% of such holder’s Allowed Senior Unsecured
Credit Agreement Claim (which Allowed Claim constitutes
principal plus accrued but unpaid prepetition interest) as
follows: (1) if Class 7 Canadian Senior Unsecured Note
Claims votes to accept the Plan and (A) if Class 12
and Class 13 vote to accept the Plan, 9.4% of New Common
Interests, (B) if Class 12 votes to accept the Plan
and Class 13 does not vote to accept the Plan, 9.5% of New
Common Interests, (C) if Class 12 does not vote to
accept the Plan and if Class 13 votes to accept the Plan,
10.3% of New Common Interests, or (D) if neither
Class 12 nor Class 13 vote to accept the Plan, 10.3%
of New Common Interests or (2) if Class 7 Canadian
Senior Unsecured Note Claims does not vote to accept the Plan
and (A) if Class 12 and Class 13 vote to accept
the Plan, 8.8% of New Common Interests, (B) if
Class 12 votes to accept the Plan and Class 13 does
not vote to accept the Plan, 8.9% of New Common Interests,
(C) if Class 12 does not vote to accept the Plan and
if Class 13 votes to accept the Plan, 9.6% of New Common
Interests, and (D) if neither Class 12 nor
Class 13 votes to accept the Plan, 9.6% of New Common
Interests, in full satisfaction and settlement of any Claims
held by such holder of an Allowed Senior Unsecured Term Loan
Claim. Following the Senior Unsecured Credit Agreement Exchange,
all Senior Unsecured Credit Agreements transferred and assigned
to the Reorganized Debtors shall no longer be outstanding and
shall automatically be cancelled and shall cease to exist.
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|
F.
|
Issuance
Of New Common Interests To Holders Of Senior Subordinated Note
Claims
|
On, or as soon as reasonably practicable after, the Effective
Date and without the need for any action by the holder of a
Senior Subordinated Note Claim or the Reorganized Debtors, each
holder of a Senior Subordinated Note Claim shall transfer and
assign to the Reorganized Debtors all of such holder’s
rights and obligations under the Senior Subordinated Notes, free
and clear of any Liens, and any promissory notes or other
evidence of indebtedness payable to each such holder of a Senior
Subordinated Note Claim under the Senior Subordinated Notes
shall thereafter be held of record by the Reorganized Debtors.
In exchange for such transfer and assignment of the Senior
Subordinated Notes held by each holder of a Senior Subordinated
Note
C-25
Claim (the “Senior Subordinated Notes Exchange”), on
account of the approximately $1,200 million Allowed Senior
Subordinated Note Claims each holder of an Allowed Senior
Subordinated Note Claim shall receive its pro rata
share of (i)(A) 7.5% of New Common Interests if Class 7 and
Class 13 vote to accept the plan, (B) 7.6% of New Common
Interests if Class 7 votes to accept the Plan and Class 13 does
not vote to accept the Plan, (C) 7.5% of New Common Interests if
Class 7 does not vote to accept the Plan and Class 13 Votes to
accept the Plan, and (D) 7.6% of New Common Interests if Class 7
and Class 13 do not vote to accept the Plan; provided
that Class 12 votes to accept the Plan; provided
further however that in the event that Class 12
does not vote to accept the Plan but the Plan is nonetheless
confirmed, no holder of an Allowed Senior Subordinated Note
Claim shall receive any shares of New Common Interests, and (ii)
Contingent Value Rights, in full satisfaction and settlement of
any Claims held by such holder of an Allowed Senior Subordinated
Note Claim. Following the Senior Subordinated Notes Exchange,
the Senior Subordinated Notes transferred and assigned to the
Reorganized Debtors shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist. The
foregoing Class 12 treatment shall not be adjusted in the
event Class 13 receives the treatment described in
Article III.G.13.c herein.
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|
G.
|
Issuance
Of New Common Interests To Holders Of Junior Subordinated Note
Claims
|
On, or as soon as reasonably practicable after, the Effective
Date and without the need for any action by the holder of a
Junior Subordinated Note Claim or the Reorganized Debtors, each
holder of a Junior Subordinated Note Claim shall transfer and
assign to the Reorganized Debtors all of such holder’s
rights and obligations under the Junior Subordinated Notes, free
and clear of any Liens, and any promissory notes or other
evidence of indebtedness payable to each such holder of a Junior
Subordinated Note Claim under the Junior Subordinated Notes
shall thereafter be held of record by the Reorganized Debtors.
In exchange for such transfer and assignment of the Junior
Subordinated Notes held by each holder of a Junior Subordinated
Note Claim (the “Junior Subordinated Notes Exchange”
and together with the Canadian Senior Unsecured Note Exchange,
the Long-Dated Senior Unsecured Note Exchange, the Senior
Unsecured Note Exchange, the Senior Unsecured Term Loan
Exchange, the Senior Unsecured Credit Agreement Exchange and the
Senior Subordinated Notes Exchange, the “Exchanges”),
on account of the approximately $779 million Allowed Junior
Subordinated Note Claims each holder of an Allowed Junior
Subordinated Note Claim shall receive its pro rata
share of (a) 0.8% of New Common Interests if Class 7
and Class 12 vote to accept the Plan or (b) 0.7% of
New Common Interests if Class 7 does not vote to accept the
Plan and Class 12 votes to accept the Plan; provided
that Class 13 votes to accept the Plan;
provided further however that if
Class 12 and Class 13 do not vote to accept the Plan
but the Plan is nonetheless confirmed, no holder of an Allowed
Junior Subordinated Note Claim shall receive any shares of New
Common Interests and (b) Contingent Value Rights, in full
satisfaction and settlement of any Claims held by such holder of
an Allowed Junior Subordinated Note Claim. Following the Junior
Subordinated Notes Exchange, the Junior Subordinated Notes
acquired by the Reorganized Debtors shall no longer be
outstanding and shall automatically be cancelled and shall cease
to exist.
CIT Group Inc. is in discussions with certain holders of Junior
Subordinated Note Claims whereby such holders would agree to
execute an agreement to vote their Junior Subordinated Notes in
favor of the Plan of Reorganization in exchange for modifying
Class 13 treatment to increase to 1.5% the percentage of
New Common Interests distributable pro rata to holders of Junior
Subordinated Note Claims (which percentage shall be subject to
adjustment in accordance with the terms of the Plan of
Reorganization) in the event Class 12 and Class 13
accept the Plan of Reorganization. In the event CIT Group Inc.
reaches agreement with such holders, the percentage of New
Common Interests distributable to other holders under the Plan
of Reorganization will be ratably reduced, thereby reflecting
the increased distribution to holders of Junior Subordinated
Note Claims. The Company anticipates providing supplemental
disclosure prior to the Voting Deadline setting forth such
adjustments to treatment for classes receiving New Common
Interests.
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H.
|
Allocation
Of Contingent Value Rights
|
On, or as soon as reasonably practicable after, the Effective
Date and substantially contemporaneously with the Exchanges, the
Reorganized Debtors shall allocate non-transferable contingent
value rights (the “Contingent Value Rights” or
“CVRs”) to (i) holders of Senior Subordinated
Note Claims (the “Senior CVRs”)
C-26
pro rata based on each such holder’s share of
the aggregate amount of Senior Subordinated Note Claims,
(ii) holders of Junior Subordinated Note Claims (the
“Junior CVRs”) pro rata based on each
such holder’s share of the aggregate amount of Junior
Subordinated Note Claims, and (iii) holders of Old
Preferred Interests (the “Preferred Stock CVRs”)
pro rata based on each such holder’s share of
the aggregate combined liquidation preference of the Old
Preferred Interests, including accrued and unpaid dividends
thereon to the Petition Date. The CVRs entitle holders of such
Claims to a distribution under the Plan in the form of New
Common Interests under certain circumstances, as described in
more detail below.
CVR
Distributions
If, on the Measurement Date, the aggregate Fair Market Value of
the
Class 8-11
Securities exceeds the
Class 8-11
Par Recovery Amount (such excess, the
“Class 8-11
Excess Value Amount”), the Disbursing Agent shall, as soon
as reasonably practicable after the Measurement Date, distribute
or caused to be distributed to holders of CVRs, New Common
Interests in the following order of priority:
FIRST, pro rata to holders of Senior CVRs, an
amount of New Common Interests having an aggregate Fair Market
Value (as adjusted to take into account the dilutive impact of
any distribution required to be made on account of CVRs
hereunder) equal to the lesser of (i) an amount such that,
immediately after such distribution, the Class 8-11 Excess Value
Amount (as adjusted to take into account the dilutive impact of
any distribution required to be made on account of CVRs
hereunder) is reduced to zero and (ii) the excess of
(x) the Class 12 Par Recovery Amount over
(y) the aggregate Fair Market Value (as adjusted to take
into account the dilutive impact of any distribution required to
be made on account of CVRs hereunder) of the New Common
Interests (if any) received by holders of Senior Subordinated
Note Claims in the Senior Subordinated Notes Exchange;
SECOND, if, following any distribution required to be made on
account of Senior CVRs, the
Class 8-11
Excess Value Amount (as adjusted to take into account the
dilutive impact of any distribution required to be made on
account of CVRs hereunder) is greater than zero, pro
rata to holders of Junior CVRs, an amount of New Common
Interests having an aggregate Fair Market Value (as adjusted to
take into account the dilutive impact of any distribution
required to be made on account of CVRs hereunder) equal to the
lesser of (i) an amount such that, immediately after such
distribution and after giving effect to any distribution on
account of Senior CVRs, the
Class 8-11
Excess Value Amount (as adjusted to take into account the
dilutive impact of any distribution required to be made on
account of CVRs hereunder) is reduced to zero and (ii) the
excess of (A) the Class 13 Par Recovery Amount
over (B) the aggregate Fair Market Value (as
adjusted to take into account the dilutive impact of any
distribution required to be made on account of CVRs hereunder)
of the New Common Interests (if any) received by holders of
Junior Subordinated Note Claims in the Junior Subordinated Notes
Exchange; and
THIRD, if, following any distribution required to be made on
account of Junior CVRs, the
Class 8-11
Excess Value Amount (as adjusted to take into account the
dilutive impact of any distribution required to be made on
account of CVRs hereunder) is greater than zero, pro
rata to holders of Preferred Stock CVRs, an amount of New
Common Interests having an aggregate Fair Market Value (as
adjusted to take into account the dilutive impact of any
distribution required to be made on account of CVRs hereunder)
equal to the lesser of (i) an amount such that, immediately
after such distribution and after giving effect to any
distribution on account of Senior CVRs and Junior CVRs, the
Class 8-11
Excess Value Amount (as adjusted to take into account the
dilutive impact of any distribution required to be made on
account of CVRs hereunder) is reduced to zero and (ii) the
Class 15 Par Recovery Amount.
There shall be no distribution on account of CVRs if, as of the
Measurement Date, the aggregate Fair Market Value of the
Class 8-11
Securities is less than or equal to the
Class 8-11
Par Recovery Amount.
Termination
The CVRs shall terminate and cease to exist on the Measurement
Date unless a distribution is required to be made on account of
the CVRs, in which case the CVRs shall terminate and cease to
exist on the date such distribution is made.
C-27
required to be made on account of such CVRs, in which case such
CVRs shall terminate and cease to exist on the date such
distribution is made.
Disbursing
Agent
The Disbursing Agent shall determine, in the exercise of its
reasonable good faith discretion after consultation with a
financial advisor, the amount of any distribution of New Common
Interests required to be made on account of CVRs pursuant to
this Article IV.H, including without limitation, the
anticipated impact on Fair Market Value as a result of any
distribution of New Common Interests required to be made
hereunder on account of CVRs. Each such determination by the
Disbursing Agent shall be final and binding.
Status
and Availability of New Common Interests
Reorganized CIT shall at all times during which the CVRs remain
outstanding reserve from its authorized capital a sufficient
amount of New Common Interests to provide distributions in full
to holders of CVRs pursuant to this Article IV.H. If, at
any time prior to the time the CVRs terminate and cease to
exist, Reorganized CIT’s authorized capital shall not be
sufficient to permit distributions in full to holders of CVRs
pursuant to this Article IV.H, Reorganized CIT will
promptly take such corporate action as may be necessary to
increase its authorized capital to such amount as shall be
sufficient for such purposes.
Reorganized CIT shall take all such action as may be necessary
to ensure that all New Common Interests distributed to holders
of CVRs pursuant to this Article IV.H shall, at the time of
distribution of such securities, be duly and validly authorized,
fully paid and non-assessable.
Agreements
of CVR Holders
Each holder of CVRs, by receiving a distribution hereunder of
such CVRs, shall automatically be deemed to consent and agree
with the Reorganized Debtors and with each other holder of CVRs
that: (i) the CVRs are subject to the terms, provisions and
conditions of the Plan, including this Article IV.H;
(ii) the CVRs will not be represented by any certificates
and may not be transferred or assigned; (iii) the CVRs do
not bear any stated rate of interest; and (iv) no holder of
CVRs shall be entitled to vote, receive dividends or be deemed
for any purpose the holder of any securities of the Reorganized
Debtors nor anything contained herein be construed to confer
upon any holder of CVRs any of the rights of a stockholder of
the Reorganized Debtors or any right to vote for the election of
directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions
affecting stockholders, or to receive subscription rights, or to
exercise appraisal rights, or otherwise.
Contingent
Nature of CVRs
The CVRs represent the right to receive contingent distributions
of value under the Plan in the form of New Common Interests as
provided in this Article IV.H. Distributions on account of
CVRs will be made only to the extent required by this
Article IV.H and, if no such distributions are required to
be made hereunder, the CVRs will terminate and cease to exist
and holders thereof will receive no value on account of the CVRs.
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I.
|
Letters
of Credit Under JPM L/C Facility
|
JPM shall hold all cash collateral on hand as of the Petition
Date until the Effective Date, including any retainers
established for JPM counsel specified in any cash collateral
agreements between CIT Group Inc. and JPM.
JPM and the Debtors shall honor any and all draws under the JPM
L/C Facility in the ordinary course of business and pursuant to
the terms of the JPM L/C Facility Agreement. In the event of any
drawings, such drawings made after the Petition Date but before
the Effective Date, under any letter of credit issued under the
JPM L/C Facility (i) to the extent JPM holds cash
collateral supporting such drawn letter of credit, JPM shall be
authorized to apply such cash collateral to the reimbursement
obligation and the Debtors and JPM shall stipulate, and the
Debtors shall seek Bankruptcy Court approval of any such
stipulation, to lift the automatic
C-28
stay to allow JPM to so apply such cash collateral and
(ii) to the extent no cash collateral supports such drawn
letter of credit, Reorganized CIT shall pay the reimbursement
obligation under such drawn letter of credit in full on the
Effective Date (including any interest thereon as set forth in
the JPM L/C Facility Agreement). In no event shall JPM be
permitted to pursue, and JPM is hereby expressly enjoined from
pursuing, any non-Debtor applicant, account party or other third
party for satisfaction of a reimbursement obligation under any
letter of credit issued and drawn under the JPM L/C Facility and
JPM’s sole remedy for reimbursement of a letter of credit
issued and drawn under the JPM L/C Facility shall be against CIT
Group Inc.
and/or
Reorganized CIT as set forth in (i) and (ii) above;
provided that the foregoing forbearance is
entirely contractual and does not constitute any admission that
the automatic stay imposed by Bankruptcy Code section 362
or any other law requires such forbearance, and neither the
Debtors nor the Reorganized Debtors nor any of their affiliates
shall seek entry of an order during the Chapter 11 Cases
restraining JPM from so pursing any such person or entity. JPM
will not terminate any unexpired outstanding letters of credit
without consent of CIT Group Inc. and any beneficiary
thereunder, provided that the foregoing shall not
prevent JPM from issuing a notice of non-renewal on any
evergreen letter of credit for which such renewal would cause
the next renewal date to extend past the expiry of the facility
on May 14, 2010.
If Class 6 JPM L/C Facility Claims votes to accept the
Plan, (i) on, or as soon as reasonably practicable after,
the Effective Date, Reorganized CIT shall provide JPM with the
Cash Collateralization and (ii) in exchange for the Cash
Collateralization, JPM shall not pursue any subsidiary or
affiliate of CIT Group Inc. or any other entity that JPM
contends may be co-liable with CIT Group Inc. under the JPM L/C
Facility or the JPM L/C Facility Agreement for any remedies,
claims or causes of action arising out of or relating to the JPM
L/C Facility or the JPM L/C Facility Agreement. All fees and
other charges arising under or in respect of the JPM L/C
Facility Agreement shall be paid on, or as soon as reasonably
practicable after, the Effective Date by Reorganized CIT. Upon
the Effective Date, each non-Debtor subsidiary and affiliate of
CIT Group Inc. that was or is a co-applicant or account party on
a letter of credit issued under the JPM L/C Facility shall
execute a release and waiver of any and all claims against JPM
and/or any
other lenders under the JPM L/C Facility in respect of the JPM
L/C Facility
and/or the
JPM L/C Facility Agreement arising prior to the Effective Date.
If Class 6 JPM L/C Facility Claims does not vote to accept
the Plan and the Plan is nonetheless confirmed,
(i) Reorganized CIT shall satisfy any Claims for
reimbursement under the JPM L/C Facility that arose during the
Chapter 11 Cases in full on, or as soon as reasonably
practicable after, the Effective Date and (ii) following
the Effective Date, Reorganized CIT shall pay all such Claims
for reimbursement under the JPM L/C Facility in the ordinary
course of business and upon the terms set forth in the JPM L/C
Facility Agreement. In exchange for Reorganized CIT maintaining
the reimbursement obligations in the immediately preceding
(i) and (ii), JPM shall not pursue any subsidiary or
affiliate of CIT Group Inc. or any other entity that JPM
contends may be co-liable with CIT Group Inc. under the JPM L/C
Facility Agreement for any remedies, claims or causes of action
arising out of or relating to the JPM L/C Facility or the JPM
L/C Facility Agreement
JPM shall provide CIT Group Inc. and Reorganized CIT with
updated reports in accordance with existing procedures of the
amount of letters of credit outstanding and drawings, if any,
thereunder and JPM’s application of cash collateral against
CIT Group Inc.’s
and/or
Reorganized CIT’s reimbursement obligations. To the extent
that, due to letters of credit expiring undrawn, the amount of
cash collateral held by JPM shall at any time exceed the
amount(s) provided pursuant to the Cash Collateralization, JPM
shall release any such excess cash collateral to CIT Group Inc.
and/or
Reorganized CIT upon written request from CIT Group Inc.
and/or
Reorganized CIT.
No letters of credit shall be issued, renewed, extended or
amended under the JPM L/C Facility after the Petition Date.
On the Effective Date, the Reorganized Debtors shall
(a) enter into the Exit Facility together with all
guarantees evidencing obligations of the Reorganized Debtors
thereunder and security documents, (b) execute such
mortgages, certificates and other documentation and deliveries
as the agent under the Exit Facility
C-29
reasonably requests, and (c) deliver insurance and
customary opinions (collectively, the documents in (a)-(c), the
“Exit Facility Documents”), all of which such Exit
Facility Documents shall be in form and substance satisfactory
to the Exit Facility Lenders, and such documents and all other
documents, instruments and agreements to be entered into,
delivered or contemplated thereunder shall become effective in
accordance with their terms on the Effective Date. In the
Confirmation Order, the Bankruptcy Court shall approve the Exit
Facility and authorize the Reorganized Debtors to execute the
same together with such other documents as the Exit Facility
Lenders may reasonably require in order to effectuate the
treatment afforded to such parties under the Exit Facility.
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K.
|
Continued
Existence and Vesting of Assets in Reorganized Debtors
|
The Debtors shall continue to exist after the Effective Date as
separate corporate entities in accordance with the applicable
law for the State of Delaware and pursuant to their certificate
of incorporation and by laws and certificate of formation, or
other governing documents, as amended and restated on the
Effective Date. The Reorganized CIT Certificate of
Incorporation, the Reorganized Delaware Funding Amendment to
Certificate of Formation and the Reorganized Delaware Funding
Amendment to Limited Liability Company Agreement are attached
hereto as
Exhibits A-1,
A-2 and
A-3,
respectively.
Among other things, the Debtors’ existing certificates of
incorporation or other governing documents, as applicable, shall
be amended to include a provision prohibiting the issuance of
nonvoting equity securities as required under
section 1123(a)(6) of the Bankruptcy Code.
On and after the Effective Date, all property of the Estate, and
all Litigation Claims, and any property acquired by the Debtors
under or in connection with the Plan, shall vest in the
Reorganized Debtors free and clear of all Claims, Interests and
Liens except as otherwise expressly provided in the Plan. On and
after the Effective Date, the Reorganized Debtors may operate
their businesses and may use, acquire and dispose of property
and compromise or settle any Claims without supervision of or
approval by the Bankruptcy Court and free and clear of any
restrictions of the Bankruptcy Code or Bankruptcy Rules other
than restrictions expressly imposed by the Plan or the
Confirmation Order. Without limiting the foregoing, the
Reorganized Debtors may pay charges that they incur on and after
the Effective Date for professionals’ fees, disbursements,
expenses or related support services without application to the
Bankruptcy Court.
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L.
|
Cancellation
of Interests and Agreements
|
On the Effective Date, except as otherwise expressly provided
for in the Plan, (i) the Canadian Senior Unsecured Notes,
the Long-Dated Senior Unsecured Notes, the Senior Unsecured
Notes, the Senior Unsecured Term Loans, the Senior Unsecured
Credit Agreements, the Senior Subordinated Notes, the Junior
Subordinated Notes, the Old Preferred Interests, the Old Common
Interests, and the Other Equity Interests or other instrument or
document evidencing or creating any indebtedness or obligation
of or ownership interest in the Debtors, except such notes or
other instruments evidencing indebtedness or obligations of or
Interests in the Debtors that are Reinstated under this Plan, to
the extent not already cancelled, shall be deemed cancelled,
terminated and of no further force or effect without any further
action on the part of the Bankruptcy Court or any Person;
provided however that notwithstanding the entry of
the Confirmation Order or the occurrence of the Effective Date,
the Canadian Senior Unsecured Notes, the Long-Dated Senior
Unsecured Notes, the Senior Unsecured Notes, the Senior
Unsecured Term Loans, the Senior Unsecured Credit Agreements,
the Senior Subordinated Notes and the Junior Subordinated Notes
shall be deemed to continue in effect solely to the extent
necessary to (1) allow holders of such Canadian Senior
Unsecured Notes, the Long-Dated Senior Unsecured Notes, Senior
Unsecured Notes, Senior Unsecured Term Loans, Senior Unsecured
Credit Agreements, Senior Subordinated Notes
and/or
Junior Subordinated Notes to receive distributions, if any,
under the Plan and (2) allow the Disbursing Agents to make
distributions under the Plan as provided herein, and
(ii) the obligations of the Debtors under the Canadian
Senior Unsecured Notes, the Long-Dated Senior Unsecured Notes,
the Senior Unsecured Notes, the Senior Unsecured Term Loans, the
Senior Unsecured Credit Agreements, the Senior Subordinated
Notes, the Junior Subordinated Notes, the Old Preferred
Interests, the Old Common Interests, and the Other Equity
Interests shall be discharged.
C-30
CIT Group Inc.’s Board of Directors (the “Board”)
(which as of the date of this Plan has ten (10) members)
has determined that the appropriate size of the Board on and
after the Effective Date would be thirteen (13) directors.
At the request of and in cooperation with the Steering
Committee, CIT Group Inc. has engaged Spencer Stuart, an
internationally recognized director search firm, to assist the
Nominating and Governance Committee of the Board (the
“N&GC”) in identifying, interviewing and
selecting candidates for the expanded Board
and/or
replacing members of the present Board who may determine to step
down. Spencer Stuart will identify candidates who are
independent of CIT Group Inc., not affiliated with, or
representatives of, any of the members of the Steering
Committee, and who possess the qualifications, skills and
experience specified by the N&GC.
The Steering Committee will recommend to the N&GC
candidates for the Board from among the qualified individuals
identified by Spencer Stuart (the “Steering Committee
Nominees”). The candidates that are approved by the
N&GC will be reviewed with the Federal Reserve Bank of New
York (the “Federal Reserve”) and, to the extent
approved by the Federal Reserve, will be submitted to the full
Board for consideration and appointment to the Board. Following
the Effective Date, the Board will include five directors that
were recommended to the N&GC by the Steering Committee. The
Board will nominate a slate of at least 13 directors for
election at the 2010 annual meeting of stockholders, which slate
will not include more than five of the directors serving as of
the date hereof.
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N.
|
Certain
Corporate Governance Matters
|
On and after the Effective Date, Reorganized CIT will use its
commercially reasonable best efforts to hold its next annual
meeting no later than May 31, 2010. CIT Group Inc. does not
have a staggered or classified board and, accordingly, all
directors of Reorganized CIT will be elected at the annual
meeting. During the Chapter 11 Cases, CIT Group Inc. will
not implement a stockholders’ rights plan other than
(i) CIT Group Inc.’s August 12, 2009 tax benefits
preservation plan or (ii) other actions CIT Group Inc.
considers appropriate to preserve the benefit of net operating
losses. CIT Group Inc. will not amend its certificate of
incorporation during the Chapter 11 Cases to create a
staggered or classified board. The Reorganized CIT Certificate
of Incorporation will provide that the chairman of the board or
secretary of Reorganized CIT shall call a special meeting of its
stockholders at the request in writing of stockholders
possessing at least 25% of the voting power of the issued and
outstanding common stock of Reorganized CIT entitled to vote
generally for the election of directors.
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O.
|
Preservation
of Rights of Action; Settlement of Litigation Claims
|
Except as otherwise provided in the Plan, the Confirmation Order
or in any document, instrument, release or other agreement
entered into in connection with the Plan, in accordance with
section 1123(b) of the Bankruptcy Code, the Reorganized
Debtors will retain all of the Litigation Claims, and may
enforce, sue on, settle or compromise (or decline to do any of
the foregoing) any or all of such Litigation Claims. The Debtors
will file as a Plan Supplement a non-exclusive list of claims or
causes of action that the Debtors hold or may hold either in
pending or potential litigation. The Debtors reserve their
rights to modify such list to add or delete parties or causes of
action, but disclaims any obligation to do so. The failure of
the Debtors to specifically list any claim, right of action,
suit or proceeding herein or in the Plan does not, and will not
be deemed to, constitute a waiver or release by the Debtors of
such claim, right of action, suit or proceeding, and the
Reorganized Debtors will retain the right to pursue additional
claims, rights of action, suits or proceedings. In addition, at
any time after the Petition Date and before the Effective Date,
notwithstanding anything in the Plan to the contrary, the
Debtors may settle some or all of the Litigation Claims with the
approval of the Bankruptcy Court pursuant to Bankruptcy
Rule 9019.
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P.
|
Effectuating
Documents; Further Transactions
|
The chairman of the board of directors, president, chief
executive officer, chief financial officer or any other
appropriate officer of the Debtors shall be authorized to
execute, deliver, file or record such contracts,
C-31
instruments, releases, indentures and other agreements or
documents, and take such actions, as may be necessary or
appropriate to effectuate and further evidence the terms and
conditions of the Plan. The secretary or assistant secretary of
the Debtors shall be authorized to certify or attest to any of
the foregoing actions.
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Q.
|
Exemption
from Certain Transfer Taxes
|
Pursuant to section 1146 of the Bankruptcy Code, the
issuance, transfer or exchange of debt and equity under the
Plan, the creation of any mortgage, deed of trust, or other
security interest, the making or assignment of any contract,
lease or sublease, or the making or delivery of any deed or
other instrument of transfer under, in furtherance of, or in
connection with the Plan shall be exempt from all taxes
(including, without limitation, stamp tax or similar taxes) to
the fullest extent permitted by section 1146 of the
Bankruptcy Code, and the appropriate state or local governmental
officials or agents shall not collect any such tax or
governmental assessment and shall accept for filing and
recordation any of the foregoing instruments or other documents
without the payment of any such tax or governmental assessment.
Except as otherwise expressly provided herein, in the
Confirmation Order or in any document, instrument or other
agreement created in connection with the Plan, on the Effective
Date, all mortgages, deeds of trust, liens or, other security
interests against the property of the Debtors or the Estate
automatically shall be released, and the holders of such
mortgages, deeds of trust, liens, or other security interests
shall execute such documents as may be necessary or desirable to
reflect or effectuate such releases.
ARTICLE V
PROVISIONS
GOVERNING DISTRIBUTIONS
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A.
|
Distributions
for Claims Allowed as of the Effective Date
|
Except as otherwise provided herein or as ordered by the
Bankruptcy Court, distributions to be made on account of or in
exchange for Claims that are Allowed Claims as of the Effective
Date shall be made on the Distribution Date. All Cash
distributions shall be made from available Cash of the
Reorganized Debtors. Any distribution under the Plan of property
other than Cash shall be made by the Disbursing Agent in
accordance with the terms of the Plan.
The Disbursing Agent(s) shall make all distributions required
under the Plan (subject to the provisions of
Articles II, III and IV hereof); provided,
however, that with respect to a holder of a Claim whose
distribution is governed by an agent or other agreement which is
administered by an indenture trustee, agent or servicer, such
distributions shall be made at the direction of the appropriate
agent or servicer, or shall be deposited with the appropriate
agent or servicer, who shall then deliver such distributions to
the holders of Claims in accordance with the provisions of the
Plan and the terms of the relevant indenture or other governing
agreement.
Disbursing Agent(s) other than the Debtors, including any agent
or servicer, shall receive, without further Bankruptcy Court
approval, reasonable compensation for distribution services
rendered pursuant to the Plan and reimbursement of reasonable
out-of-pocket expenses incurred in connection with such services
from the Reorganized Debtors on terms acceptable to the
Reorganized Debtors. No Disbursing Agent shall be required to
give any bond or surety or other security for the performance of
its duties unless otherwise ordered by the Bankruptcy Court. If
otherwise so ordered, all costs and expenses of procuring any
such bond shall be paid by the Reorganized Debtors.
C-32
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C.
|
Calculation
of Distribution Amounts of New Common Interests and New
Notes
|
No fractional shares of New Common Interests or fractional
currencies of New Notes shall be issued or distributed under the
Plan or by the Reorganized Debtors, or any Disbursing Agent,
agent or servicer. Each Person entitled to receive New Common
Interests or New Notes (collectively, the “New
Securities”) shall receive the total number of whole shares
or currencies of New Securities to which such Person is
entitled. Whenever any distribution to a particular Person would
otherwise call for distribution of a fraction of a New Security,
the Reorganized Debtors, or any Disbursing Agent, agent or
servicer, shall allocate separately one whole share of New
Common Interests or one whole currency of New Notes, as
applicable, to such Person in order of the fractional portion of
its entitlements, starting with the largest such fractional
portion, until all remaining whole shares of New Common
Interests or whole currencies of New Notes have been allocated.
Upon the allocation of a whole share of New Common Interests or
whole currency of New Notes to a Person in respect of the
fractional portion of its entitlement, such fractional portion
shall be deemed cancelled. If two or more Persons are entitled
to equal fractional entitlements and the number of Persons so
entitled exceeds the number of whole shares of New Common
Interests or currencies of New Notes which remain to be
allocated, the Reorganized Debtors, or any Disbursing Agent,
agent or servicer shall allocate the remaining whole shares of
New Common Interests or whole currency of New Notes to such
holders by random lot or such other impartial method as the
Reorganized Debtors, or any Disbursing Agent, agent or servicer
deems fair. Upon the allocation of all of the whole shares of
New Common Interests or currencies of New Notes authorized under
the Plan, all remaining fractional portions of the entitlements,
if any, shall be cancelled and shall be of no further force and
effect. No shares of New Common Interests or currencies of New
Notes will be issued and no other property will be distributed
under the Plan or by the Reorganized Debtors, or any Disbursing
Agent, agent or servicer on account of entitlements, if any, to
a fractional share of New Common Interests or fraction of a
currency of New Notes which fall below a threshold level to be
determined by the Reorganized Debtors, or any Disbursing Agent,
agent or servicer, after allocation of whole shares of New
Common Interests or whole currencies of New Notes in respect of
fractional entitlements as described above. Accordingly, a
Person who otherwise would be entitled to receive a distribution
of a fractional share of New Common Interests or fraction of a
currency of New Notes will not receive any such distribution if
the fractional share of New Common Interests or fractional
currency of New Notes such Person was to receive falls below
such threshold.
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D.
|
Delivery
of Distributions; Undeliverable or Unclaimed
Distributions
|
Distributions to holders of Allowed Claims shall be made by the
Disbursing Agent (i) at each holder’s address set
forth in the Debtors’ books and records, unless such
address is superseded by a proof of claim or interest or
transfer of claim filed pursuant to Bankruptcy Rule 3001 or
(ii) at the address in any written notice of address change
delivered to the Disbursing Agent, at the address set forth in
the Disbursing Agent’s system. If any holder’s
distribution is returned as undeliverable, no further
distributions to such holder shall be made, unless and until the
Disbursing Agent is notified of such holder’s then current
address, at which time all missed distributions shall be made to
such holder without interest. Amounts in respect of
undeliverable distributions made through the Disbursing Agent
shall be returned to the Reorganized Debtors until such
distributions are claimed. The Disbursing Agent shall deliver
any non-deliverable New Common Interests
and/or New
Notes to the Reorganized Debtors no later than ten
(10) Business Days following the first anniversary of the
Effective Date. All claims for undeliverable distributions must
be made within one year after the Effective Date, after which
date the claim of any holder or successor to such holder with
respect to such property will be discharged and forever barred.
In such cases, any Cash for distribution on account of or in
exchange for unclaimed or undeliverable distributions shall
become property of the Reorganized Debtors free of any
restrictions thereon and notwithstanding any federal or state
escheat laws to the contrary. Any New Common Interests or New
Notes held for distribution on account of such Claim shall be
cancelled and of no further force or effect. Nothing contained
in the Plan shall require any Disbursing Agent, including, but
not limited to the Reorganized Debtors, to attempt to locate any
holder of an Allowed Claim.
C-33
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E.
|
Withholding
and Reporting Requirements
|
In connection with the Plan and all distributions thereunder,
the Reorganized Debtors and the Disbursing Agent shall comply
with all withholding, payment, and reporting requirements
imposed by any federal, state, local or foreign taxing
authority, and all distributions shall be subject to any such
withholding, payment, and reporting requirements. The
Reorganized Debtors and the Disbursing Agent shall be authorized
to take any and all actions that may be necessary or appropriate
to comply with such withholding, payment, and reporting
requirements. All amounts properly withheld from distributions
of New Common Interests, New Notes, Contingent Value Rights, or
New Common Interests distributed pursuant to the Contingent
Value Rights, to a holder as required by applicable law and paid
over to the applicable taxing authority for the account of such
holder shall be treated as part of the distributions to such
holder. All persons holding Claims or Interests shall be
required to provide any information necessary to effect
information reporting, withholding, and payment of such taxes.
Notwithstanding any other provision of the Plan, (i) each
holder of an Allowed Claim that is to receive a distribution of
New Common Interests, New Notes or Contingent Value Rights
pursuant to the Plan, or a distribution of New Common Interests
pursuant to the Contingent Value Rights, shall have sole and
exclusive responsibility for the satisfaction and payment of any
tax obligations imposed by any governmental unit, including
income, withholding and other tax obligations, on account of
such distribution, and (ii) no distribution shall be made
to or on behalf of such holder pursuant to the Plan unless and
until such holder has made arrangements satisfactory to the
Reorganized Debtors and the Disbursing Agent for the payment and
satisfaction of such tax obligations or has, to the Reorganized
Debtors’ and the Disbursing Agent’s satisfaction,
established an exemption therefrom. Any New Common Interests,
New Notes or Contingent Value Rights to be distributed pursuant
to the Plan, or New Common Interests distributed pursuant to the
Contingent Value Rights, shall, pending the implementation of
such arrangements or the establishment of such an exemption, be
treated as undeliverable pursuant to Article V.D of the
Plan.
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F.
|
Allocation
of Plan Distributions Between Principal and Interest
|
To the extent that any Allowed Claim entitled to a distribution
under the Plan is comprised of indebtedness and accrued but
unpaid interest thereon, such distribution shall, for
U.S. federal income tax purposes, be allocated to the
principal amount of the Claim first and then, to the extent that
the consideration exceeds the principal amount of the Claim, to
the portion of such Claim representing accrued but unpaid
interest.
Except as provided in the Plan, the Debtors may, but shall not
be required to, set off or offset against any Claim, and the
payments or other distributions to be made pursuant to the Plan
in respect of such Claim, claims of any nature whatsoever that
the Debtors may have against the Claim’s holder;
provided, however, that neither the failure to do
so nor the allowance of any Claim hereunder shall constitute a
waiver or release by the Debtors of any claim that the Debtors
may have against such holder; provided further
however that the Debtors shall not set off or offset
against the Senior Credit Facility, the Canadian Senior
Unsecured Notes, the Long-Dated Senior Unsecured Notes, the
Senior Unsecured Notes, the Senior Unsecured Term Loans, the
Senior Unsecured Credit Agreements, the Senior Subordinated
Notes or the Junior Subordinated Notes. Nothing herein shall be
deemed to expand rights to setoff under applicable law.
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H.
|
Surrender
of Instruments or Securities
|
The Disbursing Agent(s)
and/or any
applicable broker or agent shall use reasonable best efforts to
obtain the surrender of all certificates or instruments relating
to the Canadian Senior Unsecured Notes (if Class 7 votes to
accept the plan), the Senior Unsecured Notes, the Senior
Unsecured Term Loans, the Long-Dated Senior Unsecured Notes, the
Senior Unsecured Credit Agreements, the Senior Subordinated
Notes or the Junior Subordinated Notes to the Debtors, the
Reorganized Debtors or the Disbursing Agent and shall execute
such other documents as might be necessary to effectuate the
Plan. The Canadian Senior Unsecured Notes (if Class 7 votes
to accept the plan), the Long-Dated Senior Unsecured Notes, the
Senior Unsecured Notes, the Senior Unsecured Term Loans, the
Senior Unsecured Credit Agreements, the Senior Subordinated
Notes and the Junior Subordinated Notes shall be marked as
cancelled on and as of the Effective Date, regardless of
C-34
whether the holder(s) of such Canadian Senior Unsecured Notes
(if Class 7 votes to accept the plan), Long-Dated Senior
Unsecured Notes, Senior Unsecured Notes, Senior Unsecured Term
Loans, Senior Unsecured Credit Agreements, Senior Subordinated
Notes and Junior Subordinated Notes has surrendered its
certificates and instruments.
Any holder of Canadian Senior Unsecured Notes (if Class 7
votes to accept the plan), Long-Dated Senior Unsecured Notes,
Senior Unsecured Notes, Senior Unsecured Term Loans, Senior
Unsecured Credit Agreements, Senior Subordinated Notes or Junior
Subordinated Notes who fails to surrender the applicable
Canadian Senior Unsecured Notes (if Class 7 votes to accept
the plan), Senior Unsecured Notes, Senior Unsecured Term Loans,
Senior Unsecured Credit Agreements, Senior Subordinated Notes or
Junior Subordinated Notes required to be tendered under the Plan
or fails to deliver an affidavit of loss or such other documents
as might be required by the relevant trustee or agent, together
with an indemnity in the customary form within one (1) year
after the Effective Date shall have its Claim and its
distribution pursuant to the Plan on account of such Canadian
Senior Unsecured Note Claim (if Class 7 votes to accept the
plan), Long-Dated Senior Unsecured Notes, Senior Unsecured Note
Claim, Senior Unsecured Term Loan Claim, Senior Unsecured Credit
Agreement Claim, Senior Subordinated Note Claim or Junior
Subordinated Note Claim discharged and forfeited and shall not
participate in any distribution under the Plan. Any property in
respect of such forfeited Claims would revert to the Reorganized
Debtors.
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|
I.
|
Lost,
Stolen, Mutilated or Destroyed Securities or
Instruments
|
In addition to any requirements under the Canadian Senior
Unsecured Notes (if Class 7 votes to accept the plan), the
Long-Dated Senior Unsecured Notes, the Senior Unsecured Notes,
the Senior Unsecured Term Loans, the Senior Unsecured Credit
Agreements, the Senior Subordinated Notes and the Junior
Subordinated Notes or any other applicable agreement, any holder
of a Canadian Senior Unsecured Note (if Class 7 votes to
accept the plan), a Long-Dated Senior Unsecured Note, a Senior
Unsecured Note, a Senior Unsecured Term Loan, a Senior Unsecured
Credit Agreement, a Senior Subordinated Note or a Junior
Subordinated Note that has been lost, stolen, mutilated or
destroyed shall, in lieu of surrendering such Canadian Senior
Unsecured Note, Long-Dated Senior Unsecured Note, Senior
Unsecured Note, Senior Unsecured Term Loan, Senior Unsecured
Credit Agreement, Senior Subordinated Note or Junior
Subordinated Note in accordance with Article V.H. hereof,
deliver to the Reorganized Debtors or their agent:
(i) evidence reasonably satisfactory to the Reorganized
Debtors of the loss, theft, mutilation or destruction; and
(ii) such security or indemnity as may be required by the
Reorganized Debtors to hold the Reorganized Debtors harmless
from any damages, liabilities or costs incurred in treating such
individual as a holder of an Allowed Claim. Upon compliance with
this Article V.I by a holder of a claim evidenced by a
Canadian Senior Unsecured Note (if Class 7 votes to accept
the plan), a Long-Dated Senior Unsecured Note, a Senior
Unsecured Note, a Senior Unsecured Term Loan, a Senior Unsecured
Credit Agreement, a Senior Subordinated Note or a Junior
Subordinated Note, such holder shall, for all purposes under the
Plan, be deemed to have surrendered such instrument.
ARTICLE VI
PROCEDURES
FOR RESOLVING DISPUTED,
CONTINGENT AND UNLIQUIDATED CLAIMS
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A.
|
Resolution
of Disputed Claims
|
Except as provided otherwise in the Plan or by order of the
Bankruptcy Court, holders of Claims shall not be required to
file proofs of Claim with the Bankruptcy Court. The amount and
validity of any disputed, contingent
and/or
unliquidated Claim shall be determined, resolved or adjudicated,
as the case may be, in the manner in which such Claim would have
been determined, resolved or adjudicated if the Chapter 11
Cases had not been commenced; provided, however,
that the Debtors reserve the right to file with the Bankruptcy
Court, on or before the Claims Objection Deadline, an objection
to any Claim. The Debtors shall be authorized to, and shall,
resolve all Disputed Claims by withdrawing or settling such
objections thereto, or by litigating to judgment in the
Bankruptcy Court or such other court having jurisdiction the
validity, nature,
and/or
amount thereof.
C-35
Any Claim successfully subordinated pursuant to Bankruptcy Code
section 510(b) that is not otherwise included in
Class 14 Subordinated 510(b) Claims shall be classified in
that Class immediately below the Class in which such Claim was
classified prior to subordination under Bankruptcy Code
section 510(b).
In addition, the Debtors or the holder of a contingent or
unliquidated Claim may, at any time, request that the Bankruptcy
Court estimate any contingent or unliquidated Claim pursuant to
section 502(c) of the Bankruptcy Code regardless of whether
the Debtors have previously objected to such Claim or whether
the Bankruptcy Court has ruled on any such objection, and the
Bankruptcy Court will retain jurisdiction to estimate any Claim
at any time during litigation concerning any objection to any
Claim, including during the pendency of any appeal relating to
any such objection. In the event the Bankruptcy Court estimates
any contingent or unliquidated Claim, that estimated amount will
constitute either the Allowed amount of such Claim or a maximum
limitation on such Claim, as determined by the Bankruptcy Court.
If the estimated amount constitutes a maximum limitation on such
Claim, the Debtors may elect to pursue any supplemental
proceedings to object to any ultimate payment on such Claim. All
of the aforementioned Claims objection, estimation and
resolution procedures are cumulative and are not necessarily
exclusive of one another. Claims may be estimated and thereafter
resolved by any permitted mechanism.
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B.
|
No
Distribution Pending Allowance
|
No payments or distributions, if any contemplated by the Plan,
will be made with respect to all or any portion of a Disputed
Claim unless and until all objections to such Disputed Claim
have been settled or withdrawn or have been determined by Final
Order, and the Disputed Claim, or some portion thereof, has
become an Allowed Claim.
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C.
|
Distributions
After Allowance
|
To the extent that a Disputed Claim ultimately becomes an
Allowed Claim, a distribution, if any, will be made to the
holder of such Allowed Claim in accordance with the provisions
of the Plan. As soon as reasonably practicable after the date
that the order or judgment of the Bankruptcy Court or other
applicable court of competent jurisdiction allowing any Disputed
Claim becomes a Final Order, or the date upon which other final
resolution has been reached to Allow such Claim, the Disbursing
Agent shall provide to the holder of such Claim the distribution
to which such holder is entitled under the Plan. Notwithstanding
the foregoing, the Disbursing Agent shall not be required to
make distributions more frequently than once every ninety
(90) days.
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D.
|
Reservation
of Right to Object to Allowance or Asserted Priority of
Claims
|
Nothing herein will waive, prejudice or otherwise affect the
rights of the Debtors, the Reorganized Debtors or the holders of
any Claim to object at any time, including after the Effective
Date, to the allowance or asserted priority of any Claim.
ARTICLE VII
TREATMENT
OF CONTRACTS AND LEASES
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A.
|
Assumed
Contracts and Leases
|
Except as otherwise expressly provided in the Plan or in any
contract, instrument, release, indenture or other agreement or
document entered into in connection with the Plan, as of the
Effective Date the Debtors shall be deemed to have assumed each
executory contract and unexpired lease to which a Debtor is a
party unless such contract or lease (i) previously was
assumed or rejected by the Debtors, (ii) previously expired
or terminated pursuant to its own terms, or (iii) is the
subject of a motion to assume or reject filed on or before the
Confirmation Date. The Debtors shall further be deemed to assume
as of the Effective Date all indemnification obligations,
whether arising by bylaws, other constituent documents or
otherwise, to the Debtors’ directors and officers and all
such indemnification obligations shall constitute assumed
executory
C-36
contracts. The Debtors reserve the right, at any time prior to
the Confirmation Date, to seek to reject any executory contract
or unexpired lease to which a Debtor is a party (except as
provided in the preceding sentence). The Confirmation Order
shall constitute an order of the Bankruptcy Court under
sections 365 and 1123 of the Bankruptcy Code approving the
contract and lease assumptions described above as of the
Effective Date.
Each executory contract and unexpired lease that is assumed and
relates to the use, ability to acquire or occupancy of real
property shall include (i) all modifications, amendments,
supplements, restatements or other agreements made directly or
indirectly by any agreement, instrument or other document that
in any manner affect such executory contract or unexpired lease
and (ii) all executory contracts or unexpired leases
appurtenant to the premises, including all easements, licenses,
permits, rights, privileges, immunities, options, rights of
first refusal, powers, uses, usufructs, reciprocal easement
agreements, vaults, tunnel or bridge agreements or franchises,
and any other interests in real estate or rights in rem related
to such premises, unless any of the foregoing agreements has
been rejected pursuant to an order of the Bankruptcy Court or is
the subject of a motion to reject filed on or before the
Confirmation Date.
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B.
|
Treatment
of Change of Control Provisions
|
The entry of the Confirmation Order, consummation of the Plan,
issuance of the New Common Interests
and/or New
Notes under the Plan
and/or any
other acts taken to implement the Plan shall not constitute a
“change in control” under any provision of any
contract, agreement or other document which provides for the
occurrence of any event, the granting of any right, or any other
change in the then-existing relationship between the parties
upon a “change in control” of the Debtors.
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C.
|
Payments
Related to Assumption of Contracts and Leases
|
Any monetary amounts by which any executory contract or
unexpired lease to be assumed under the Plan is in default shall
be satisfied, under section 365(b)(1) of the Bankruptcy
Code, by Cure. If there is a dispute regarding (i) the
nature or amount of any Cure, (ii) the ability of the
Reorganized Debtors to provide “adequate assurance of
future performance” (within the meaning of section 365
of the Bankruptcy Code) under the contract or lease to be
assumed or (iii) any other matter pertaining to assumption,
Cure shall occur following the entry of a Final Order of the
Bankruptcy Court resolving the dispute and approving the
assumption.
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D.
|
Claims
Based on Rejection of Executory Contracts or Unexpired
Leases
|
If the rejection by the Debtors, pursuant to the Plan or
otherwise, of an executory contract or unexpired lease gives
rise to a Claim, a proof of Claim must be served upon the
Debtors and their counsel within thirty (30) days after the
later of (i) notice of entry of the Confirmation Order or
(ii) other notice that the executory contract or unexpired
lease has been rejected, provided that any such
Claims arising from the rejection of an unexpired lease of real
property shall be subject to the cap on rejection damages
imposed by Bankruptcy Code section 502(b)(6). Any Claims
not served within such time periods will be forever barred from
assertion against the Debtors, the Reorganized Debtors, the
Estates and their property.
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E.
|
Claims
Based on Rejection of Employment Agreements
|
In the event that the Debtors determine to reject any employment
agreements to which the Debtors are party, any rejection damages
claims arising therefrom will be classified as Class 5
General Unsecured Claims and will likewise be Unimpaired,
provided that the Debtors
and/or the
Reorganized Debtors pay such non-debtor party or parties to such
rejected employment agreement(s) the one-year’s
compensation under Bankruptcy Code section 502(b)(7) on
account of any rejection damages claim(s).
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F.
|
Compensation
and Benefit Plans and Treatment of Retirement Plan
|
Except as otherwise expressly provided in the Plan or in any
contract, instrument, release, indenture or other agreement or
document entered into in connection with the Plan and subject to
any limitations under
C-37
applicable law, all of the Debtors’ programs, plans,
agreements and arrangements relating to employee compensation
and benefits, including programs, plans, agreements and
arrangements subject to sections 1114 and 1129(a)(13) of
the Bankruptcy Code and including, without limitation, all
savings plans, retirement plans, healthcare plans, disability
plans, severance plans, incentive plans, life, accidental death
and dismemberment insurance plans, and employment, severance,
salary continuation and retention agreements entered into before
the Petition Date and not since terminated, will be deemed to
be, and will be treated as though they are, executory contracts
that are assumed under Article VII.A of the Plan, and the
Debtors’ obligations under such programs, plans, agreements
and arrangements will survive confirmation of the Plan, except
for executory contracts or plans that previously have been
rejected, are the subject of a motion to reject or have been
specifically waived by the beneficiaries of any plans or
contracts. In addition, pursuant to the requirements of
section 1129(a)(13) of the Bankruptcy Code, the Plan
provides for the continuation of payment by the Debtors of all
“retiree benefits,” as defined in section 1114(a)
of the Bankruptcy Code, if any, at previously established levels.
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G.
|
Indemnification
of Directors and Officers
|
The Debtors’ indemnification obligations in favor of their
officers and directors contained in the certificates of
incorporation and bylaws of the Debtors as of the Petition Date
shall be included in the amended and restated certificate of
incorporation, amended and restated certificate of formation and
bylaws of the Reorganized Debtors. Unless otherwise required by
applicable law, all Claims of the Debtors’ officers and
directors for indemnity arising prior to the Petition Date
(including the D&O Claims) shall be deemed to be
Class 5 General Unsecured Claims hereunder, and all Claims
of the Debtors’ officers and directors for indemnity
arising on and after the Petition Date shall be deemed to be
Administrative Claims hereunder.
ARTICLE VIII
SECURITIES
TO BE ISSUED
IN CONNECTION WITH THE PLAN
On, or as soon as reasonably practicable after, the Effective
Date, the Reorganized Debtors shall issue for distribution in
accordance with the provisions of the Plan the New Common
Interests required for distribution pursuant to the provisions
hereof. All securities to be issued shall be deemed issued as of
the Effective Date regardless of the date on which they are
actually distributed. All stock issued by the Reorganized
Debtors pursuant to the provisions of the Plan shall be deemed
to be duly authorized and issued, fully paid and nonassessable.
The terms of the New Common Interests are summarized in
Exhibit B hereto.
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B.
|
Exemption
from Registration
|
The (i) offer by the Debtors
and/or the
Reorganized Debtors of the New Common Interests issued under the
Plan shall be exempt from the registration requirements of the
Securities Act and similar state statutes pursuant to applicable
securities law and (ii) sale and issuance by the
Reorganized Debtors of such New Notes and New Common Interests
shall be exempt from the registration requirements of the
Securities Act and similar state statutes pursuant to
section 1145 of the Bankruptcy Code.
On, or as soon as reasonably practicable after, the Effective
Date, the Reorganized Debtors shall issue for distribution in
accordance with the provisions of the Plan the New Notes
required for distribution pursuant to the provisions hereof. All
New Notes to be issued shall be deemed issued as of the
Effective Date regardless of the date on which they are actually
distributed. The terms of the New Notes are substantially set
forth in the Offering Memorandum and Disclosure Statement.
C-38
ARTICLE IX
CONDITIONS
PRECEDENT TO THE PLAN’S CONFIRMATION
The following are conditions precedent to confirmation of the
Plan, each of which must be satisfied or waived in accordance
with the Plan:
(1) The Bankruptcy Court shall have approved the Disclosure
Statement with respect to the Plan in form and substance
reasonably satisfactory to the Debtors and the Steering
Committee, which approval may be in the Confirmation Order.
(2) The proposed Confirmation Order shall be in form and
substance reasonably satisfactory to the Debtors and the
Steering Committee.
ARTICLE X
CONDITIONS
PRECEDENT TO EFFECTIVE DATE
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A.
|
Conditions
to Effective Date
|
The following are conditions precedent to the occurrence of the
Effective Date, each of which must be satisfied or waived in
accordance with the Plan:
(1) The Confirmation Order, in form and substance
acceptable to the Debtors and the Steering Committee, confirming
the Plan shall have been entered and must provide, among other
things, that:
(a) the provisions of the Confirmation Order are
nonseverable and mutually dependent;
(b) all executory contracts or unexpired leases assumed by
the Debtors during the Chapter 11 Cases or under the Plan
shall remain in full force and effect for the benefit of the
Reorganized Debtors or their assignee notwithstanding any
provision in such contract or lease (including those described
in sections 365(b)(2) and (f) of the Bankruptcy Code)
that prohibits such assignment or transfer or that enables,
permits or requires termination of such contract or lease;
(c) except as expressly provided in the Plan or the
Confirmation Order, the Debtors are discharged effective upon
the Confirmation Date, subject to the occurrence of the
Effective Date, from any “debt” (as that term is
defined in section 101(12) of the Bankruptcy Code), and the
Debtors’ liability in respect thereof shall be extinguished
completely, whether such debt (i) is reduced to judgment or
not, liquidated or unliquidated, contingent or noncontingent,
asserted or unasserted, fixed or unfixed, matured or unmatured,
disputed or undisputed, legal or equitable, or known or unknown,
or (ii) arose from (a) any agreement of the Debtors
that has either been assumed or rejected in the Chapter 11
Cases or pursuant to the Plan, (b) any obligation the
Debtors incurred before the Confirmation Date or (c) any
conduct of the Debtors prior to the Confirmation Date, or that
otherwise arose before the Confirmation Date, including, without
limitation, all interest, if any, on any such debts, whether
such interest accrued before or after the Petition Date;
(d) the Canadian Senior Unsecured Notes, the Long-Dated
Senior Unsecured Notes, the Senior Unsecured Notes, the Senior
Unsecured Term Loans, the Senior Unsecured Credit Agreements,
the Senior Subordinated Notes, and the Junior Subordinated Notes
transferred and assigned to the Reorganized Debtors pursuant to
the Plan shall be deemed cancelled, terminated and extinguished
effective upon the Effective Date, except as otherwise provided
in the Plan, and all Claims arising thereunder shall be deemed
satisfied on the Effective Date in exchange for (i) New
Notes issued by the Reorganized Debtors, (ii) New Common
Interests issued by the Reorganized Debtors,
and/or
(iii) the Contingent Value Rights, as applicable;
(e) the Old Preferred Interests, the Old Common Interests
and the Other Equity Interests shall be deemed cancelled,
terminated and extinguished effective upon the Effective
Date; and
C-39
(f) the Reorganized Debtors’ offer of New Common
Interests and New Notes issued under the Plan is exempt from the
registration requirements of the Securities Act pursuant to
applicable securities law and the Reorganized Debtors’
issuance and sale of such New Common Interests and New Notes
under the Plan are exempt from the registration requirements of
the Securities Act and similar state statutes pursuant to
section 1145 of the Bankruptcy Code.
(2) The Confirmation Order shall have become a Final Order
and shall not be the subject of an unresolved request for
revocation under section 1144 of the Bankruptcy Code.
(3) The Reorganized CIT Certificate of Incorporation, the
Reorganized Delaware Funding Certificate of Amendment to
Certificate of Formation and the Reorganized Delaware Funding
Amendment to Limited Liability Company Agreement in form and
substance reasonably satisfactory to the Debtors and the
Steering Committee shall have been executed.
(4) The Exchanges shall have been consummated and all
documents to be executed in connection therewith shall have been
executed and delivered, and all conditions precedent thereto
shall have been satisfied or waived by the parties thereto.
(5) The Debtors shall have executed and delivered all
documents necessary to effectuate the issuance of New Notes and
other documentation necessary to effectuate the Plan (including,
without limitation, any material refinancings, modifications or
amendments to any subsidiary level financing, conduits or
securitizations) in form and substance reasonably satisfactory
to the Steering Committee.
(6) The Debtors shall have executed and delivered all
documents necessary to effectuate the issuance of the New Common
Interests in form and substance reasonably satisfactory to the
Steering Committee.
(7) All authorizations, consents and regulatory approvals
required, if any, in connection with the consummation of the
Plan shall have been obtained.
(8) All other actions, documents and agreements necessary
to implement the Plan shall have been effected or executed.
(9) Nomination of the Steering Committee Nominees to the
N&GC.
Each of the conditions (other than entry of orders) set forth in
Articles IX and X.A above may be waived in whole or in part
by the Debtors with the consent of the Steering Committee, not
to be unreasonably withheld, conditioned or delayed, without any
notice to other parties in interest or the Bankruptcy Court and
without a hearing. The failure to satisfy or waive any condition
to the Effective Date may be asserted by the Debtors or the
Steering Committee regardless of the circumstances giving rise
to the failure of such condition to be satisfied. The failure of
the Debtors or the Steering Committee to exercise any of the
foregoing rights shall not be deemed a waiver of any other
rights, and each such right shall be deemed an ongoing right
that may be asserted at any time.
ARTICLE XI
MODIFICATIONS
AND AMENDMENTS
The Debtors may alter, amend or modify the Plan or any exhibits
or schedules hereto under section 1127(a) of the Bankruptcy
Code at any time prior to the Confirmation Date, with the
consent of the Steering Committee which consent shall not be
unreasonably withheld, conditioned or delayed. The Debtors
reserve the right to include any amended exhibits or schedules
in the Plan Supplement. After the Confirmation Date and prior to
substantial consummation of the Plan, as defined in
section 1101(2) of the Bankruptcy Code, the Debtors may,
under section 1127(b) of the Bankruptcy Code, institute
proceedings in the Bankruptcy Court to remedy any defect or
omission or reconcile any inconsistencies in the Plan, the
Disclosure Statement or the Confirmation Order, and to
accomplish such matters as may be necessary to carry out the
purposes and effects of the Plan so long as such proceedings do
not materially adversely affect the treatment of holders of
Claims
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under the Plan; provided, however, that prior
notice of such proceedings shall be served in accordance with
the Bankruptcy Rules or order of the Bankruptcy Court.
ARTICLE XII
RETENTION
OF JURISDICTION
Under sections 105(a) and 1142 of the Bankruptcy Code, and
notwithstanding the Plan’s confirmation and the occurrence
of the Effective Date, the Bankruptcy Court shall retain
exclusive jurisdiction (except with respect to the matters
described under clause (a) below, as to which jurisdiction
shall not be exclusive) over all matters arising out of or
related to the Chapter 11 Cases and the Plan, to the
fullest extent permitted by law, including jurisdiction to:
(a) Determine any and all objections to the allowance of
Claims;
(b) Determine any and all motions to estimate Claims at any
time, regardless of whether the Claim to be estimated is the
subject of a pending objection, a pending appeal, or otherwise;
(c) Hear and determine all Professional Fee Claims and
other Administrative Claims;
(d) Hear and determine all matters with respect to the
assumption or rejection of any executory contract or unexpired
lease to which one or more of the Debtors is a party or with
respect to which the Debtors may be liable, including, if
necessary, the nature or amount of any required Cure or the
liquidation of any Claims arising therefrom;
(e) Hear and determine any and all adversary proceedings,
motions, applications and contested or litigated matters arising
out of, under or related to, the Chapter 11 Cases;
(f) Enter such orders as may be necessary or appropriate to
execute, implement or consummate the provisions of the Plan and
all contracts, instruments, releases and other agreements or
documents created in connection with the Plan, the Disclosure
Statement or the Confirmation Order;
(g) Hear and determine disputes arising in connection with
the interpretation, implementation, consummation or enforcement
of the Plan and all contracts, instruments and other agreements
executed in connection with the Plan;
(h) Hear and determine any request to modify the Plan or to
cure any defect or omission or reconcile any inconsistency in
the Plan or any order of the Bankruptcy Court;
(i) Issue and enforce injunctions or other orders, or take
any other action that may be necessary or appropriate to
restrain any interference with the implementation, consummation
or enforcement of the Plan or the Confirmation Order;
(j) Enter and implement such orders as may be necessary or
appropriate if the Confirmation Order is for any reason
reversed, stayed, revoked, modified or vacated;
(k) Hear and determine any matters arising in connection
with or relating to the Plan, the Disclosure Statement, the
Confirmation Order or any contract, instrument, release or other
agreement or document created in connection with the Plan, the
Disclosure Statement or the Confirmation Order (but excluding
matters arising in connection with the Senior Credit Facility,
the New Notes, the New Common Interests and the Exit Facility);
(l) Enforce all orders, judgments, injunctions, releases,
exculpations, indemnifications and rulings entered in connection
with the Chapter 11 Cases;
(m) Recover all assets of the Debtors and property of the
Debtors’ Estate, wherever located;
(n) Hear and determine matters concerning state, local and
federal taxes in accordance with sections 346, 505 and 1146
of the Bankruptcy Code;
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(o) Hear and determine all disputes involving the
existence, nature or scope of the Debtors’ discharge;
(p) Hear and determine such other matters as may be
provided in the Confirmation Order or as may be authorized under
or not inconsistent with, provisions of the Bankruptcy
Code; and
(q) Enter a final decree closing the Chapter 11 Cases.
ARTICLE XIII
MISCELLANEOUS
PROVISIONS
Prior to, on or after the Effective Date (as appropriate), all
matters expressly provided for under the Plan that would
otherwise require approval of the interest holders, managers or
directors of the Debtors shall be deemed to have occurred and
shall be in effect prior to, on or after the Effective Date (as
appropriate) pursuant to the applicable limited liability
company or general corporation law of the State of Delaware
without any requirement of further action by the interest
holders or directors of the Debtors.
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B.
|
Professional
Fee Claims
|
All final requests for compensation or reimbursement of costs
and expenses pursuant to sections 327, 328, 330, 331,
503(b) or 1103 of the Bankruptcy Code for services rendered to
the Debtors or any Committee (if appointed) prior to the
Effective Date must be filed with the Bankruptcy Court and
served on the Reorganized Debtors and their counsel no later
than sixty (60) days after the Effective Date, unless
otherwise ordered by the Bankruptcy Court. Objections to
applications of such Professionals or other entities for
compensation or reimbursement of costs and expenses must be
filed and served on the Reorganized Debtors and their counsel
and the requesting Professional or other entity no later than
twenty-five (25) days (or such longer period as may be
allowed by order of the Bankruptcy Court) after the date on
which the applicable application for compensation or
reimbursement was served. The Reorganized Debtors may pay
charges that they incur on and after the Effective Date for
Professionals’ fees, disbursements, expenses or related
support services in the ordinary course of business and without
application to the Bankruptcy Court.
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C.
|
Payment
of Statutory Fees
|
All fees payable under section 1930 of title 28 of the
United States Code, as determined by the Bankruptcy Court at the
Confirmation Hearing, shall be paid on or before the Effective
Date. All such fees that arise after the Effective Date but
before the closing of the Chapter 11 Cases shall be paid by
the Reorganized Debtors.
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D.
|
Confirmation
of Plan for Single Debtor
|
The Plan constitutes a separate plan of reorganization for each
of CIT Group Inc. and Delaware Funding. In the event that the
Plan cannot be confirmed with respect to one of the Debtors, the
Plan may nonetheless be confirmed with respect to the other
Debtor at the request of such other Debtor.
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E.
|
Severability
of Plan Provisions
|
If, prior to the Confirmation Date, any term or provision of the
Plan is held by the Bankruptcy Court to be invalid, void or
unenforceable, the Bankruptcy Court, at the request of the
Debtors, shall have the power to alter and interpret such term
or provision to make it valid or enforceable to the maximum
extent practicable, consistent with the original purpose of the
term or provision held to be invalid, void or unenforceable, and
such term or provision shall then be applicable as altered or
interpreted. Notwithstanding any such holding, alteration or
interpretation, the remainder of the terms and provisions of the
Plan shall remain in full force and effect and shall in no way
be affected, impaired or invalidated by such holding, alteration
or interpretation.
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F.
|
Successors
and Assigns
|
The rights, benefits and obligations of any Person named or
referred to in the Plan shall be binding on, and shall inure to
the benefit of, any heir, executor, administrator, successor or
assign of that Person.
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G.
|
Discharge
of Claims and Termination of Interests
|
Except as otherwise provided herein or in the Confirmation
Order, all consideration distributed under this Plan shall be in
exchange for, and in complete satisfaction, settlement,
discharge, and release of, all Claims and Interests (other than
those Claims and Interests that are Unimpaired under this Plan)
of any nature whatsoever against the Debtors or any of their
assets or properties, and regardless of whether any property
shall have been distributed or retained pursuant to this Plan on
account of such Claims and Interests. Upon the Effective Date,
each of the Debtors and the Reorganized Debtors shall be deemed
discharged and released under section 1141(d)(1) of the
Bankruptcy Code from any and all Claims and Interests (other
than those Claims and Interests that are not Impaired under this
Plan), including, but not limited to, demands and liabilities
that arose before the Confirmation Date, and all debts of the
kind specified in section 502(g), 502(h), or 502(i) of the
Bankruptcy Code, and the Old Preferred Interests, the Old Common
Interests and the Other Equity Interests (if any) shall be
cancelled, terminated and extinguished.
By accepting distribution pursuant to the Plan, each holder of
an Allowed Claim receiving distributions pursuant to the Plan
shall be deemed to have specifically consented to the discharge
set forth in this Article XIII.G.
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1.
|
Releases
by the Debtors
|
As of the Effective Date, for good and valuable
consideration, the adequacy of which is hereby confirmed, the
Debtors, their Estates and the Reorganized Debtors, and any
Person seeking to assert claims or exercise rights of any of the
foregoing, shall be deemed to forever release, waive and
discharge all claims, obligations, suits, judgments, damages,
demands, debts, rights, causes of action and liabilities (other
than the rights of the Debtors and the Reorganized Debtors to
enforce the Plan and the contracts, instruments, releases,
indentures and other agreements or documents delivered
thereunder), whether liquidated or unliquidated, fixed or
contingent, matured or unmatured, known or unknown, foreseen or
unforeseen, then existing or thereafter arising, in law, equity
or otherwise, that are based in whole or in part on any act,
omission, transaction, event or other occurrence taking place on
or prior to the Effective Date, including, to the extent the
underlying claims and causes of action are property of Delaware
Funding’s Estate, the claims and causes of action asserted
in the Canadian Senior Unsecured Notes Litigation, in any way
relating to the Debtors, the Reorganized Debtors, the
Chapter 11 Cases, the Offering Memorandum, the Plan or the
Disclosure Statement, and that could have been asserted by or on
behalf of the Debtors, their Estates or the Reorganized Debtors,
as of the Effective Date against (i) the Debtors’ or
the Debtors’ subsidiaries’ members, members of boards
of managers, directors and officers (acting in such capacity or
as the Debtors’ agents or employees), employees, advisors,
attorneys, agents or representatives, in each case to the extent
acting in any such capacity since May 8, 2009, or any of
their successors or assigns (in each case acting in such
capacity); (ii) the Steering Committee (in such capacity)
and its current members, members of boards of managers,
directors and officers (acting in such capacity or as the
Steering Committee’s agents or employees), employees,
equity holders, partners, affiliates, advisors, attorneys,
agents or representatives, or any of its successors or assigns
(in each case acting in such capacity); and (iii) solely
with respect to the JPM L/C Facility or the JPM L/C Facility
Agreement, JPM or any other lender under the JPM Facility
Agreement (in each case acting in such capacity), provided that
nothing in this paragraph shall be deemed to operate as a waiver
or release from any causes of action based on willful
misconduct, gross negligence, or intentional fraud, in each case
as determined by a final order of a court of competent
jurisdiction.
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2.
|
Releases
by Holders of Claims and Interests
|
As of the Effective Date, for good and valuable
consideration, the adequacy of which is hereby confirmed, each
holder of a Claim, solely in its capacity as such, each holder
of a Claim that affirmatively votes in favor of the Plan shall
have agreed to forever release, waive and discharge all claims,
defenses, obligations, suits, judgments, damages, demands,
debts, rights, causes of action and liabilities (other than the
rights to enforce the Plan and the contracts, instruments,
releases, indentures and other agreements or documents delivered
thereunder) and including the claims and causes of action
asserted in the Canadian Senior Unsecured Notes Litigation
against any and all present or future defendants named in the
Canadian Senior Unsecured Notes Litigation, whether liquidated
or unliquidated, fixed or contingent, matured or unmatured,
known or unknown, foreseen or unforeseen, then existing or
thereafter arising, in law, equity or otherwise, that are based
in whole or in part on any act, omission, transaction, event or
other occurrence taking place on or prior to the Effective Date
in any way relating to the Debtors, the Reorganized Debtors, the
Chapter 11 Cases, the Debtors’ prepetition
restructuring efforts, the Offering Memorandum, the Plan, the
Disclosure Statement, or the JPM L/C Facility or the JPM L/C
Facility Agreement, against: (i) the Debtors and the
Reorganized Debtors and their respective subsidiaries;
(ii) the Debtors’ and their subsidiaries’
members, members of boards of managers, directors and employees,
advisors, attorneys, agents or representatives, officers (acting
in such capacity or as the Debtors’ agents or employees) in
each case to the extent acting in any such capacity since
May 8, 2009, or any of their successors or assigns (in each
case acting in such capacity); and (iii) the Steering
Committee (in such capacity) and its current members, members of
boards of managers, directors and officers, employees, advisors,
attorneys, agents or representatives (acting in such capacity or
as the Steering Committee’s agents or employees), or any of
its successors or assigns (in each case acting in such
capacity), each as of the Effective Date, provided that nothing
in this paragraph shall be deemed to operate as a waiver or
release from any causes of action based on willful misconduct,
gross negligence or intentional fraud, in each case as
determined by a final order of a court of competent
jurisdiction.
Except as provided in the Plan or the Confirmation Order, as of
the Confirmation Date, subject to the occurrence of the
Effective Date, all Persons that have held, currently hold or
may hold a Claim or other debt or liability that is discharged
or an Interest or other right of an equity security holder that
is terminated pursuant to the terms of the Plan are permanently
enjoined from taking any of the following actions against the
Debtors or their property on account of any such discharged
Claims, debts or liabilities or terminated Interests or rights:
(i) commencing or continuing, in any manner or in any
place, any action or other proceeding; (ii) enforcing,
attaching, collecting or recovering in any manner any judgment,
award, decree or order; (iii) creating, perfecting or
enforcing any Lien; (iv) asserting a setoff, right of
subrogation or recoupment of any kind against any debt,
liability or obligation due to the Debtors; and
(v) commencing or continuing any action, in each case in
any manner, in any place that does not comply with or is
inconsistent with the provisions of the Plan.
By accepting distribution pursuant to the Plan, each holder of
an Allowed Claim receiving distributions pursuant to the Plan
shall be deemed to have specifically consented to the
injunctions set forth in this Article XIII.I.
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J.
|
Exculpation
and Limitation of Liability
|
The Reorganized Debtors, the Debtors, the Estate, their
subsidiaries, any Committee, the Steering Committee and any and
all of their respective current or former members, officers,
directors, members of boards of managers, employees, equity
holders, partners, affiliates, advisors, attorneys, agents or
representatives, or any of their successors or assigns, shall
not have or incur any liability to any holder of a Claim or an
Interest, or any other party in interest, or any of their
respective members, officers, directors, managers, employees,
equity holders, partners, affiliates, advisors, attorneys,
agents or representatives, or any of their successors or
assigns, for any act or omission in connection with, relating to
or arising out of, the
C-44
administration of the Chapter 11 Cases, the negotiation of
the terms of the Plan, the solicitation of acceptances of the
Plan, the pursuit of confirmation of the Plan, the consummation
of the Plan, or the administration of the Plan or the property
to be distributed under the Plan, except for their willful
misconduct, gross negligence or intentional fraud as determined
by a final order of a court of competent jurisdiction, and in
all respects shall be entitled to reasonably rely upon the
advice of counsel with respect to their duties and
responsibilities with respect to the Chapter 11 Cases and
the Plan.
Notwithstanding any other provision of the Plan, but without
limiting the releases provided in the Plan or affecting the
status or treatment of any Claim Allowed pursuant to the Plan,
no holder of a Claim or Interest, no other party in interest,
none of their respective members, officers, directors, managers,
employees, equity holders, partners, affiliates, subsidiaries,
advisors, attorneys, agents or representatives, and no
successors or assigns of the foregoing, shall have any right of
action against the Reorganized Debtors, the Debtors, their
Estates, their subsidiaries, any Committee, the Steering
Committee or any of their respective current or former members,
officers, directors, managers, employees, equity holders,
partners, affiliates, subsidiaries, advisors, attorneys, agents
or representatives, or any of their successors or assigns, for
any act or omission in connection with, relating to or arising
out of, the administration of the Chapter 11 Cases, the
solicitation of acceptances of the Plan, the pursuit of
confirmation of the Plan, the consummation of the Plan, or the
administration of the Plan or the property to be distributed
under the Plan, except for their willful misconduct or gross
negligence as determined by a final order of a court of
competent jurisdiction.
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K.
|
Enforcement
of Subordination
|
The classification and manner of satisfying all Claims and
Interests under the Plan takes into consideration all
subordination rights, if any, whether arising by contract, under
general principles of equitable subordination, Sections 510
or 1129(b)(2) of the Bankruptcy Code, or otherwise. All holders
in any Class that votes to accept the Plan shall have been
deemed to have waived all such subordination rights and shall be
permanently enjoined and estopped from enforcing such
subordination rights. To the extent that any such rights have
not otherwise been expressly taken into account by the Plan, all
such rights are not waived and are hereby expressly
reserved.
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L.
|
Term of
Injunctions or Stays
|
Unless otherwise provided herein or in the Confirmation Order,
all injunctions or stays in effect in the Chapter 11 Cases
under sections 105 or 362 of the Bankruptcy Code or any
order of the Bankruptcy Court, and extant on the Confirmation
Date (excluding any injunctions or stays contained in the Plan
or the Confirmation Order), shall remain in full force and
effect until the Effective Date. All injunctions or stays
contained in the Plan or the Confirmation Order shall remain in
full force and effect in accordance with their terms.
The Plan shall be binding upon and inure to the benefit of the
Debtors, all present and former holders of Claims against and
Interests in the Debtors, whether or not such holders will
receive or retain any property or interest in property under the
Plan, their respective successors and assigns, including,
without limitation, the Reorganized Debtors, and all other
parties in interest in the Chapter 11 Cases.
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N.
|
Revocation,
Withdrawal or Non-Consummation
|
The Debtors reserve the right to revoke or withdraw the Plan at
any time prior to the Confirmation Date and to file other plans
of reorganization. If the Debtors revoke or withdraw the Plan,
or if confirmation or consummation of the Plan does not occur,
then (i) the Plan shall be null and void in all respects,
any settlement or compromise embodied in the Plan (including the
fixing or limiting to an amount any Claim or Class of Claims),
assumption or rejection of executory contracts or leases
effected by the Plan, and any document or agreement executed
pursuant to the Plan shall be deemed null and void, and
(ii) nothing contained in the Plan, and no acts taken in
preparation for consummation of or statements made in the Plan,
C-45
shall (a) constitute or be deemed to constitute a waiver or
release of any Claims by or against, or any Interests in, the
Debtors or any other Person, (b) prejudice in any manner
the rights of the Debtors or any Person in any further
proceedings involving the Debtors, or (c) constitute an
admission of any sort by the Debtors or any other Person. If
this Plan is not confirmed, then the treatment of the Claims
under this Plan (a) shall not be deemed an admission of any
kind by the holders of the Claims or a waiver of any rights or
claims by the holders of the Claims, and (b) shall have no
collateral estoppel, presumptive or evidentiary effect of any
kind in any other matter or proceeding in this Chapter 11
Cases or in any Chapter 7 proceedings with respect to the
Debtors.
On the Effective Date, the duties of any Committee (if
appointed) shall terminate, except with respect to any
application for compensation or reimbursement of costs and
expenses in connection with services rendered prior to the
Effective Date.
Any and all exhibits, lists or schedules referred to herein but
not filed with the Plan, including the New Notes Indenture,
shall be contained in the Plan Supplement and filed with the
Clerk of the Bankruptcy Court at least five (5) days prior
to the date of the commencement of the Confirmation Hearing.
Thereafter, any Person may examine the Plan Supplement in the
office of the Clerk of the Bankruptcy Court during normal court
hours. Holders of Claims or Interests may obtain a copy of the
Plan Supplement upon written request to the Debtors in
accordance with Article XIII.Q hereof.
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Q.
|
Notices
to Debtors, the Steering Committee
|
Any notice, request or demand required or permitted to be made
or provided under the Plan shall be (i) in writing,
(ii) served by (a) certified mail, return receipt
requested, (b) hand delivery, (c) overnight delivery
service, (d) first-class mail or (e) facsimile
transmission, and (iii) deemed to have been duly given or
made when actually delivered or, in the case of notice by
facsimile transmission, when received and telephonically
confirmed, addressed as follows:
(1) IF TO THE DEBTORS:
CIT Group Inc.
Corporate Legal
One CIT Drive
Livingston, NJ 07041
Attn: Robert Ingato
Facsimile:
973-740-5264
with copies to:
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
One Rodney Square
P.O. Box 636
Wilmington, DE 19899
Attn: Gregg M. Galardi, Esq.
Facsimile:
302-651-3001
or if by hand or courier:
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
One Rodney Square
10th & King Streets
7th Floor
Wilmington, DE 19801
C-46
Attn: Gregg M. Galardi, Esq.
Facsimile:
302-651-3001
with copies to:
SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP
333 West Wacker Drive
Chicago, Illinois 60606
Attn: Chris L. Dickerson, Esq.
Facsimile:
312-407-0411
(2) IF TO THE STEERING COMMITTEE:
PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP
1285 Avenue of the Americas
New York, NY 10019
Attn: Andrew N. Rosenberg, Esq.
Attn: Alice Belisle Eaton, Esq.
Facsimile:
212-757-3990
Unless a rule of law or procedure is supplied by federal law
(including the Bankruptcy Code and Bankruptcy Rules),
(i) the laws of the State of Delaware shall govern the
construction and implementation of the Plan, (ii) except as
expressly provided otherwise in any agreements, documents and
instruments executed in connection with the Plan, the laws of
the State of Delaware shall govern the construction and
implementation of such agreements, documents and instruments,
and (iii) the laws of the state of incorporation,
organization or formation of the Debtors shall govern corporate
governance matters with respect to the Debtors, in each case
without giving effect to the principles of conflicts of law
thereof.
Except as otherwise provided in the Plan or the Confirmation
Order, the Debtors shall have the right to prepay, without
penalty, all or any portion of an Allowed Claim at any time;
provided, however, that any such prepayment shall
not be violative of, or otherwise prejudice, the relative
priorities and parities among the Classes of Claims.
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T.
|
Section 1125(e)
of the Bankruptcy Code
|
As of the Confirmation Date, the Debtors shall be deemed to have
solicited acceptances of the Plan in good faith and in
compliance with the applicable provisions of the Bankruptcy
Code. The Debtors and each of their affiliates, agents,
directors, officers, employees, investment bankers, financial
advisors, attorneys and other professionals have participated in
good faith and in compliance with the applicable provisions of
the Bankruptcy Code in the offer and issuance of the New Notes,
the New Common Interests and the Contingent Value Rights under
the Plan, and therefore are not, and on account of such offer,
issuance and solicitation will not be, liable at any time for
the violation of any applicable law, rule or regulation
governing the solicitation of acceptances or rejections of the
Plan or the offer and issuance of the New Notes, the New Common
Interests and the Contingent Value Rights under the Plan.
C-47
Dated: New
York, New York
October 16, 2009
Debtor and Debtor in Possession
Debtor and Debtor in Possession
Gregg M. Galardi, Esq.
J. Gregory St. Clair, Esq.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP
Four Times Square
New York, New York 10036
(212) 735-3000
– and –
Chris L. Dickerson, Esq.
Jessica Kumar, Esq.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP
333 West Wacker Drive
Chicago, Illinois 60606
(312) 407-0700
Proposed Counsel for the Debtors and Debtors in
Possession
C-48
EXHIBIT A-1
TO
FIRST
AMENDED PREPACKAGED REORGANIZATION PLAN
OF CIT GROUP INC. AND
CIT GROUP FUNDING COMPANY OF DELAWARE LLC
REORGANIZED
CIT CERTIFICATE OF INCORPORATION
CERTIFICATE
OF AMENDMENT
TO
THE
CERTIFICATE
OF INCORPORATION
OF
CIT GROUP
INC.
Pursuant
to Sections 242 and 303 of the General
Corporation Law of the State of Delaware
CIT Group Inc., a Delaware corporation (hereinafter called the
“Corporation”), does hereby certify as follows:
FIRST: A new Article ELEVENTH is hereby
added to the Corporation’s Second Restated Certificate of
Incorporation which shall read in its entirety as set forth
below:
“ELEVENTH: The Corporation shall not issue any non-voting
equity securities to the extent prohibited by Section 1123
of Title 11 of the United States Code (the “Bankruptcy
Code”), as in effect on the effective date of the First
Amended Prepackaged Plan of Reorganization of CIT Group Inc. and
CIT Group Funding Company of Delaware LLC (the “Prepackaged
Plan”).”
SECOND: Article SEVENTH (c) is
hereby amended to read in its entirety as set forth below:
“(c) Unless otherwise prescribed by law of this Certificate
of Incorporation, special meetings of stockholders of the
Corporation may be called at any by (i) the Chairman of the
Board of Directors or secretary of the Corporation at the
request in writing of stockholders holding at least 25% of the
voting power of the issued and outstanding common stock of the
Corporation entitled to vote generally for the election of
directors or (ii) by the Board of Directors in its
discretion. Such a written request of stockholders shall state
the purpose or purposes of the proposed meeting. Business
transacted at any such special meeting called at the request of
stockholders shall be limited to the purpose or purposes set
forth in the written request of such stockholders.”
THIRD: The foregoing amendments were duly
adopted in accordance with Sections 242 and 303 of the
General Corporation Law of the State of Delaware, pursuant to
the Prepackaged Plan. The Prepackaged Plan was confirmed by an
order of the U.S. Bankruptcy Court in the District of
Delaware (the “Bankruptcy Court”) on
[ ], 2009. The Bankruptcy Court had
jurisdiction of the proceeding for the reorganization of the
Corporation under the Bankruptcy Code.
IN WITNESS WHEREOF, CIT Group Inc. has caused this Certificate
of Amendment to be duly executed in its corporate name this
[ ] day of
[ ], 2009.
CIT GROUP INC.
Name:
Exhibit A-1-1
EXHIBIT A-2
TO
FIRST
AMENDED PREPACKAGED REORGANIZATION PLAN
OF CIT GROUP INC. AND
CIT GROUP FUNDING COMPANY OF DELAWARE LLC
REORGANIZED
DELAWARE FUNDING CERTIFICATE OF
AMENDMENT TO CERTIFICATE OF FORMATION
CERTIFICATE
OF AMENDMENT
TO
CERTIFICATE
OF FORMATION
OF
CIT GROUP
FUNDING COMPANY OF DELAWARE LLC
Pursuant
to
Sections 18-202
of the
Delaware Limited Liability Company Act
1. The name of the limited liability company is CIT Group
Funding Company of Delaware LLC (the “Company”).
2. The Certificate of Formation of the Company is hereby
amended to add a new Article FIFTH thereto, which Article
shall read in its entirety as set forth below:
“5. CIT Group Funding Company of Delaware LLC shall
not issue any non-voting equity securities to the extent
prohibited by Section 1123 of Title 11 of the United
States Code as in effect as of the effective date of the
Prepackaged Plan of Reorganization of CIT Group Inc. and CIT
Group Funding Company of Delaware LLC.”
IN WITNESS WHEREOF, the undersigned authorized person has
executed this Certificate of Amendment
this
day of [ ], 2009.
CIT GROUP FUNDING COMPANY OF DELAWARE LLC
Name:
Exhibit A-2-1
EXHIBIT A-3
TO
FIRST
AMENDED PREPACKAGED REORGANIZATION PLAN
OF CIT GROUP INC. AND
CIT GROUP FUNDING COMPANY OF DELAWARE LLC
REORGANIZED
DELAWARE FUNDING
AMENDMENT TO LIMITED LIABILITY COMPANY AGREEMENT
AMENDMENT
NO. 1 TO
LIMITED LIABILITY COMPANY AGREEMENT
OF
CIT GROUP FUNDING COMPANY OF DELAWARE LLC
THIS AMENDMENT NO. 1 (the “Amendment”) to the
Limited Liability Company Agreement of CIT GROUP FUNDING COMPANY
OF DELAWARE LLC (the “Company”), entered into by
C.I.T. Leasing Corporation (the “Member”), as the sole
member, dated as of December 31, 2007 (the
“Agreement”), is made and entered into as of this
[ ] day of
[ ], 2009, by the Member.
Capitalized terms used but not otherwise defined herein shall
have the meaning ascribed to such terms in the Agreement.
WITNESSETH:
WHEREAS, the Member desires to amend the Agreement as set forth
below.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, it is hereby
agreed as follows:
1. Amendment to Section 8. Section 8 of
the Agreement is hereby amended by amending and restating such
section in its entirety so that, as amended and restated, it
shall read as follows:
8. Powers.
(r) The Company (i) shall have and exercise all powers
necessary, convenient or incidental to accomplish its purposes
as set forth in Section 7 and (ii) shall have and
exercise all of the powers and rights conferred upon limited
liability companies formed pursuant to the Act.
(s) Notwithstanding anything in subsection (a) of this
Section 8, the Company shall not issue any non-voting
equity securities to the extent prohibited by Section 1123
of Title 11 of the United States Bankruptcy Code as in
effect as of the effective date (the “Effective Date”)
of the Prepackaged Plan of Reorganization of CIT Group Inc. and
CIT Group Funding Company of Delaware LLC (the “Plan”).
2. Effect. From and after the date hereof, all references
to the Agreement shall be deemed to be references to the
Agreement as amended hereby.
3. Ratification. Except as expressly modified by this
Amendment, each term and provision of the Agreement is hereby
ratified and confirmed and shall continue in full force and
effect.
4. Governing Law. This Amendment shall be governed by and
construed under the laws of the State of Delaware (without
regard to conflict of laws principles), all rights and remedies
being governed by said laws.
[SIGNATURE
PAGE FOLLOWS]
Exhibit A-3-1
IN WITNESS WHEREOF, the undersigned, intending to be legally
bound hereby, has duly executed this Amendment as of the day and
year first above written.
SOLE MEMBER:
C.I.T. LEASING CORPORATION
Name:
Exhibit A-3-2
EXHIBIT B
TO
FIRST
AMENDED PREPACKAGED REORGANIZATION PLAN
OF CIT GROUP INC. AND
CIT GROUP FUNDING COMPANY OF DELAWARE LLC
DESCRIPTION
OF NEW COMMON INTERESTS
The principal terms of the New Common Interests to be issued by
the Reorganized Debtors under the Plan shall be as follows:
|
|
|
Authorization:
|
|
800 million shares
|
Initial Issuance:
|
|
400 million shares
|
Par Value:
|
|
$.01 per share
|
Voting Rights:
|
|
One vote per share
|
Dividends:
|
|
Payable at the discretion of the board of directors of
Reorganized CIT
|
Conversion Rights:
|
|
None
|
Splits and Adjustments:
|
|
Generally, arithmetic splits, combinations, etc., are
proportionately treated
|
Restrictions on Transfer:
|
|
None (other than restrictions imposed by applicable state and
federal securities laws)
|
Registration Rights:
|
|
None
|
Exhibit B-1
SCHEDULE 1
TO
FIRST
AMENDED PREPACKAGED REORGANIZATION PLAN OF CIT GROUP INC. AND
CIT GROUP FUNDING COMPANY OF DELAWARE LLC
LIST OF
SENIOR UNSECURED NOTES
(EXCLUDING 2015 HYBRID CONVERTIBLE/EQUITY NOTES)
|
|
|
|
|
|
|
Outstanding Principal
|
|
|
Title
|
|
Amount
|
|
CUSIP/ISIN
|
|
6.875% Notes due November 1, 2009
|
|
USD 300,000,000
|
|
12560PCL3
|
4.125% Notes due November 3, 2009
|
|
USD 500,000,000
|
|
125581AM0
|
3.85% Notes due November 15, 2009
|
|
USD 1,959,000
|
|
12557WJP7
|
4.63% Notes due November 15, 2009
|
|
USD 1,349,000
|
|
12557WLV1
|
5.05% Notes due November 15, 2009
|
|
USD 2,800,000
|
|
12557WPC9
|
5.00% Notes due November 15, 2009
|
|
USD 4,217,000
|
|
12557WB26
|
5.00% Notes due November 15, 2009
|
|
USD 5,083,000
|
|
12557WB59
|
5.00% Notes due November 15, 2009
|
|
USD 6,146,000
|
|
12557WB83
|
3.95% Notes due December 15, 2009
|
|
USD 3,314,000
|
|
12557WJV4
|
4.80% Notes due December 15, 2009
|
|
USD 2,073,000
|
|
12557WMB4
|
4.70% Notes due December 15, 2009
|
|
USD 285,000
|
|
12557WPL9
|
4.85% Notes due December 15, 2009
|
|
USD 582,000
|
|
12557WPU9
|
6.25% Notes due December 15, 2009
|
|
USD 63,703,000
|
|
12557WSJ1
|
6.50% Notes due December 15, 2009
|
|
USD 40,994,000
|
|
12557WSM4
|
Floating Rate Notes due December 21, 2009
|
|
USD 113,000,000
|
|
12560PDL2
|
4.25% Notes due February 1, 2010
|
|
USD 750,000,000
|
|
125581AQ1
|
4.05% Notes due February 15, 2010
|
|
USD 4,172,000
|
|
12557WKE0
|
5.15% Notes due February 15, 2010
|
|
USD 1,918,000
|
|
12557WQC8
|
5.05% Notes due February 15, 2010
|
|
USD 1,497,000
|
|
12557WQL8
|
6.50% Notes due February 15, 2010
|
|
USD 58,219,000
|
|
12557WSX0
|
6.25% Notes due February 15, 2010
|
|
USD 44,138,000
|
|
12557WTE1
|
Floating Rate Notes due March 1, 2010
|
|
CHF 100,000,000
|
|
CH00293 82659
|
2.75% Notes due March 1, 2010
|
|
CHF 50,000,000
|
|
CH0029407191
|
Floating Rate Notes due March 12, 2010
|
|
USD 1,000,000,000
|
|
125581CX4
|
4.30% Notes due March 15, 2010
|
|
USD 1,822,000
|
|
12557WKL4
|
5.05% Notes due March 15, 2010
|
|
USD 4,241,000
|
|
12557WMH1
|
5.15% Notes due March 15, 2010
|
|
USD 6,375,000
|
|
12557WMP3
|
4.90% Notes due March 15, 2010
|
|
USD 297,000
|
|
12557WQU8
|
4.85% Notes due March 15, 2010
|
|
USD 784,000
|
|
12557WRC7
|
6.50% Notes due March 15, 2010
|
|
USD 33,677,000
|
|
12557WTL5
|
Floating Rate Notes due March 22, 2010
|
|
USD 150,000,000
|
|
12560PFN6
|
4.45% Notes due May 15, 2010
|
|
USD 3,980,000
|
|
12557WKS9
|
5.25% Notes due May 15, 2010
|
|
USD 2,414,000
|
|
12557WMV0
|
4.30% Notes due June 15, 2010
|
|
USD 1,013,000
|
|
12557WKX8
|
4.35% Notes due June 15, 2010
|
|
USD 1,419,000
|
|
12557WLE9
|
5.30% Notes due June 15, 2010
|
|
USD 2,622,000
|
|
12557WNB3
|
4.60% Notes due August 15, 2010
|
|
USD 1,131,000
|
|
12557WLL3
|
Schedule 1-1
|
|
|
|
|
|
|
Outstanding Principal
|
|
|
Title
|
|
Amount
|
|
CUSIP/ISIN
|
|
5.45% Notes due August 15, 2010
|
|
USD 11,920,000
|
|
12557WNH0
|
5.50% Notes due August 15, 2010
|
|
USD 1,511,000
|
|
12557WA92
|
4.25% Notes due September 15, 2010
|
|
USD 295,000
|
|
12557WLS8
|
5.25% Notes due September 15, 2010
|
|
USD 11,403,000
|
|
12557WNR8
|
5.20% Notes due November 3, 2010
|
|
USD 500,000,000
|
|
125577AS5
|
Floating Rate Notes due November 3, 2010
|
|
USD 474,000,000
|
|
125577AT3
|
5.05% Notes due November 15, 2010
|
|
USD 9,054,000
|
|
12557WLY5
|
5.25% Notes due November 15, 2010
|
|
USD 6,349,000
|
|
12557WNZ0
|
5.25% Notes due November 15, 2010
|
|
USD 12,292,000
|
|
12557WC33
|
5.25% Notes due November 15, 2010
|
|
USD 1,686,000
|
|
12557WC74
|
4.75% Notes due December 15, 2010
|
|
USD 750,000,000
|
|
12560PDB4
|
5.00% Notes due December 15, 2010
|
|
USD 5,842,000
|
|
12557WME8
|
5.05% Notes due December 15, 2010
|
|
USD 5,926,000
|
|
12557WPH8
|
4.90% Notes due December 15, 2010
|
|
USD 3,188,000
|
|
12557WPR6
|
5.25% Notes due December 15, 2010
|
|
USD 807,000
|
|
12557WSE2
|
6.50% Notes due December 15, 2010
|
|
USD 12,177,000
|
|
12557WSR3
|
6.50% Notes due January 15, 2011
|
|
USD 17,752,000
|
|
12557WSV4
|
4.72% Notes due February 10, 2011
|
|
CAD 400,000,000
|
|
125581AU2
|
5.15% Notes due February 15, 2011
|
|
USD 2,158,000
|
|
12557WPZ8
|
5.15% Notes due February 15, 2011
|
|
USD 1,458,000
|
|
12557WQH7
|
6.60% Notes due February 15, 2011
|
|
USD 25,229,000
|
|
12557WTB7
|
Floating Rate Notes due February 28, 2011(1)
|
|
GBP 70,000,000
|
|
XS0245933 121
|
5.05% Notes due March 15, 2011
|
|
USD 1,560,000
|
|
12557WML2
|
5.00% Notes due March 15, 2011
|
|
USD 1,001,000
|
|
12557WQR5
|
4.90% Notes due March 15, 2011
|
|
USD 806,000
|
|
12557WQZ7
|
5.00% Notes due March 15, 2011
|
|
USD 1,589,000
|
|
12557WRH6
|
6.75% Notes due March 15, 2011
|
|
USD 7,604,000
|
|
12557WTJ0
|
6.50% Notes due March 15, 2011
|
|
USD 6,187,000
|
|
12557WTQ4
|
5.15% Notes due April 15, 2011
|
|
USD 957,000
|
|
12557WMS7
|
Floating Rate Notes due April 27, 2011
|
|
USD 280,225,000
|
|
125581BA5
|
5.60% Notes due April 27, 2011
|
|
USD 750,000,000
|
|
125581AZ1
|
5.40% Notes due May 15, 2011
|
|
USD 1,283,000
|
|
12557WMY4
|
5.35% Notes due June 15, 2011
|
|
USD 558,000
|
|
12557WNE7
|
Floating Rate Notes due July 28, 2011
|
|
USD 669,500,000
|
|
125581BE7
|
5.80% Notes due July 28, 2011
|
|
USD 550,000,000
|
|
125581BF4
|
5.35% Notes due August 15, 2011
|
|
USD 2,254,000
|
|
12557WNM9
|
5.20% Notes due September 15, 2011
|
|
USD 2,685,000
|
|
12557WNV9
|
Floating Rate Notes due September 21, 2011(1)
|
|
GBP 40,000,000
|
|
XS0268935698
|
4.25% Notes due September 22, 2011(2)
|
|
EUR 750,000,000
|
|
XS0201605192
|
5.20% Notes due November 15, 2011
|
|
USD 7,392,000
|
|
12557WPD7
|
5.25% Notes due November 15, 2011
|
|
USD 4,427,000
|
|
12557WB34
|
5.25% Notes due November 15, 2011
|
|
USD 5,175,000
|
|
12557WB67
|
5.25% Notes due November 15, 2011
|
|
USD 4,944,000
|
|
12557WB91
|
Floating Rate Notes due November 30, 2011(1)
|
|
EUR 500,000,000
|
|
XS0275670965
|
Schedule 1-2
|
|
|
|
|
|
|
Outstanding Principal
|
|
|
Title
|
|
Amount
|
|
CUSIP/ISIN
|
|
4.85% Notes due December 15, 2011
|
|
USD 482,000
|
|
12557WPM7
|
5.00% Notes due December 15, 2011
|
|
USD 1,685,000
|
|
12557WPV7
|
5.40% Notes due February 13, 2012
|
|
USD 479,996,000
|
|
125581CT3
|
Floating Rate Notes due February 13, 2012
|
|
USD 654,250,000
|
|
125581CU0
|
5.25% Notes due February 15, 2012
|
|
USD 2,937,000
|
|
12557WQD6
|
5.15% Notes due February 15, 2012
|
|
USD 1,532,000
|
|
12557WQM6
|
7.25% Notes due February 15, 2012
|
|
USD 30,577,000
|
|
12557WSY8
|
7.00% Notes due February 15, 2012
|
|
USD 17,676,000
|
|
12557WTF8
|
5.00% Notes due March 15, 2012
|
|
USD 482,000
|
|
12557WQV6
|
5.00% Notes due March 15, 2012
|
|
USD 1,059,000
|
|
12557WRD5
|
7.25% Notes due March 15, 2012
|
|
USD 13,609,000
|
|
12557WTM3
|
7.75% Notes due April 2, 2012
|
|
USD 259,646,000
|
|
125581AB4
|
5.75% Notes due August 15, 2012
|
|
USD 466,000
|
|
12557WA68
|
3.80% Notes due November 14, 2012(1)
|
|
EUR 450,000,000
|
|
XS0234935434
|
5.50% Notes due November 15, 2012
|
|
USD 2,711,000
|
|
12557WC41
|
5.50% Notes due November 15, 2012
|
|
USD 1,381,000
|
|
12557WC82
|
7.63% Notes due November 30, 2012
|
|
USD 1,277,653,000
|
|
125577AZ9
|
5.50% Notes due December 15, 2012
|
|
USD 495,000
|
|
12557WSF9
|
7.00% Notes due December 15, 2012
|
|
USD 36,343,000
|
|
12557WSK8
|
7.25% Notes due December 15, 2012
|
|
USD 19,425,000
|
|
12557WSN2
|
7.30% Notes due December 15, 2012
|
|
USD 11,775,000
|
|
12557WSS1
|
Floating Rate Notes due December 21, 2012
|
|
USD 290,705,000
|
|
12560PEP2
|
6.15% Notes due January 15, 2013
|
|
USD 29,038,000
|
|
12557WAZ4
|
6.25% Notes due January 15, 2013
|
|
USD 62,461,000
|
|
12557WBC4
|
6.15% Notes due January 15, 2013
|
|
USD 52,560,000
|
|
12557WBF7
|
6.25% Notes due January 15, 2013
|
|
USD 53,967,000
|
|
12557WBJ9
|
7.50% Notes due January 15, 2013
|
|
USD 27,292,000
|
|
12557WSW2
|
6.25% Notes due February 15, 2013
|
|
USD 22,781,000
|
|
12557WBM2
|
6.20% Notes due February 15, 2013
|
|
USD 24,387,000
|
|
12557WBQ3
|
6.00% Notes due February 15, 2013
|
|
USD 22,368,000
|
|
12557WBT7
|
7.60% Notes due February 15, 2013
|
|
USD 23,615,000
|
|
12557WTC5
|
6.15% Notes due February 15, 2013
|
|
USD 23,318,000
|
|
12557WBW0
|
5.40% Notes due March 7, 2013
|
|
USD 483,516,000
|
|
125581AX6
|
7.75% Notes due March 15, 2013
|
|
USD 18,242,000
|
|
12557WTK7
|
7.90% Notes due March 15, 2013
|
|
USD 17,591,000
|
|
12557WTN1
|
7.25% Notes due March 15, 2013
|
|
USD 5,350,000
|
|
12557WTR2
|
6.00% Notes due March 15, 2013
|
|
USD 26,178,000
|
|
12557WBZ3
|
6.00% Notes due March 15, 2013
|
|
USD 27,547,000
|
|
12557WCC3
|
6.10% Notes due March 15, 2013
|
|
USD 27,499,000
|
|
12557WCF6
|
6.25% Notes due March 15, 2013
|
|
USD 26,121,000
|
|
12557WCJ8
|
6.15% Notes due April 15, 2013
|
|
USD 24,593,000
|
|
12557WCM1
|
6.15% Notes due April 15, 2013
|
|
USD 28,983,000
|
|
12557WCQ2
|
6.05% Notes due April 15, 2013
|
|
USD 19,386,000
|
|
12557WCT6
|
6.05% Notes due May 15, 2013
|
|
USD 44,494,000
|
|
12557WCW9
|
Schedule 1-3
|
|
|
|
|
|
|
Outstanding Principal
|
|
|
Title
|
|
Amount
|
|
CUSIP/ISIN
|
|
4.95% Notes due May 15, 2013
|
|
USD 9,133,000
|
|
12557WCZ2
|
4.95% Notes due May 15, 2013
|
|
USD 11,492,000
|
|
12557WDC2
|
4.88% Notes due June 15, 2013
|
|
USD 6,237,000
|
|
12557WDF5
|
4.85% Notes due June 15, 2013
|
|
USD 7,956,000
|
|
12557WDJ7
|
4.60% Notes due June 15, 2013
|
|
USD 9,421,000
|
|
12557WDM0
|
4.45% Notes due June 15, 2013
|
|
USD 5,051,000
|
|
12557WDQ1
|
Floating Rate Notes due June 20, 2013(1)
|
|
EUR 500,000,000
|
|
XS0258343564
|
5.05% Notes due July 15, 2013
|
|
USD 5,228,000
|
|
12557WEF4
|
4.65% Notes due July 15, 2013
|
|
USD 9,267,000
|
|
12557WDT5
|
4.75% Notes due July 15, 2013
|
|
USD 2,318,000
|
|
12557WDW8
|
5.00% Notes due July 15, 2013
|
|
USD 15,182,000
|
|
12557WDZ1
|
4.75% Notes due July 15, 2013
|
|
USD 5,779,000
|
|
12557WEC1
|
5.30% Notes due August 15, 2013
|
|
USD 7,479,000
|
|
12557WEJ6
|
5.50% Notes due August 15, 2013
|
|
USD 2,903,000
|
|
12557WEM9
|
5.50% Notes due August 15, 2013
|
|
USD 6,810,000
|
|
12557WEQ0
|
5.40% Notes due September 15, 2013
|
|
USD 2,445,000
|
|
12557WET4
|
5.50% Notes due September 15, 2013
|
|
USD 4,171,000
|
|
12557WEW7
|
5.25% Notes due September 15, 2013
|
|
USD 4,374,000
|
|
12557WEZ0
|
5.20% Notes due September 15, 2013
|
|
USD 4,378,000
|
|
12557WFC0
|
5.20% Notes due October 15, 2013
|
|
USD 5,497,000
|
|
12557WFF3
|
5.20% Notes due October 15, 2013
|
|
USD 8,130,000
|
|
12557WFJ5
|
5.25% Notes due October 15, 2013
|
|
USD 3,359,000
|
|
12557WFM8
|
5.30% Notes due November 15, 2013
|
|
USD 3,146,000
|
|
12557WFQ9
|
5.10% Notes due November 15, 2013
|
|
USD 7,480,000
|
|
12557WFT3
|
5.40% Notes due December 15, 2013
|
|
USD 5,783,000
|
|
12557WFW6
|
5.20% Notes due December 15, 2013
|
|
USD 7,241,000
|
|
12557WFZ9
|
5.10% Notes due January 15, 2014
|
|
USD 2,897,000
|
|
12557WGC9
|
4.85% Notes due January 15, 2014
|
|
USD 1,333,000
|
|
12557WGF2
|
5.00% Notes due February 13, 2014
|
|
USD 671,749,000
|
|
125581AH1
|
5.00% Notes due February 15, 2014
|
|
USD 5,957,000
|
|
12557WGJ4
|
4.90% Notes due February 15, 2014
|
|
USD 1,958,000
|
|
12557WGM7
|
7.85% Notes due February 15, 2014
|
|
USD 23,034,000
|
|
12557WSZ5
|
7.65% Notes due February 15, 2014
|
|
USD 10,897,000
|
|
12557WTG6
|
4.80% Notes due March 15, 2014
|
|
USD 4,492,000
|
|
12557WGQ8
|
4.60% Notes due March 15, 2014
|
|
USD 4,211,000
|
|
12557WGT2
|
7.85% Notes due March 15, 2014
|
|
USD 4,573,000
|
|
12557WTS0
|
4.80% Notes due April 15, 2014
|
|
USD 2,177,000
|
|
12557WGW5
|
5.10% Notes due April 15, 2014
|
|
USD 5,735,000
|
|
12557WGZ8
|
5.00% Notes due May 13, 2014(2)
|
|
EUR 463,405,000
|
|
XS0192461837
|
5.25% Notes due May 15, 2014
|
|
USD 4,898,000
|
|
12557WHC8
|
5.80% Notes due May 15, 2014
|
|
USD 11,357,000
|
|
12557WHF1
|
5.70% Notes due June 15, 2014
|
|
USD 8,890,000
|
|
12557WHJ3
|
5.75% Notes due June 15, 2014
|
|
USD 10,815,000
|
|
12557WHM6
|
5.75% Notes due June 15, 2014
|
|
USD 1,930,000
|
|
12557WRU7
|
Schedule 1-4
|
|
|
|
|
|
|
Outstanding Principal
|
|
|
Title
|
|
Amount
|
|
CUSIP/ISIN
|
|
5.85% Notes due June 15, 2014
|
|
USD 1,593,000
|
|
12557WRX1
|
6.00% Notes due June 15, 2014
|
|
USD 10,892,000
|
|
12557WSA0
|
5.65% Notes due July 15, 2014
|
|
USD 8,504,000
|
|
12557WHQ7
|
5.30% Notes due July 15, 2014
|
|
USD 10,005,000
|
|
12557WHT1
|
5.20% Notes due August 15, 2014
|
|
USD 5,691,000
|
|
12557WHW4
|
5.30% Notes due August 15, 2014
|
|
USD 3,915,000
|
|
12557WHZ7
|
6.00% Notes due August 15, 2014
|
|
USD 2,555,000
|
|
12557WA27
|
6.00% Notes due August 15, 2014
|
|
USD 2,389,000
|
|
12557WA76
|
5.25% Notes due September 15, 2014
|
|
USD 16,332,000
|
|
12557WJC6
|
5.05% Notes due September 15, 2014
|
|
USD 17,112,000
|
|
12557WJF9
|
5.125% Notes due September 30, 2014
|
|
USD 638,267,000
|
|
125581AK4
|
4.90% Notes due October 15, 2014
|
|
USD 5,520,000
|
|
12557WJJ1
|
5.10% Notes due October 15, 2014
|
|
USD 13,944,000
|
|
12557WJM4
|
5.05% Notes due November 15, 2014
|
|
USD 7,238,000
|
|
12557WJQ5
|
5.50% Notes due December 1, 2014(2)
|
|
GBP 480,000,000
|
|
XS0207079764
|
5.125% Notes due December 15, 2014
|
|
USD 7,632,000
|
|
12557WJT9
|
5.10% Notes due December 15, 2014
|
|
USD 18,101,000
|
|
12557WJW2
|
5.05% Notes due January 15, 2015
|
|
USD 6,302,000
|
|
12557WJZ5
|
5.00% Notes due February 1, 2015
|
|
USD 671,141,000
|
|
125581AR9
|
4.95% Notes due February 15, 2015
|
|
USD 6,678,000
|
|
12557WKC4
|
4.90% Notes due February 15, 2015
|
|
USD 6,848,000
|
|
12557WKF7
|
7.90% Notes due February 15, 2015
|
|
USD 24,329,000
|
|
12557WTD3
|
5.10% Notes due March 15, 2015
|
|
USD 12,247,000
|
|
12557WKJ9
|
5.05% Notes due March 15, 2015
|
|
USD 2,575,000
|
|
12557WKM2
|
4.25% Notes due March 17, 2015(2)
|
|
EUR 412,500,000
|
|
XS0215269670
|
5.375% Notes due April 15, 2015
|
|
USD 6,369,000
|
|
12557WKQ3
|
5.25% Notes due May 15, 2015
|
|
USD 15,954,000
|
|
12557WKT7
|
5.30% Notes due May 15, 2015
|
|
USD 27,090,000
|
|
12557WKW0
|
5.10% Notes due June 15, 2015
|
|
USD 14,930,000
|
|
12557WKZ3
|
5.05% Notes due June 15, 2015
|
|
USD 10,912,000
|
|
12557WLA7
|
5.20% Notes due June 15, 2015
|
|
USD 8,322,000
|
|
12557WLF6
|
5.30% Notes due August 15, 2015
|
|
USD 10,741,000
|
|
12557WLJ8
|
5.375% Notes due August 15, 2015
|
|
USD 15,892,000
|
|
12557WLM1
|
5.25% Notes due September 15, 2015
|
|
USD 11,241,000
|
|
12557WLQ2
|
5.10% Notes due September 15, 2015
|
|
USD 4,898,000
|
|
12557WLT6
|
5.50% Notes due November 15, 2015
|
|
USD 4,016,000
|
|
12557WLW9
|
5.80% Notes due November 15, 2015
|
|
USD 7,456,000
|
|
12557WLZ2
|
5.75% Notes due December 15, 2015
|
|
USD 8,155,000
|
|
12557WMC2
|
5.80% Notes due December 15, 2015
|
|
USD 12,621,000
|
|
12557WMF5
|
5.40% Notes due January 30, 2016
|
|
USD 604,263,000
|
|
125581AW8
|
5.85% Notes due March 15, 2016
|
|
USD 14,372,000
|
|
12557WMJ7
|
5.80% Notes due March 15, 2016
|
|
USD 11,705,000
|
|
12557WMM0
|
6.00% Notes due March 15, 2016
|
|
USD 69,046,000
|
|
12557WMQ1
|
5.88% Notes due April 15, 2016
|
|
USD 4,888,000
|
|
12557WMT5
|
Schedule 1-5
|
|
|
|
|
|
|
Outstanding Principal
|
|
|
Title
|
|
Amount
|
|
CUSIP/ISIN
|
|
6.05% Notes due May 15, 2016
|
|
USD 14,943,000
|
|
12557WMW8
|
6.15% Notes due May 15, 2016
|
|
USD 18,636,000
|
|
12557WMZ1
|
6.10% Notes due June 15, 2016
|
|
USD 15,478,000
|
|
12557WNC1
|
6.10% Notes due June 15, 2016
|
|
USD 17,660,000
|
|
12557WNF4
|
6.20% Notes due August 15, 2016
|
|
USD 37,135,000
|
|
12557WNJ6
|
6.13% Notes due August 15, 2016
|
|
USD 36,401,000
|
|
12557WNN7
|
5.85% Notes due September 15, 2016
|
|
USD 391,533,000
|
|
12558 1CS5
|
6.05% Notes due September 15, 2016
|
|
USD 31,772,000
|
|
12557WNS6
|
5.95% Notes due September 15, 2016
|
|
USD 11,219,000
|
|
12557WNW7
|
4.65% Notes due September 19, 2016
|
|
EUR 474,000,000
|
|
XS0268133799
|
6.00% Notes due November 15, 2016
|
|
USD 29,155,000
|
|
12557WPA3
|
5.95% Notes due November 15, 2016
|
|
USD 13,264,000
|
|
12557WPE5
|
Floating Rate Notes due December 14, 2016
|
|
USD 34,452,000
|
|
12560PDK4
|
5.80% Notes due December 15, 2016
|
|
USD 35,842,000
|
|
12557WPJ4
|
5.65% Notes due December 15, 2016
|
|
USD 8,701,000
|
|
12557WPN5
|
5.70% Notes due December 15, 2016
|
|
USD 9,571,000
|
|
12557WPS4
|
5.70% Notes due December 15, 2016
|
|
USD 9,817,000
|
|
12557WPW5
|
5.50% Notes due December 20, 2016
|
|
GBP 367,400,000
|
|
XS0278525992
|
5.65% Notes due February 13, 2017
|
|
USD 548,087,000
|
|
125577AY2
|
5.85% Notes due February 15, 2017
|
|
USD 7,724,000
|
|
12557WQA2
|
5.95% Notes due February 15, 2017
|
|
USD 11,074,000
|
|
12557WQE4
|
5.85% Notes due February 15, 2017
|
|
USD 6,471,000
|
|
12557WQJ3
|
5.80% Notes due February 15, 2017
|
|
USD 7,792,000
|
|
12557WQN4
|
Floating Rate Notes due March 15, 2017
|
|
USD 50,000,000
|
|
12560PDR9
|
5.75% Notes due March 15, 2017
|
|
USD 6,741,000
|
|
12557WQS3
|
5.75% Notes due March 15, 2017
|
|
USD 13,498,000
|
|
12557WQW4
|
5.70% Notes due March 15, 2017
|
|
USD 9,533,000
|
|
12557WRA1
|
5.65% Notes due March 15, 2017
|
|
USD 5,935,000
|
|
12557WRE3
|
5.75% Notes due March 15, 2017
|
|
USD 10,298,000
|
|
12557WRJ2
|
5.75% Notes due May 15, 2017
|
|
USD 2,708,000
|
|
12557WRL7
|
5.80% Notes due May 15, 2017
|
|
USD 3,779,000
|
|
12557WRN3
|
5.80% Notes due May 15, 2017
|
|
USD 5,038,000
|
|
12557WRQ6
|
5.38% Notes due June 15, 2017(5)
|
|
GBP 300,000,000
|
|
XS027632734
|
6.00% Notes due June 15, 2017
|
|
USD 23,842,000
|
|
12557WRS2
|
6.00% Notes due June 15, 2017
|
|
USD 8,205,000
|
|
12557WRV5
|
6.10% Notes due June 15, 2017
|
|
USD 6,648,000
|
|
12557WRY9
|
6.25% Notes due June 15, 2017
|
|
USD 10,535,000
|
|
12557WSB8
|
6.25% Notes due August 15, 2017
|
|
USD 1,190,000
|
|
12557WA35
|
6.25% Notes due November 15, 2017
|
|
USD 8,958,000
|
|
12557WB42
|
6.25% Notes due November 15, 2017
|
|
USD 11,778,000
|
|
12557WB75
|
6.25% Notes due November 15, 2017
|
|
USD 6,339,000
|
|
12557WC25
|
6.40% Notes due November 15, 2017
|
|
USD 3,404,000
|
|
12557WC58
|
6.50% Notes due November 15, 2017
|
|
USD 2,197,000
|
|
12557WC90
|
10-Year
Forward Rate Bias Notes due December 11, 2017(3)
|
|
USD 500,000,000
|
|
N/A
|
Schedule 1-6
|
|
|
|
|
|
|
Outstanding Principal
|
|
|
Title
|
|
Amount
|
|
CUSIP/ISIN
|
|
6.50% Notes due December 15, 2017
|
|
USD 556,000
|
|
12557WSG7
|
7.50% Notes due December 15, 2017
|
|
USD 24,275,000
|
|
12557WSL6
|
7.75% Notes due December 15, 2017
|
|
USD 14,936,000
|
|
12557WSP7
|
7.80% Notes due December 15, 2017
|
|
USD 8,731,000
|
|
12557WST9
|
5.80% Senior Notes due October 1, 2036(4)
|
|
USD 316,015,000
|
|
12560PFP1
|
|
|
|
(1) |
|
Listed on the London Stock Exchange. Following consummation of
the Plan, the Debtors intend to delist these notes from the
London Stock Exchange’s Gilt Edged and Fixed Interest
Market. |
|
(2) |
|
Listed on the Luxembourg Stock Exchange. Following consummation
of the Plan, the Debtors intend to delist these notes from the
Luxembourg Stock Exchange. |
|
(3) |
|
These securities are not listed with the Depository
Trust Company. |
|
(4) |
|
The 5.80% Senior Notes due October 1, 2036 have a put
right on October 1, 2018. |
|
(5) |
|
The 5.38% Notes due June 15, 2017 have a put right on
June 15, 2010. |
Schedule 1-7
SCHEDULE 2
TO
FIRST
AMENDED PREPACKAGED REORGANIZATION PLAN OF CIT GROUP INC. AND
CIT GROUP FUNDING COMPANY OF DELAWARE LLC
LIST OF
LONG-DATED SENIOR UNSECURED NOTES
|
|
|
|
|
Title of Long-Dated Senior Unsecured Notes
|
|
Outstanding Principal Amount
|
|
CUSIP/ISIN
|
|
6.25% Notes due August 15, 2021
|
|
USD 43,204,000
|
|
12557WNP2
|
6.35% Notes due August 15, 2021
|
|
USD 19,139,000
|
|
12557WNK3
|
6.15% Notes due September 15, 2021
|
|
USD 27,174,000
|
|
12557WNX5
|
6.25% Notes due September 15, 2021
|
|
USD 38,817,000
|
|
12557WNT4
|
6.10% Notes due November 15, 2021
|
|
USD 63,647,000
|
|
12557WPF2
|
6.25% Notes due November 15, 2021
|
|
USD 35,172,000
|
|
12557WPB1
|
5.85% Notes due December 15, 2021
|
|
USD 14,529,000
|
|
12557WPP0
|
5.875% Notes due December 15, 2021
|
|
USD 18,181,000
|
|
12557WPT2
|
5.90% Notes due December 15, 2021
|
|
USD 18,463,000
|
|
12557WPX3
|
6.00% Notes due December 15, 2021
|
|
USD 58,477,000
|
|
12557WPK1
|
5.95% Notes due February 15, 2022
|
|
USD 12,325,000
|
|
12557WQP9
|
6.00% Notes due February 15, 2022
|
|
USD 47,741,000
|
|
12557WQB0
|
6.00% Notes due February 15, 2022
|
|
USD 36,570,000
|
|
12557WQK0
|
6.05% Notes due February 15, 2022
|
|
USD 24,258,000
|
|
12557WQF1
|
5.85% Notes due March 15, 2022
|
|
USD 12,016,000
|
|
12557WQX2
|
5.85% Notes due March 15, 2022
|
|
USD 15,025,000
|
|
12557WRB9
|
5.85% Notes due March 15, 2022
|
|
USD 19,227,000
|
|
12557WRF0
|
5.90% Notes due March 15, 2022
|
|
USD 8,296,000
|
|
12557WQT1
|
5.95% Notes due March 15, 2022
|
|
USD 27,181,000
|
|
12557WRK9
|
6.00% Notes due May 15, 2022
|
|
USD 13,726,000
|
|
12557WRM5
|
6.00% Notes due May 15, 2022
|
|
USD 18,355,000
|
|
12557WRP8
|
6.00% Notes due May 15, 2022
|
|
USD 11,441,000
|
|
12557WRR4
|
6.15% Notes due June 15, 2022
|
|
USD 30,302,000
|
|
12557WRT0
|
6.20% Notes due June 15, 2022
|
|
USD 6,819,000
|
|
12557WRW3
|
6.25% Notes due June 15, 2022
|
|
USD 4,611,000
|
|
12557WRZ6
|
6.50% Notes due June 15, 2022
|
|
USD 15,028,000
|
|
12557WSC6
|
6.50% Notes due August 15, 2022
|
|
USD 1,457,000
|
|
12557WA43
|
6.50% Notes due August 15, 2022
|
|
USD 397,000
|
|
12557WA84
|
6.70% Notes due November 15, 2022
|
|
USD 1,930,000
|
|
12557WC66
|
6.75% Notes due November 15, 2022
|
|
USD 2,609,000
|
|
12557WSD4
|
6.75% Notes due December 15, 2022
|
|
USD 676,000
|
|
12557WSH5
|
6.00% Notes due April 1, 2036
|
|
USD 309,021,000
|
|
125581AY4
|
2.83% Notes due April 2, 2036(1)
|
|
JPY 20,000,000
|
|
XS0249719534
|
|
|
|
(1) |
|
These securities are not listed with the Depository
Trust Company (“DTC”). |
Schedule 2-1
APPENDIX D
GUARANTORS
|
|
|
|
|
NAME OF
|
|
|
|
ENTITY
|
GUARANTOR
|
|
JURISD.
|
|
TYPE
|
|
Baffin Shipping Co., Inc.
|
|
Delaware
|
|
CORP
|
C.I.T. Leasing Corporation
|
|
Delaware
|
|
CORP
|
Capita Colombia Holdings Corp.
|
|
Delaware
|
|
CORP
|
Capita Corporation
|
|
Delaware
|
|
CORP
|
Capita International L.L.C.
|
|
Delaware
|
|
LLC
|
Capita Premium Corporation
|
|
Delaware
|
|
CORP
|
CIT Capital USA Inc.
|
|
Delaware
|
|
CORP
|
CIT China 12, Inc.
|
|
Delaware
|
|
CORP
|
CIT China 13, Inc.
|
|
Delaware
|
|
CORP
|
CIT China 2, Inc.
|
|
Delaware
|
|
CORP
|
CIT China 3, Inc.
|
|
Delaware
|
|
CORP
|
CIT Communications Finance Corporation
|
|
Delaware
|
|
CORP
|
CIT Credit Finance Corp.
|
|
Delaware
|
|
CORP
|
CIT Credit Group USA Inc.
|
|
Delaware
|
|
CORP
|
CIT Financial Ltd. of Puerto Rico
|
|
Delaware
|
|
CORP
|
CIT Financial USA, Inc.
|
|
Delaware
|
|
CORP
|
CIT Group (NJ) LLC
|
|
Delaware
|
|
LLC
|
CIT Group SF Holding Co., Inc.
|
|
Delaware
|
|
CORP
|
CIT Healthcare LLC
|
|
Delaware
|
|
LLC
|
CIT Holdings, LLC
|
|
Delaware
|
|
LLC
|
CIT Lending Services Corporation
|
|
Delaware
|
|
CORP
|
CIT Lending Services Corporation (Illinois)
|
|
Delaware
|
|
CORP
|
CIT Loan Corporation (f/k/a The CIT Group/Consumer Finance, Inc.)
|
|
Delaware
|
|
CORP
|
CIT Real Estate Holding Corporation
|
|
Delaware
|
|
CORP
|
CIT Realty LLC
|
|
Delaware
|
|
LLC
|
CIT Technologies Corporation
|
|
Michigan
|
|
CORP
|
CIT Technology Financing Services, Inc.
|
|
Massachusetts
|
|
CORP
|
Education Loan Servicing Corporation
|
|
Delaware
|
|
CORP
|
Equipment Acceptance Corporation
|
|
New York
|
|
CORP
|
Franchise Portfolio 1, Inc.
|
|
Delaware
|
|
CORP
|
Franchise Portfolio 2, Inc.
|
|
Delaware
|
|
CORP
|
GFSC Aircraft Acquisition Financing Corporation
|
|
Delaware
|
|
CORP
|
Hudson Shipping Co., Inc.
|
|
Delaware
|
|
CORP
|
Namekeepers LLC
|
|
Delaware
|
|
LLC
|
Owner-Operator Finance Company
|
|
Delaware
|
|
CORP
|
Student Loan Xpress, Inc.
|
|
Delaware
|
|
CORP
|
The CIT Group/BC Securities Investment, Inc.
|
|
New Jersey
|
|
CORP
|
The CIT Group/Business Credit, Inc.
|
|
New York
|
|
CORP
|
The CIT Group/Capital Finance, Inc.
|
|
Delaware
|
|
CORP
|
The CIT Group/Capital Transportation, Inc.
|
|
Delaware
|
|
CORP
|
The CIT Group/CmS Securities Investment, Inc.
|
|
New Jersey
|
|
CORP
|
D-1
|
|
|
|
|
NAME OF
|
|
|
|
ENTITY
|
GUARANTOR
|
|
JURISD.
|
|
TYPE
|
|
The CIT Group/Commercial Services, Inc.
|
|
New York
|
|
CORP
|
The CIT Group/Commercial Services, Inc. (Va.)
|
|
Delaware
|
|
CORP
|
The CIT Group/Consumer Finance, Inc. (NY)
|
|
New York
|
|
CORP
|
The CIT Group/Consumer Finance, Inc. (TN)
|
|
Delaware
|
|
CORP
|
The CIT Group/Corporate Aviation, Inc.
|
|
Delaware
|
|
CORP
|
The CIT Group/Equipment Financing, Inc.
|
|
Delaware
|
|
CORP
|
The CIT Group/Equity Investments, Inc.
|
|
New Jersey
|
|
CORP
|
The CIT Group/Factoring One, Inc.
|
|
New York
|
|
CORP
|
The CIT Group/FM Securities Investment, Inc.
|
|
New Jersey
|
|
CORP
|
The CIT Group/LsC Securities Investment, Inc.
|
|
New Jersey
|
|
CORP
|
The CIT Group/Securities Investment, Inc.
|
|
Delaware
|
|
CORP
|
The CIT Group/Venture Capital, Inc.
|
|
New Jersey
|
|
CORP
|
Western Star Finance, Inc.
|
|
Delaware
|
|
CORP
|
Schedule B
Foreign
Grantors
|
CIT Financial (Barbados) Srl
|
CIT Holdings Canada ULC
|
CIT Group Holdings (UK) Limited
|
CIT Holdings No. 2 (Ireland)
|
D-2
PTS
BALLOT
No person
has been authorized to give any information or advice, or to
make any representation, other than what is contained in the
Offering Memorandum to which this Ballot is annexed.
REVISED
BALLOT FOR ACCEPTING OR REJECTING THE PREPACKAGED PLAN OF
REORGANIZATION OF CIT GROUP INC. AND CIT GROUP FUNDING COMPANY
OF DELAWARE
[THIS
BALLOT IS EXCLUSIVELY FOR USE BY HOLDERS OF NON-CERTIFICATED
SECURITIES IN CLASS 7 CANADIAN SENIOR UNSECURED NOTE
CLAIMS, CLASS 8 LONG-DATED SENIOR UNSECURED
NOTE CLAIMS, CLASS 9 SENIOR UNSECURED
NOTE CLAIMS, CLASS 12 SENIOR SUBORDINATED
NOTE CLAIMS, AND CLASS 13 JUNIOR SUBORDINATED
NOTE CLAIMS]
On October 1, 2009, CIT Group Inc. and CIT Group Funding
Company of Delaware (collectively, “CIT”)
commenced their exchange offer solicitation (the
“October 1 Offers”) whereby CIT is seeking to
exchange certain of their unsecured debt for new notes and
equity in CIT Group Inc. Contemporaneously with the launch of
the October 1 Offers, CIT also commenced the solicitation of
votes to accept or reject the Prepackaged Plan of Reorganization
of CIT Group Inc. and CIT Group Funding Company of Delaware (as
amended and modified, the “Plan of
Reorganization”) from holders of their unsecured debt.
On October 16, 2009, CIT Group Inc. commenced its exchange
offer solicitation for certain long term notes whereby CIT Group
Inc. is seeking to exchange certain of their long-term maturity
debt for new notes and equity in CIT Group Inc. (the
“Long Term CIT Offers” and together with the
October 1 Offers, the “Exchange Offer”). The
holders of notes subject to the Long Term CIT Offers are also
having their votes solicited in connection with the Plan of
Reorganization.
The Exchange Offer and Plan of Reorganization are explained in
greater detail in the offering memorandum (the “Offering
Memorandum”) to which this ballot (the
“Ballot”) is annexed. This Ballot is to be used
to vote to accept or reject the Plan by holders of unsecured
notes (the “Old Notes”) in the Plan of
Reorganization classes identified above. The Old Notes subject
to the October 1 Offers are identified in the Offering
Memorandum as the Original CIT Old Notes and the Delaware
Funding Old Notes (collectively, the “October 1 Offer
Notes”). The Old Notes subject to the Long Term CIT Offers
are identified in the Offering Memorandum as the CIT Long Term
Old Notes. PLEASE NOTE THAT THERE ARE DIFFERENT EXCHANGE
DEADLINES FOR THE OCTOBER 1 OFFERS AND THE LONG TERM CIT
OFFERS.
As discussed in the Offering Memorandum, CIT may commence a
chapter 11 case under the Bankruptcy Code and seek
immediate confirmation of the Plan of Reorganization:
(a) if the conditions to consummating the Exchange Offer
are not satisfied
and/or
(b) the votes on the Plan of Reorganization are sufficient
to confirm such Plan of Reorganization under title 11 of
the United States Code (the “Bankruptcy Code”).
Your instructions with respect to the Exchange Offer
and/or Plan
of Reorganization are to be relayed to the bank, broker, or
other nominee (each, a “Nominee”) holding the Old
Notes on your behalf. Your options with respect to the
Exchange Offer and vote to accept or reject the Plan of
Reorganization are as follows:
OPTION 1. PARTICIPATE in the Exchange Offer; vote to
ACCEPT the Plan of Reorganization.
OPTION 2. NOT PARTICIPATE in the Exchange Offer; vote
to ACCEPT the Plan of Reorganization.
OPTION 3. NOT PARTICIPATE in the Exchange Offer; vote
to REJECT the Plan of Reorganization.
OPTION 4. Take no action; NOT PARTICIPATE in the
Exchange Offer; NO VOTE on the Plan of Reorganization.
PTS BALLOT
A vote to
accept the Plan constitutes your consent to the releases
specified in Article XIII of the Plan.
The Nominee will also need to tender (or “block”) your
Old Notes on your behalf, in accordance with your instructions.
There are three different voting choices in connection with the
Exchange Offer and Plan of Reorganization, which are outlined in
greater detail below. This Ballot was designed to assist you to
understand the voting process. Do not return the Ballot to cast
your vote. Instead, you will need to provide your
instructions to the Nominee holding your Old Notes in accordance
with the directions provided by your Nominee. By providing
instructions to your Nominee, you are requesting that they
(1) tender your underlying Old Notes on your behalf in
accordance with your instructions, and (2) execute a master
ballot on your behalf that reflects your instructions with
respect to the Plan of Reorganization. Your instructions to
the firm holding your Old Notes will have the same effect as if
you had completed and returned a physical Ballot to indicate
your vote with respect to the Plan of Reorganization. If you
have any questions, you may contact the information agent, D.F.
King & Co., Inc., at
(800) 758-5880
or
(212) 269-5550.
Please note that, except as provided in the Plan, the Plan
contemplates (i) separate plans of reorganization for each
potential debtor, and (ii) separate classes of creditors
for each plan for voting and distribution purposes. Depending on
the Old Notes you hold against CIT, you may hold claims in
multiple classes. The Offering Memorandum contains a schedule
indicating each series of debt and the corresponding Plan of
Reorganization class, which begins on the inside front cover.
Please note that if you participate in the Exchange Offer you
are also required to vote to accept the Plan of Reorganization.
Therefore, if you intend to participate in the Exchange Offer
you should also carefully review the terms of the Plan of
Reorganization. The treatment of your claims under the Plan
may be different from the treatment provided under the Exchange
Offer.
A vote to accept the Plan constitutes your consent to the
releases, injunctions, and exculpation provisions specified in
Article XIII of the Plan of Reorganization.
Please read and follow the attached instructions
carefully.
DEADLINES
FOR THE OCTOBER 1 OFFER NOTES AND OCTOBER 1
OFFERS
THE EXCHANGE OFFER DEADLINE FOR THE OCTOBER 1 OFFERS AND
DEADLINE FOR OCTOBER 1 OFFER NOTE HOLDERS TO VOTE TO
ACCEPT OR REJECT THE PLAN OF REORGANIZATION IS 11:59 P.M.
(NEW YORK CITY TIME) ON OCTOBER 29, 2009 (THE “ORIGINAL
EXPIRATION DATE”), UNLESS EXTENDED BY CIT. The Nominee
holding your October 1 Offer Notes must
(1) electronically deliver (“tender”) your
October 1 Offer Notes into the appropriate account by the
Original Expiration Date and (2) submitted a master ballot
with a report of beneficial owner instructions by 8:00 p.m.
(New York City Time) on October 30, 2009.
DEADLINES
FOR THE CIT LONG TERM OLD NOTES AND LONG TERM CIT
OFFERS
THE EXCHANGE OFFER DEADLINE AND DEADLINE TO VOTE TO ACCEPT OR
REJECT THE PLAN OF REORGANIZATION FOR THE LONG TERM CIT OFFERS
IS 11:59 P.M. (NEW YORK CITY TIME) ON NOVEMBER 13, 2009
UNLESS EXTENDED BY CIT (THE “LONG TERM EXPIRATION
DATE”). HOLDERS OF CIT LONG TERM OLD NOTES MAY
TENDER CIT LONG TERM OLD NOTES FOR EARLY ACCEPTANCE UP TO
11:59 P.M. (NEW YORK CITY TIME) ON OCTOBER 29, 2009 UNLESS
EXTENDED BY CIT (THE “LONG TERM NOTES EARLY
ACCEPTANCE DATE”). The Nominee holding your CIT Long
Term Old Notes must (1) electronically deliver
(“tender”) your CIT Long Term Old Notes into the
appropriate account by the Long Term Expiration Date and
(2) submitted a master ballot with a report of beneficial
owner instructions by 8:00 p.m. (New York City Time) on
November 13, 2009.
2
PTS BALLOT
You must give your instructions to your Nominee in
sufficient time for them to be able to tender your underlying
Old Notes by the Original Expiration Date, Long Term Expiration
Date, or Long Term Notes Early Acceptance Date (each, a
“Deadline”), as applicable. Please note that once
your Old Notes have been tendered, you will not be able to trade
your Old Notes through an automated exchange. Exchange
withdrawals will only be permitted as set forth in the Offering
Memorandum.
INSTRUCTIONS
CIT is soliciting the votes of certain of their creditors on
their proposed Plan, described in and annexed to the Offering
Memorandum accompanying this Ballot. Please review the Offering
Memorandum and Plan carefully before deciding on the action you
wish to take. Unless otherwise defined, capitalized terms used
herein and in the Master Ballot have the meanings ascribed to
them in the Plan.
VOTING
DEADLINE:
The Deadlines for your Nominee to be able to tender your Old
Notes are set forth above. PLEASE ALLOW SUFFICIENT TIME FOR YOUR
NOMINEE TO EFFECT YOUR INSTRUCTIONS BY THE APPLICABLE
DEADLINE. YOUR NOMINEE MAY ESTABLISH AN EARLIER DEADLINE FOR YOU
TO PROVIDE IT WITH YOUR INSTRUCTIONS.
HOW TO
VOTE:
Item 1. Determine How You Wish to Vote, and
provide your instructions to the Nominee holding your Old Notes.
Please note that each holder of the Old Notes must vote all
of his, her, or its Old Notes within a class in a consistent
fashion, and may not split the vote with respect to the Plan of
Reorganization.
THE THREE
VOTING OPTIONS ARE AS FOLLOWS:
OPTION 1. PARTICIPATE in the Exchange Offer; vote to
ACCEPT the Plan of Reorganization.
OPTION 2. NOT PARTICIPATE in the Exchange Offer; vote
to ACCEPT the Plan of Reorganization.
OPTION 3. NOT PARTICIPATE in the Exchange Offer; vote
to REJECT the Plan of Reorganization.
A vote to
accept the Plan constitutes your consent to the releases
specified in Article XIII of the Plan.
TO CAST YOUR VOTE, YOU MUST GIVE YOUR
INSTRUCTIONS TO THE NOMINEE HOLDING YOUR OLD NOTES IN
ACCORDANCE WITH THE DIRECTIONS PROVIDED BY THAT FIRM. WITH
RESPECT TO THE OLD NOTES TENDERED IN CONNECTION WITH THE
OCTOBER 1 OFFERS, IN ORDER TO EFFECT YOUR INSTRUCTIONS,
THE NOMINEE HOLDING YOUR OLD NOTES MUST (1) TENDER THE
UNDERLYING BONDS IN ACCORDANCE WITH YOUR INSTRUCTIONS, AND
(2) EXECUTE AND RETURN A MASTER BALLOT TO THE VOTING AGENT
ON YOUR BEHALF BY 8:00 P.M. (NEW YORK CITY TIME) OCTOBER 30,
2009 (UNLESS THE DEADLINES ARE EXTENDED BY THE DEBTORS). PLEASE
SEE THE ADDITIONAL DEADLINES SET FORTH ON PAGE 2 OF THIS
BALLOT IN CONNECTION WITH THE LONG TERM NOTES.
YOU MAY ALSO INSTRUCT YOUR NOMINEE WITH RESPECT TO A FOURTH
OPTION, which is also the default option for those holders
that do not provide any instructions:
OPTION 4. Take no action; NOT PARTICIPATE in the
Exchange Offer; NO VOTE on the Plan of Reorganization.
PLEASE NOTE THAT IF YOU INSTRUCT YOUR NOMINEE TO TAKE NO
ACTION ON YOUR BEHALF, OR FAIL TO PROVIDE TIMELY
INSTRUCTIONS TO THAT FIRM, YOU SHALL NEVERTHELESS BE BOUND
BY THE TERMS OF THE PLAN OF REORGANIZATION IF IT IS CONSUMMATED.
3
PTS BALLOT
WITHDRAWAL
RIGHTS:
Any party who has delivered valid instructions with respect to
the Exchange Offer and Plan of Reorganization may withdraw such
instruction prior to the applicable Deadline under the
conditions set forth in the Offering Memorandum.
By providing your instructions, you acknowledge (1) that
the solicitation of votes to accept or reject the Plan is
subject to all the terms and conditions set forth in the
Offering Memorandum, (2) that you have received a copy of
the Offering Memorandum, (3) that the vote on the Plan of
Reorganization is being made pursuant to the terms and
conditions set forth therein, (4) that a vote to accept
the Plan of Reorganization is an affirmative consent to the
releases, injunctions, and exculpation contained in
Article XIII of the Plan, (5) that you have
thereby requested that the Nominee holding your Old Notes tender
your underlying Old Notes in accordance with your instructions;
and (6) that you have thereby requested that such firm
submit a Master Ballot reflecting your vote.
Certification
by Beneficial Holders Residing in the European Union
In connection with the exchange the Old Notes pursuant to the
Exchange Offer
and/or
voting to accept or reject the Plan of Reorganization, the
undersigned represents and warrants that either:
1. both:
(a) the undersigned is a legal entity which is authorized
or regulated to operate in the financial markets or, if not so
authorized or regulated, whose corporate purpose is solely to
invest in securities; or
(b) the undersigned is a legal entity which meets two or
more of the following criteria: (i) an average number of at
least 250 employees during our last financial year;
(ii) a total balance sheet more than €43,000,000 and
(iii) an annual net turnover more than €50,000,000;
and:
(c) either the undersigned is acting for its own account in
respect of the Exchange Offer and voting to accept or reject the
Plan of Reorganization; or
(d) the undersigned is acting for the account of one or
more other persons who meet two or more of the criteria
described in paragraph 1(b) above and (i) is duly
authorized by those persons to provide the instructions to the
Nominee on their behalf, and (ii) the provisions of this
certification constitute legal, valid and binding obligations
upon the undersigned and any other person for whose account the
undersigned is acting.
Or:
2. both:
(a) the undersigned is a legal entity which is authorized
or regulated to operate in the financial markets or, if not so
authorized or regulated, whose corporate purpose is solely to
invest in securities; and
(b) the undersigned is acting for the account of one or
more persons who are not qualified investors within the meaning
of the law in a Member State of the European Economic Area
implementing Article 2(1)(e) of the Prospectus Directive
and the terms on which the undersigned has been engaged enable
the undersigned to make decisions concerning the acceptance of
the Exchange Offer of the Old Notes and voting to accept or
reject the Plan without reference to those persons.
4
PTS BALLOT
Certification
of Beneficial Holders Residing in Canada
Holders of Old Notes who are residents of Canada hereby confirm
and certify to CIT Group Inc. and CIT Group Funding Company of
Delaware LLC that such holder is an “accredited
investor”, as such term is defined in applicable Canadian
securities legislation.
The undersigned acknowledges that CIT and others will rely upon
the undersigned certifications set forth herein, and the
undersigned agrees to notify CIT promptly in writing if any of
the certifications, representations or warranties herein ceases
to be accurate or complete.
|
|
|
Name of Holder:
|
|
HOLDERS SHOULD PROVIDE THEIR INSTRUCTIONS TO THE
NOMINEE
|
|
|
|
Signature:
|
|
HOLDING THEIR OLD NOTES IN ACCORDANCE WITH THE
DIRECTIONS
|
|
|
|
Print or Type Name:
|
|
PROVIDED BY THAT FIRM. BY PROVIDING YOUR
INSTRUCTIONS TO
|
|
|
|
Title (if appropriate):
|
|
YOUR NOMINEE, YOU ARE THEREBY REQUESTING THAT THE FIRM
|
|
|
|
Address:
|
|
TENDER YOUR OLD NOTES IN ACCORDANCE WITH YOUR
DIRECTIONS,
|
|
|
|
Telephone Number:
|
|
AND CAST A MASTER BALLOT ON YOUR BEHALF TO
|
|
|
|
Date:
|
|
TRANSMIT YOUR VOTE.
|
|
|
|
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL
MAKE YOU OR ANY OTHER PERSON AN AGENT OF THE COMPANY OR THE
VOTING AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH
RESPECT TO THE PLAN, EXCEPT FOR THE STATEMENTS CONTAINED IN THE
DOCUMENTS ENCLOSED HEREWITH. NO BENEFICIAL OWNER BALLOT OR
MASTER BALLOT SHALL CONSTITUTE OR BE DEEMED TO CONSTITUTE
(A) A PROOF OF CLAIM OR (B) AN ADMISSION BY THE
COMPANY OF THE NATURE, VALIDITY, OR AMOUNT OF ANY CLAIM.
DEADLINES
FOR EXCHANGE OFFER AND VOTING DEADLINES
PLEASE CONSULT THE SECOND PAGE OF THIS BALLOT FOR THE
APPLICABLE VOTING AND EXCHANGE DEADLINES. YOUR NOMINEE MAY
ESTABLISH AN EARLIER EXCHANGE DEADLINE.
ADDITIONAL
INFORMATION
Retail holders of Old Notes with questions regarding the
voting and exchange process should contact the information
agent, D.F. King & Co., Inc., at
(800) 758-5880
or
(212) 269-5550.
Nominees with questions regarding the voting and exchange
process should contact the exchange and voting agent, Financial
Balloting Group LLC, at
(646) 282-1888.
5
The
information agent for the Offers and Plan of Reorganization
is:
D.F. King & Co., Inc.
88 Wall Street
New York, New York 10005
Inquiries by note holders with regard to this Offering
Memorandum and Disclosure Statement and related documents may be
directed to the information agent toll free at the following
telephone numbers:.
(800) 758-5880
+1 (212) 269-5550
(international callers)
The
Exchange Agent for the Offers and Voting Agent for the Plan of
Reorganization is:
Financial Balloting Group LLC
757 Third Avenue, 3rd Floor
New York, New York 10017
Requests by banks or brokers for additional copies of this
Offering Memorandum and Disclosure Statement and related
documents may be directed to the Exchange Agent.
Banks and Brokers call:
+1 (646) 282-1888