FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of a Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month(s) of: March 18, 1999
NEWCOURT CREDIT GROUP INC.
BCE Place, 181 Bay Street
Suite 3500, P.O. Box 827
Toronto, Ontario
Canada, M5J 2T3
[Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.]
Form 20-F / / Form 40-F /X/
[Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.]
Yes / / No /X/
[If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b)]
82-
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Exhibit Index
Exhibit
No. Description
- ------- -----------
2 Agreement and Plan of Reorganization, dated as of March 7, 1999
between The CIT Group, Inc. and Newcourt Credit Group Inc.
99 Certain Information included in an analysts' presentation given
by The CIT Group, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: March 18,1999
NEWCOURT CREDIT GROUP INC.
By: /s/ John P. Stevenson
--------------------------
John P. Stevenson
Corporate Secretary
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March 18, 1999
Ontario Securities Commission VIA SEDAR
P.O. Box 55, Suite 800 VIA EDGAR
20 Queen Street West
Toronto, Ontario
AND TO THE SECURITIES REGULATORY AUTHORITIES
LISTED IN APPENDIX "A" ATTACHED HERETO.
Attention: Continuous Disclosure Division
Dear Sirs:
Re: Form 27 Material Change Report of Newcourt Credit Group Inc.
Under Section 75(2) of the Securities Act (Ontario)
1. Reporting Issuer
The following constitutes the material change report pursuant to
Section 75(2) of the Securities Act (Ontario) of Newcourt Credit
Group Inc. ("Newcourt" or the "Corporation"), the reporting
issuer, the principal office of which is:
BCE Place, 181 Bay Street
Suite 3500, P.O. Box 827
Toronto, Ontario M5J 2T3
2. Date of Material Change
The date of the material change was March 8, 1999.
3. Press Release
The material change to which this report refers was authorized by
the Board of Directors of Newcourt and publicly announced by press
release on March 8, 1999 (a copy of the press release is attached
hereto). The press release was filed with The Toronto Stock
Exchange, the Montreal Exchange and the New York Stock Exchange
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and each of the securities regulatory authorities in each of the
provinces in which Newcourt's common shares are qualified for
distribution and distributed in Canada and in the United States
via the National Wire Services of the Canadian Press on March 8,
1999.
4. Summary of Material Change
On March 8, 1999, Newcourt Credit Group Inc. ("Newcourt")
announced that it had entered into an agreement with the CIT
Group, Inc. ("CIT") to acquire Newcourt (the "Transaction"). The
Transaction would be accomplished by the issuance of CIT common
stock with a value of approximately $4.2 billion as of March 8,
1999. Under the terms of the Transaction, 0.92 shares of CIT's
common stock will be exchanged for each outstanding share of
Newcourt's common stock. Following the Transaction, which will be
accounted for on a purchase basis, CIT shareholders will own 54%
of the combined company and Newcourt shareholders will own 46%.
The Transaction is subject to the satisfaction of certain
conditions including receipt of regulatory approvals and the
affirmative vote of the shareholders of each of CIT and Newcourt.
A copy of the Agreement and Plan of Reorganization is filed
herewith and incorporated by reference in its entirety in this
Paragraph 4 hereof. Certain information included in an analysts'
presentation (the "Analysts' Presentation") given by CIT is also
filed herewith and incorporated by reference in its entirety in
Paragraph 4 hereof.
5. Full Description of Material Change
See attached Form 6-K which was filed by Newcourt with the
Securities and Exchange Commission on March 17, 1999.
6. Reliance on Section 75(3) of the Securities Act, R.S.O. 1990,
c.S.5.
This report is not being filed on a confidential basis.
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7. Omitted Information
No material information has been omitted.
8. Senior Officer
For further information, contact either Scott J. Moore, Executive
Vice President, Legal and General Counsel [telephone (973) 355-
7053] or John P. Stevenson, Secretary [telephone (416) 777-6081],
Newcourt Credit Group Inc., 181 Bay Street, BCE Place, Suite 3500,
Toronto, Ontario M5J 2T3.
9. Statement of Senior Officer
The foregoing accurately discloses the material change referred to
herein. This report may contain forward looking statements about
the operations, objectives and strategies of Newcourt. These
statements are subject to risks and uncertainties. Actual results
may differ materially due to a variety of factors including
competition, technological change, issues relating to Year 2000
readiness, the global capital markets and general economic conditions
in the U.S., Canada, or internationally. These and other factors
should be considered carefully and readers should not place undue
reliance on Newcourt's forward looking statements.
DATED at Toronto, Ontario, this eighteenth day of March, 1999.
NEWCOURT CREDIT GROUP INC.
By: (Signed) "John P. Stevenson"______
J.P. Stevenson, Secretary
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APPENDIX "A"
Commission des valeurs de mobilieres du Quebec
P.O. Box 246
Stock Exchange Tower
17th Floor, 800 Victoria Square
Montreal, Quebec H4Z 1G3
Securities Division - Department of Justice
P.O. Box 8700
56th Floor, West Block
Confederation Building
St. John's, Newfoundland A1B 4J6
Registrar of Securities
P.O. Box 2000, 5th Floor
Shaw Building
105 Rochford Street
Charlottetown, P.E.I. C1A 7N8
Nova Scotia Securities Commission
P.O. Box 458
Joseph Howe Building
2nd Floor, 1690 Hollis Street
Halifax, Nova Scotia B3J 3J9
Office of the Administrator
P.O. Box 5001
Suite 102
77 Germain Street
Saint John, New Brunswick E2L 4Y9
Manitoba Securities Commission
1128 - 405 Broadway Avenue
Winnipeg, Manitoba R3C 3L6
Saskatchewan Securities Commission
800-1920 Broad Street
Regina, Saskatchewan S4P 3V7
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Alberta Securities Commission
21st Floor
10025 Jasper Avenue
Edmonton, Alberta T5J 3Z5
British Columbia Securities Commission
1100 - 865 Hornby Street
Vancouver, British Columbia V6Z 2H4
Securities and Exchange Commission
Operations Center
6432 General Green Way
Alexandria, Virginia 22312-2413
U.S.A.
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EX-2
Agreement and Plan of Reorganization
================================================================================
AGREEMENT AND PLAN OF REORGANIZATION
Between
THE CIT GROUP, INC.
and
NEWCOURT CREDIT GROUP INC.
Dated as of March 7, 1999
================================================================================
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TABLE OF CONTENTS
Page
----
ARTICLE I
THE ARRANGEMENT ...............................................................2
1.1. Plan of Arrangement......................................................2
1.2. Implementation of Arrangement by Newcourt................................2
1.3. Implementation of Arrangement by CIT.....................................3
1.4. Interim Order............................................................3
1.5. Articles of Arrangement..................................................4
1.6. Treatment of Stock Options...............................................4
ARTICLE II
CERTAIN DEFINITIONS ...........................................................5
2.1. Certain Definitions......................................................5
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES............................................12
3.1. Disclosure Schedules....................................................12
3.2. Standards...............................................................13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NEWCOURT....................................13
4.1. Corporate Organization..................................................14
4.2. Capitalization..........................................................14
4.3. Authority; No Violation.................................................16
4.4. Consents and Approvals..................................................17
4.5. Reports.................................................................18
4.6. Financial Statements....................................................18
4.7. Broker's Fees...........................................................19
4.8. Absence of Changes; Conduct of Business.................................19
4.9. Legal Proceedings.......................................................20
4.10. Taxes..................................................................21
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4.11. Employees..............................................................21
4.12. OSC and SEC Reports....................................................23
4.13. Newcourt Information...................................................24
4.14. Compliance with Applicable Law.........................................24
4.15. Certain Contracts......................................................24
4.16. Agreements with Regulatory Agencies....................................25
4.17. Environmental Matters..................................................25
4.18. Opinion................................................................26
4.19. [Reserved]. ...........................................................26
4.20. Property...............................................................27
4.21. Year 2000 Compliance Plan..............................................27
4.22. Interested Party Transactions..........................................28
4.23. Insurance..............................................................28
4.24. Board Approval.........................................................28
4.25. Intellectual Property..................................................28
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CIT.........................................28
5.1. Corporate Organization..................................................29
5.2. Capitalization..........................................................29
5.3. Authority; No Violation.................................................30
5.4. Consents and Approvals..................................................32
5.5. Reports.................................................................32
5.6. Financial Statements....................................................33
5.7. Broker's Fees...........................................................34
5.8. Absence of Changes; Conduct of Business.................................34
5.9. Legal Proceedings.......................................................35
5.10. Taxes..................................................................35
5.11. Employees..............................................................36
5.12. SEC Reports............................................................37
5.13. CIT Information........................................................37
5.14. Compliance with Applicable Law.........................................38
5.15. Certain Contracts......................................................38
5.16. Agreements with Regulatory Agencies....................................39
5.17. Environmental Matters..................................................39
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ARTICLE VII
5.18. Opinion................................................................40
5.19. Ownership of Newcourt Common Shares....................................40
5.20. Property...............................................................40
5.21. Year 2000 Compliance Plan..............................................40
5.22. Interested Party Transactions..........................................40
5.23. Insurance..............................................................41
5.24. Board Approval.........................................................41
5.25. Intellectual Property..................................................41
5.26. DGCL Section 203.......................................................41
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS.....................................42
6.1. Covenants of CIT and Newcourt...........................................42
ARTICLE VII
ADDITIONAL AGREEMENTS ........................................................46
7.1. Regulatory Matters......................................................46
7.2. Access to Information...................................................48
7.3. Shareholder Meetings....................................................49
7.4. Legal Conditions to Arrangement.........................................50
7.5. Affiliates..............................................................51
7.6. Stock Exchange Listings; Tax Status.....................................51
7.7. Employee Benefit Plans; Existing Agreements.............................51
7.8. Indemnification.........................................................54
7.9. Additional Agreements...................................................55
7.10. Coordination of Dividends...............................................55
7.11. [Reserved.].............................................................55
7.12. Executive Officers; Employment Contracts................................55
7.13. Board of Directors......................................................55
7.14. Notification of Certain Matters.........................................56
7.15. Comfort Letters.........................................................56
7.16. Year 2000...............................................................57
7.17. No Inconsistent Actions.................................................57
7.18. Disregarded Entity......................................................57
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ARTICLE VIII
CONDITIONS PRECEDENT .........................................................57
8.1. Conditions to Each Party's Obligation To Effect the Arrangement.........57
8.2. Conditions to Obligations of CIT........................................59
8.3. Conditions to Obligations of Newcourt...................................61
8.4. No Adverse DKB Regulatory Condition; No Adverse Amendment...............63
8.5. Satisfaction of Conditions..............................................64
ARTICLE IX
TERMINATION AND AMENDMENT ....................................................64
9.1. Termination.............................................................64
9.2. Effect of Termination...................................................66
9.3. Amendment...............................................................68
9.4. Extension; Waiver.......................................................69
ARTICLE X
GENERAL PROVISIONS ...........................................................69
10.1. Closing................................................................69
10.2. Nonsurvival of Representations, Warranties and Agreements..............69
10.3. Expenses...............................................................69
10.4. Notices................................................................70
10.5. Interpretation.........................................................71
10.6. Counterparts...........................................................71
10.7. Entire Agreement.......................................................72
10.8. Governing Law..........................................................72
10.9. Enforcement of Agreement...............................................72
10.10. Severability...........................................................72
10.11. Publicity..............................................................72
10.12. Assignment; No Third Party Beneficiaries...............................72
10.13. No Personal Liability..................................................73
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Exhibit A - Form of DKB Voting Agreement
Exhibit B - Form of Voting Agreement
Exhibit C - Form of Stock Option Agreement
Exhibit D - Plan of Arrangement
Exhibit E - Form of Arrangement Resolutions
Exhibit F - Form of Support Agreement
Exhibit G - Form of Voting and Exchange Trust Agreement
Exhibit H - Form of Hudson Employment Agreement
Exhibit I - Form of Employment Agreement
Exhibit 7.5 - Forms of Affiliates Letters
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of March 7, 1999, between
The CIT Group, Inc., a Delaware corporation ("CIT"), and Newcourt Credit Group
Inc., an Ontario corporation ("Newcourt").
WHEREAS, the Boards of Directors of CIT and Newcourt have determined that
it is in the best interests of their respective companies and their shareholders
to consummate the business combination transaction provided for herein; and
WHEREAS, in order to induce Newcourt to enter into this Agreement, The
Dai-Ichi Kangyo Bank, Limited, a Japanese bank ("DKB") which beneficially owns
approximately 43% of the outstanding shares of CIT Common Stock (as defined
herein), is contemporaneously entering into a Voting Agreement, of even date
herewith (the "DKB Voting Agreement"), with Newcourt, in the form of Exhibit A
attached hereto; and
WHEREAS, in order to induce CIT to enter into this Agreement, each of
Hercules Holdings (Cayman) Limited, a Cayman Islands company which beneficially
owns approximately 11.8% of the outstanding Newcourt Common Shares (as defined
herein), and Canadian Imperial Bank of Commerce, a chartered bank pursuant to
the Bank Act (Canada) which beneficially owns approximately 9.5% of the
outstanding Newcourt Common Shares, and each of the executive officers of
Newcourt listed on Appendix I attached hereto, is contemporaneously entering
into a Voting Agreement, of even date herewith, with CIT in the form of Exhibit
B attached hereto; and
WHEREAS, as a condition and inducement to CIT's willingness to enter into
this Agreement, Newcourt and CIT are contemporaneously entering into a Stock
Option Agreement, of even date herewith (the "Stock Option Agreement") in the
form of Exhibit C attached hereto, pursuant to which Newcourt is granting CIT an
option to purchase Newcourt Common Shares, subject to the terms and conditions
set forth therein; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Arrangement and also to prescribe certain
conditions to the Arrangement.
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE ARRANGEMENT
1.1. Plan of Arrangement. Subject to the terms and conditions of this
Agreement and the Plan of Arrangement, substantially in the form attached hereto
as Exhibit D (the "Plan of Arrangement"), at the Effective Time (as defined
herein) (i) each outstanding common share or special share in the capital of
Newcourt (each, a "Newcourt Common Share") for which the holder thereof shall
have made a valid election shall be transferred by the holder thereof, without
any act or formality on the part of such holder, to Newco in exchange for 0.92
of a fully paid and non-assessable share of Class A Common Stock, par value
$0.01 per share (the "CIT Common Stock"), of CIT, (ii) each Newcourt Common
Share for which the holder thereof shall have made a valid election shall be
exchanged by the holder thereof, without any act or formality on the part of
such holder, for 0.92 of a fully paid and non-assessable share in the class of
non-voting exchangeable shares in the capital of Newcourt (each, an
"Exchangeable Share"), (iii) each Newcourt Common Share for which no valid
election shall have been made (other than (x) Newcourt Common Shares held by a
Dissenting Shareholder who is ultimately entitled to be paid the fair value of
the Newcourt Common Shares held by such shareholder and (y) Newcourt Common
Shares held by CIT or any Subsidiary or affiliate thereof) shall be transferred
by the holder thereof, without any act or formality on the part of such holder,
to Newco in exchange for 0.92 of a fully paid and non-assessable share of CIT
Common Stock, (iv) each Newcourt Option shall be exchanged for a Replacement
Option to purchase shares of CIT Common Stock as contemplated by Section 1.6 and
(v) the other terms set forth in the Plan of Arrangement shall be implemented.
Such ratio of Newcourt Common Shares to CIT Common Stock or Exchangeable Shares,
as the case may be, is hereinafter referred to as the "Exchange Ratio." The Plan
of Arrangement provides for the terms of the Arrangement and the mode of
carrying the Arrangement into effect. Such terms and conditions are incorporated
by reference herein and made a part hereof.
1.2. Implementation of Arrangement by Newcourt. Newcourt shall, following
preparation with CIT of the Proxy Circular:
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(a) apply in a manner reasonably acceptable to CIT under section 182
of the OBCA for an order approving the Arrangement and for the Interim
Order, and thereafter proceed with and diligently pursue the obtaining of
the Interim Order;
(b) convene and hold the meeting of Newcourt's shareholders
contemplated by Section 7.3 hereof for the purpose of considering the
Arrangement Resolution and for any other proper purpose as may be set out
in the notice for such meeting;
(c) subject to obtaining such shareholder approval as is required by
the Interim Order, proceed with and diligently pursue the application to
the Court for the Final Order; and
(d) subject to obtaining the Final Order and the satisfaction or
waiver of the other conditions set forth herein, send to the Director for
endorsement as a certificate of arrangement under section 183(2) of the
OBCA, the Articles of Arrangement and such other documents as may be
required in connection therewith under the OBCA to give effect to the
Arrangement.
1.3. Implementation of Arrangement by CIT. At or prior to the Effective
Time and subject to the satisfaction or waiver of the other conditions set forth
herein:
(a) CIT shall execute and deliver the Support Agreement;
(b) CIT shall execute and deliver the Voting and Exchange Trust
Agreement; and
(c) CIT shall issue to the Trustee the CIT Special Voting Share.
1.4. Interim Order. The notice of motion for the application referred to
in Section 1.2(a) shall request that the Interim Order provide:
(a) for the class of Persons to whom notice is to be provided in
respect of the Arrangement and the meeting of Newcourt's shareholders
contemplated by Section 7.3 hereof and for the manner in which such notice
is to be provided;
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(b) that the requisite shareholder approval for the Arrangement
Resolution shall be 66-2/3% of the votes cast on the Arrangement
Resolution by holders of Newcourt Common Shares present in person or by
proxy at the meeting of Newcourt's shareholders contemplated by Section
7.3 hereof ;
(c) that, in all other respects, the terms, restrictions and
conditions of the by-laws and articles of Newcourt, including quorum
requirements and all other matters, shall apply in respect of the meeting
of Newcourt's shareholders contemplated by Section 7.3 hereof ; and
(d) for the grant of the Dissent Rights.
1.5. Articles of Arrangement. The Articles of Arrangement shall, with such
other matters as are necessary to effect the Arrangement as described in
Sections 1.1 and 1.6 hereof, provide as contemplated by the Plan of Arrangement.
1.6. Treatment of Stock Options. At the Effective Time, each option
granted by Newcourt (a "Newcourt Option") to purchase Newcourt Common Shares
which is outstanding and unexercised immediately prior thereto shall be
converted automatically into an option to purchase shares of CIT Common Stock
(each a "Replacement Option") in an amount and at an exercise price determined
as provided below (and otherwise subject to the terms of the Newcourt Option
Plan):
(a) The number of shares of CIT Common Stock to be subject to the
Replacement Option shall be equal to the product of the number of Newcourt
Common Shares subject to the original Newcourt Option immediately prior to the
Effective Time and the Exchange Ratio, provided that any fractional shares of
CIT Common Stock resulting from such multiplication shall be rounded down to the
nearest whole number of shares of CIT Common Stock;
(b) The exercise price per share of CIT Common Stock under the Replacement
Option shall be equal to the exercise price per Newcourt Common Share under the
original Newcourt Option immediately prior to the Effective Time divided by the
Exchange Ratio, provided that such exercise price shall be rounded up to the
nearest cent; and
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(c) The Board of Directors of Newcourt shall not exercise any discretion
or take any action which would result in the acceleration of the vesting of any
unvested Newcourt Option, or would result in any cash becoming payable by
Newcourt or, after the Effective Time, CIT in respect of any such option;
provided, however, that nothing contained herein shall be deemed to prohibit any
such acceleration or cashout which is provided in any employment agreement
except to the extent a new employment agreement to be entered into hereunder
prohibits such acceleration.
The duration and other terms of each Replacement Option shall be the same as the
original Newcourt Option immediately prior to the Effective Time, except that
all references to Newcourt shall be deemed to be references to CIT and except to
the extent a new employment agreement to be entered into hereunder modifies the
duration or the terms of the Replacement Options.
ARTICLE II
CERTAIN DEFINITIONS
2.1. Certain Definitions. For purposes of this Agreement, the following
terms shall have the respective meanings indicated:
"Arrangement" means an arrangement under Section 182 of the OBCA on the
terms and subject to the conditions set forth in the Plan of Arrangement,
subject to any amendments or variations thereto made in accordance with Section
9.3 hereof or Article 6 of the Plan of Arrangement or made at the direction of
the Court in the Final Order.
"Arrangement Resolution" means the special resolution of the holders of
Newcourt Common Shares, to be substantially in the form and content of Exhibit E
attached hereto.
"Articles of Arrangement" means the articles of arrangement of Newcourt in
respect of the Arrangement filed under the OBCA after the Final Order is made
giving effect to the Arrangement.
"Bankruptcy Exception" means, in respect of any agreement, contract or
commitment, any limitation thereon imposed (i) by any bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar law affecting
creditors'
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rights and remedies generally and (ii) with respect to the enforceability of any
agreement, contract or commitment, by general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
"BHC Act" means the Bank Holding Company Act of 1956, as amended.
"Canadian GAAP" has the meaning set forth in Section 4.6.
"CIT Common Stock" has the meaning set forth in Section 1.1.
"CIT Contract" has the meaning set forth in Section 5.15.
"CIT Disclosure Schedule" has the meaning set forth in Section 3.1.
"CIT ERISA Affiliate" has the meaning set forth in Section 5.11.
"CIT Plans" has the meaning set forth in Section 5.11.
"CIT Regulatory Agencies" has the meaning set forth in Section 5.4.
"CIT Regulatory Agreement" has the meaning set forth in Section 5.16.
"CIT Reports" has the meaning set forth in Section 5.12.
"CIT Shareholder Matters" has the meaning set forth in Section 7.3.
"CIT Special Voting Share" has the meaning set forth in the Voting and
Exchange Trust Agreement.
"CIT Subsidiary" means each Subsidiary of CIT.
"Closing" has the meaning set forth in Section 10.1.
"Closing Date" has the meaning set forth in Section 10.1.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Confidentiality Agreement" has the meaning set forth in Section 7.2.
"Court" means the Ontario Court of Justice (General Division).
"Date Data" has the meaning set forth in Section 4.21.
"Date-Sensitive System" has the meaning set forth in Section 4.21.
"Dell Contract" means the Agreement of Limited Partnership of Dell
Financial Services, LP, dated April 14, 1997, by and among Dell Credit Company
LLC, Dell DFS Corporation and Newcourt DFS Inc. and the "Ancillary Agreements"
contemplated therein.
"Director" means the Director appointed pursuant to Section 278 of the
OBCA.
"Dissenting Shareholder" has the meaning set forth in Section 1.1 of the
Plan of Arrangement.
"Dissent Rights" means the rights of dissent in respect of the Arrangement
granted to holders of Newcourt Common Shares described in the Plan of
Arrangement.
"Effective Time" has the meaning set forth in the Plan of Arrangement.
"Encumbrance" means, with respect to any Property, any encumbrance,
mortgage, hypothecation, prior claim, lien, pledge, collateral assignment,
assignment for security, charge, security interest or equitable interest in
respect of such Property or any restriction on the right to vote, sell or
otherwise dispose of such Property.
"Environmental Laws" has the meaning set forth in Section 4.17.
"ERISA" has the meaning set forth in Section 4.11.
"ERISA Affiliate" has the meaning set forth in Section 4.11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Exchange Ratio" has the meaning set forth in Section 1.1.
"Exchangeable Shares" has the meaning set forth in Section 1.1.
"Federal Reserve Board" has the meaning set forth in Section 5.4.
"Final Order" means the final order of the Court approving the Arrangement
as such order may be amended at any time prior to the Effective Time or, if
appealed, then unless such appeal is withdrawn or denied, as affirmed.
"Governmental Entity" has the meaning set forth in Section 4.4.
"Hazardous Materials" has the meaning set forth in Section 4.17.
"Injunction" has the meaning set forth in Section 8.1.
"Interim Order" means the interim order of the Court in respect of the
Arrangement as contemplated by Section 1.4.
"ITA" means the Income Tax Act (Canada).
"Lucent Contract" means the Financial Services Agreement, dated March 9,
1998, by and between Lucent Technologies Inc. and Newcourt Credit Group, Inc.
"Material Adverse Effect" means, with respect to CIT or Newcourt, as the
case may be, a material adverse effect on (a) the business, results of
operations or financial condition of such party and its Subsidiaries taken as a
whole, other than any such effect attributable to or resulting from (i) any
change in general economic or capital market conditions or in prevailing levels
of interest rates, (ii) with respect to Newcourt, any change in Canadian GAAP
or, with respect to CIT, any change in U.S. GAAP or (iii) any action or omission
of Newcourt or CIT or any Subsidiary of either of them taken with the prior
written consent of the other party hereto or (b) the ability of such party and
its Subsidiaries to consummate the transactions contemplated hereby.
"ME" means the Montreal Exchange.
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"Newco" means a wholly owned Subsidiary of CIT incorporated under the laws
of the Province of Nova Scotia.
"New CIT" means CIT from and after the Effective Time.
"Newcourt Common Shares" has the meaning set forth in Section 1.1.
"Newcourt Contract" has the meaning set forth in Section 4.15.
"Newcourt Disclosure Schedule" has the meaning set forth in Section 3.1.
"Newcourt Employees" has the meaning set forth in Section 7.7.
"Newcourt Fee Amount" has the meaning set forth in Section 9.2(b).
"Newcourt Option Plan" means the Employee Stock Option Plan of Newcourt,
adopted on November 19, 1993, as amended on October 24, 1995, March 25, 1997,
May 2, 1997, February 4, 1998 and February 18, 1999.
"Newcourt OSC Report" has the meaning set forth in Section 4.12.
"Newcourt SEC Report" has the meaning set forth in Section 4.12.
"Newcourt Regulatory Agency" has the meaning set forth in Section 4.5.
"Newcourt Regulatory Agreement" has the meaning set forth in Section 4.16.
"Newcourt Report" has the meaning set forth in Section 4.12.
"Newcourt Shareholder Matters" has the meaning set forth in Section 7.3.
"Newcourt Subsidiary" means each Subsidiary of Newcourt.
"NYSE" means the New York Stock Exchange.
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"OBCA" means the Business Corporations Act (Ontario).
"Ontario Securities Act" means the Securities Act (Ontario).
"OSC" means the Ontario Securities Commission.
"OSFI" means the Office of the Superintendent of Financial Institutions of
Canada.
"Permitted Encumbrance" means, with respect to a particular party, (a) any
lien for Taxes not yet due and payable or being contested in good faith, (b) any
mechanics', materialmen's, workmen's, warehousemen's, carriers' and other
similar liens and Encumbrances arising in the ordinary course of business, (c)
as to any Property with respect to which such party or any of its Subsidiaries
is the lessor, seller or secured party, as the case may be, pursuant to the
terms of any loan, lease, sale contract, credit or finance agreement or similar
arrangement (a "receivable") (whether initially or as an assignee), any
Encumbrance that is permitted in accordance with the terms of, or created by,
such receivable relating to such Property, (d) any Encumbrance to the extent
that the obligation secured thereby is reflected on such party's December 31,
1998 balance sheet, (e) any imperfection of title, easement or Encumbrance, if
any, that does not interfere with the use or materially impair the value of the
respective Property as such Property is used on the date of this Agreement, (f)
any Encumbrance incurred after December 31, 1998, in the ordinary course of
business, consistent with past practice, (g) any rights under any vendor program
permitting the repurchase of receivables originated, purchased or financed
thereunder and (h) buyout rights under partnerships, joint ventures or virtual
joint venture relationships in accordance with the terms of the agreements
establishing such partnerships, joint ventures or virtual joint venture
relationships.
"Person" means an individual, partnership, limited partnership, limited
liability partnership, limited liability company, foreign limited liability
company, trust, estate, corporation, custodian, trustee, executor,
administrator, nominee or any other entity.
"Plan" has the meaning set forth in Section 4.11.
"Plan of Arrangement" has the meaning set forth in Section 1.1.
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"Primary Approvals" means the approvals, if any, of the Federal Reserve
Board, the OSFI, the Minister of Finance of Canada, the Governor in Council of
Canada, the Ministry of Finance of Japan (including any acceptance of notice by
the Ministry of Finance of Japan) and the Office of Superintendent of Financial
Institutions of Japan required to consummate the transactions contemplated
hereby (including the Arrangement).
"Property" means any property and assets of whatsoever nature, including
real property, personal property (whether tangible or intangible) and any
claims, rights and choses in action.
"Proxy Circular" has the meaning set forth in Section 4.4.
"Registration Statement" has the meaning set forth in Section 7.1.
"Replacement Option" has the meaning set forth in Section 1.6.
"Requisite Regulatory Approval" has the meaning set forth in Section 8.1.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Newcourt Subsidiary" means any Newcourt Subsidiary that
constitutes a "significant subsidiary" under Rule 405 promulgated by the SEC
under the Securities Act.
"Significant CIT Subsidiary" means any CIT Subsidiary that constitutes a
"significant subsidiary" under Rule 405 promulgated by the SEC under the
Securities Act.
"SRO" has the meaning set forth in Section 4.5.
"State Regulator" has the meaning set forth in Section 4.5.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other organization, whether incorporated or unincorporated, which
is consolidated with such Person for financial reporting purposes.
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"Support Agreement" means an agreement to be made among Newcourt, CIT and
Newco substantially in the form and content attached to Exhibit F hereto, with
such changes thereto as shall be reasonably acceptable to the parties hereto.
"Taxes" has the meaning set forth in Section 4.10.
"Tax Return" has the meaning set forth in Section 4.10.
"Trustee" means a Canadian trust company reasonably acceptable to both
Newcourt and CIT, which will act as trustee under the Voting and Exchange Trust
Agreement.
"TSE" means The Toronto Stock Exchange.
"U.S. GAAP" has the meaning set forth in Section 5.6.
"Voting and Exchange Trust Agreement" means an agreement to be made among
CIT, Newcourt and the Trustee substantially in the form and content of Exhibit G
attached hereto, with such changes thereto as shall be reasonably acceptable to
the parties hereto.
"Year 2000 Compliant" has the meaning set forth in Section 4.21.
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
3.1. Disclosure Schedules. Prior to the execution and delivery of this
Agreement, Newcourt has delivered to CIT, and CIT has delivered to Newcourt, a
schedule (in the case of Newcourt, the "Newcourt Disclosure Schedule," and in
the case of CIT, the "CIT Disclosure Schedule") setting forth, among other
things, items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof or
as an exception to one or more of such party's representations or warranties
contained in Article IV, in the case of Newcourt, or Article V, in the case of
CIT, or to one or more of such party's covenants contained in Article VI;
provided, however, that notwithstanding anything
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in this Agreement to the contrary (a) no such item is required to be set forth
in the Disclosure Schedule as an exception to a representation or warranty
(other than Sections 4.2, 4.3(a) and 4.3(b)(i), the second sentence of Section
4.5 and Sections 4.6, 4.7, 4.10, 4.11(a), 4.12, 4.13, 4.16 and 4.18, with
respect to Newcourt, and Sections 5.2, 5.3(a) and 5.3(b)(i), the second sentence
of Section 5.5 and Sections 5.6, 5.7, 5.10, 5.11(a), 5.12, 5.13, 5.16 and 5.18,
with respect to CIT) if its absence would not result in the related
representation or warranty being deemed untrue or incorrect under the standard
established by Section 3.2; provided, that the party shall have used its best
efforts to cause its Disclosure Schedule to be accurate (provided that a party
shall not be deemed not to have used its best efforts if it fails to disclose
items or matters which, individually or in the aggregate, are not material), and
(b) the mere inclusion of an item in a Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by a party that such
item represents a material exception or material fact, event or circumstance or
that such item has had or is reasonably expected to have a Material Adverse
Effect with respect to either Newcourt or CIT, respectively.
3.2. Standards. No representation or warranty of Newcourt contained in
Article IV (other than the representations and warranties contained in Sections
4.2, 4.3(a) and 4.3(b)(i), the second sentence of Section 4.5 and Sections 4.6,
4.7, 4.10, 4.11(a), 4.12, 4.13, 4.16 and 4.18) or of CIT contained in Article V
(other than the representations and warranties contained in Sections 5.2, 5.3(a)
and 5.3(b)(i), the second sentence of Section 5.5 and Sections 5.6, 5.7, 5.10,
5.11(a), 5.12, 5.13, 5.16 and 5.18) shall be deemed untrue or incorrect for any
purpose under this Agreement, and no party hereto shall be deemed to have
breached any such representation or warranty for any purpose under this
Agreement, in any case as a consequence of the existence or absence of any fact,
circumstance or event unless such fact, circumstance or event, individually or
when taken together with all other facts, circumstances or events inconsistent
with any representations or warranties contained in Article IV, in the case of
Newcourt, or Article V, in the case of CIT, has had or is reasonably expected to
have a Material Adverse Effect with respect to Newcourt or CIT, respectively.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NEWCOURT
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Subject to Article III and except as contemplated by this Agreement and
the Plan of Arrangement, Newcourt hereby represents and warrants to CIT as
follows:
4.1. Corporate Organization. (a) Newcourt is a corporation duly
organized, validly existing and in good standing under the laws of
Ontario. Newcourt has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it
makes such licensing or qualification necessary. The restated articles of
incorporation dated February 8, 1996, as amended by articles of amendment
dated March 26, 1997 (the "Restated Articles of Incorporation"), and
by-laws no. 1 and 4 of Newcourt, copies of which have previously been
delivered to CIT, are true and correct copies of such documents as in
effect as of the date of this Agreement.
(b) Each Newcourt Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction
of incorporation or organization. Each Newcourt Subsidiary has the
corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted and is
duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or the
location of the properties and assets owned or leased by it makes such
licensing or qualification necessary. The articles of incorporation,
by-laws and similar governing documents of each Significant Newcourt
Subsidiary, copies of which have previously been made available to CIT,
are true and correct copies of such documents as in effect as of the date
of this Agreement.
(c) Except as set forth in Section 4.1(c) of the Newcourt Disclosure
Schedule, the minute books of Newcourt and each Newcourt Subsidiary
contain true and correct records of all meetings and other corporate
actions held or taken since December 31, 1996 of their respective
shareholders and Boards of Directors (including committees of their
respective Boards of Directors).
4.2. Capitalization. (a) As of the date of this Agreement, the authorized
capital stock of Newcourt consists of an unlimited number of Newcourt Common
Shares, an unlimited number of special shares (the "Newcourt Special Shares")
and an unlimited number of Class A preference shares (the "Newcourt Class A
Preferred Shares"). As of February 19, 1999, there were 148,374,321 Newcourt
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Common Shares outstanding and no Newcourt Common Shares held by Newcourt as
treasury stock. As of March 1, 1999, there were (i) no Newcourt Common Shares
reserved for issuance upon exercise of outstanding stock options or otherwise,
except for (x) 6,500,020 Newcourt Common Shares reserved for issuance pursuant
to options outstanding under the Newcourt Option Plan and (y) 22,256,148
Newcourt Common Shares reserved for issuance upon exercise of the option granted
to CIT pursuant to the Stock Option Agreement , and (ii) no Newcourt Special
Shares or Newcourt Class A Preference Shares issued or outstanding, held in
Newcourt's treasury or reserved for issuance upon exercise of outstanding stock
options or otherwise. All of the issued and outstanding Newcourt Common Shares
have been duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. Except as referred to above or reflected in Section 4.2(a) of
the Newcourt Disclosure Schedule, Newcourt does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any Newcourt Common
Shares, Newcourt Special Shares or Newcourt Class A Preferred Shares or any
other equity security of Newcourt or any securities representing the right to
purchase or otherwise receive any Newcourt Common Shares or any other equity
security of Newcourt. The names of the optionees, the date of each option to
purchase Newcourt Common Shares granted, the number of shares subject
to each such option, the expiration date of each such option, and the price at
which each such option may be exercised under the Newcourt Option Plan are set
forth in Section 4.2(a) of the Newcourt Disclosure Schedule.
(b) Section 4.2(b) of the Newcourt Disclosure Schedule sets forth a true
and correct list of all of the Newcourt Subsidiaries as of the date of this
Agreement. Except as set forth in Section 4.2(b) of the Newcourt Disclosure
Schedule, as of the date of this Agreement, Newcourt owns, directly or
indirectly, all of the issued and outstanding shares of the capital stock of
each of such Subsidiaries, free and clear of all Encumbrances other than
Permitted Encumbrances contemplated by clause (h) of the definition thereof, and
all of such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. Except as set forth in Section 4.2(c) of the
Newcourt Disclosure Schedule and except for Permitted Encumbrances contemplated
by clause (h) of the definition thereof, as of the date of this Agreement, no
Newcourt Subsidiary has or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of capital stock or any other equity security
of such Subsidiary or any securities representing the right to purchase or
otherwise receive any
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shares of capital stock or any other equity security of such Subsidiary.
Assuming compliance by CIT with Section 1.6, at the Effective Time, there will
not be any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character by which Newcourt or any of the Newcourt
Subsidiaries will be bound calling for the purchase or issuance of any shares of
the capital stock of Newcourt or, except for buyout rights under partnerships,
joint ventures or virtual joint venture relationships in accordance with the
terms of the agreements establishing such partnerships, joint ventures or
virtual joint venture relationships, any of the Newcourt Subsidiaries.
4.3. Authority; No Violation. (a) Newcourt has full corporate power and
authority to execute and deliver this Agreement and, subject to receipt of the
approval of Newcourt's shareholders and the Court, to consummate the
transactions contemplated hereby and by the Plan of Arrangement. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby and by the Plan of Arrangement have been duly and validly
approved by the Board of Directors of Newcourt. The Board of Directors of
Newcourt has directed that the Plan of Arrangement be submitted to Newcourt's
shareholders for approval at a meeting of such shareholders and, except for the
approval of the Plan of Arrangement by the requisite vote of the holders of the
Newcourt Common Shares and the approval of the Proxy Circular and of other
matters relating solely to the implementation of the Arrangement, no other
corporate proceedings on the part of Newcourt are necessary to approve this
Agreement and the Plan of Arrangement and to consummate the transactions
contemplated hereby and thereby. This Agreement has been duly and validly
executed and delivered by Newcourt and (assuming due authorization, execution
and delivery by CIT) this Agreement constitutes a valid and binding obligation
of Newcourt, enforceable against Newcourt in accordance with its terms, except
as may be limited by the Bankruptcy Exception.
(b) Except as set forth in Section 4.3(b) of the Newcourt Disclosure
Schedule, neither the execution and delivery of this Agreement by Newcourt, nor
the consummation by Newcourt of the transactions contemplated hereby or by the
Plan of Arrangement, nor compliance by Newcourt with any of the terms or
provisions hereof, will (i) violate any provision of the Restated Articles of
Incorporation or By-laws of Newcourt, (ii) violate any provision of the
certificate of incorporation, by-laws or similar governing documents of any of
the Newcourt Subsidiaries, or (iii) assuming that the consents and approvals
referred to in Section 4.4 hereof are duly obtained, (x) violate any statute,
code, ordinance, rule, regulation, mandatory government policy, judgment, order,
writ, decree or injunction applicable
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to Newcourt or any of the Newcourt Subsidiaries, or any of their respective
Properties, or (y) violate, conflict with, result in a breach of any provision
of or the loss of any benefit under, constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under,
require any payment under, result in the termination of or a right of
termination or cancellation under, accelerate or permit the creation of an
obligation to accelerate the performance required by, result in the loss of any
benefit under, or result in a right of first refusal or option to purchase or
acquire, or result in the creation of any Encumbrance (other than any Permitted
Encumbrance) upon any of the respective Properties of Newcourt or any of the
Newcourt Subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, loan or credit
agreement or other agreement or other instrument or obligation to which Newcourt
or any of the Newcourt Subsidiaries is a party, or by which they or any of their
respective Properties may be bound or affected.
4.4. Consents and Approvals. Except for (a)(i) compliance with the
premerger notification filing requirements under Part IX of the Competition Act
(Canada) and the expiration of the applicable waiting period in relation thereto
or (ii) receipt of an advance ruling certificate (an "ARC") pursuant to section
102 of the Competition Act (Canada), (b) the filing of applications with the
appropriate financial regulatory authorities in the provinces, states and
countries in which Newcourt or any Newcourt Subsidiary conducts business, (c)
receipt of exemption orders from the provincial securities regulators from the
registration and prospectus requirements with respect to the Exchangeable
Shares, (d) the filing with the Court, the SEC, the OSC and other Canadian
securities regulatory authorities of a joint proxy statement and proxy circular
in definitive form relating to the meetings of Newcourt's shareholders and CIT's
shareholders to be held in connection with this Agreement and the transactions
contemplated hereby (the "Proxy Circular") and the mailing to Newcourt's
shareholders of the Proxy Circular and, if required, the filing by CIT and
declaration of the effectiveness of the Registration Statement in respect of the
shares of CIT Common Stock issuable pursuant to the Arrangement or upon the
exchange of the Exchangeable Shares, (e) the approval of the Plan of Arrangement
by the requisite vote of the shareholders of Newcourt, (f) filings with the
Director appointed pursuant to Section 278 of the OBCA, (g) approval of the TSE
regarding the listing of the Exchangeable Shares, (i) the approval of the Court
of the Arrangement and the filing of the Articles of Arrangement and any other
documents required by the OBCA by way of issuance of the Interim Order and the
Final Order, (h) such filings, authorizations, orders and approvals as may be
required under the Ontario Securities Act and other relevant Canadian securities
statutes, any other applicable federal, provincial or
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state securities laws and the rules of the TSE, the ME and the NYSE and (j) such
filings, authorizations or approvals as may be set forth in Section 4.4 of the
Newcourt Disclosure Schedule, no consents, orders or approvals of or filings or
registrations with any foreign or domestic court, regulatory body,
administrative agency or commission or other governmental authority or
instrumentality (each a "Governmental Entity") or with any third party are
necessary in connection with (1) the execution and delivery by Newcourt of this
Agreement and the Plan of Arrangement and (2) the consummation by Newcourt of
the Arrangement and the other transactions contemplated hereby.
4.5. Reports. Newcourt and each of the Newcourt Subsidiaries have timely
filed all reports, schedules, forms, registrations, statements and other
documents, together with any amendments required to be made with respect
thereto, that they were required to file since December 31, 1996 with (i) any
state finance commissions or any other provincial or state regulatory authority,
other than Tax authorities (each a "State Regulator"), (ii) the OSC, (iii) the
TSE, the ME and the NYSE and (iv) any self-regulatory organization ("SRO")
(collectively, the "Newcourt Regulatory Agencies"), and have paid all fees and
assessments due and payable in connection therewith. Except for normal
examinations conducted by a Newcourt Regulatory Agency in the regular course of
the business of Newcourt and the Newcourt Subsidiaries, and except as set forth
in Section 4.5 of the Newcourt Disclosure Schedule, no Newcourt Regulatory
Agency has initiated any material proceeding or, to the knowledge of Newcourt,
material investigation into the business or operations of Newcourt or any of the
Newcourt Subsidiaries since December 31, 1996. Except as set forth in Section
4.5 of the Newcourt Disclosure Schedule, there is no unresolved violation or
exception by any Newcourt Regulatory Agency with respect to any report or
statement relating to any examinations of Newcourt or any of the Newcourt
Subsidiaries.
4.6. Financial Statements. Newcourt has previously made available to CIT
copies of the consolidated balance sheets of Newcourt and the Newcourt
Subsidiaries as of December 31 for the fiscal years 1997 and 1998, and the
related consolidated statements of income and retained earnings and cash flows
for the fiscal years 1996 through 1998, inclusive, in each case accompanied by
the audit report of Ernst & Young, independent public accountants with respect
to Newcourt. The December 31, 1997 and 1998 consolidated balance sheets of
Newcourt, including the related notes, fairly present the consolidated financial
position of Newcourt and the Newcourt Subsidiaries as of the dates thereof, and
the other financial statements referred to in this Section 4.6 (including the
related notes, where applicable) fairly present, and the financial statements to
be filed with the OSC after the date hereof will fairly present
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(subject, in the case of unaudited interim statements, to recurring audit
adjustments normal in nature and amount), the results of the consolidated
operations and consolidated financial position of Newcourt and the Newcourt
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) complies, and the financial statements to be filed with the OSC
after the date hereof will comply, with applicable accounting requirements and
with the published rules and regulations of the OSC with respect thereto; and
each of such statements (including the related notes, where applicable) has
been, and the financial statements to be filed with the OSC after the date
hereof will be, prepared in accordance with Canadian generally accepted
accounting principles ("Canadian GAAP") consistently applied during the periods
involved, except as indicated in the notes thereto or, in the case of unaudited
interim statements, as permitted by the rules and regulations of the OSC. Except
(A) as reflected in such financial statements or in the notes thereto, (B) for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby and (C) for liabilities or obligations incurred in the
ordinary course of business, neither Newcourt nor any of the Newcourt
Subsidiaries has any liabilities or obligations of any nature as of the date of
this Agreement, which, individually or in the aggregate, have had a Material
Adverse Effect on Newcourt as of the date of this Agreement. The books and
records of Newcourt and the Significant Newcourt Subsidiaries have been, and are
being, maintained in all material respects in accordance with Canadian GAAP and
any other applicable legal and accounting requirements.
4.7. Broker's Fees. Except as set forth in Section 6.1(j) of the Newcourt
Disclosure Schedule, neither Newcourt nor any Newcourt Subsidiary nor any of
their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement, except
that Newcourt has engaged, and will pay a fee or commission to, Goldman, Sachs &
Co. ("Goldman Sachs") and CIBC Wood Gundy Securities Inc. ("Gundy") in
accordance with the terms of a letter agreement among Goldman Sachs, Gundy and
Newcourt, a true and correct copy of which has been previously made available by
Newcourt to CIT.
4.8. Absence of Changes; Conduct of Business.
(a) Except as set forth in Section 4.8 of the Newcourt Disclosure
Schedule, (x) since December 31, 1998, (i) there has not been: (1) through the
date of this Agreement, any change or development or combination of changes or
developments which, individually or in the aggregate, has had a Material Adverse
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Effect on Newcourt; (2) any declaration, setting aside or payment of any
dividend or other distribution with respect to Newcourt's shares other than the
declaration and payment of regular quarterly cash dividends; (3) any change by
Newcourt in accounting methods, principles or practices (other than as disclosed
in the notes to Newcourt's consolidated financial statements as of and for the
year ended December 31, 1998) except as required by changes in Canadian GAAP or
U.S. GAAP as concurred to by Newcourt's independent auditors; (4) through the
date of this Agreement, any writing off of the value of any assets; (5) any
acquisition or sale of Property of Newcourt or any Significant Newcourt
Subsidiary, other than in the ordinary course of business consistent with past
practice and other than as permitted under Section 6.1 or 7.4(b); or (6) to the
knowledge of Newcourt, any labor dispute or charge of unfair labor practice
(other than routine individual grievances), any activity or proceeding by a
labor union or representative hereof to organize any employees of Newcourt or
any Newcourt Subsidiary or any campaign conducted to solicit authorization from
such employees to be represented by such labor union and (ii) Newcourt and the
Newcourt Subsidiaries have carried on their respective businesses in the
ordinary course consistent with their past practices and (y) since December 31,
1998, there has not been any increase in or modification of the compensation or
benefits payable or to become payable by any of Newcourt or the Newcourt
Subsidiaries to any of its directors or employees, except in the ordinary course
of business consistent with past practices.
(b) The books, records and accounts of Newcourt and the Newcourt
Subsidiaries (i) have been maintained in accordance with good business practices
on a basis consistent with prior years and (ii) are stated in reasonable detail
and accurately and fairly reflect the transactions and dispositions of Newcourt.
Newcourt has devised and maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (x) transactions are executed
in accordance with management's general or specific authorization; and (y)
transactions are recorded as necessary (A) to permit preparation of financial
statements in conformity with Canadian GAAP, U.S. GAAP or any other criteria
applicable to such statements and (B) to maintain accountability of assets.
4.9. Legal Proceedings. (a) Except as set forth in Section 4.9 of the
Newcourt Disclosure Schedule, neither Newcourt nor any of the Newcourt
Subsidiaries is a party to any, and there are no pending or, to the knowledge of
Newcourt, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against Newcourt or any of
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the Newcourt Subsidiaries or challenging the validity or propriety of the
transactions contemplated by this Agreement.
(b) Except as set forth in Section 4.9(b) of the Newcourt Disclosure
Schedule, there is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Newcourt, any of the Newcourt Subsidiaries or the
assets of Newcourt or any of the Newcourt Subsidiaries.
4.10. Taxes. (a) Except as set forth in Section 4.10(a) of the Newcourt
Disclosure Schedule, each of Newcourt and the Newcourt Subsidiaries has (i) duly
and timely filed (including applicable extensions granted without penalty) all
material Tax Returns (as hereinafter defined) required to be filed at or prior
to the Effective Time, and such Tax Returns are true and correct in all material
respects except to the extent adequate provision has been made with respect
thereto in Newcourt's consolidated financial statements, (ii) paid in full or
made adequate provision in the financial statements of Newcourt (in accordance
with Canadian GAAP) for all Taxes (as hereinafter defined) shown to be due on
such Tax Returns and (iii) not received written notice of a proposed assessment
or reassessment of a material liability for unpaid Taxes, the amount of which
has not been previously paid or adequately provided for in Newcourt's
consolidated financial statements. Except as set forth in Section 4.10(a) of the
Newcourt Disclosure Schedule, as of the date hereof neither Newcourt nor any of
the Newcourt Subsidiaries has requested any extension of time within which to
file any material Tax Returns in respect of any fiscal year which have not since
been filed and no request for waivers of the time to assess any Taxes are
pending or outstanding. No material Tax liens have been filed with respect to
Newcourt or any Newcourt Subsidiary, other than for Taxes not yet due and
payable or those being contested in good faith.
(b) For the purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies, penalties or other assessments imposed by any United
States federal, state, local or foreign taxing authority, including, but not
limited to income, excise, property, sales, transfer, franchise, payroll, Canada
or Quebec Pension Plan premiums, withholding, social security or other taxes,
including any interest, penalties or additions attributable thereto. For
purposes of this Agreement, "Tax Return" shall mean any return, report,
information return or other document (including any related or supporting
information) with respect to Taxes.
4.11. Employees. (a) Section 4.11(a) of the Newcourt Disclosure Schedule
sets forth a true and correct list of each material deferred compensation
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plan, incentive compensation plan, equity compensation plan, "welfare" plan,
fund or program (within the meaning of section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")); "pension" plan, fund or
program (within the meaning of section 3(2) of ERISA or the ITA); each material
employment, termination or severance agreement (other than employment letters
with employees entered into in the ordinary course of business); and each other
material employee benefit plan, fund, program, agreement or arrangement, in each
case, that is (or, with respect to any pension plan that is or was subject to
Title IV of ERISA, during any time in the last six years was) sponsored,
maintained, participated in or contributed to or required to be contributed to
(the "Plans") by Newcourt, any of the Newcourt Subsidiaries or by any trade or
business, whether or not incorporated (an "ERISA Affiliate"), all of which
together with Newcourt would be deemed a "single employer" within the meaning of
Section 4001 of ERISA, for the benefit of any employee or former employee of
Newcourt or any Newcourt Subsidiary.
(b) To the extent that Newcourt has provided or made available any of the
following documents to CIT, the copies so provided or made available were true
and correct copies of such documents: (i) any Plan document including all
amendments thereto; (ii) any actuarial report for such Plan for each of the last
two years, (iii) the most recent determination letter from the Internal Revenue
Service for any such Plan; (iv) the most recent summary plan description and
related summaries of modifications or (v) the most recent Form 5500 (including
all schedules) filed with the IRS and the most recent reports and declarations
filed with Revenue Canada.
(c) Except as set forth in Section 4.11(c) of the Newcourt Disclosure
Schedule: each of the Plans is in compliance with all applicable provisions of
the Code and ERISA; each of the Plans and related trusts intended to be
"qualified" within the meaning of Sections 401(a) and 501(a) of the Code has
received a favorable determination letter from the IRS and nothing has occurred
to cause the loss of such qualified status; no Plan has an accumulated or waived
funding deficiency within the meaning of Section 412 of the Code; all
contributions required to be made by Newcourt or any Newcourt Subsidiary to any
Plan have been made by the due date; neither Newcourt nor any ERISA Affiliate
has incurred, directly or indirectly, any liability to or on account of a Plan
pursuant to Title IV of ERISA (other than for premiums not yet due to the
Pension Benefit Guaranty Corporation); to the knowledge of Newcourt no
proceedings have been instituted to terminate any Plan that is subject to Title
IV of ERISA; no "reportable event," as such term is defined in Section 4043(c)
of ERISA, has occurred with respect to any Plan (other than
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a reportable event with respect to which the thirty day notice period has been
waived); and no condition exists that presents a risk to Newcourt of incurring a
liability to or on account of a Plan pursuant to Title IV of ERISA; no Plan is a
multiemployer plan (within the meaning of Section 4001(a)(3) of ERISA) and no
Plan is a multiple employer plan (as defined in Section 413 of the Code); except
as required by Section 4980B of the Code or Part 6 of Title I of ERISA, no Plan
provides post-retirement welfare benefits and there are no pending, or to the
knowledge of Newcourt, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against any of the Plans or any trusts
related thereto or against Newcourt, any Newcourt Subsidiary or any individual
or entity for which the Plans, Newcourt or any Newcourt Subsidiary may have
liability; all employee benefit plans that are subject to the laws of any
jurisdiction outside the United States are in compliance with such applicable
laws and the requirements of any trust deed or other document under which they
are established or maintained.
4.12. OSC and SEC Reports. (a) No final report, schedule, statement,
shareholder communication or other document required to be filed since December
31, 1996 by Newcourt with the OSC (the "Newcourt OSC Reports") contained any
misrepresentation (as defined in the Ontario Securities Act), except that
information as of a later date contained or incorporated by reference in a
Newcourt OSC Report shall be deemed to modify information as of an earlier date.
(b) No final report, schedule, statement, shareholder communication or
other document required to be filed since December 31, 1996 by Newcourt with the
SEC pursuant to the Securities Act or the Exchange Act (the "Newcourt SEC
Reports" and, together with the Newcourt OSC Reports, the "Newcourt Reports")
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading, except that information as of a later date contained or incorporated
by reference in a Newcourt SEC Report shall be deemed to modify information as
of an earlier date. Since December 31, 1996, Newcourt has timely filed all
material Newcourt Reports and other material documents required to be filed by
it with the OSC or the SEC, as the case may be, and, as of their respective
dates, all Newcourt Reports complied in all material respects with the published
rules and regulations of the OSC or the SEC, as the case may be, and the rules,
regulations and mandatory policies of the TSE and the ME, in each case, with
respect thereto.
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4.13. Newcourt Information. The information which is provided to CIT by
Newcourt specifically for inclusion in the Proxy Circular and the Registration
Statement, or in any other document filed with any other regulatory agency in
connection herewith, will not at the time the Proxy Circular is mailed to
shareholders and at the time of each of the Newcourt and the CIT shareholders'
meetings contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The Proxy Circular (except
for such portions thereof that relate only to or are prepared by CIT or any of
the CIT Subsidiaries) will comply in all material respects with the provisions
of the OBCA, applicable law and the rules, regulations and mandatory policies of
the TSE and the ME.
4.14. Compliance with Applicable Law. Except as set forth in Section 4.14
of the Newcourt Disclosure Schedule, Newcourt and each of the Newcourt
Subsidiaries hold, and have at all times held, all licenses, franchises, permits
and authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, and have complied with and are not in
default in any respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to
Newcourt or any of the Newcourt Subsidiaries or the conduct of their respective
businesses, and neither Newcourt nor any of the Newcourt Subsidiaries has
received notice of any violations of any of the above.
4.15. Certain Contracts. (a) Except as set forth in Section 4.15(a) of the
Newcourt Disclosure Schedule, neither Newcourt nor any of the Newcourt
Subsidiaries is a party to or bound by any contract or commitment (whether
written or oral) (i) which, upon the consummation of the transactions
contemplated by this Agreement, will (either alone or upon the occurrence of any
additional acts or events) result in any payment or benefits (whether of
severance pay or otherwise) becoming due, or the acceleration or vesting of any
rights to any payment or benefits, from CIT, Newcourt or any of their respective
Subsidiaries to any director, officer, employee, contractor or consultant
thereof, (ii) which is a material contract (as defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this Agreement that
has not been filed or incorporated by reference in the Newcourt Reports, (iii)
which materially increases any benefits otherwise payable under any Newcourt
compensation plan or other benefit arrangement, (iv) which requires Newcourt to
register any securities under the Securities Act or otherwise or (v) which
materially restricts the conduct of any line of business by Newcourt or any of
the Newcourt Subsidiaries. Each contract, arrangement, commitment or
understanding of the type described in clause (ii) of this Section 4.15(a),
whether or not set forth in
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Section 4.15(a) of the Newcourt Disclosure Schedule, is referred to herein as a
"Newcourt Contract". Newcourt has previously delivered or made available to CIT
true and correct copies of each Newcourt Contract listed in Section 4.15(a) of
the Newcourt Disclosure Schedule which is marked with an asterisk.
(b) Except as set forth in Section 4.15(b) of the Newcourt Disclosure
Schedule, (i) each Newcourt Contract is valid and binding and in full force and
effect, (ii) neither Newcourt nor any of the Newcourt Subsidiaries is in default
in respect of its obligations under any Newcourt Contract, (iii) no event or
condition exists which constitutes or, after notice or lapse of time or both,
would constitute, a default on the part of Newcourt or any of the Newcourt
Subsidiaries under any Newcourt Contract, and (iv) no other party to any
Newcourt Contract is, to the knowledge of Newcourt, in default in any respect
thereunder.
4.16. Agreements with Regulatory Agencies. Except as set forth in Section
4.16 of the Newcourt Disclosure Schedule, neither Newcourt nor any of the
Newcourt Subsidiaries is subject to any material cease-and-desist or other order
issued by, or is a party to any material written agreement, consent agreement or
memorandum of understanding with, or is a party to any material commitment
letter or similar undertaking to, or is subject to any material order or
directive by, or is a recipient of any material extraordinary supervisory letter
from, or has adopted any material board resolutions at the request of (each,
whether or not set forth on Section 4.16 of the Newcourt Disclosure Schedule, a
"Newcourt Regulatory Agreement"), any Newcourt Regulatory Agency or other
Governmental Entity that materially restricts the conduct of its business or
that in any material manner relates to its capital adequacy, its credit
policies, its management or its business, nor has Newcourt or any of the
Newcourt Subsidiaries been advised by any Newcourt Regulatory Agency or other
Governmental Entity that it is considering issuing or requesting any Newcourt
Regulatory Agreement.
4.17. Environmental Matters. Except as set forth in Section 4.17 of the
Newcourt Disclosure Schedule:
(a) Each of Newcourt and the Newcourt Subsidiaries and, to the
knowledge of Newcourt, each of the Participation Facilities (as
hereinafter defined), are in compliance with all applicable Canadian or
United States federal, provincial, state, local and foreign laws,
including common law, regulations and ordinances, and with all applicable
decrees, orders and contractual obligations relating
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to pollution or the discharge of, or exposure to, Hazardous Materials (as
hereinafter defined) in the environment or workplace ("Environmental
Laws");
(b) There is no suit, claim, action or proceeding, pending or, to
the knowledge of Newcourt, threatened, before any Governmental Entity or
other forum in which Newcourt, any of the Newcourt Subsidiaries or any
Participation Facility, has been or, with respect to threatened
proceedings, could reasonably be expected to be, named as a defendant (x)
for alleged noncompliance (including by any predecessor) with any
Environmental Laws, or (y) relating to the release, threatened release or
exposure to any Hazardous Material whether or not occurring at or on a
site owned, leased or operated by Newcourt or any of the Newcourt
Subsidiaries or any Participation Facility;
(c) To the knowledge of Newcourt, during the period of (i)
Newcourt's or any of the Newcourt Subsidiaries' ownership or operation of
any of their respective current or former properties or (ii) Newcourt's or
any of the Newcourt Subsidiaries' participation in the management of any
Participation Facility, there has been no release of Hazardous Materials
in, on, under or affecting any such property. To the knowledge of
Newcourt, prior to the period of (x) Newcourt's or any of the Newcourt
Subsidiaries' ownership or operation of any of their respective current or
former properties or (y) Newcourt's or any of the Newcourt Subsidiaries'
participation in the management of any Participation Facility, there was
no release of Hazardous Materials in, on, under or affecting any such
property or Participation Facility; and
(d) The following definitions apply for purposes of this Section
4.19: (x) "Hazardous Materials" means any chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum or other regulated
substances or materials, and (y) "Participation Facility" means any
facility in which Newcourt or any of the
Newcourt Subsidiaries participates in the management and, where required
by the context, said term means the owner or operator of such facility.
4.18. Opinion. Prior to the execution of this Agreement, Newcourt has
received opinions from each of Goldman Sachs and Gundy to the effect that as of
the date thereof and based upon and subject to the matters set forth therein,
the Exchange Ratio is fair to the shareholders of Newcourt from a financial
point of view. Such opinions have not been amended or rescinded as of the date
of this Agreement.
4.19. [Reserved].
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4.20. Property. Newcourt or one of the Newcourt Subsidiaries has good and
marketable title free and clear of all Encumbrances to all of the Properties
which are reflected on the consolidated balance sheet of Newcourt as of December
31, 1998 or were acquired after such date, except for (i) Permitted Encumbrances
and (ii) dispositions of, and Encumbrances on, such Properties in the ordinary
course of business or as otherwise permitted or required hereunder.
4.21. Year 2000 Compliance Plan.
(a) Section 4.21 of the Newcourt Disclosure Schedule sets forth a true and
complete copy of Newcourt's plan to cause all of the Date-Sensitive Systems
owned, leased for use by or used by Newcourt or any Newcourt Subsidiary intended
and necessary for use after December 31, 1999, or licensed to Newcourt or any
Newcourt Subsidiary for use by Newcourt or such Newcourt Subsidiary, and all of
Newcourt's and each Newcourt Subsidiary's Date Data to be Year 2000 Compliant
(Newcourt's "Y2K Plan"). Newcourt believes that its Y2K Plan can be
substantially achieved on or before September 30, 1999, with aggregate
expenditures under the Y2K Plan not materially in excess of $35,000,000.
(b) For purposes of this Agreement, the following terms shall have the
meanings set forth below:
"Date Data" means any data of any type that includes date information or
that is otherwise derived from, dependent on, or related to date information.
"Date-Sensitive System" means, with respect to a particular Person, any
software, microcode or hardware system or component, including any electronic or
electronically controlled system or component, that processes any Date Data and
that is installed in a development or on order by such Person or any Subsidiary
of such Person for its internal use.
"Year 2000 Compliant" means, (i) with respect to Date Data, that such data
that are in proper format for all dates in the twentieth and twenty-first
centuries and (ii) with respect to Date-Sensitive Systems, that each such system
accurately processes all Date Data, including for the twentieth and twenty-first
centuries, without loss of any functionality or performance, including
calculating, comparing, sequencing, storing and displaying such Date Data
(including all leap-year considerations), when used as a stand-alone system or
in combination with other software or hardware.
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4.22. Interested Party Transactions. Except as set forth in Section 4.22
of the Newcourt Disclosure Schedule or as disclosed in the Newcourt Reports
filed prior to the date of this Agreement, no executive officer of Newcourt has,
either directly or indirectly, a material interest in (1) any Person which
purchases from or sells, licenses or furnishes to Newcourt or any of the
Newcourt Subsidiaries any material goods, property, technology or intellectual
or other material property rights or services or (2) any material contract or
agreement to which Newcourt or any of the Newcourt Subsidiaries is a party or by
which it may be bound or affected.
4.23. Insurance. Newcourt and each of the Newcourt Subsidiaries have
their respective assets insured against loss or damages as appropriate in their
businesses and assets in such amounts and against such risks as are appropriate
in their business, and such insurance coverage will be continued in full force
and effect to and including the Effective Time.
4.24. Board Approval. The Board of Directors of Newcourt has, as of the
date hereof, (i) approved this Agreement, (ii) determined that the Arrangement
is in the best interests of the shareholders of Newcourt and (iii) recommended
the shareholders of Newcourt approve the Arrangement.
4.25. Intellectual Property. Newcourt and the Newcourt Subsidiaries own
or have a valid license to use all trademarks, service marks and trade names
(including any registrations or applications for registration of any of the
foregoing) (collectively, the "Newcourt Intellectual Property") necessary to
carry on its business substantially as currently conducted. Neither Newcourt nor
any such subsidiary has received any notice of infringement of or conflict with,
and, to Newcourt's knowledge, there are no infringements of or conflicts with,
the rights of others with respect to the use of any material Newcourt
Intellectual Property which have not been previously resolved.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF CIT
Subject to Article III and except as contemplated by this Agreement and
the Plan of Arrangement, CIT hereby represents and warrants to Newcourt as
follows:
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5.1. Corporate Organization. (a) CIT is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
CIT has the corporate power and authority to own or lease all of its properties
and assets and to carry on its business as it is now being conducted, and is
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. The Certificate of Incorporation and By-laws of CIT,
copies of which have previously been delivered to Newcourt, are true and correct
copies of such documents as in effect as of the date of this Agreement.
(b) Each CIT Subsidiary is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each CIT
Subsidiary has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. The articles of incorporation, by-laws and similar
governing documents of each Significant CIT Subsidiary, copies of which have
previously been made available to Newcourt, are true and correct copies of such
documents as in effect as of the date of this Agreement.
(c) Except as set forth in Section 5.1(c) of the CIT Disclosure Schedule,
the minute books of CIT and each CIT Subsidiary contain true and correct records
of all meetings and other corporate actions held or taken since December 31,
1996 of their respective shareholders and Boards of Directors (including
committees of their respective Boards of Directors).
5.2. Capitalization. (a) As of the date of this Agreement, the authorized
capital stock of CIT consists of 700,000,000 shares of CIT Common Stock,
510,000,000 shares of Class B Common Stock, par value $0.01 per share ("CIT B
Stock"), and 50,000,000 shares of preferred stock, par value $0.01 per share
("CIT Preferred Stock"). As of March 1, 1999, there were 162,051,244 shares of
CIT Common Stock, no shares of CIT B Stock and no shares of CIT Preferred Stock
issued and outstanding, and 1,093,635 shares of CIT Common Stock held in CIT's
treasury. As of the date of this Agreement, no shares of CIT Common Stock or CIT
Preferred Stock were reserved for issuance, except that (i) 13,003,000 shares of
CIT Common Stock were reserved for issuance upon the exercise of stock options
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pursuant to the Employee Long Term Equity Compensation Plan and the Employee
Stock Purchase Plan (collectively, the "CIT Stock Plans"). All of the issued and
outstanding shares of CIT Common Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. As of the date of this
Agreement, except as referred to above or reflected in Section 5.2(a) of the CIT
Disclosure Schedule, CIT does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of CIT Common Stock
or CIT Preferred Stock or any other equity securities of CIT or any securities
representing the right to purchase or otherwise receive any shares of CIT Common
Stock or CIT Preferred Stock. The shares of CIT Common Stock to be issued
pursuant to the Arrangement or upon exchange from time to time of the
Exchangeable Shares have been duly authorized and, on their respective dates of
issue, such shares will be validly issued, fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof.
(b) Section 5.2(b) of the CIT Disclosure Schedule sets forth a true and
correct list of all of the CIT Subsidiaries as of the date of this Agreement.
Except as set forth in Section 5.2(b) of the CIT Disclosure Schedule, as of the
date of this Agreement, CIT owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of the CIT Subsidiaries, free and
clear of all Encumbrances other than Permitted Encumbrances, and all of such
shares are duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. As of the date of this Agreement, except for Permitted
Encumbrances, no CIT Subsidiary has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or
any other equity security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock or any other
equity security of such Subsidiary. At the Effective Time, there will not be any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character by which CIT or any of the CIT Subsidiaries will be bound
calling for the purchase or issuance of any shares of the capital stock of CIT
or any of the CIT Subsidiaries.
5.3. Authority; No Violation. (a) CIT has full corporate power and
authority to execute and deliver this Agreement and, subject to receipt of the
approval of CIT's shareholders, to consummate the transactions contemplated
hereby and by the Plan of Arrangement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and by
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the Plan of Arrangement, and the execution of the DKB Voting Agreement by CIT,
have been duly and validly approved by the Board of Directors of CIT. The Board
of Directors of CIT has directed that the issuance of shares of CIT Common Stock
pursuant to this Agreement and the Plan of Arrangement and upon conversion of
Exchangeable Shares be submitted to CIT's shareholders for approval at a meeting
of such shareholders and, except for the approval of the issuance of such shares
by the requisite vote of CIT's shareholders, no other corporate proceedings on
the part of CIT are necessary to approve this Agreement and the Plan of
Arrangement and to consummate the transactions contemplated hereby and thereby.
This Agreement and the Plan of Arrangement have been duly and validly executed
and delivered by CIT and (assuming due authorization, execution and delivery by
Newcourt) each of this Agreement and the Plan of Arrangement constitutes a valid
and binding obligation of CIT, enforceable against CIT in accordance with its
terms, except as may be limited by the Bankruptcy Exception.
(b) Except as set forth in Section 5.3(b) of the CIT Disclosure Schedule,
neither the execution and delivery of this Agreement by CIT, nor the
consummation by CIT of the transactions contemplated hereby or by the Plan of
Arrangement, nor compliance by CIT with any of the terms or provisions hereof,
will (i) violate any provision of the Certificate of Incorporation or By-Laws of
CIT, (ii) violate the articles of incorporation or by-laws or similar governing
documents of any of the CIT Subsidiaries or (iii) assuming that the consents and
approvals referred to in Section 5.4 are duly obtained, (x) violate any statute,
code, ordinance, rule, regulation, mandatory government policy, judgment, order,
writ, decree or injunction applicable to CIT or any of its Subsidiaries or any
of their respective Properties, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, require any payment under, result in the
termination of or a right of termination or cancellation under, accelerate or
permit the creation of an obligation to accelerate the performance required by,
result in the loss of any benefit under, or result in a right of first refusal
or option to purchase or acquire, or result in the creation of any Encumbrance
(other than any Permitted Encumbrance) upon any of the respective Properties of
CIT or any of the CIT Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, loan or credit agreement or other agreement or other instrument or
obligation to which CIT or any of the CIT Subsidiaries is a party, or by which
they or any of their respective Properties may be bound or affected.
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5.4. Consents and Approvals. Except for (a) the filing of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act and approval of such
applications and notices, (b)(i) compliance with the premerger notification
filing requirements under Part IX of the Competition Act (Canada) and the
expiration of the applicable waiting period in relation thereto or (ii) receipt
of an ARC pursuant to section 102 of the Competition Act (Canada), (c) the
filing of an application for review under the Investment Canada Act and the
responsible Minister under such Act being satisfied, or being deemed to be
satisfied, that the consummation of the Arrangement and the other transactions
contemplated hereby is likely to be of net benefit to Canada for purposes of
that Act, (d) the filing of applications with, and the approval of such
applications by, the appropriate financial regulatory authorities in the
provinces, states and countries in which CIT or any CIT Subsidiary conducts
business, (e) receipt of exemption orders from the provincial securities
regulators from the registration and prospectus requirements with respect to the
issuance of and first trade in CIT Common Stock, (f) the filing with the Court,
the SEC, the OSC and other Canadian securities regulatory authorities of the
Proxy Circular and, if required, the filing and declaration of effectiveness of
the Registration Statement, (g) the approval of the issuance of shares of CIT
Common Stock pursuant to this Agreement and the Plan of Arrangement by the
requisite vote of the shareholders of CIT, (h) approval of the listing of the
CIT Common Stock to be issued in the Arrangement, upon exchange of the
Exchangeable Shares and upon exercise of the Replacement Options on the NYSE,
(i) approvals or orders in respect of CIT and/or DKB under section 518 or 521 of
the Bank Act (Canada), (j) approvals, if applicable, of the Ministry of Finance
of Japan and the Office of Superintendent of Financial Institutions of Japan and
(k) such filings, authorizations or approvals as may be set forth in Section 5.4
of the CIT Disclosure Schedule, no consents, orders or approvals of or filings
or registrations with any Governmental Entity or with any third party are
necessary in connection with (1) the execution and delivery by CIT of this
Agreement and the Plan of Arrangement and (2) the consummation by CIT of the
Arrangement and the other transactions contemplated hereby.
5.5. Reports. CIT and each of the CIT Subsidiaries have timely filed all
reports, schedules, forms, registrations, statements and other documents,
together with any amendments required to be made with respect thereto, that they
were required to file since December 31, 1996 with the Federal Reserve Board,
any State Regulator or any SRO (collectively, the "CIT Regulatory Agencies"),
and have paid all fees and assessments due and payable in connection therewith.
Except for normal examinations conducted by a CIT Regulatory Agency in the
regular course of the
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business of CIT and the CIT Subsidiaries, and except as set forth in Section 5.5
of CIT Disclosure Schedule, no CIT Regulatory Agency has initiated any material
proceeding or, to the knowledge of CIT, material investigation into the business
or operations of CIT or any of the CIT Subsidiaries since December 31, 1996.
There is no unresolved violation or exception by any CIT Regulatory Agency with
respect to any report or statement relating to any examinations of CIT or any of
the CIT Subsidiaries.
5.6. Financial Statements. CIT has previously made available to Newcourt
copies of (a) the consolidated balance sheets of CIT and the CIT Subsidiaries as
of December 31 for the fiscal years 1997 and 1998 and the related consolidated
statements of income, changes in shareholders' equity and cash flows for the
fiscal years 1996 through 1998, inclusive, in the case of the December 31, 1997
consolidated balance sheet and the related consolidated statements of income,
changes in shareholders' equity and cash flows for the fiscal years 1996 and
1997 accompanied by the audit report of KPMG Peat Marwick LLP, independent
public accountants with respect to CIT. The December 31, 1997 and 1998
consolidated balance sheets of CIT, including the related notes, fairly present
the consolidated financial position of CIT and its Subsidiaries as of the dates
thereof, and the other financial statements referred to in this Section 5.6
(including the related notes, where applicable) fairly present and the financial
statements to be filed with the SEC after the date hereof will fairly present
(subject, in the case of unaudited interim statements, to recurring audit
adjustments normal in nature and amount), the results of the consolidated
operations and changes in shareholders' equity and consolidated financial
position of CIT and the CIT Subsidiaries for the respective fiscal periods or as
of the respective dates therein set forth; each of such statements (including
the related notes, where applicable) complies, and the financial statements to
be filed with the SEC after the date hereof will comply, with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto; and each of such statements (including the related notes,
where applicable) has been, and the financial statements to be filed with the
SEC after the date hereof will be, prepared in accordance with United States
generally accepted accounting principles ("U.S. GAAP") consistently applied
during the periods involved, except as indicated in the notes thereto or, in the
case of unaudited interim statements, as permitted by Form 10-Q. Except (A) as
reflected in such financial statements or in the notes thereto, (B) for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby and (C) for liabilities or obligations incurred in the
ordinary course of business, neither CIT nor any of the CIT Subsidiaries has any
liabilities or obligations of any nature as of the date of this Agreement,
which, individually or in the aggregate, have had a Material Adverse
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Effect on CIT as of the date of this Agreement. The books and records of CIT and
the Significant CIT Subsidiaries have been, and are being, maintained in all
material respects in accordance with U.S. GAAP and any other applicable legal
and accounting requirements.
5.7. Broker's Fees. Neither CIT nor any CIT Subsidiary, nor any of their
respective officers or directors, has employed any broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by this Agreement, except that CIT has
engaged, and will pay a fee or commission to, J.P. Morgan Securities Inc.
5.8. Absence of Changes; Conduct of Business.
(a) Except as set forth in Section 5.8 of the CIT Disclosure Schedule, (x)
since December 31, 1998, (i) there has not been: (1) through the date of this
Agreement, any change or development or combination of changes or developments
which, individually or in the aggregate, has had a Material Adverse Effect on
CIT; (2) any declaration, setting aside or payment of any dividend or other
distribution with respect to CIT capital stock other than the declaration and
payment of regular quarterly cash dividends; (3) any change by CIT in accounting
methods, principles or practices except as required by changes in U.S. GAAP as
concurred to by CIT's independent auditors; (4) through the date of this
Agreement, any writing off of the value of any assets; (5) any acquisition or
sale of Property of CIT or any Significant CIT Subsidiary, other than in the
ordinary course of business consistent with past practice and other than as
permitted under Section 6.1 or 7.4(b); or (6) to the knowledge of CIT, any labor
dispute or charge of unfair labor practice (other than routine individual
grievances), any activity or proceeding by a labor union or representative
hereof to organize any employees of CIT or any CIT Subsidiary or any campaign
conducted to solicit authorization from such employees to be represented by such
labor union or (ii) CIT and the CIT Subsidiaries have carried on their
respective businesses in the ordinary course consistent with their past
practices and (y) since December 31, 1998, there has not been any increase in or
modification of the compensation or benefits payable or to become payable by any
of CIT or the CIT Subsidiaries to any of its directors or employees, except in
the ordinary course of business consistent with past practice.
(b) The books, records and accounts of CIT and the CIT Subsidiaries (i)
have been maintained in accordance with good business practices on a basis
consistent with prior years and (ii) are stated in reasonable detail and
accurately
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and fairly reflect the transactions and dispositions of CIT. CIT has devised and
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (x) transactions are executed in accordance with
management's general or specific authorization; and (y) transactions are
recorded as necessary (A) to permit preparation of financial statements in
conformity with U.S. GAAP or any other criteria applicable to such statements
and (B) to maintain accountability of assets.
5.9. Legal Proceedings. (a) Except as set forth in Section 5.9 of the CIT
Disclosure Schedule, neither CIT nor any of the CIT Subsidiaries is a party to
any and there are no pending or, to CIT's knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature against CIT or any of the CIT
Subsidiaries or challenging the validity or propriety of the transactions
contemplated by this Agreement.
(b) Except as set forth in Section 5.9(b) of the CIT Disclosure Schedule,
there is no injunction, order, judgment, decree, or regulatory restriction
imposed upon CIT, any of the CIT Subsidiaries or the assets of CIT or any of the
CIT Subsidiaries.
5.10. Taxes. Except as set forth in Section 5.10 of the CIT Disclosure
Schedule, each of CIT and its Subsidiaries has (i) duly and timely filed
(including applicable extensions granted without penalty) all material Tax
Returns required to be filed at or prior to the Effective Time, and such Tax
Returns are true and correct in all material respects except to the extent
adequate provision has been made with respect thereto in CIT's consolidated
financial statements, (ii) paid in full or made adequate provision in the
financial statements of CIT (in accordance with U.S. GAAP) for all Taxes shown
to be due on such Tax Returns and (iii) not received written notice of a
proposed assessment or reassessment of a material liability for unpaid Taxes,
the amount of which has not been previously paid or adequately provided for in
CIT's consolidated financial statements. Except as set forth in Section 5.10 of
the CIT Disclosure Schedule, as of the date hereof, neither CIT nor any of its
Subsidiaries has requested any extension of time within which to file any
material Tax Returns in respect of any fiscal year which have not since been
filed and no request for waivers of the time to assess any Taxes are pending or
outstanding. No material Tax liens have been filed with respect to CIT or any
CIT Subsidiary, other than for Taxes not yet due and payable or those being
contested in good faith.
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5.11. Employees. (a) Section 5.11(a) of the CIT Disclosure Schedule sets
forth a true and correct list of each material deferred compensation plan,
incentive compensation plan, equity compensation plan, "welfare" plan, fund or
program (within the meaning of section 3(1) of the ERISA); "pension" plan, fund
or program (within the meaning of section 3(2) of ERISA); each material
employment, termination or severance agreement; and each other material employee
benefit plan, fund, program, agreement or arrangement, in each case, that is
(or, with respect to any pension plan that is or was subject to Title IV of
ERISA, during any time in the last six years was) sponsored, maintained,
participated in or contributed to or required to be contributed to as of the
date of this Agreement (the "CIT Plans") by CIT, any of its Subsidiaries or by
any trade or business, whether or not incorporated (a "CIT ERISA Affiliate"),
all of which together with CIT would be deemed a "single employer" within the
meaning of Section 4001 of ERISA, for the benefit of any employee or former
employee of CIT or any Subsidiary.
(b) To the extent that CIT has provided or made available any of the
following documents to Newcourt, the copies so provided or made available were
true and correct copies of such documents: (i) any CIT Plan document including
all amendments thereto; (ii) any actuarial report for such CIT Plan for each of
the last two years, (iii) the most recent determination letter from the Internal
Revenue Service for any such CIT Plan; (iv) the most recent summary plan
description and related summaries of modifications or (v) the most recent Form
5500 (including all schedules) filed with the IRS.
(c) Except as set forth in Section 5.11(c) of the CIT Disclosure Schedule:
each of the CIT Plans is in compliance with all applicable provisions of the
Code and ERISA; each of the CIT Plans and related trusts intended to be
"qualified" within the meaning of Sections 401(a) and 501(a) of the Code has
received a favorable determination letter from the IRS and nothing has occurred
to cause the loss of such qualified status; no CIT Plan has an accumulated or
waived funding deficiency within the meaning of Section 412 of the Code; all
contributions required to be made by CIT or any CIT Subsidiary to any CIT Plan
have been made by the due date; neither CIT nor any CIT ERISA Affiliate has
incurred, directly or indirectly, any liability to or on account of a CIT Plan
pursuant to Title IV of ERISA (other than for premiums not yet due to the
Pension Benefit Guaranty Corporation); to the knowledge of CIT no proceedings
have been instituted to terminate any CIT Plan that is subject to Title IV of
ERISA; no "reportable event," as such term is defined in Section 4043(c) of
ERISA, has occurred with respect to any CIT Plan (other than a reportable event
with respect to which the thirty day notice period has been waived);
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and no condition exists that presents a risk to CIT of incurring a liability to
or on account of a CIT Plan pursuant to Title IV of ERISA; no CIT Plan is a
multiemployer plan (within the meaning of Section 4001(a)(3) of ERISA) and no
CIT Plan is a multiple employer plan (as defined in Section 413 of the Code);
except as required by Section 4980B of the Code or Part 6 of Title I of ERISA,
no CIT Plan provides post-retirement welfare benefits and there are no pending,
or, to the knowledge of CIT, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of the CIT Plans or
any trusts related thereto or against CIT, any CIT Subsidiary or any individual
or entity for which the CIT Plans, CIT or any CIT Subsidiary may have liability;
all employee benefit plans that are subject to the laws of any jurisdiction
outside the United States are in compliance with such applicable laws and the
requirements of any trust deed or other document under which they are
established or maintained.
5.12. SEC Reports. No final registration statement, prospectus, report,
schedule, definitive proxy statement or other document required to be filed
since December 31, 1996 by CIT with the SEC pursuant to the Securities Act or
the Exchange Act (the "CIT Reports") contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that information
as of a later contained or incorporated by reference in a CIT Report date shall
be deemed to modify information as of an earlier date. Since December 31, 1996,
CIT has timely filed all material CIT Reports and other material documents
required to be filed by it under the Securities Act and the Exchange Act, and,
as of their respective dates, all CIT Reports complied in all material respects
with the published rules and regulations of the SEC with respect thereto.
5.13. CIT Information. The information to be contained in the Proxy
Circular and the Registration Statement, or in any other document filed with any
other regulatory agency in connection herewith (other than any information which
is provided to CIT by Newcourt specifically for inclusion in such document),
will not at the time the Proxy Circular is mailed to shareholders and at the
time of each of the Newcourt and the CIT shareholders' meetings contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances in which they are
made, not misleading. The Proxy Circular (except for such portions thereof that
relate only to or are prepared by Newcourt or any of the Newcourt Subsidiaries)
will comply with the provisions of the Exchange Act and the rules and
regulations thereunder. The Registration Statement
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will comply with the provisions of the Securities Act and the rules and
regulations thereunder.
5.14. Compliance with Applicable Law. CIT and each of its Subsidiaries
holds, and has at all times held, all licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses
under and pursuant to all, and have complied with and are not in default in any
respect under any, applicable law, statute, order, rule, regulation, policy
and/or guideline of any Governmental Entity relating to CIT or any of its
Subsidiaries or the conduct of their respective businesses and neither CIT nor
any of the CIT Subsidiaries knows of, or has received notice of violation of,
any violations of any of the above.
5.15. Certain Contracts. (a) Except as set forth in Section 5.15(a) of the
CIT Disclosure Schedule, neither CIT nor any of the CIT Subsidiaries is a party
to or bound by any contract or commitment (whether written or oral) (i) which,
upon the consummation of the transactions contemplated by this Agreement, will
(either alone or upon the occurrence of any additional acts or events) result in
any payment or benefits (whether of severance pay or otherwise) becoming due, or
the acceleration or vesting of any rights to any payment or benefits, from CIT,
Newcourt or any of their respective Subsidiaries to any director, officer,
employee, contractor or consultant thereof, (ii) which is a material contract
(as defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed
after the date of this Agreement that has not been filed or incorporated by
reference in the CIT Reports, (iii) which materially increases any benefits
otherwise payable under any CIT compensation plan or other benefit arrangement,
(iv) which requires CIT to register any securities under the Securities Act or
otherwise or (v) which materially restricts the conduct of any line of business
by CIT or any of the CIT Subsidiaries. Each contract, arrangement, commitment or
understanding of the type described in clause (ii) of this Section 5.15(a),
whether or not set forth in Section 5.15(a) of the CIT Disclosure Schedule, is
referred to herein as a "CIT Contract". CIT has previously delivered or made
available to Newcourt true and correct copies of each CIT Contract.
(b) Except as set forth in Section 5.15(b) of the CIT Disclosure Schedule,
(i) each CIT Contract is valid and binding and in full force and effect, (ii)
neither CIT nor any of the CIT Subsidiaries is in default in respect of its
obligations under any CIT Contract, (iii) no event or condition exists which
constitutes or, after notice or lapse of time or both, would constitute, a
default on the part of CIT or any of the CIT Subsidiaries under any CIT
Contract, and (iv) no other party to any CIT Contract is, to the knowledge of
CIT, in default in any respect thereunder.
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5.16. Agreements with Regulatory Agencies. Except as set forth in Section
5.16 of the CIT Disclosure Schedule, neither CIT nor any of its Subsidiaries is
subject to any material cease-and-desist or other order issued by, or is a party
to any material written agreement, consent agreement or memorandum of
understanding with, or is a party to any material commitment letter or similar
undertaking to, or is subject to any material order or directive by, or is a
recipient of any material extraordinary supervisory letter from, or has adopted
any material board resolutions at the request of (each, whether or not set forth
in Section 5.16 of the CIT Disclosure Schedule, a "CIT Regulatory Agreement"),
any CIT Regulatory Agency or other Governmental Entity that materially restricts
the conduct of its business or that in any material manner relates to its
capital adequacy, its credit policies, its management or its business, nor has
CIT or any of its Subsidiaries been advised by any CIT Regulatory Agency or
other Governmental Entity that it is considering issuing or requesting any CIT
Regulatory Agreement.
5.17. Environmental Matters. Except as set forth in Section 5.17 of the
CIT Disclosure Schedule:
(a) Each of CIT and its Subsidiaries and, to the knowledge of CIT,
each of the Participation Facilities (as hereinafter defined), are in
compliance with all Environmental Laws;
(b) There is no suit, claim, action or proceeding, pending or, to
the knowledge of CIT, threatened, before any Governmental Entity or other
forum in which CIT, any of its Subsidiaries or any Participation Facility,
has been or, with respect to threatened proceedings, could reasonably be
expected to be, named as a defendant (x) for alleged noncompliance
(including by any predecessor) with any Environmental Laws, or (y)
relating to the release, threatened release or exposure to any Hazardous
Material whether or not occurring at or on a site owned, leased or
operated by CIT or any of its Subsidiaries or any Participation Facility;
(c) To the knowledge of CIT during the period of (i) CIT's or any of
its Subsidiaries' ownership or operation of any of their respective
current or former properties or (ii) CIT's or any of its Subsidiaries'
participation in the management of any Participation Facility, there has
been no release of Hazardous Materials in, on, under or affecting any such
property. To the knowledge of CIT, prior to the period of (x) CIT's or any
of its Subsidiaries' ownership or operation of any of their respective
current or former properties or (y) CIT's or any of its Subsidiaries'
participation in the management of any Participation Facility, there was
no release of
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Hazardous Materials in, on, under or affecting any such property or
Participation Facility; and
(d) The following definition applies for purposes of this Section
5.17: "Participation Facility" means any facility in which CIT or any of
its Subsidiaries participates in the management and, where required by the
context, said term means the owner or operator of such facility.
5.18. Opinion. Prior to the execution of this Agreement, CIT has received
an opinion from J.P. Morgan Securities Inc. to the effect that as of the date
thereof and based upon and subject to the matters set forth therein, the
Exchange Ratio pursuant to this Agreement is fair from a financial point of view
to CIT. Such opinion has not been amended or rescinded as of the date of this
Agreement.
5.19. Ownership of Newcourt Common Shares. Neither CIT nor, to the
knowledge of CIT, any of its affiliates or associates (as such terms are defined
under the Exchange Act) (a) beneficially owns, directly or indirectly, or (b) is
a party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of capital stock of
Newcourt.
5.20. Property. Each of CIT and its Subsidiaries has good and marketable
title free and clear of all Encumbrances to all of the Properties which are
reflected on the consolidated statement of financial condition of CIT as of
December 31, 1998 or were acquired after such date, except for (i) Permitted
Encumbrances and (ii) dispositions of, and Encumbrances on, such Properties in
the ordinary course of business or as otherwise permitted or required hereunder.
5.21. Year 2000 Compliance Plan. Section 5.21 of the CIT Disclosure
Schedule sets forth a true and complete copy of CIT's plan to cause all of the
Date-Sensitive Systems owned, leased for use by or used by the CIT or any CIT
Subsidiary intended and necessary for use after December 31, 1999, or licensed
to the CIT or any CIT Subsidiary for use by CIT or such CIT Subsidiary, and all
of CIT's and each CIT Subsidiary's Date Data to be Year 2000 Compliant (CIT's
"Y2K Plan"). CIT believes that its Y2K Plan can be substantially achieved on or
before September 30, 1999.
5.22. Interested Party Transactions. Except as set forth in Section 5.22
of the CIT Disclosure Schedule or as disclosed in the CIT Reports filed prior to
the date of this Agreement, no executive officer of CIT has, either directly or
indirectly, a material interest in (1) any Person which purchases from or sells,
licenses or
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furnishes to CIT or any of the CIT Subsidiaries any material goods, property,
technology or intellectual or other material property rights or services or (2)
any material contract or agreement to which CIT or any of the CIT Subsidiaries
is a party or by which it may be bound or affected.
5.23. Insurance. CIT and each of the CIT Subsidiaries have their
respective assets insured against loss or damages as appropriate in their
businesses and assets in such amounts and against such risks as are appropriate
in their business, and such insurance coverage will be continued in full force
and effect to and including the Effective Time.
5.24. Board Approval. The Board of Directors of CIT has, as of the date
hereof, (i) approved this Agreement and the Arrangement, (ii) determined that
the Arrangement is in the best interests of CIT and the shareholders of CIT and
(iii) recommended the shareholders of CIT approve the issuance of shares of CIT
Common Stock pursuant to this Agreement and the Plan of Arrangement and upon
conversion of the Exchangeable Shares.
5.25. Intellectual Property. CIT and the CIT Subsidiaries own or have a
valid license to use all trademarks, service marks and trade names (including
any registrations or applications for registration of any of the foregoing)
(collectively, the "CIT Intellectual Property") necessary to carry on its
business substantially as currently conducted. Neither CIT nor any such
subsidiary has received any notice of infringement of or conflict with, and, to
CIT's knowledge, there are no infringements of or conflicts with, the rights of
others with respect to the use of any material CIT Intellectual Property which
have not been previously resolved.
5.26. DGCL Section 203. The provisions of Section 203 of the Delaware
General Corporation Law will not apply to Newcourt (by virtue of the DKB Voting
Agreement or otherwise), this Agreement or the Plan of Arrangement or any of the
transactions contemplated hereby or thereby.
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ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1. Covenants of CIT and Newcourt. During the period from the date of
this Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or with the prior written consent of
the other party, Newcourt, CIT and each of their respective Subsidiaries shall
(x) carry on their respective businesses in the ordinary course consistent with
past practice and (y) use reasonable efforts to maintain and preserve intact its
business organization and advantageous business relationships and retain the
services of its officers and key employees. Without limiting the generality of
the foregoing, and except as set forth in Section 6.1 of the Newcourt Disclosure
Schedule, with respect to Newcourt, or Section 6.1 of the CIT Disclosure
Schedule, with respect to CIT, or as otherwise contemplated by this Agreement or
consented to in writing by the other party, neither Newcourt nor CIT shall, and
neither Newcourt nor CIT shall permit any of its Subsidiaries to:
(a) solely in the case of Newcourt and CIT, declare or pay any
dividends on, or make other distributions in respect of, any of its
capital stock, other than quarterly dividends not in excess of (i)
Cdn$0.06 per Newcourt Common Share, in the case of Newcourt, and (ii)
US$0.10 per share of CIT Common Stock, in the case of CIT;
(b) (i) repurchase, redeem or otherwise acquire any shares of the
capital stock of such party or any of its Subsidiaries, or any securities
convertible into or exercisable for any shares of the capital stock of
such party or any of its Subsidiaries, (ii) split, combine or reclassify
any shares of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (iii) issue, deliver,
allocate, sell or pledge, or authorize or propose the issuance, delivery,
allocation, sale or pledge of, any shares of its capital stock or any
stock appreciation rights or securities convertible into or exercisable
for, or any rights, warrants or options to acquire, any such shares, or
enter into any agreement with respect to any of the foregoing except, in
the case of clauses (ii) and (iii), for (x) the issuance of such party's
common shares upon the exercise or fulfillment of rights or options issued
or existing pursuant to employee benefit plans, programs or arrangements,
all to the extent outstanding and in existence on the date of this
Agreement and in accordance with their present terms, and (y) in
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the case of Newcourt, the distribution or sale of outstanding Newcourt
Common Shares currently held for Newcourt's employees pursuant to
Newcourt's employee share loan program;
(c) amend its charter, by-laws or other similar governing documents;
(d) solely in the case of Newcourt and the Newcourt Subsidiaries,
authorize or permit any of its officers, directors, employees or agents to
directly or indirectly solicit, initiate or encourage any inquiries
relating to, or the making of any proposal which constitutes, an
"Acquisition Proposal" (as defined below), or participate in any
discussions or negotiations, or provide third parties with any nonpublic
information, relating to any such inquiry or proposal or otherwise
facilitate any effort or attempt to make or implement an Acquisition
Proposal; provided, however, that (x) Newcourt may, in response to an
Acquisition Proposal that the Board of Directors of Newcourt determines in
good faith to be more favorable to its shareholders than the transactions
contemplated hereby, and for which financing is committed or for which, in
the good faith judgment of the Board of Directors of Newcourt, financing
is reasonably capable of being obtained by such third party (a "Superior
Proposal"), and subject to providing prior written notice of such Superior
Proposal to CIT, participate in any discussions or negotiations regarding,
or provide the party making such Superior Proposal with any nonpublic
information (pursuant to a customary confidentiality agreement and
provided Newcourt provides CIT with such information, concurrently with or
prior to providing it to such party) in connection with, such Superior
Proposal, or otherwise facilitate any effort or attempt to implement such
Superior Proposal, if the Board of Directors of Newcourt determines in
good faith, after consultation with outside counsel, that it is necessary
to do so in order to comply with its fiduciary duties to Newcourt and to
Newcourt's shareholders under applicable law, (y) Newcourt may communicate
information about any Acquisition Proposal to its shareholders if, in the
judgment of Newcourt's Board of Directors, based upon the advice of
outside counsel, such communication is required under applicable law and
(z) nothing contained in this Agreement shall prevent Newcourt or its
Board of Directors from complying with Rule 14e-2 promulgated under the
Exchange Act with regard to an Acquisition Proposal, provided, however,
that, except in connection with a Superior Proposal, neither the Board of
Directors of Newcourt nor any committee thereof shall withdraw or modify,
or propose publicly to withdraw or modify, its position with respect to
the Newcourt Shareholder Matters, or approve or recommend, or propose
publicly to approve or recommend, an Acquisition Proposal. Newcourt will
immediately cease and cause to be terminated any existing
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activities, discussions or negotiations previously conducted with any
parties other than CIT with respect to any of the foregoing and Newcourt
will take all actions necessary or advisable to inform the appropriate
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 6.1(d). Newcourt will (A) notify
CIT immediately if any such inquiries or Acquisition Proposals are
received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with,
Newcourt and (B) promptly inform CIT in writing of all of the relevant
details and status with respect to the foregoing. As used in this
Agreement, "Acquisition Proposal" shall mean any tender or exchange offer,
proposal for a merger, consolidation, amalgam- ation, arrangement or other
business combination involving, or a recapitalization of, a party to this
Agreement or any of its Subsidiaries or any proposal or offer to acquire
in any manner a substantial equity interest in, or a substantial portion
of the assets of, a party to this Agreement or any of its Subsidiaries
other than the transactions contemplated or permitted by this Agreement,
but "Acquisition Proposal" shall not include the entering into of
partnerships, joint ventures, virtual joint ventures, investment funds and
other similar arrangements as part of the ordinary course funding
activities of such party;
(e) make any capital expenditures in excess of the US$50 million
budgeted for calendar year 1999;
(f) enter into any new line of business or enter into any material
transaction not in the ordinary course of its business;
(g) acquire or agree to acquire, by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof or otherwise acquire any assets, which would be material,
individually or in the aggregate, to such party and its Subsidiaries,
taken as a whole, other than (i) in connection with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt restructurings
in the ordinary course of business consistent with past practices and (ii)
partnerships, joint ventures, virtual joint ventures, investment funds and
other similar arrangements as part of the ordinary course business
activities of such party;
(h) take any action that is intended or may reasonably be expected
to result in any of its representations and warranties set forth in this
Agree-
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ment being or becoming untrue, or in any of the conditions to the
Arrangement set forth in Article VIII not being satisfied;
(i) change its methods of accounting in effect at December 31, 1998,
except as required by changes in (x) Canadian GAAP or U.S. GAAP as
concurred to by Newcourt's independent auditors, in the case of Newcourt
or (y) U.S. GAAP as concurred to by CIT's independent auditors, in the
case of CIT;
(j) (i) except as set forth in Section 7.7 hereof or, with respect
to Newcourt, as set forth in Section 6.1(j) of the Newcourt Disclosure
Schedule, as required by applicable law or as required to maintain
qualification pursuant to the Code or the ITA, adopt, amend, or terminate
any employee benefit plan or any agreement, arrangement, plan or policy
between such party or any of its Subsidiaries and one or more of its
current or former directors, officers or employees, or any collective
bargaining, bonus, profit sharing, compensation, stock option, pension,
retirement, employee stock ownership, deferred compensation employment
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees or
(ii) except, with respect to Newcourt, as described in Section 6.1(j) of
the Newcourt Disclosure Schedule, and, in the case of either party, except
for normal increases in the ordinary course of business consistent with
past practice or except as required by applicable law, increase in any
manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any employee benefit plan or
agreement as in effect as of the date of this Agreement (including,
without limitation, the granting of stock options, stock appreciation
rights, restricted stock, restricted stock units or performance units or
shares); provided, however, that nothing contained herein shall prohibit
Newcourt from paying 1998 bonuses which have been earned and accrued on
its books.
(k) solely in the case of Newcourt and the Newcourt Subsidiaries,
other than activities in the ordinary course of business consistent with
past practice (including financing, securitization, syndication, pooling
and other similar activities) and except as set forth in Section 6.1(k) of
the Newcourt Disclosure Schedule, sell, lease, encumber, assign or
otherwise dispose of, or agree to sell, lease, encumber, assign or
otherwise dispose of, any of its material assets, properties or other
rights or agreements;
(l) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money or assume,
guarantee,
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endorse or otherwise as an accommodation become responsible for the
obligations of any unrelated individual, corporation or other entity;
(m) other than in the ordinary course of business and except as set
forth in Section 6.1(m) of the Newcourt Disclosure Schedule, create,
renew, amend or terminate or give notice of a proposed renewal, amendment
or termination of, any material contract, agreement or lease (as lessee)
for goods, services or office space to which such party or any of its
Subsidiaries is a party or by which such party or any of its Subsidiaries
or their respective properties is bound, other than any amendment or
renewal which does not materially reduce the benefits of any such
contract, agreement or lease to such party; or
(n) agree to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Regulatory Matters. (a) Newcourt and CIT shall promptly prepare the
Proxy Circular and, if required, CIT shall promptly prepare and file with the
SEC a registration statement on the appropriate form with respect to any of the
securities to be issued in the Arrangement (or upon exchange of Exchangeable
Shares) (the "Registration Statement") and shall take all actions necessary to
maintain such Registration Statement current and effective for as long as shall
be required to enable the holders of Exchangeable Shares to sell the shares of
CIT Common Stock received upon exchange thereof. Each of the Newcourt and CIT
shall use its reasonable best efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing, (or, if the filing of the Registration Statement is not required,
to have the Proxy Circular reviewed by the SEC prior to mailing) and each of
Newcourt and CIT shall thereafter mail the Proxy Circular to its respective
shareholders. CIT shall also use its reasonable best efforts to obtain all
necessary state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement.
(b) Newcourt shall file the Proxy Circular in all Canadian jurisdictions
where the Proxy Circular is required to be filed and with the SEC in accordance
with the applicable rules and regulations thereof. The parties shall use all
reasonable efforts to obtain all orders required from the applicable Canadian
securities
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authorities to permit the issuance and first resale of (i) the Exchangeable
Shares and the shares of CIT Common Stock to be issued pursuant to the
Arrangement, (ii) the shares of CIT Common Stock to be issued upon exchange of
the Exchangeable Shares from time to time and (iii) the shares of CIT Common
Stock to be issued from time to time upon the exercise of the Replacement
Options, in each case without qualification with or approval of or the filing of
any document, including any prospectus or similar document, or the taking of any
proceeding with, or the obtaining of any further order, ruling, or consent from,
any Governmental Entity or regulatory authority under any Canadian federal,
provincial or territorial securities laws or pursuant to the rules and
regulations of any regulatory authority administering such laws, or the
fulfilment of any other legal requirement in any such jurisdiction (other than,
with respect to such first resales, any restrictions on transfer by reason of,
among other things, a holder being a "control person" of Newcourt or CIT for
purposes of Canadian federal, provincial or territorial securities laws).
(c) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including the Arrangement) and for the parties and their Subsidiaries
to conduct their respective businesses after the Closing Date in substantially
the same manner as conducted currently, or which are required in order to
maintain in effect any governmental authorizations, licenses or approvals
pursuant to which either of the parties or their Subsidiaries carries on its
business as currently conducted. Newcourt and CIT each will furnish to the other
for review in advance, and to the extent practicable each will consult the other
on, in each case subject to applicable laws relating to the exchange of
information, all the information relating to Newcourt or CIT, as the case may
be, and any of their respective Subsidiaries, which appears in any filing made
with, or written materials submitted to, any third party or any Governmental
Entity in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the parties hereto shall act reasonably
and as promptly as practicable. The parties hereto agree that they will consult
with each other with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated by this
Agreement and, in each case subject to applicable law relating to the exchange
of information, each party will keep the other apprised of the status of matters
relating to completion of the transactions contemplated herein. Promptly upon
the reasonable request of CIT,
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Newcourt will provide, and will use its reasonable efforts to cause each other
Co-Venturer (and the ultimate parent entity thereof) in a Joint Venture to
provide promptly, to CIT, to the extent reasonably available to Newcourt or such
other party, the information required in order to respond to any questions asked
by the Federal Reserve Board regarding any Co-Venturer or any joint venture.
"Co-Venturer" means any company that (i) owns an interest in a company in which
Newcourt has an interest or (ii) has entered into an agreement with Newcourt for
Newcourt or its affiliates to finance the sale of the company's products.
(d) Newcourt and CIT shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Circular, the Registration Statement or any other
statement, filing, notice or application made by or on behalf of Newcourt, CIT
or any of their respective Subsidiaries to any Governmental Entity in connection
with the Arrangement and the other transactions contemplated by this Agreement.
(e) Newcourt and CIT shall, subject to applicable law, promptly furnish
each other with copies of written communications received by Newcourt or CIT, as
the case may be, or any of their respective Subsidiaries, Affiliates or
Associates (as such terms are defined in Rule 12b-2 under the Exchange Act as in
effect on the date of this Agreement) from, or delivered by any of the foregoing
to, any Governmental Entity in respect of the transactions contemplated hereby.
(f) Each party will give the other party a reasonable opportunity to
participate in the defense of any shareholder litigation against such party and
its directors relating to the transactions contemplated hereby; provided,
however, that (x) the foregoing shall not require either party to take any such
action which would be reasonably likely to jeopardize such party's
attorney-client privilege and (y) the party to this Agreement that is the
defendant in such litigation shall control such litigation.
7.2. Access to Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each party shall, and
shall cause each of its Subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of the other party, reasonable
access, during normal business hours during the period prior to the Effective
Time, to all its properties, books, contracts, commitments, records, officers,
employees, accountants, counsel and other representatives and, during such
period, it shall, and shall cause its Subsid-
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iaries to, make available to the other party all information concerning its
business, properties and personnel as the other party may reasonably request;
provided, that nothing herein shall require Newcourt or any of the Newcourt
Subsidiaries to disclose any information to CIT that would cause significant
competitive harm to Newcourt or its affiliates if the transactions contemplated
by this Agreement are not consummated (the "Restricted Information"); provided
further, however, that each of the individuals listed in Section 7.2 of the
Newcourt Disclosure Schedule shall be permitted access to the Restricted
Information of Newcourt if, but only if, such individual has executed and
delivered to Newcourt an agreement (a) to be bound by the Confidentiality
Agreement and (b) not to disclose to any other person the Restricted
Information. CIT shall cause each such individual to comply strictly with the
terms of such agreement to which such individual is a party and CIT shall be
responsible for any failure by any such individual to comply with the terms of
such agreement. Neither party nor any of its Subsidiaries shall be required to
provide access to or to disclose information where such access or disclosure
would violate the rights of its customers, jeopardize any attorney-client
privilege or contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement. The parties hereto will use their reasonable best efforts to (x)
mitigate any restrictions pursuant to the preceding sentence and (y) make
appropriate substitute disclosure arrangements under circumstances in which such
restrictions cannot be so mitigated.
(b) All information furnished to either party pursuant to Section 7.2(a)
shall be subject to, and such party shall hold all such information in
confidence in accordance with, the provisions of the confidentiality agreement,
dated February 24, 1999 (the "Confidentiality Agreement"), between Newcourt and
CIT.
(c) No investigation by either of the parties or their respective
representatives shall affect the representations, warranties, covenants or
agreements of the other set forth herein.
7.3. Shareholder Meetings. Newcourt and CIT each shall take all steps
necessary to duly call, give notice of, convene and hold a meeting of its
respective shareholders to be held as soon as is reasonably practicable after
the issuance of the Interim Order for the purpose of voting upon the approval of
(a) the Plan of Arrangement and the consummation of the transactions
contemplated thereby (the "Newcourt Shareholder Matters"), in the case of
Newcourt, and (b) the issuance of shares of CIT Common Stock pursuant to this
Agreement and the Plan of Arrangement and upon exchange of Exchangeable Shares
and exercise of the Replacement
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Options (the "CIT Shareholder Matters"), in the case of CIT. CIT will and,
subject to the penultimate sentence of this Section 7.3, Newcourt will, through
its respective Board of Directors, recommend to its respective shareholders (x)
approval of the Newcourt Shareholder Matters, in the case of Newcourt, and (y)
approval of the CIT Shareholder Matters, in the case of CIT, and, in each case,
such other matters as may be submitted to its shareholders in connection with
this Agreement. Neither the Board of Directors of either party nor any committee
thereof shall withdraw or modify, or propose publicly to withdraw or modify, in
a manner adverse to the other party, the approval or recommendation by such
Board of Directors or such committee of the Newcourt Shareholder Matters, in the
case of Newcourt, or the CIT Shareholder Matters, in the case of CIT, and
neither the Board of Directors of Newcourt nor any committee thereof shall (i)
approve or recommend, or propose publicly to approve or recommend, any
Acquisition Proposal, or (ii) cause Newcourt to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement (each,
an "Acquisition Agreement") related to any Acquisition Proposal. Notwithstanding
the foregoing, in the event that the Board of Directors of Newcourt determines
in good faith, after consultation with outside counsel, that in light of a
Superior Proposal it is necessary to do so in order to comply with its fiduciary
duties to Newcourt and to Newcourt's shareholders under applicable law, the
Board of Directors of Newcourt may terminate this Agreement solely in order to
concurrently enter into an Acquisition Agreement with respect to a Superior
Proposal, but only after the fifth day following CIT's receipt of written notice
advising CIT that the Board of Directors of Newcourt is prepared to accept a
Superior Proposal, and only if, during such five-day period, if CIT so elects,
Newcourt and its advisors shall have negotiated in good faith with CIT to make
such adjustments in the terms and conditions of this Agreement as would enable
CIT to proceed with the transactions contemplated herein on such adjusted terms.
Newcourt and CIT shall coordinate and cooperate with respect to the foregoing
matters with a view toward, among other things, holding the respective meetings
of each party's shareholders on the same day.
7.4. Legal Conditions to Arrangement. (a) Each of Newcourt and CIT
shall, and shall cause its Subsidiaries to, use their reasonable best efforts
(i) to take, or cause to be taken, all actions necessary, proper or advisable to
comply promptly with all legal requirements which may be imposed on such party
or its Subsidiaries with respect to the Arrangement and, subject to the
conditions set forth in Article VIII hereof, to consummate the transactions
contemplated by this Agreement and (ii) to obtain (and to cooperate with the
other party to obtain) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity and any other third party which is
required to be obtained by Newcourt or CIT or any
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of their respective Subsidiaries in connection with the Arrangement and the
other transactions contemplated by this Agreement, and to comply with the terms
and conditions of such consent, authorization, order or approval.
(b) Without limiting the generality of Section 7.4(a), in the event that
either party fails or expects to fail to obtain any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity, other than
any Primary Approval, because of the type or nature of any assets or the
activities of any business of either party or any of its Subsidiaries, such
party shall use its reasonable best efforts to take or cause to be taken all
actions necessary to either obtain the required approval or obviate the need to
obtain such approval, including, if necessary, discontinuing or disposing of
such business or assets or restructuring the conduct of such business; provided,
however, that the party shall not be required to take any such action if doing
so would be reasonably expected to have a Material Adverse Effect on Newcourt
and CIT (on a combined basis).
7.5. Affiliates. Newcourt shall use its reasonable best efforts to cause
each director, executive officer and other person who is an "affiliate" (for
purposes of Rule 145 under the Securities Act) of Newcourt to deliver to CIT, as
soon as practicable after the date of this Agreement, a written agreement, in
the form of Exhibit 7.5(a) or Exhibit 7.5(b) hereto, as applicable.
7.6. Stock Exchange Listings; Tax Status. Each of CIT and Newcourt
shall, to the extent applicable, use its reasonable best efforts to (i) cause
the Exchangeable Shares and the shares of CIT Common Stock to be listed and
posted for trading on the TSE by the Effective Time and, with respect to the
Exchangeable Shares, to maintain the listing as long as any Exchangeable Shares
are outstanding, (ii) cause the shares of CIT Common Stock to be issued in the
Arrangement or upon exchange of the Exchangeable Shares and upon exercise of the
Replacement Options from time to time to be approved for listing on the NYSE,
subject to official notice of issuance, as of the Effective Time and (iii)
ensure that Newcourt remains a "public corporation" within the meaning of the
ITA until the earlier of (i) such time as there are no Exchangeable Shares
outstanding and (ii) five years after the Effective Time.
7.7. Employee Benefit Plans; Existing Agreements. (a) From and after the
Effective Time, the employees of Newcourt and the Newcourt Subsidiaries as of
the Effective Time (the "Newcourt Employees") shall continue to participate in
Newcourt's employee benefit and compensation plans in which they currently
participate or, at CIT's discretion, in CIT's employee benefit and compensation
plans
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or a combination thereof. Prior to December 31, 2000, CIT shall not, and shall
not permit any of its Subsidiaries to, modify or amend the benefit programs
applicable to Newcourt Employees in any manner which would cause the benefits
provided to such employees under such plans in the aggregate, to be less
favorable than those provided to Newcourt Employees under such plans immediately
prior to the Effective Time except to the extent agreed to by Messrs. Gamper and
Hudson of New CIT. The foregoing limitation on CIT's and its subsidiaries' right
to amend or modify the compensation plans does not apply to Newcourt employees
who have employee contracts with New CIT. Without limiting the generality of the
foregoing, from and after the Effective Time, CIT shall continue to maintain
Newcourt's share loan program (including the related financial support thereof)
with respect to participants in such program as of the Effective Time for the
sole purpose of permitting participants in the program at the Effective Time to
repay outstanding loans without adverse amendment or adverse alteration in the
administration thereof for so long as any loans remain outstanding thereunder.
(b) Following December 31, 2000 (or such earlier date that a Newcourt
Employee commences participation in a plan), with respect to each deferred
compensation plan, incentive compensation plan, equity compensation plan,
"welfare" plan, fund or program, "pension" plan, fund or program; each
termination or severance plan or program; and each other employee benefit plan,
fund, program, agreement or arrangement, in each case, in which Newcourt
Employees participate (the "New CIT Plans"), for purposes of determining
eligibility to participate, vesting, and entitlement to benefits, including for
severance benefits and vacation entitlement (but not for accrual of pension
benefits or post-retirement welfare benefits), service with Newcourt (or
predecessor employers to the extent Newcourt provides past service credit) shall
be treated as service with New CIT. Such service also shall apply for purposes
of satisfying any waiting periods, evidence of insurability requirements, or the
application of any preexisting condition limitations. Each New CIT Plan shall
waive pre-existing condition limitations to the same extent waived under the
applicable Newcourt Plan. Newcourt Employees shall be given credit for amounts
paid under a corresponding benefit plan during the same period for purposes of
applying deductibles, copayments and out-of-pocket maximums as though such
amounts had been paid in accordance with the terms and conditions of the New CIT
Plan.
(c) Not later than March 15, 2000 (the "1999 Bonus Payment Date"), in
addition to any amounts that the Newcourt Employees shall have earned under
CIT's incentive bonus plans in 1999, CIT shall, or shall cause Newcourt to, pay
to each Newcourt Employee who is employed on the Bonus Payment Date a
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pro-rata 1999 bonus under Newcourt's incentive bonus plans in respect of the
period from January 1, 1999 through the Closing Date based on Newcourt's
annualized performance (without regard to the effect (including the cost) of any
actions taken by Newcourt or any of the Newcourt Subsidiaries in contemplation
of the Arrangement or at the request of CIT) from January 1, 1999 through the
end of the last full month prior to consummation of the Arrangement; provided,
however, that if, prior to the 1999 Bonus Payment Date, any Newcourt Employee is
terminated other than for cause, CIT shall, or shall cause Newcourt to, pay to
such Newcourt Employee on the date of termination the pro-rata 1999 bonus that
would have otherwise been payable to such employee on the 1999 Bonus Payment
Date. The provisions of this Section 7.7(c) are intended to be for the benefit
of, and shall be enforceable by, each such director, officer or employee.
(d) As of the Effective Time, CIT shall assume and honor and shall cause
the appropriate Subsidiaries of CIT to assume and to honor in accordance with
their terms all employment, severance and other compensation agreements and
arrangements existing prior to the execution of this Agreement which are between
Newcourt or any of its Subsidiaries and any director, officer or employee
thereof and whether or not disclosed in the Newcourt Disclosure Schedule. CIT
acknowledges and agrees that the Arrangement constitutes a "Change in Control"
for all purposes pursuant to such agreements and arrangements. The provisions of
this Section 7.7(d) are intended to be for the benefit of, and shall be
enforceable by, each such director, officer or employee.
(e) Prior to the Effective Time, Newcourt shall amend or cause to be
amended the Newcourt Credit Group Inc. Savings and Investment Plan (the "Savings
Plan") so that, as of the Effective Time, participants in the Savings Plan will
not be permitted to transfer balances into, make contributions to, or have
contributions made to, the Newcourt Common Share investment option under the
Savings Plan.
(f) Newcourt and CIT shall take all such steps as may be required to
provide that, with respect to each Section 16 Affiliate (as defined below), (i)
the transactions contemplated by this Agreement and the Plan of Arrangement, and
(ii) any other acquisitions of CIT equity securities (including derivative
securities) in connection with this Agreement or the Plan of Arrangement, shall
be exempt under Rule 16b-3 promulgated under the Exchange Act, in accordance
with the terms and conditions set forth in that certain No-Action Letter, dated
January 12, 1999, issued by the SEC to Skadden, Arps, Slate, Meagher & Flom LLP.
For purposes of this
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Agreement, "Section 16 Affiliate" shall mean each individual who (x) immediately
prior to the Effective Time is a director or officer of Newcourt or (y) at the
Effective Time will become a director or officer of CIT.
7.8. Indemnification. (a) From and after the Effective Time, CIT agrees
to maintain, or cause to be maintained, all rights to indemnification and
exculpation from liabilities for acts or omissions occurring at or prior to the
Effective Time now existing in favor of the current or former directors or
officers of Newcourt or any Newcourt Subsidiary as provided in their respective
articles of incorporation or by-laws or similar governing documents, and CIT
hereby assumes, effective at the Effective Time, all such liability.
(b) CIT shall cause the persons serving as officers and directors of
Newcourt immediately prior to the Effective Time to be covered for a period of
six years from the Effective Time by the directors' and officers' liability
insurance policy maintained by Newcourt (provided that CIT may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are in the aggregate not less advantageous than such policy)
with respect to acts or omissions occurring prior to the Effective Time which
were committed by such officers and directors in their capacity as such;
provided, however, that in no event shall CIT be required to expend on an annual
basis more than 150% of the current amount expended by Newcourt (the "Insurance
Amount") to maintain or procure insurance coverage, and further provided that if
CIT is unable to maintain or obtain the insurance called for by this Section
7.8(b), CIT shall use all reasonable efforts to obtain as much comparable
insurance as is available for the Insurance Amount.
(c) In the event CIT or any of its successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or (ii)
transfers or conveys all or substantially all of its properties and assets to
any person, then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of CIT assume the
obligations set forth in this section.
(d) The provisions of this Section 7.8 are intended to be for the
benefit of, and shall be enforceable by such officer and director referred to in
this Section 7.8.
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7.9. Additional Agreements. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement and
their respective Subsidiaries shall take all such necessary action as may be
reasonably requested by either party.
7.10. Coordination of Dividends. After the date of this Agreement each
of CIT and Newcourt shall coordinate with the other regarding the declaration
and payment of any dividends in respect of the CIT Common Stock and the Newcourt
Common Shares and the record dates and payment dates relating thereto, it being
the intention of the parties that any holder of Newcourt Common Shares shall not
receive more than one dividend, or fail to receive one dividend, for any single
calendar quarter with respect to such holder's Newcourt Common Shares and/or any
shares of CIT Common Stock or Exchangeable Shares any such holder receives
pursuant to the Arrangement.
7.11. [Reserved.]
7.12. Executive Officers; Employment Contracts.
(a) In accordance with the terms hereof and of the employment agreement
referred to in Section 7.12(b) below, (i) at the Effective Time, Mr. Albert R.
Gamper shall serve as Chairman of the Board of Directors and Chief Executive
Officer of New CIT and (ii) at the Effective Time, Mr. Steven K. Hudson shall
serve as President of New CIT.
(b) Substantially concurrently with the execution hereof, CIT shall (i)
enter into an employment agreement with Mr. Steven K. Hudson substantially in
the form set forth in Exhibit H attached hereto and (ii) enter into employment
agreements with the Newcourt officers listed in Section 7.12 of the Newcourt
Disclosure Schedule substantially on the terms set forth in Exhibits I through N
attached hereto, in each case to become effective at the Effective Time.
7.13. Board of Directors. At the Effective Time, the total number of
persons serving on the Board of Directors of New CIT shall be twenty (20),
eleven (11) of whom shall be selected by the Board of Directors of CIT as
provided below and nine (9) of whom shall be selected by the Board of Directors
of Newcourt as provided below. Six of the twenty initial Directors of New CIT
shall be employees of New CIT at and after the Effective Time, with three being
employee directors of
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Newcourt immediately prior to the Effective Time and three being employee
directors of CIT immediately prior to the Effective Time. The three employee
directors who are employee directors of CIT shall be Messrs. Albert R. Gamper,
Joseph A. Pollicino and William O'Grady and the three employee directors who are
employee directors of Newcourt shall be Messrs. Steven K. Hudson, Bradley D.
Nullmeyer and David D. McKerroll. Two of the remaining eight initial directors
selected by CIT shall be Hisao Kobayashi and Takasuke Kaneko, and two of the
remaining six initial directors selected by Newcourt shall be a person
designated by Hercules Holdings (Cayman) Limited and a person designated by
Canadian Imperial Bank of Commerce, in each case, pursuant to the Voting
Agreements entered into as of the date of this Agreement between each of such
parties, respectively, and CIT. The remaining four persons to serve initially on
the Board of Directors of New CIT as of the Effective Time who are to be
selected by Newcourt shall be selected solely by and at the absolute discretion
of the Board of Directors of Newcourt from among those persons serving on the
Board of Directors of Newcourt prior to the Effective Time; and the remaining
six persons to serve on the Board of Directors of New CIT as of the Effective
Time who are to be selected by CIT shall be selected solely by and at the
absolute discretion of the Board of Directors of CIT from among those persons
serving on the Board of Directors of CIT prior to the Effective Time. In the
event that, prior to the Effective Time, any person named above or any other
person so selected to serve on the Board of Directors of New CIT after the
Effective Time is unable or unwilling to serve in such position, the Board of
Directors which selected such person shall designate another of its members to
serve in such person's stead in accordance with the provisions of the
immediately preceding sentence.
7.14. Notification of Certain Matters. Each of Newcourt and CIT will
give prompt notice to the other party of (i) any change or event which would
cause any representation or warranty made by it to be untrue or inaccurate as of
the Effective Time, subject to Article III, or (ii) any material failure by it
to comply with or satisfy any covenant or agreement to be complied with by it
hereunder.
7.15. Comfort Letters. Each of Newcourt and CIT shall use its reasonable
efforts to cause to be delivered to the other party a letter of its respective
independent public accountants dated (i) the date on which the Registration
Statement shall become effective, or, if there is no Registration Statement, the
date of mailing of the Proxy Circular, and (ii) a date shortly prior to the
Effective Time, and addressed to such other party, in form and substance
customary for "comfort" letters delivered by independent accountants in
accordance with Statement of Auditing Standards No. 72.
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7.16. Year 2000. Each Party shall use its reasonable best efforts to
implement its respective Y2K Plan. At the request of the other party, each party
shall periodically update the other party regarding its process with respect to
its Y2K Plan.
7.17. No Inconsistent Actions. Neither Newcourt nor CIT shall effectuate
any transaction or enter into any agreement the effect of which would be to
interfere with or otherwise impede consummation of the transactions contemplated
hereby.
7.18. Disregarded Entity. CIT shall take all actions necessary to cause
Newco to be, and shall refrain from taking any actions that would cause Newco
not to be, disregarded as an entity separate from its owner for United States
federal income tax purposes.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation To Effect the Arrangement.
The respective obligation of each party to effect the Arrangement shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Shareholder Approvals. (i) The Arrangement Resolution shall have
been approved and adopted by the requisite vote of not less than
two-thirds of the votes cast by the holders of Newcourt Common Shares who
are represented in person or by proxy at the meeting of Newcourt's
shareholders contemplated by Section 7.3 and in accordance with any other
conditions which may be imposed by the Interim Order and (ii) the issuance
of shares of CIT Common Stock pursuant to this Agreement and the Plan of
Arrangement and upon exchange of Exchangeable Shares and upon issuance or
exercise of Replacement Options shall have been approved and adopted by
the requisite vote of the holders of the outstanding shares of CIT Common
Stock under the rules of the NYSE.
(b) Interim and Final Orders. The Interim Order and the Final Order
shall each have been obtained in form and terms reasonably satisfactory to
each of Newcourt and CIT, and shall such orders not have been set aside or
modified on appeal or otherwise in a manner which is not reasonably
acceptable to such parties.
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(c) Listing of Shares. The Exchangeable Shares and the shares of CIT
Common Stock which shall be issued to the shareholders of Newcourt upon
consummation of the Arrangement and the shares of CIT Common Stock to be
issued upon conversion of the Exchangeable Shares shall have been
conditionally approved for listing on the TSE subject to the usual
conditions and the shares of CIT Common Stock which shall be issued to the
shareholders of Newcourt upon consummation of the Arrangement, upon
exchange of the Exchangeable Shares or upon exercise of the Replacement
Options shall have been authorized for listing on the NYSE, subject to
official notice of issuance.
(d) Other Approvals. The Primary Approvals and all other regulatory
approvals required to consummate the transactions contemplated hereby
(including the Arrangement) shall have been obtained and shall remain in
full force and effect and all statutory waiting periods in respect thereof
shall have expired (all such approvals, including the Primary Approvals,
and the expiration of all such waiting periods being referred to herein as
the "Requisite Regulatory Approvals"), provided that the party asserting
the failure of the condition set forth in this Section 8.1(d) shall have
taken any and all actions that such party is required to take under
Section 7.4(b).
(e) Registration Statement. If required, the Registration Statement
shall have become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(f) No Injunctions or Restraints; Illegality. No order, injunction
or decree issued by any court or agency of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the
Arrangement (an "Injunction") shall be in effect. No statute, rule,
regulation, order, injunction or decree shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits,
restricts or makes illegal consummation of the Arrangement.
(g) Dissenting Shareholders. Newcourt shall not have received from
holders of more than 5% of the Newcourt Common Shares the written
objection to the Arrangement Resolution referred to in Section 185(6) of
the OBCA where (i) such objections (x) shall have been made timely under
Section 3.1 of the Plan of Arrangement and (y) shall not have been
withdrawn and (ii) such shares are not voted in favor of the Plan of
Arrangement, unless within 30 days after the meeting
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of Newcourt's shareholders held pursuant to Section 7.3 or, if earlier,
immediately prior to the Effective Time, either of Goldman Sachs or J.P.
Morgan Securities Inc., or any of their respective affiliates, has
provided Newcourt and CIT with a letter stating that in the good faith
reasonable judgment of such firm, such firm believes that it can place a
sufficient amount of permanent equity securities of New CIT to fund the
payments required to be made in respect of those shares in excess of 5% of
the Newcourt Common Shares for which Dissent Rights shall have been
perfected.
8.2. Conditions to Obligations of CIT. The obligation of CIT to effect
the Arrangement is also subject to the satisfaction or waiver by CIT at or prior
to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to Section 3.2, the
representations and warranties of Newcourt set forth in this Agreement
(other than those set forth in Sections 4.2, 4.3(a) and 4.3(b)(i), the
second sentence of Section 4.5 and Sections 4.6, 4.7, 4.10, 4.11(a), 4.12,
4.13, 4.16 and 4.18) shall be true and correct as of the date of this
Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and
as of the Closing Date; and (ii) the representations and warranties of
Newcourt set forth in Sections 4.2, 4.3(a) and 4.3(b)(i), the second
sentence of Section 4.5 and Sections 4.6, 4.7, 4.10, 4.11(a), 4.12, 4.13,
4.16 and 4.18 of this Agreement shall be true and correct in all material
respects (without giving effect to Section 3.2 of this Agreement) as of
the date of this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date. CIT shall have received a
certificate signed on behalf of Newcourt by the Chief Executive Officer
and the Chief Financial Officer of Newcourt to the foregoing effect.
(b) Performance of Obligations of Newcourt. Newcourt shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
CIT shall have received a certificate signed on behalf of Newcourt by the
Chief Executive Officer and the Chief Financial Officer of Newcourt to
such effect.
(c) No Pending Governmental Actions. No proceeding initiated by any
Governmental Entity seeking an Injunction shall be pending.
(d) Regulatory Conditions. No Primary Approval shall have imposed
any condition or restriction that would so materially adversely affect
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the economic or business benefits of the transactions contemplated by this
Agreement so as to render inadvisable, in the reasonable good faith
judgment of CIT, the consummation of the transactions contemplated hereby.
(e) Third Party Consents. The consent, approval or waiver of each
Person (other than the Governmental Entities referred to in Section
8.1(d)) whose consent to or approval of the Arrangement shall be required
under any note, bond, mortgage, indenture, deed of trust, license, lease,
loan or credit agreement or other agreement or other instrument or
obligation to which Newcourt or any of the Newcourt Subsidiaries is a
party, or by which they or any of their respective Properties may be bound
or affected (other than the Dell Contract and the Lucent Contract) shall
have been obtained and shall remain in full force and effect, except where
the failure to have obtained such consent, waiver or approval, or the
failure of any such consent, waiver or approval to be in full force and
effect, would not, individually or in the aggregate, have a Material
Adverse Effect on Newcourt.
(f) Dell Contract. Any consent, approval or waiver which is required
under the Dell Contract by virtue of the Arrangement shall have been
obtained and the Dell Contract shall remain in full force and effect,
without any amendment or modification from the terms thereof as in effect
on the date of this Agreement, other than any such amendment or
modification which does not materially reduce the economic benefits of
such agreement to Newcourt.
(g) Lucent Contract. Any consent, approval or waiver which is
required under the Lucent Contract by virtue of the Arrangement shall have
been obtained and the Lucent Contract shall remain in full force and
effect, without any amendment or modification from the terms thereof as in
effect on the date of this Agreement, other than any such amendment or
modification which does not materially reduce the economic benefits of
such agreement to Newcourt.
(h) Credit Rating. Immediately preceding the Effective Time, the
rating accorded Newcourt's long-term unsecured debt (on a stand-alone
basis as distinguished from the indicative combined rating) shall not have
been downgraded from the rating in effect on the date of this Agreement by
two or more of the "nationally recognized statistical rating
organizations," as that term is defined by the SEC for purposes of Rule
436(g)(2) under the Securities Act, that shall have issued a rating for
such debt as of the date of this Agreement.
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(i) Cumulative Quarterly Earnings. As of the Effective Time, the
cumulative consolidated quarterly earnings per share of Newcourt (on a
fully-diluted basis) from January 1, 1999 (based on Newcourt's published
operating results) shall not be more than 25% below the cumulative
consolidated quarterly earnings per share of Newcourt (on a fully-diluted
basis) estimated by IBES as set forth on Appendix II attached hereto.
(j) Availability of Executives. Each of Steven K. Hudson and Bradley
D. Nullmeyer shall be serving as executive officers of Newcourt
immediately prior to the Effective Time and not less than two of the
following four persons shall be serving as officers of Newcourt
immediately prior to the Effective Time: David D. McKerroll, Daniel A.
Jauernig, Paul W. Currie and Scott J. Moore.
(k) Litigation. The representations and warranties made in Section
4.9(a) shall be true and correct as of the Closing Date regardless of the
disclosure made with respect thereto in any Section of the Newcourt
Disclosure Schedule, except where the failure of such representations and
warranties to be so true and correct would not have, individually or in
the aggregate, a Material Adverse Effect on Newcourt.
8.3. Conditions to Obligations of Newcourt. The obligation of Newcourt
to effect the Arrangement is also subject to the satisfaction or waiver by
Newcourt at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to Section 3.2, the
representations and warranties of CIT set forth in this Agreement (other
than those set forth in Sections 5.2, 5.3(a) and 5.3(b)(i), the second
sentence of Section 5.5 and Sections 5.6, 5.7, 5.10, 5.11(a), 5.12, 5.13,
5.16 and 5.18) shall be true and correct as of the date of this Agreement
and (except to the extent such representations and warranties speak as of
an earlier date) as of the Closing Date as though made on and as of the
Closing Date; and (ii) the representations and warranties of CIT set forth
in Sections 5.2, 5.3(a) and 5.3(b)(i), the second sentence of Section 5.5
and Sections 5.6, 5.7, 5.10, 5.11(a), 5.12, 5.13, 5.16 and 5.18 of this
Agreement shall be true and correct in all material respects (without
giving effect to Section 3.2 of this Agreement) as of the date of this
Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and
as of the Closing Date. Newcourt shall have received a certificate signed
on behalf of CIT by the Chief Executive Officer and the Chief Financial
Officer of CIT to the foregoing effect.
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(b) Performance of Obligations of CIT. CIT shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and Newcourt shall have
received a certificate signed on behalf of CIT by the Chief Executive
Officer and the Chief Financial Officer of CIT to such effect.
(c) No Pending Governmental Actions. No proceeding initiated by any
Governmental Entity seeking an Injunction shall be pending.
(d) Board of Directors. CIT shall have taken all such actions as
shall be necessary so that at the Effective Time, the composition of New
CIT's Board of Directors shall comply with Section 7.13 hereof (assuming
Newcourt has designated the initial Directors of New CIT that it is
permitted to designate under Section 7.13 hereof).
(e) Regulatory Conditions. No Primary Approval shall have imposed
any condition or restriction that would materially adversely affect the
economic or business benefits of the transactions contemplated by this
Agreement so as to render inadvisable, in the reasonable good faith
judgment of Newcourt, the consummation of the transactions contemplated
hereby.
(f) Third Party Consents. The consent, approval or waiver of each
Person (other than the Governmental Entities referred to in Section
8.1(d)) whose consent to or approval of the Arrangement shall be required
under any note, bond, mortgage, indenture, deed of trust, license, lease,
loan or credit agreement or other agreement or other instrument or
obligation to which CIT or any of the CIT Subsidiaries is a party, or by
which they or any of their respective Properties may be bound or affected
shall have been obtained and shall remain in full force and effect, except
where the failure to have obtained such consent, waiver or approval, or
the failure of any such consent, waiver or approval to be in full force
and effect, would not, individually or in the aggregate, have a Material
Adverse Effect on CIT.
(g) Credit Rating. Immediately preceding the Effective Time, the
rating accorded CIT's long-term unsecured debt (on a stand-alone basis as
distinguished from the indicative combined rating) shall not have been
downgraded from the rating in effect on the date of this Agreement by two
or more of the "nationally recognized statistical rating organizations,"
as that term is defined by the SEC for purposes of Rule 436(g)(2) under
the Securities Act, that shall have issued a rating for such debt as of
the date of this Agreement.
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(h) Litigation. The representations and warranties made in Section
5.9(a) shall be true and correct as of the Closing Date regardless of the
disclosure made with respect thereto in any Section of the CIT Disclosure
Schedule, except where the failure of such representations and warranties
to be so true and correct would not have, individually or in the
aggregate, a Material Adverse Effect on CIT.
8.4. No Adverse DKB Regulatory Condition; No Adverse Amendment.
(a) In addition to the other conditions set forth in this Article VIII, if
any approval of the Federal Reserve Board, the OSFI, the Minister of Finance of
Canada or the Governor in Council of Canada required to consummate the
transactions contemplated hereby (including the Arrangement) shall have imposed
any condition or restriction on DKB or any of its Subsidiaries, other than (x)
any conditions or restrictions that solely affect Newcourt or CIT or any of
their respective Subsidiaries, and (y) any existing requirement, restriction or
condition imposed by any such regulatory authority with respect to DKB or any of
its Subsidiaries on or prior to the date hereof, the parties hereto shall not
effect the Arrangement unless such condition or restriction is satisfactory to
DKB in its sole reasonable judgment.
(b) If the Ministry of Finance of Japan, the Office of Supervision of
Financial Institutions of Japan or any other Japanese regulatory authority shall
have imposed any requirement on DKB with respect to the transactions
contemplated hereby (including the Arrangement) that would reasonably be
expected to have a material adverse effect on the business or financial
condition of DKB and its Subsidiaries (other than CIT), taken as a whole, the
parties hereto shall not effect the Arrangement without the prior written
consent of DKB.
(c) Newcourt and CIT shall not amend or modify this Agreement in any
manner that would (i) increase the Exchange Ratio or alter the form of the
consideration payable to the shareholders of Newcourt hereunder, (ii) extend the
Outside Termination Date, (iii) result in a change in the structure of the
transactions contemplated hereby, or (iv) alter or amend Section 7.12 or 7.13
hereof, or otherwise enter into any agreements addressing the composition of the
Board of Directors of New CIT (other than the Voting Agreements referred to in
the Recitals to this Agreement) or any current or future Chief Executive Officer
of CIT (in each case other than the agreements set forth herein) unless such
amendment or modification is satisfactory to DKB in its sole reasonable
judgment.
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(d) The provisions of this Section 8.4 may not be amended or waived by the
parties without the prior written consent of DKB.
(e) The provisions of this Section 8.4 are intended to be for the benefit
of, and shall be enforceable by, DKB.
8.5. Satisfaction of Conditions. The conditions precedent set forth in
Section 8.1, 8.2, 8.3 and 8.4 shall be conclusively deemed to have been
satisfied or waived when, with the agreement of Newcourt and CIT, and absent a
prior written objection from DKB under Section 8.4, a certificate of arrangement
in respect of the Arrangement is issued by the Director.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1. Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Arrangement by the shareholders of both Newcourt and CIT:
(a) by mutual consent of Newcourt and CIT in a written instrument,
if the Board of Directors of each so determines by a vote of a majority of
the members of its entire Board;
(b) by either CIT or Newcourt upon written notice to the other party
(i) 30 days after the date on which any request or application for a
Requisite Regulatory Approval shall have been denied or withdrawn at the
request or recommendation of the Governmental Entity which must grant such
Requisite Regulatory Approval, unless within the 30-day period following
such denial or withdrawal a petition for rehearing or an amended
application has been filed with the applicable Governmental Entity,
provided, however, that no party shall have the right to terminate this
Agreement pursuant to this Section 9.1(b)(i) if such denial or request or
recommendation for withdrawal shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants
and agreements of such party set forth herein (including Section 7.4(b))
or (ii) subject to Section 7.4(b), if any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order enjoining or
otherwise prohibiting the Arrangement;
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(c) by either CIT or Newcourt if the Arrangement shall not have been
consummated on or before September 30, 1999 (the "Outside Termination
Date"), unless the failure of the Closing to occur by such date shall be
due to the failure of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such party set forth
herein.
(d) by either CIT or Newcourt (provided that the terminating party
shall not be in material breach of any of its obligations under Section
7.3) if any approval of the shareholders of Newcourt required for the
consummation of the Arrangement shall not have been obtained by reason of
the failure to obtain the required vote at a duly held meeting of such
shareholders or at any adjournment or postponement thereof;
(e) by either CIT or Newcourt (provided that the terminating party
shall not be in material breach of any of its obligations under Section
7.3) if any approval of the shareholders of CIT required for the
consummation of the Arrangement shall not have been obtained by reason of
the failure to obtain the required vote at a duly held meeting of such
shareholders or at any adjournment or postponement thereof;
(f) by either CIT or Newcourt (provided that the terminating party
is not then in material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have been a material
breach of any of the representations or warranties set forth in this
Agreement on the part of the other party, which breach is not cured within
thirty days following written notice to the party committing such breach,
or which breach, by its nature, cannot be cured prior to the Closing;
provided, however, that neither party shall have the right to terminate
this Agreement pursuant to this Section 9.1(f) unless the breach of
representation or warranty, together with all other such breaches, would
entitle the party receiving such representation not to consummate the
transactions contemplated hereby under Section 8.2(a) (in the case of a
breach of representation or warranty by Newcourt) or Section 8.3(a) (in
the case of a breach of representation or warranty by CIT);
(g) by either CIT or Newcourt (provided that the terminating party
is not then in material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have been a material
breach of any of the covenants or agreements set forth in this Agreement
on the part of the other party, which breach shall not have been cured
within thirty days following receipt by the
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breaching party of written notice of such breach from the other party
hereto, or which breach, by its nature, cannot be cured prior to the
Closing;
(h) by Newcourt, if the Board of Directors of Newcourt shall have
exercised its termination rights set forth in the penultimate sentence of
Section 7.3;
(i) by CIT, if either the Dell Contract or the Lucent Contract shall
have been terminated, or either of the conditions contained in Sections
8.2(f) and 8.2(g) shall have otherwise become incapable of being
satisified;
(j) by CIT, if the rating accorded Newcourt's long-term unsecured
debt (on a stand-alone basis as distinguished from the indicative combined
basis) shall have been downgraded from the rating in effect on the date of
this Agreement by two or more of the "nationally recognized statistical
rating organizations," as that term is defined by the SEC for purposes of
Rule 436(g)(2) under the Securities Act, that shall have issued a rating
for such debt as of the date of this Agreement; or
(k) by CIT, if, at any time after the date of this Agreement, (i)
either Steven K. Hudson or Bradley D. Nullmeyer shall not be serving as an
executive officer of Newcourt, or (ii) any three of the following four
persons shall not be serving as an officer of Newcourt: David D.
McKerroll, Daniel A. Jauernig, Paul W. Currie and Scott J. Moore.
9.2. Effect of Termination.
(a) In the event of termination of this Agreement by either CIT or
Newcourt as provided in Section 9.1, this Agreement shall forthwith become void
and have no effect except (i) Sections 7.2(b), 9.2 and 10.3 shall survive any
termination of this Agreement and (ii) that notwithstanding anything to the
contrary contained in this Agreement, no party shall be relieved or released
from any liabilities or damages arising out of its willful breach of any
provision of this Agreement.
(b) If Newcourt terminates this Agreement pursuant to Section 9.1(h),
Newcourt shall pay to CIT a termination fee equal to the Newcourt Fee Amount by
wire transfer of same day funds on the date of termination. The "Newcourt Fee
Amount" shall be $135 million; provided, however, that if the Stock Option
Agreement shall terminate pursuant to the last sentence of Section 2(a) of the
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Stock Option Agreement, the Newcourt Fee Amount shall be $160 million less any
amounts paid by Newcourt to CIT pursuant to the terms of the Stock Option
Agreement.
(c) In the event that an Acquisition Proposal (as defined in Section
6.1(d)) with respect to Newcourt or any of its Subsidiaries shall have been made
known to Newcourt or any of its Subsidiaries and shall have been publicly
announced or otherwise become public, or shall have been made to the
shareholders of Newcourt generally, and thereafter (x) this Agreement is
terminated by either Newcourt or CIT pursuant to Section 9.1(d) of this
Agreement, and (y) within twelve months of such termination Newcourt or any of
its Subsidiaries enters into any Newcourt Acquisition Agreement (as defined
below) or consummates a Newcourt Takeover Proposal (as defined below), then upon
the first occurrence of any of the events contemplated by clause (y) Newcourt
shall pay CIT a termination fee equal to the Newcourt Fee Amount by wire
transfer of same day funds. "Newcourt Takeover Proposal" shall mean any inquiry,
proposal or offer from any person relating to any direct or indirect acquisition
or purchase of a business that constitutes 50% or more of the net revenues, net
income or the assets of Newcourt and its subsidiaries taken as a whole, or 50%
or more of the outstanding voting securities of Newcourt, any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 50% or more of the outstanding voting securities of Newcourt, or any
merger, amalgamation, plan of arrangement, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Newcourt or the Newcourt Common Shares (or any one or more of Newcourt's
Subsidiaries, if the business of such Subsidiary or all of such Subsidiaries
constitutes 50% or more of the net revenues, net income or assets of Newcourt
and its Subsidiaries taken as a whole), other than the transactions contemplated
by this Agreement. "Newcourt Acquisition Agreement" shall mean any agreement,
letter of intent or other binding agreement relating to any transaction of the
type described in the definition of Newcourt Takeover Proposal.
(d) In the event that an Acquisition Proposal (as defined in Section
6.1(d)) with respect to CIT or any of its Subsidiaries shall have been made
known to CIT or any of its Subsidiaries and shall have been publicly announced
or otherwise become public, or shall have been made to the shareholders of CIT
generally, and thereafter (x) this Agreement is terminated by either Newcourt or
CIT pursuant to Section 9.1(e) of this Agreement, and (y) within twelve months
of such termination CIT or any of its Subsidiaries enters into any CIT
Acquisition Agreement (as defined below) or consummates a CIT Takeover Proposal
(as defined below), then
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upon the first occurrence of any of the events contemplated by clause (y) CIT
shall pay Newcourt a termination fee equal to $160 million by wire transfer of
same day funds. "CIT Takeover Proposal" shall mean any inquiry, proposal or
offer from any person relating to any direct or indirect acquisition or purchase
of a business that constitutes 50% or more of the net revenues, net income or
the assets of CIT and its subsidiaries taken as a whole, or 50% or more of the
outstanding voting securities of CIT, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 50% or more of the
outstanding voting securities of CIT, or any merger, amalgamation, plan of
arrangement, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving CIT or the CIT Common Shares (or
any one or more of CIT's Subsidiaries, if the business of such Subsidiary or all
of such Subsidiaries constitutes 50% or more of the net revenues, net income or
assets of CIT and its Subsidiaries taken as a whole), other than the
transactions contemplated by this Agreement. "CIT Acquisition Agreement" shall
mean any agreement, letter of intent or other binding agreement relating to any
transaction of the type described in the definition of CIT Takeover Proposal.
(e) Newcourt and CIT agree that the agreements contained in Sections
9.2(b), 9.2(c) and 9.2(d) above are integral parts of the transactions
contemplated by this Agreement and constitute liquidated damages and not a
penalty. If one party fails to promptly pay to the other party any fee due under
Section 9.2(b), 9.2(c) or 9.2(d), the defaulting party shall pay the costs and
expenses (including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee at the publicly
announced prime rate of Citibank, N.A. from the date such fee was required to be
paid.
9.3. Amendment. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Arrangement by the shareholders of
either Newcourt or CIT; provided, however, that after any approval of the
transactions contemplated by this Agreement by Newcourt's shareholders, there
may not be, without further approval of such shareholders, any amendment of this
Agreement which reduces the amount or changes the form of the consideration to
be delivered to Newcourt shareholders hereunder other than as contemplated by
this Agreement. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
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9.4. Extension; Waiver. At any time prior to the Effective Time, each of
the parties hereto, by action taken or authorized by its Board of Directors,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions of the other party contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
ARTICLE X
GENERAL PROVISIONS
10.1. Closing. Subject to the terms and conditions of this Agreement, the
closing of the Arrangement (the "Closing") will take place at 10:00 a.m. on the
first day which is at least two business days after the satisfaction or waiver
(subject to applicable law) of the latest to occur of the conditions set forth
in Article VIII hereof (other than those conditions which relate to actions to
be taken at the Closing)(the "Closing Date"), at the offices of Schulte Roth &
Zabel LLP unless another time, date or place is agreed to in writing by the
parties hereto.
10.2. Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement shall survive the
Effective Time, except for those covenants and agreements contained herein and
therein which by their terms apply in whole or in part after the Effective Time.
10.3. Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, except that Newcourt shall bear and pay 50%
of, and CIT shall bear and pay 50% of, the costs and expenses incurred in
connection with the filing, printing and mailing of the Registration Statement
and the Proxy Circular (including SEC filing fees).
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10.4. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to CIT, to:
The CIT Group, Inc.
1211 Avenue of the Americas
New York, New York 10036
Attention: Ernest Stein, Esq.
with copies to:
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
Attn: Marc Weingarten, Esq.
and
Goodman Phillips & Vineberg
1501 McGill College Avenue, 26th Floor
Montreal, Quebec
Attn: Sidney Horn, Esq.
and
(b) if to Newcourt, to:
Newcourt Credit Group Inc.
2 GateHall Center
Parsippany, New Jersey 07924
Attention: Scott J. Moore, Esq.
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with copies to:
Skadden, Arps, Slate, Meagher
& Flom LLP
919 Third Avenue
New York, New York 10022
Attn: William S. Rubenstein, Esq.
and
Blake, Cassels & Graydon
Box 25 Commerce Court West
Toronto, Canada M5L 1A9
Attn: Gordon Currie, Esq.
10.5. Interpretation. Unless otherwise explicitly indicated, all
references in this Agreement to "dollars," "$" or "US$" are intended to refer to
United States dollars. When a reference is made in this Agreement to Sections,
Exhibits or Schedules, such reference shall be to a Section of or Exhibit or
Schedule to this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The phrases
"the date of this Agreement", "the date hereof" and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to March 7,
1999. No provision of this Agreement shall be construed to require Newcourt, CIT
or any of their respective Subsidiaries or affiliates to take any action, or
refrain from taking any action, where taking or refraining from taking such
action would violate any applicable law (whether statutory or common), rule or
regulation.
10.6. Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
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10.7. Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreement.
10.8. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to any
applicable conflicts of law.
10.9. Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that the provisions contained in 7.2(b) of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of Section 7.2(b) of this
Agreement and to enforce specifically the terms and provisions thereof in any
court of competent jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
10.10. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
10.11. Publicity. Except as otherwise required by law or the rules of the
ME, the TSE or the NYSE, so long as this Agreement is in effect, neither CIT nor
Newcourt shall, or shall permit any of its Subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to,
or otherwise make any public statement concerning, the transactions contemplated
by this Agreement without the consent of the other party, which consent shall
not be unreasonably withheld.
10.12. Assignment; No Third Party Beneficiaries. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
either of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the
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parties and their respective successors and assigns. Except as otherwise
expressly provided herein, this Agreement (including the documents and
instruments referred to herein) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
10.13. No Personal Liability. (a) No director of officer of Newcourt shall
have any personal liability whatsoever to CIT under this Agreement, or any other
document delivered in connection with the Arrangement on behalf of Newcourt.
(b) No director of officer of CIT shall have any personal liability
whatsoever to Newcourt under this Agreement, or any other document delivered in
connection with the Arrangement on behalf of CIT.
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IN WITNESS WHEREOF, CIT and Newcourt have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
THE CIT GROUP, INC.
By ____________________________________
Name:
Title:
NEWCOURT CREDIT GROUP INC.
By ____________________________________
Name:
Title:
By ____________________________________
Name:
Title:
<PAGE>
APPENDIX I
Executive Officers Signing Voting Agreement
-------------------------------------------
Steven K. Hudson
Bradley D. Nullmeyer
David D. McKerrol
Daniel A. Jauernig
Paul W. Currie
Scott J. Moore
David J. Sharpless
I-1
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APPENDIX II
IBES Consolidated Quarterly Earnings per Share Estimates
--------------------------------------------------------
1999 Quarter Estimated EPS (Fully-Diluted)
------------ -----------------------------
First US$0.39
Second US$0.44
Third US$0.49
Fourth US$0.55
I-2
Exhibit 99
Certain of the following information, which was set forth in the Analysts'
Presentation, including, without limitation, that concerning the financial
projections of the combined companies, the business and operating strategy of
the combined companies, CIT's prospective liquidity, the growth of the combined
companies' business, the reduction in the combined companies' expenses, the
intent to reduce the combined companies' volume of securitizations and the
overall anticipated effect on CIT of the proposed business combination,
constitutes forward-looking statements concerning the combined companies'
operations, economic performance and financial condition. Because such
statements reflect risks and uncertainties, actual results may differ from those
expressed or implied by such forward-looking statements. Factors that could
cause such differences include but are not limited to risks of economic slowdown
or downturn, risks inherent in changes in the prevailing interest rates,
unanticipated difficulties in combining the management, operations or cultures
of CIT and Newcourt, cost savings that are not realized or are not realized
within the time anticipated, risks associated with the value and recoverability
of leased equipment, adequacy of credit reserves for credit losses, funding
opportunities and borrowing costs, changes in regulations governing the combined
companies' business and operations, competitive factors, issues associated with
year 2000 compliance and uncertainties associated with risk management,
including credit risk management, asset/liability management and interest rate
risk management.
Analysts' Presentation
CIT disclosed the following financial targets:
o GAAP Accretive 2-3% in 2000 and 10%+ in 2001
o 15%+ EPS growth
o 15%+ return on tangible common equity
o Securitization activity reduced to less than 15% of total funding by year
2000
o Synergies
$150 million in operating expense savings phased in 50% in 1999 and
100% in 2000
70+ bps funding advantage for Newcourt on-balance sheet assets
<PAGE>
CIT also disclosed the following financial statistics:
1998A
-----
CIT Newcourt Pro forma
--- -------- ---------
($ millions)
Market capitalization(1) $ 5,000 $ 4,200 $ 9,200
Managed finance assets 26,200 23,600 49,800
Total equity(2) 2,950 3,050 7,250
Tangible equity 2,740 1,820 4,560
- ----------
(1) Based on closing prices as of March 5, 1999. Newcourt pro forma for
exchange ratio
(2) Includes preferred equity. Pro forma adjusted to include $1.2 billion in
additional equity from the transaction
<PAGE>
The following reflects CIT management's pro forma financial projections
(based upon I/B/E/S projections) for the combined business:
1999E 2000E 2001E
----- ----- -----
Net income -I/B/E/S
CIT $380 $430 $490
Newcourt 280(1) 350 420
--------------------------
Combined 660 780 910
After-tax impact of transaction --
Management Adjustments
Cost savings (growth adjusted) 50 100 105
Net funding/securitization (2) (140) (35) 20
Incremental goodwill amortization (3) (35) (35) (35)
--------------------------
Net transaction benefits/(costs) (125) 30 90
Net Income $535 $ 810 $1,000
Original GAAP EPS(4) $2.65 $3.00
Pro forma GAAP EPS $2.71 $3.35
GAAP accretion(4) 2.3% 11.7%
Pro forma cash EPS $2.99 $3.63
Cash EPS accretion 9.8% 18.7%
Return on tangible equity 16% 17%
(1) Reflects full year of Newcourt earnings, not adjusted for mid-year
combination under purchase accounting
(2) Reflects lowered securitization gains offset by enhanced spread revenues
and estimated funding benefits
(3) Calculated based on CIT share price of $30.75 and 0.92 exchange ratio,
subject to adjustment based on CIT share price fluctuation. Assumes
35-year amortization schedule.
(4) Analysts' consensus EPS estimate of $2.65 for 2000 and an assumed EPS for
2001 based on analysts' consensus 13% long-term growth rate
<PAGE>
The following reflects planned securitizations for the combined companies in
1999:
Per share figures
1999
-------------------------
1st half 2nd half
-------- --------
Earnings per share - I/B/E/S
CIT $1.14 $1.21
Newcourt 0.81 1.12
-------------------------
Adjusted combined EPS -- 1.21
After-tax impact of transaction
Cost savings -- 0.08
Securitization impact -- (0.47)
Incremental goodwill amortization -- (0.06)
-------------------------
Total -- (0.45)
Pro forma CIT EPS 1.14 0.76*
CIT share count (millions) 162 299
* Excludes impact of one-time CIT Group restructuring charge of
$0.12 - $0.23 per share.
The following reflects the securitization strategy for the combined companies:
o Significant reduction in funding through securitizations of receivables
originated by Newcourt
o Target 10% - 15% of net income from securitizations for the combined
company
o On-balance sheet funding lowers absolute cost of financing and increases
earnings quality and transparency
o Securitization program focused on funding efficiency, diversity, risk
transfer, and liquidity
o 1998 pro forma securitized assets as a percentage of managed assets is
24%, which is expected to be reduced to 21% in 1999 and 19% in 2000.
<PAGE>
2000E
-----
($ millions)
Beginning tangible equity(1) 5,087
+ net income 810
+ goodwill amortization 82
- -dividend (90)
Ending tangible equity(1) 5,889
Internal capital generated 802
Internal capital generation rate (%) 16%
Managed asset growth (%) 16%
(1) Tangible equity = common and preferred equity less goodwill
<PAGE>
The following presents pro forma capitalization for the combined companies:
$ millions
1998A
-------------------
CIT Newcourt Pro forma
- --------------------------------------------------------------------------------
Total debt(1) 18,580 10,730 29,310
Total equity(2) 2,950 3,050 7,250
Tangible equity 2,740 1,820 4,560
Tangible common equity 2,490 1,820 4,310
Debt/equity 6.3x 3.5x 4.0x
Debt/tangible equity 6.8 5.9 6.4
Total equity/managed finance assets 11.3% 14.3% 15.2%
Tangible equity/managed finance assets 10.5 8.5 9.6
(1) Net of cash
(2) Includes preferred equity. Pro forma adjusted to include $1.2 billion in
additional equity from the transaction
