SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 and 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 5, 1999
THE CIT GROUP, INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-1861 13-2994534
(State or other jurisdication) (Commission) (I.R.S. Employer)
of incorporation) File Number) Identification No.)
1211 Avenue of the Americas
New York, New York 10036
(Address of principal executive offices)
Registrant's telephone number, including area code; (212) 536-1390
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Item 5. Other Events.
On August 5, 1999, The CIT Group, Inc. ("CIT") and Newcourt Credit Group
Inc. ("Newcourt") issued a press release (the "Acquisition Release") announcing
that they had entered into an amended and restated agreement (the "New
Agreement") pursuant to which CIT would acquire Newcourt. The Acquisition
Release and the New Agreement are filed herewith and incorporated in their
entirety in this Item 5 by reference. Certain information included in an
analysts' presentation (the "Analysts' Presentation") given by CIT if filed
herewith and incorporated by reference in its entirety in this Item 5. On August
5, 1999, CIT also issued a press release (the "Earnings Release") announcing
CIT's financial result for the quarter and six months ended June 30, 1999. The
Earnings Release is filed herewith and incorporated in its entirety in this Item
5 by reference.
Exhibit Index
Exhibit
No. Description
- --- -----------
2 Amended and Restated Agreement and Plan of Reorganization, dated as of
August 5, 1999 between The CIT Group, Inc. and Newcourt Credit Group
Inc.
99.1 Acquisition Release, dated August 5, 1999.
99.2 Earnings Release, dated August 5, 1999.
99.3 Certain information included in an analysts' presentation given by The
CIT Group, Inc. on August 5, 1999.
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 hereunto duly authorized.
The CIT Group, Inc.
By: /s/ Joseph M. Leone
---------------------------
Joseph M. Leone
Executive Vice President and
Chief Financial Officer
Date: August 6, 1999
Exhibit 2
================================================================================
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
Between
THE CIT GROUP, INC.
and
NEWCOURT CREDIT GROUP INC.
Amended and Restated as of August 5, 1999
================================================================================
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TABLE OF CONTENTS
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ARTICLE I
THE ARRANGEMENT ............................. 2
1.1. Plan of Arrangement ................................................... 2
1.2. Implementation of Arrangement by Newcourt ............................. 3
1.3. Implementation of Arrangement by CIT .................................. 3
1.4. Interim Order ......................................................... 5
1.5. Articles of Arrangement ............................................... 5
1.6. Treatment of Stock Options ............................................ 5
ARTICLE II
CERTAIN DEFINITIONS ........................... 6
2.1. Certain Definitions. .................................................. 6
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES .................. 18
3.1. Disclosure Schedules .................................................. 18
3.2. Standards ............................................................. 19
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NEWCOURT ............... 19
4.1. Corporate Organization ................................................ 19
4.2. Capitalization ........................................................ 20
4.3. Authority; No Violation ............................................... 21
4.4. Consents and Approvals ................................................ 22
4.5. Reports ............................................................... 23
4.6. Financial Statements .................................................. 24
4.7. Broker's Fees ......................................................... 25
4.8. Absence of Changes .................................................... 25
4.9. Legal Proceedings ..................................................... 26
4.10. Taxes ................................................................ 26
4.11. Employees ............................................................ 27
4.12. OSC and SEC Reports. ................................................. 28
4.13. Newcourt Information. ................................................ 29
4.14. Compliance with Applicable Law ....................................... 29
4.15. Certain Contracts. ................................................... 30
4.16. Agreements with Regulatory Agencies .................................. 30
4.17. Environmental Matters ................................................ 31
4.18. Opinion. ............................................................. 32
4.19. [reserved] ........................................................... 32
4.20. Property ............................................................. 32
4.21. Year 2000 Compliance Plan ............................................ 32
4.22. Interested Party Transactions ........................................ 33
4.23. Insurance ............................................................ 33
4.24. Board Approval ....................................................... 33
4.25. Intellectual Property ................................................ 33
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF CIT ................................. 34
5.1. Corporate Organization ................................................ 34
5.2. Capitalization ........................................................ 35
5.3. Authority; No Violation ............................................... 36
5.4. Consents and Approvals ................................................ 37
5.5. Reports ............................................................... 38
5.6. Financial Statements .................................................. 38
5.7. Broker's Fees ......................................................... 39
5.8. Absence of Changes; Conduct of Business ............................... 39
5.9. Legal Proceedings ..................................................... 40
5.10. Taxes ................................................................ 41
5.11. Employees ............................................................ 41
5.12. SEC Reports .......................................................... 42
5.13. CIT Information ...................................................... 43
5.14. Compliance with Applicable Law ....................................... 43
5.15. Certain Contracts. ................................................... 43
5.16. Agreements with Regulatory Agencies .................................. 44
5.17. Environmental Matters ................................................ 44
5.18. Opinion. ............................................................. 45
5.19. Ownership of Newcourt Common Shares. ................................. 45
5.20. Property ............................................................. 46
5.21. Year 2000 Compliance Plan ............................................ 46
5.22. Interested Party Transactions ........................................ 46
5.23. Insurance ............................................................ 46
5.24. Board Approval ....................................................... 46
5.25. Intellectual Property ................................................ 46
5.26. DGCL Section 203 ..................................................... 47
5.27. CIT Knowledge ........................................................ 47
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ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS ................ 47
6.1. Covenants of CIT and Newcourt ......................................... 47
ARTICLE VII
ADDITIONAL AGREEMENTS .......................... 52
7.1. Regulatory Matters. ................................................... 52
7.2. Access to Information ................................................. 55
7.3. Shareholder Meetings .................................................. 55
7.4. Legal Conditions to Arrangement ....................................... 57
7.5. Affiliates ............................................................ 57
7.6. Stock Exchange Listings; Tax Status ................................... 57
7.7. Employee Benefit Plans; Existing Agreements ........................... 58
7.8. Indemnification ....................................................... 60
7.9. Additional Agreements ................................................. 62
7.10. Coordination of Dividends ............................................ 62
7.11. [reserved] ........................................................... 63
7.12. [reserved] ........................................................... 63
7.13. Board of Directors ................................................... 63
7.14. Notification of Certain Matters ...................................... 64
7.15. Comfort Letters. ..................................................... 64
7.16. Year 2000 ............................................................ 64
7.17. No Inconsistent Actions .............................................. 64
7.18. [reserved] ........................................................... 64
7.19. Phase II Transactions ................................................ 64
7.20. Newcourt Allowance ................................................... 66
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ARTICLE VIII
CONDITIONS PRECEDENT .......................... 66
8.1. Conditions to Each Party's Obligation To Effect the Arrangement ....... 66
8.2. Conditions to Obligations of CIT ...................................... 68
8.3. Conditions to Obligations of Newcourt ................................. 70
8.4. No Adverse DKB Regulatory Condition; No Adverse Amendment ............. 71
8.5. Satisfaction of Conditions ............................................ 72
ARTICLE IX
TERMINATION AND AMENDMENT ........................ 72
9.1. Termination ........................................................... 72
9.2. Effect of Termination ................................................. 74
9.3. Amendment ............................................................. 76
9.4. Extension; Waiver ..................................................... 77
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ARTICLE X
GENERAL PROVISIONS ........................... 77
10.1. Closing .............................................................. 77
10.2. Nonsurvival of Representations, Warranties and Agreements ............ 77
10.3. Expenses ............................................................. 78
10.4. Notices .............................................................. 78
10.5. Interpretation ....................................................... 79
10.6. Counterparts ......................................................... 80
10.7. Entire Agreement ..................................................... 80
10.8. Governing Law ........................................................ 80
10.9. Enforcement of Agreement ............................................. 80
10.10. Severability ........................................................ 80
10.11. Publicity ........................................................... 81
10.12. Assignment; No Third Party Beneficiaries ............................ 81
10.13. No Personal Liability ............................................... 81
Exhibit A - Form of Plan of Arrangement (including Exchangeable
Share of Provisions)
Exhibit B - Form of Arrangement Resolution
Exhibit C - Form of Support Agreement
Exhibit D - Form of Voting and Exchange Trust Agreement
Exhibit E - Forms of Comfort Letters
Exhibit F - Form of Comfort Letter for Final Adjusted Shareholders'
Equity calculation
Exhibit 7.5 - Forms of Affiliates Letters
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION,
amended and restated as of August 5, 1999 (this "Agreement"), between The CIT
Group, Inc., a Delaware corporation ("CIT"), and Newcourt Credit Group Inc., an
Ontario corporation ("Newcourt").
WHEREAS, the parties previously entered into an Agreement and
Plan of Reorganization, dated as of March 7, 1999 (as amended, the "March
Agreement"); and
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 amend and restate the March Agreement and 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 an Amended and
Restated Voting Agreement, of even date herewith (the "DKB Voting Agreement"),
with Newcourt; 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; 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");
and
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WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Arrangement (as defined herein)
and also to prescribe certain conditions to the Arrangement.
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 1
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 A (the "Plan of Arrangement"), at the Effective Time (as defined
herein) (i) each outstanding Newcourt Common Share of which the holder is an
Eligible Electing Holder (as defined in Section 2.1 hereof) 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 Exchangeco
in exchange for a number of fully paid and non-assessable shares of Class A
Common Stock, par value $0.01 per share (the "CIT Common Stock"), of CIT equal
to the Exchange Ratio (as defined in Section 2.1 hereof), (ii) each Newcourt
Common Share of which the holder is an Eligible Electing Holder 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
Exchangeco in exchange for a number of fully paid and non-assessable shares in
the class of non-voting exchangeable shares in the capital of Exchangeco (each,
an "Exchangeable Share") equal to the Exchange Ratio, (iii) each Newcourt Common
Share held by any holder who is not an Eligible Electing Holder or who is an
Eligible Electing Holder but who has not made a valid election as described
above (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 Exchangeco in
exchange for a number of fully paid and non-assessable shares of CIT Common
Stock equal to the Exchange Ratio, (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. The
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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:
(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 . (a) As promptly as practicable
following the date of this Agreement:
(1) CIT shall incorporate Newco as a Nova Scotia unlimited liability
company and a wholly owned Subsidiary of CIT with a class of common shares
("Newco Common Shares") and a class of preferred shares ("Newco Preferred
Shares"); and
(2) CIT shall, or shall cause Newco to, incorporate Exchangeco as a
Nova Scotia limited liability company and a Subsidiary of Newco with authorized
capital of (A) one million common shares ("Exchangeco Common Shares"), (B) 15
billion non-cumulative non-voting Class A preferred shares ("Exchangeco Class A
Preferred Shares"), which shares shall be redeemable and retractable at any time
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for C$1.00 per share, (C) one billion cumulative non-voting Class B
preferred shares ("Exchangeco Class B Preferred Shares"), which shares
shall be redeemable after seven years at the option of Exchangeco for
C$1.00 per share, and (D) one billion Exchangeable Shares.
(b) At or prior to the Effective Time and subject to the satisfaction or
waiver of the other conditions set forth herein:
(1) CIT shall execute and deliver, and shall cause each of Newco and
Exchangeco to execute and deliver, the Support Agreement;
(2) CIT shall execute and deliver, and shall cause each of Newco and
Exchangeco to execute and deliver, the Voting and Exchange Trust Agreement; and
(3) CIT shall issue to the Trustee the CIT Special Voting Share.
(c) Not later than the day next preceding the Effective Date, and subject
to the satisfaction or waiver of the conditions set forth herein:
(1) CIT shall transfer to Newco, in exchange for additional Newco
Common Shares, shares of CIT Common Stock (the "CIT Closing Issuance
Shares") in an amount sufficient to allow Exchangeco to meet its
obligations to transfer CIT Common Stock to shareholders of Newcourt in
accordance with the terms of the Plan of Arrangement;
(2) CIT shall cause Newco to transfer the CIT Closing Issuance Shares
to Exchangeco, in exchange for (A) Exchangeco Class B Preferred Shares
having an aggregate fair market value not less than 2 percent of the value
of Newcourt on the date of this Agreement (determined based on the Exchange
Ratio and the closing price of CIT Common Stock on the New York Stock
Exchange on the day prior to the date of this Agreement) and (B) Exchangeco
Class A Preferred Shares having an aggregate redemption price equal to the
amount obtained by subtracting the aggregate fair market value of the
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Exchangeco Class B Preferred Shares from the aggregate current market price
of the CIT Closing Issuance Shares; and
(3) CIT shall cause Newco to sell to a third party not affiliated with
either CIT or Newcourt a number of Exchangeco Class B Preferred Shares that
exceeds 20 percent of the number of Exchangeco Class B Preferred Shares
transferred to Newco pursuant to Section 1.3(c)(2).
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;
(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") under the CIT Transition Option Plan in an amount
and at an exercise price determined as provided below (and otherwise subject to
the terms of the CIT Transition Option Plan):
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(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
(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
between Newcourt and any holder of a Newcourt Option or in any new employment
agreement between CIT and any holder of a Newcourt Option.
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:
"Acquisition Proposal" means any tender or exchange offer, proposal for a
merger, consolidation, amalgamation, arrangement or other business combination
involving, or a recapitalization of, a party to this Agreement or any of its
Subsid-
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iaries 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;
"Adjusted Exchange Ratio" means the Exchange Ratio that would be applicable
under the first proviso to the definition of Exchange Ratio if Final Adjusted
Shareholders' Equity was exactly $1,730,319,000.
"Adjusted Shareholders Equity" as of any date shall mean total
shareholders' equity reflected on the Section 7.2(d) Balance Sheet as of such
date, (i) minus the amount of goodwill reflected on the Section 7.2(d) Balance
Sheet as of such date, minus (ii) Excess After-Tax Securitization Fees, and
(iii) adjusted to exclude the effects of any Net Worth Charges.
"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 Documents" has the meaning set forth in Section 5.3.
"Arrangement Resolution" means the special resolution of the holders of
Newcourt Common Shares, to be substantially in the form and content of Exhibit B
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' 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
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whether enforcement is sought in a proceeding at law or in equity).
"Base Equity" equals $1,830,319,000.
"BHC Act" means the Bank Holding Company Act of 1956, as amended.
"Canadian GAAP" means Canadian generally accepted accounting principles.
"Canadian Resident" means a resident of Canada for the purpose of the
Income Tax Act (Canada).
"CIT Closing Issuance Shares" has the meaning set forth in Section
1.3(c)(1).
"CIT Common Stock" has the meaning set forth in Section 1.1 (it being
understood that to the extent that, prior to the Effective Time, the CIT
Certificate of Incorporation is amended to rename or reclassify the Class A
common stock, "CIT Common Stock" shall refer to the Class A common stock as so
renamed or reclassified).
"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 Price" means $26.0625.
"CIT Regulatory Agencies" has the meaning set forth in Section 5.5.
"CIT Regulatory Agreement" has the meaning set forth in Section 5.16.
"CIT Reports" has the meaning set forth in Section 5.12.
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"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.
"CIT Transition Option Plan" means an option plan to be established by CIT
pursuant to which Replacement Options will be issued.
"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.
"Confidentiality Agreement" has the meaning set forth in Section 7.2.
"Court" means the Ontario Court of Justice (General Division).
"Co-Venturer" has the meaning set forth in Section 7.1.
"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.
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"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.
"Eligible Holder" means a holder of Newcourt Common Shares (i) who is a
Canadian Resident, or (ii) which is a partnership that owns Newcourt Common
Shares if one or more of its members would be an Eligible Electing Holder under
clause (i) of this definition if such members held such shares directly.
"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.
"Excess After-Tax Securitization Fees" shall mean the product of (i) Excess
Securitization Fees and (ii) .60.
"Excess Securitization Fees" shall mean: (i) if the Final Net Worth
Statement is dated as of September 30, 1999, the amount, if any, by which
Securitization Fees realized during the period from July 1, 1999 through
September 30, 1999 exceeds $90 million; (ii) if the Final Net Worth Statement is
dated as of October 31, 1999, the amount, if any, by which Securitization Fees
realized during the period from July 1, 1999 through October 31, 1999 exceeds
$120 million; (iii) if the Final Net Worth Statement is dated as of November 30,
1999, the amount, if any, by which Securitization Fees realized during the
period from July 1, 1999 through November 30, 1999 exceeds $150 million; and
(iv) if the Final Net Worth Statement is dated as of December 31, 1999, the
amount, if any, by which Securitization Fees realized during the period from
July 1, 1999 through December 31, 1999 exceeds $210 million.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Ratio" shall mean .70, provided, however, that if Final Adjusted
Shareholders' Equity is less than Base Equity and equal to or greater than
$1,730,319,000, then the Exchange Ratio shall equal the quotient (rounded to the
nearest ten-thousandth (1/10,000) of a share) obtained by dividing (i) the
amount by which (A) the product of (x) .70 and (y) Total Newcourt Shares exceeds
(B) the quotient obtained by dividing (x) the amount by which Base Equity
exceeds Final Adjusted Shareholders' Equity by (y) the CIT Price by (ii) Total
Newcourt Shares; provided further, however, that if Final Adjusted Shareholders'
Equity is less than $1,730,319,000 then the Exchange Ratio shall equal the
quotient (rounded to the nearest ten-thousandth (1/10,000) of a share) obtained
by dividing (i) the amount by which (A) the product of (x) the Adjusted Exchange
Ratio and (y) Total Newcourt Shares exceeds (B) the quotient obtained by
dividing (x) the product of (1) 1.5 and (2) the amount by which $1,730,319,000
exceeds Final Adjusted Shareholders' Equity by (y) the CIT Price by (ii) Total
Newcourt Shares.
"Exchangeable Shares" has the meaning set forth in Section 1.1.
"Exchangeco" means a Subsidiary of Newco incorporated as a limited
liability company under the laws of the Province of Nova Scotia, all of the
Exchangeco Common Shares of which will be owned by Newco.
"Exchangeco Class A Preferred Shares" has the meaning set forth in Section
1.3(a)(2).
"Exchangeco Class B Preferred Shares" has the meaning set forth in Section
1.3(a)(2).
"Exchangeco Common Shares" has the meaning set forth in Section 1.3(a)(2).
"Federal Reserve Board" has the meaning set forth in Section 5.4.
"Final Adjusted Shareholders' Equity" shall mean Adjusted Shareholders'
Equity calculated on the basis of the Final Net Worth Statement.
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"Final Net Worth Statement" shall mean the Section 7.2(d) Balance Sheet as
of the end of the month immediately preceding the month in which the Closing
shall occur; provided, however, that if the Closing Date is a day that is the
fifteenth or earlier day of a month, then the "Final Net Worth Statement" shall
mean the Section 7.2(b) Balance Sheet as of the end of the second preceding
month prior to the month in which the Closing shall occur.
"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 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, (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 (iv) solely with respect to a material adverse effect on the
financial condition of Newcourt and its Subsidiaries taken as a whole, any fact,
circumstance or event to the extent such fact, circumstance or event is
reflected in the calculation of Final Adjusted Shareholders' Equity, or (b) the
ability of such party and its Subsidiaries to consummate the transactions
contemplated hereby.
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"ME" means the Montreal Exchange.
"New CIT" means CIT from and after the Effective Time.
"Net Worth Charge" means costs, losses, provisions, charge-offs and
write-offs (including provisions that are made to comply with Section 7.20
hereof to the extent such provisions are made in respect of charge-offs of any
assets set forth on Schedule X attached to Section 4.6 of the Newcourt
Disclosure Schedule) which have the effect of reducing shareholders' equity and
which result from or relate to (i) the assets, accounts and balance sheet items
reflected on such Schedule X but only to the extent specified thereon and (ii)
up to $30 million of out-of-pocket or accrued fees and expenses (consisting of
legal, accounting, and investment banking fees and expenses, registration and
filing fees, and printing expenses) incurred and to be incurred by Newcourt in
connection with the transactions contemplated hereby, plus litigation costs in
respect of any shareholder litigation commenced on or after the date hereof,
plus all severance-related costs (other than those set forth in Section 2.1 of
the Newcourt Disclosure Schedule), retention-related costs not to exceed $12
million and disclosed prior to the date hereof to CIT, and retention-related
costs expressly approved by CIT after the date hereof.
"Newco" means a wholly owned Subsidiary of CIT incorporated as an unlimited
liability company under the laws of the Province of Nova Scotia.
"Newco Common Share" has the meaning set forth in Section 1.3(a)(1).
"Newco Preferred Share" has the meaning set forth in Section 1.3(a)(1).
"Newcourt Common Share" means a common share in the capital of Newcourt,
and, for purposes of Section 1.1, shall mean a common share in the capital of
Newcourt or a Newcourt Special Share.
"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.
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"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 Reports" has the meaning set forth in Section 4.12.
"Newcourt Shareholder Matters" has the meaning set forth in Section 7.3.
"Newcourt Special Share" has the meaning set forth in Section 4.2.
"Newcourt Subsidiary" means each Subsidiary of Newcourt.
"NYSE" means the New York Stock Exchange.
"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.
"Outside Termination Date" has the meaning set forth in Section 9.1(c).
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"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.
"Phase II Transactions" has the meaning set forth in Section 7.19(a).
"Plan" has the meaning set forth in Section 4.11.
"Plan of Arrangement" has the meaning set forth in Section 1.1.
"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 Financial Supervisory Agency of Japan
required to consummate the transactions contemplated hereby (including the
Arrangement), and compliance with the pre-merger notification filing
requirements under Part IX of the Competition Act (Canada) and the expiration of
the applicable waiting period in relation thereto or the receipt of an ARC (as
defined in Section 4.4 hereof)
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pursuant to Section 102 of such act.
"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.
"SEC" means the Securities and Exchange Commission.
"Section 7.2(d) Balance Sheet" means any consolidated balance sheet
delivered pursuant to Section 7.2(d) hereof.
"Section 7.2(d) Income Statement" means any consolidated income statement
delivered pursuant to Section 7.2(d) hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Securitization Fees" means securitization gains of Newcourt recorded
during the period July 1, 1999 through the date of the Final Net Worth
Statement, as set forth in the Schedule 7.2(d) Income Statements for such period
and calculated on a basis consistent with past practice.
"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.
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"SRO" has the meaning set forth in Section 4.5.
"State Regulator" has the meaning set forth in Section 4.5.
"Stock Option Agreement" has the meaning set forth in the fifth WHEREAS
clause at the beginning of this Agreement.
"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.
"Support Agreement" means an Exchangeable Share Support Agreement to be
made among Exchangeco, CIT and Newco substantially in the form and content
attached to Exhibit C 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.
"Total Newcourt Shares" shall mean the sum of (i) the total number of
Newcourt Common Shares issued and outstanding immediately prior to the Effective
Time (including Newcourt Common Shares held by CIT or any of its Subsidiaries,
Newcourt Common Shares held by shareholders who perfect Dissent Rights and
Newcourt Common Shares held by Newcourt or any of its Subsidiaries to the extent
such shares are held in a fiduciary capacity for the benefit of third parties)
and (ii) the number of Newcourt Common Shares subject to Newcourt Options that
are deemed to be outstanding immediately prior to the Effective Time calculated
under the treasury method assuming the Exchange Ratio is .70 and based on the
CIT Price.
"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.
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"Voting and Exchange Trust Agreement" means an agreement to be made among
CIT, Exchangeco and the Trustee substantially in the form and content of Exhibit
D 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 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), 4.7, 4.11(a) and 4.18, with respect to Newcourt, and Sections
5.2, 5.3(a) and 5.3(b)(i), 5.7, 5.11(a) 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.
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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), 4.7, 4.11(a), 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), 5.7, 5.11(a), 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
Subject to Article III and except as contemplated by this Agreement and the
Plan of Arrangement or as set forth in the Newcourt Disclosure Schedule,
Newcourt hereby represents and warrants to CIT as follows:
4.1. Corporate Organization. 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
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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. As of the date of this Agreement, other than the Newcourt
Subsidiaries, Newcourt does not own beneficially, directly or indirectly, more
than 5% of any class of equity securities or similar interests of any
corporation, bank, business trust, association or similar organization, and is
not, directly or indirectly, a partner in any partnership or party to any joint
venture.
(c) 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. 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 August 3, 1999, there were 148,488,329 Newcourt Common
Shares outstanding and no Newcourt Common Shares held by Newcourt as treasury
stock. As of August 3, 1999, there were (i) no Newcourt Common Shares reserved
for issuance upon exercise of outstanding stock options or otherwise, except for
(x) 7,137,055 Newcourt Common Shares reserved for issuance pursuant to options
outstanding under the Newcourt Option Plan and (y) 22,273,249 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, 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
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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. 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 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 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 . 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 Arrangement Resolution be submitted to Newcourt's
shareholders for approval at a meeting of such shareholders and, except for the
approval of the Arrangement
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Resolution by the requisite vote of the holders of the Newcourt Common Shares
and the approval by Newcourt 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) 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 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
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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 the filing by CIT and declaration of the effectiveness of the
Registration Statement in respect of the shares of CIT Common Stock issuable
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, and (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 state
securities laws and the rules of the TSE, the ME and the NYSE, 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 proceeding or, to the knowledge of
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Newcourt, 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 (a) 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 and (b) the unaudited consolidated balance sheets of Newcourt and
the Newcourt Subsidiaries as of March 31, 1999 and June 30, 1999 and the related
unaudited consolidated statements of income and retained earnings and cash flows
for the three month and six month periods then ended, respectively, each of
which has been reviewed by Ernst & Young in accordance with the procedures
specified by the Canadian Institute of Chartered Accountants for a review of
interim financial information as described in Section 7100 of the Handbook of
the Canadian Institute of Chartered Accountants. 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 (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 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
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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. 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 World Markets 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 . (a) Since December 31, 1998, (x) there has not
been: (1) 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; (2) 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; or (3) 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; (4)
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); (5) 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; or (6)
through the date of this Agreement, any writing off of the value of any assets,
other than as disclosed in the Newcourt Reports filed after December 31, 1998
and prior to the date of this Agreement or disclosed in the consolidated
financial statements of Newcourt furnished to CIT prior to the date of this
Agreement; and (y) except for actions taken by Newcourt
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in connection with the transactions contemplated by this Agreement or the March
Agreement, Newcourt and the Newcourt Subsidiaries have carried on their
respective businesses in the ordinary course consistent with their 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. 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 the Newcourt Subsidiaries or challenging the validity
or propriety of the transactions contemplated by this Agreement.
(b) 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. 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. 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
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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 . Section 4.11(a) of the Newcourt 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 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
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Revenue Canada.
(c) 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 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 filed prior to the date of this Agreement shall be deemed to
modify information as of an earlier date.
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(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 filed prior to the date of this Agreement
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.
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 . 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.
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4.15. Certain Contracts. 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 Section 4.15(a) of the Newcourt Disclosure Schedule,
and any amendment, side letter or business plan relating thereto 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) (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 . Neither Newcourt nor any of the
Newcourt Subsidiaries is subject to any cease-and-desist or other order issued
by, or is a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any 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
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Governmental Entity that restricts the conduct of its business or that 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 . 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 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,
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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 holders of Newcourt Common Shares from a
financial point of view. Such opinions have not been amended or rescinded as of
the date of this Agreement.
4.19. [reserved]
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. 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
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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.
4.22. Interested Party Transactions. Except 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 Resolution.
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
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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 or as set forth in the CIT Disclosure Schedule, CIT hereby
represents and warrants to Newcourt as follows:
5.1. Corporate Organization. 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) 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
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Directors (including committees of their respective Boards of Directors).
5.2 Capitalization. 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 August 2, 1999, there were 161,604,093 shares of
CIT Common Stock, no shares of CIT B Stock and no shares of CIT Preferred Stock
issued and outstanding, and 1,580,480 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) 12,898,999 shares of
CIT Common Stock were reserved for issuance upon the exercise of stock options
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, 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. 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
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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. 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 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 CIT Shareholder Matters (as defined in
Section 7.3) be submitted to CIT's shareholders for approval at a meeting of
such shareholders and, except for the approval of the CIT Shareholder Matters 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 (and in the case of the
Arrangement Documents, will be) 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. Upon their formation, each of
Newco and Exchangeco will have full corporate power and authority to execute and
deliver the Support Agreement and the Voting and Exchange Trust Agreement (the
"Arrangement Documents") and to consummate the transactions contemplated
thereby. The execution and delivery of the Arrangement Documents and the
consummation of the transactions contemplated thereby will be duly and validly
approved by the Board of Directors of each of CIT, Newco and Exchangeco. Upon
the due and valid approval of the Arrangement Documents by the Board of
Directors of each of CIT, Newco and Exchangeco, no other corporate proceedings
on the part of CIT, Newco or Exchangeco are necessary to approve the Arrangement
Documents and to consummate the transactions contemplated thereby. The
Arrangement Documents will be duly and validly executed and delivered by each of
CIT, Newco and Exchangeco and (assuming due authorization, execution and
delivery by Newcourt) each of the Arrangement Documents will constitute a valid
and binding obligation of each of CIT, Newco and Exchangeco, enforceable against
each of CIT, Newco and
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Exchangeco in accordance with its terms, except as may be limited by the
Bankruptcy Exception.
(b) Neither the execution and delivery of this Agreement and the
Arrangement Documents by CIT or the Arrangement Documents by Newco and
Exchangeco, nor the consummation by CIT, Newco and Exchangeco of the
transactions contemplated hereby or by the Plan of Arrangement or the
Arrangement Documents, nor compliance by CIT, Newco and Exchangeco with any of
the terms or provisions hereof or thereof, 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.
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 a notification under the Investment Canada 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
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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 the filing and
declaration of effectiveness of the Registration Statement, (g) the approval of
the CIT Shareholder Matters, (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), and
(j) approvals, if applicable, of the Ministry of Finance of Japan and the
Financial Supervisory Agency of Japan, 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, the Arrangement Documents and the Plan of Arrangement and by Newco
and Exchangeco of the Arrangement Documents and (2) the consummation by CIT,
Newco and Exchangeco of the Arrangement and the other transactions contemplated
hereby and by the Arrangement Documents.
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 business of CIT and the CIT Subsidiaries, no CIT
Regulatory Agency has initiated any proceeding or, to the knowledge of CIT,
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 each case accompanied by the audit
report of KPMG LLP, independent public accountants with respect to CIT and (b)
the unaudited consolidated balance sheets of CIT and the CIT Subsidiaries as of
March 31, 1999 and June 30, 1999 and the related unaudited consolidated
statements of income, changes in shareholders' equity and cash flows for the
three month and six month
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periods then ended, respectively. 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 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, each of J.P. Morgan Securities
Inc. and Donaldson Lufkin & Jenrette Securities Corporation.
5.8. Absence of Changes; Conduct of Business. (a) Since December 31, 1998,
(x) there has not been: (1) 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; (2) any change by
CIT in
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accounting methods, principles or practices except as required by changes in
U.S. GAAP as concurred to by CIT's independent auditors; (3) 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; (4) 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; (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) through the date of this Agreement, any
writing off of the value of any assets, other than as disclosed in the CIT
Reports filed after December 31, 1998 and prior to the date of this Agreement or
disclosed in the consolidated financial statements of CIT furnished to Newcourt
prior to the date of this Agreement; and (y) CIT and the CIT Subsidiaries have
carried on their respective businesses in the ordinary course consistent with
their past practices.
(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 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. 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) 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.
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5.10. Taxes. 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. 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.
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
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(including all schedules) filed with the IRS.
(c) 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); 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
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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 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. 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
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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)(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.
5.16. Agreements with Regulatory Agencies. Neither CIT nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any 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 restricts the conduct of its business or that
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. (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;
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(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 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 each of J.P. Morgan Securities Inc. and Donaldson Lufkin &
Jenrette Securities Corporation 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.
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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 Transaction. Except 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 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
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"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.
5.27. CIT Knowledge. As of the date of this Agreement, CIT is not aware of
any matter, except as set forth on the Newcourt Disclosure Schedule, as to which
CIT believes that such matter would result in a Net Worth Charge.
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, except as set forth in the Newcourt Disclosure Schedule or the
CIT Disclosure Schedule, and except 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;
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(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, (y) in 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 and (z)
in the case of CIT, the grant of additional stock options to its directors and
employees, in the ordinary course consistent with past practice as to both the
timing of such grants and the amount of such grants, pursuant to CIT's stock
option and stock incentive plans for employees and directors;
(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, 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 confiden-
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tiality 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
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;
(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, other than in the ordinary
course of its business, enter into any material transaction, provided, however,
that the negative covenants contained in this clause (f) shall apply to CIT and
its Subsidiaries only to the extent that any of the actions contemplated would,
or would reasonably be expected to, delay or inhibit the receipt of any
regulatory approvals required for the consummation of the transactions
contemplated hereby;
(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,
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association or other business organization or division thereof or otherwise
acquire any assets, 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,
provided, however, that the negative covenants contained in this clause (g)
shall apply to CIT and its Subsidiaries only to the extent that any of the
actions contemplated would, or would reasonably be expected to, delay or inhibit
the receipt of any regulatory approvals required for the consummation of the
transactions contemplated hereby;
(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 Agreement
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) solely in the case of Newcourt and the Newcourt Subsidiaries (i)
except as set forth in Section 7.7 hereof, 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 for normal increases in the ordinary course of business consistent with
past practice and 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; provided further, however, that the aggregate amount
of cash compensation paid in
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respect of fiscal year 1999 to the nine executive officers of Newcourt listed on
Section 6.1(j) of the Newcourt Disclosure Schedule (exclusive of the aggregate
amount of any severance payments and any retention or stay bonuses paid to any
of such officers) shall not exceed the aggregate amount of cash compensation
paid to such persons in respect of fiscal year 1998;
(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), 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; provided, however,
that Newcourt and the Newcourt Subsidiaries may not sell or otherwise dispose of
any line of business, or any material portion of any line of business or any of
Newcourt's remaining investment in KMC Telecom;
(l) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or assume, guarantee,
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, 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;
(n) solely in the case of Newcourt and the Newcourt Subsidiaries,
enter into any new joint ventures without the consent of CIT, which shall not be
unreasonably withheld, it being understood that the withholding of such consent
would be reasonable if the entering into such joint venture would, in the good
faith reasonable judgment of CIT, reasonably be expected to jeopardize or delay
the receipt of (or result in the imposition of any conditions in connection
with) any Primary Approval;
(o) solely in the case of Newcourt and the Newcourt Subsidiaries,
engage in any interest rate risk management or other derivative transac-
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tions or arrangements other than for hedging purposes;
(p) solely in the case of Newcourt and the Newcourt Subsidiaries,
enter into any financing program agreements or arrangements containing any
exclusivity or non-competition provisions without the consent of CIT, which
consent shall not be unreasonably withheld; or
(q) 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 CIT shall use its reasonable best efforts to file the Proxy
Circular with the SEC not later than 20 days after the date of this Agreement.
Each of Newcourt and CIT shall thereafter mail the Proxy Circular to its
respective shareholders. CIT shall use its reasonable best efforts to prepare
and file with the SEC not later than 20 days after the date of this Agreement a
registration statement on the appropriate form with respect to the shares of CIT
Common Stock to be issued upon exchange of any 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 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. 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,
the TSE and the ME 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 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
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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 prepare and file not later than 10 days after the
date of this Agreement all necessary documentation (including, with respect to
applications, notices, and filings made by the parties prior to the date of this
Agreement, all updated and/or supplemental information required in connection
therewith), 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, Newcourt will provide, and will use its
reasonable efforts to cause each other Co-
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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.
Without limiting the foregoing, Newcourt shall as promptly as practicable
provide to CIT upon its request all financial information pertaining to Newcourt
reasonably necessary or advisable in connection with the foregoing, including
the Canadian to U.S. GAAP reconciliation for the period ended June 30, 1999 and
the necessary information to conform Newcourt's financial information to CIT's
accounting policies and reporting format.
(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.
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7.2. Access to Information. 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 Subsidiaries to, make available to the
other party all information concerning its business, properties and personnel as
the other party may reasonably request. 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. The
access described above shall include the right of CIT to maintain on Newcourt's
premises during all normal business hours one or more representatives of CIT who
shall be afforded access in the manner set forth above.
(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.
(d) Within twenty-one (21) days following the last day of each month
after the date of this Agreement, Newcourt shall provide CIT with its
consolidated balance sheet as of the end of such month and the related
consolidated statement of income, in each case prepared in accordance with
Canadian GAAP consistently applied, together with a statement setting forth in
reasonable detail a computation of Adjusted Shareholders' Equity as of such
month end.
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
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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, upon exchange of Exchangeable Shares and upon exercise of the
Replacement Options, and the CIT Transition Option Plan (collectively, 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.
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7.4. Legal Conditions to Arrangement. (a) Each of Newcourt and CIT shall,
and shall cause its Subsidiaries (including, in the case of CIT, Newco and
Exchangeco) 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; (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 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; and
(iii) in the case of CIT, to execute and deliver (and cause Newco and Exchangeco
to execute and deliver) the Arrangement Documents.
(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 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 no party
shall be required to take any such action if doing so would reasonably be
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
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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 Exchangeco
remains a "public corporation" within the meaning of the ITA until the earlier
of (x) such time as there are no Exchangeable Shares outstanding and (y) five
years after the Effective Time.
7.7. Employee Benefit Plans; Existing Agreements. 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 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 Banks 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,
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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 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 or as of 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, including, without limitation, the Separation Agreements and General
Releases of even date herewith between Newcourt and each of the parties thereto
as listed in Section 4.8(a)(x)(3) of 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, except that, with
respect to the AT&T Capital Member Severance Plan, the AT&T Capital 1995
Leadership Severance Plan and any AT&T Capital Annual Incentive Plan, the
existing Plan Administrators and Benefits Committee (as defined therein) under
each such plan will seek advice and make a determination as to whether the
Arrangement constitutes such
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a Change of Control, and the acknowledgment of CIT in this sentence shall be
deemed operative with respect to any such plan only to the extent the
Arrangement is so determined by the Plan Administrators and the Benefits
Committee for such plan to constitute a Change of Control under and pursuant to
such Plan. 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 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. 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) In addition to the foregoing, in the event of any threatened or
actual claim, action, suit, proceeding or investigation, whether civil, criminal
or administrative, including, without limitation, any such claim, action, suit,
proceeding or investigation in which any person who is now, or has been at any
time prior to the date of this Agreement, or who becomes prior to the Effective
Time, a
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director, officer or employee of Newcourt or any of its Subsidiaries, (the
"Indemnified Parties") is, or is threatened to be, made a party based in whole
or in part on, or arising in whole or in part out of, or pertaining to (i) the
fact that he is or was a director, officer or employee of Newcourt, any of the
Subsidiaries of Newcourt or any of their respective predecessors or affiliates
or (ii) this Agreement, the March Agreement or any of the transactions
contemplated hereby or thereby, whether in any case asserted or arising before
or after the Effective Time, the parties hereto agree to cooperate and use their
best efforts to defend against and respond thereto. It is understood and agreed
that after the Effective Time, CIT shall indemnify and hold harmless each such
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including reasonable attorney's fees and expenses in advance of the
final disposition of any claim, suit, proceeding or investigation to each
Indemnified Party) judgments, fines and amounts paid in settlement in connection
with any such threatened or actual claim, action, suit, proceeding or
investigation, and in the event of any such threatened or actual claim, action,
suit, proceeding or investigation (whether asserted or arising before or after
the Effective Time), the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with CIT; provided, however, that (1)
CIT shall have the right to assume the defense thereof and upon such assumption
CIT shall not be liable to any Indemnified Party for any legal expenses of other
counsel or any other expenses subsequently incurred by any Indemnified Party in
connection with the defense thereof, except that if CIT elects not to assume
such defense or counsel for the Indemnified Parties reasonably advises that
there are issues which raise conflicts of interest between CIT and the
Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with CIT, and CIT shall pay the
reasonable fees and expenses of such counsel for the Indemnified Parties, (2)
CIT shall in all cases (other than cases involving issues which raise conflicts
of interest between or among two or more Indemnified Parties, in which cases the
limitation on CIT's obligations contained in this clause (2) shall not apply) be
obligated pursuant to this paragraph to pay for only one firm of counsel for all
Indemnified Parties, (3) CIT shall not be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld) and (4) CIT shall have no obligation hereunder to any Indemnified
Party when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final and nonappealable, that
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law. Any Indemnified Party wishing to claim
Indemnification under this Section 7.8, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify CIT thereof, provided
that the failure to so notify shall not affect the obligations of CIT under this
Section 7.8 except to the
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extent such failure to notify materially prejudices CIT. CIT's obligations under
this Section 7.8 shall continue in full force and effect without time limit from
and after the Effective Time.
(c) 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(c), CIT shall use all reasonable efforts to obtain as much comparable
insurance as is available for the Insurance Amount.
(d) 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.
(e) The provisions of this Section 7.8 are intended to be for the
benefit of, and shall be enforceable by, each such officer, director and
employee referred to in this Section 7.8.
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
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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. [reserved]
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 sixteen (16),
twelve (12) of whom shall be selected by the Board of Directors of CIT as
provided below and four (4) of whom shall be selected by the Board of Directors
of Newcourt as provided below (such four directors, the "Newcourt Directors").
Two of the twelve initial directors selected by CIT shall be designated by DKB
and shall be Hisao Kobayashi and Keiji Torii. One of the four initial Newcourt
Directors shall be David Banks, who will serve as non-executive Vice Chairman of
the Board of Directors of New CIT, and two of the remaining initial Newcourt
Directors shall be a person designated by Hercules Holdings (Cayman) Limited
("Hercules") and a person designated by Canadian Imperial Bank of Commerce
("CIBC"), in each case, pursuant to the Amended and Restated Voting Agreements
entered into as of the date of this Agreement between each of such parties,
respectively, and CIT. If within two years after the Effective Time, any
Newcourt Director ceases to serve as a director of New CIT, or either or both of
CIBC and Hercules ceases to have the right to nominate a director to serve on
the Board of New CIT pursuant to the terms of its Amended and Restated Voting
Agreement with CIT, then the remaining Newcourt Directors shall designate a
successor director to serve on the Board of New CIT, subject to the concurrence
of CIT. The remaining person to serve initially on the Board of Directors of New
CIT as of the Effective Time who is to be selected by Newcourt shall be selected
by the Board of Directors of Newcourt, subject to the concurrence of CIT, from
among those persons serving on the Board of Directors of Newcourt prior to the
Effective Time; and the remaining ten 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. 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 or stockholders
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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, including in the case of Newcourt Directors the concurrence
of CIT.
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, substantially in the form attached hereto as
Exhibit E, 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.
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. [reserved]
7.19. Phase II Transactions. (a) From and after the date of this
Agreement, the parties hereto hereby agree to use their reasonable best efforts
to cause the transactions described in Section 7.19 of the Newcourt Disclosure
Schedule (such transactions, the "Phase II Transactions") to occur as soon as
practicable following the Effective Time, and, in furtherance of the foregoing,
from and after the date of this Agreement, each of CIT and Newcourt 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 Phase
II Transactions, or which are required as a result of the Phase II
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Transactions 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 (which, in the case
of CIT, shall include, without limitation, entering into, effective as of the
effective time of the Phase II Transactions, any and all such supplemental
indentures, assumption agreements, support agreements and guarantees with
respect to the existing debt obligations of Newcourt and its Subsidiaries as are
necessary or advisable to consummate the Phase II Transactions); provided,
however, that no party shall be required to take any action pursuant to this
Section 7.19(a) to the extent that doing so would jeopardize or delay the
consummation of any of the transactions contemplated hereby or the satisfaction
of any of the conditions contained in Article VIII.
(b) 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 Phase II Transactions. 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 Phase
II Transactions 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 Phase II Transactions. 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 any
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 Phase II Transactions.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the terms and phrases "transactions contemplated hereby,"
"transactions contemplated by this Agreement" and "Arrangement," when used
anywhere in this Agreement, shall not be deemed for any purpose to include any
of the Phase II Transactions. Without limiting the foregoing or the covenants
contained in the other paragraphs of this Section 7.19, the parties expressly
acknowledge that none of the conditions contained in Article VIII of this
Agreement (including those contained in
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Sections 8.1(d), 8.2(g) and 8.3(e)), other than Section 8.2(e) shall require for
its satisfaction that the parties obtain any consent, permit, approval or
authorization of any third parties or Governmental Entity which is necessary or
advisable for the consummation of the Phase II Transactions and not otherwise
required for the consummation of the Arrangement.
7.20. Newcourt Allowance. Newcourt shall take such actions as shall be
necessary so that, as of the end of each month between the date of this
Agreement and the Effective Time, Newcourt's allowance for credit losses
reflected on its consolidated balance sheet for such month equals or exceeds
1.7% of the aggregate net book value of Newcourt's "Finance Assets Held for
Investment" and "Equipment Under Operating Lease" reflected on its consolidated
balance sheet for such month.
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 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) Primary Approvals. The Primary Approvals shall have been obtained
and shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired, 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. 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 10% 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 of Newcourt's shareholders held pursuant to Section 7.3 or, if earlier,
immediately prior to the Effective Time, any of Goldman Sachs, J.P. Morgan
Securities Inc., Donaldson Lufkin & Jenrette Securities Corporation 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
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be made in respect of those shares in excess of 10% 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), 4.7, 4.11(a) 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), 4.7, 4.11(a) 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 Chairman 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 Chairman 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) Dell Contract. Any consent, approval or waiver which may be
required in order for the Dell Contract to remain in full force and effect
immediately after consummation 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.
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(e) Lucent Contract. Any consent, approval or waiver which may be
required in order for the Lucent Contract to remain in full force and effect
immediately after consummation of the Arrangement and the Phase II Transactions
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.
(f) Availability of Executives. The persons listed on Section 8.2(f)
of the Newcourt Disclosure Schedule shall be serving as officers of Newcourt
immediately prior to the Effective Time.
(g) 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.
(h) Comfort Letter. Ernst & Young LLP shall have delivered to CIT a
comfort letter with respect to the calculation of Final Adjusted Shareholders'
Equity in the form of Exhibit F.
(i) Litigation. As of the Closing Date, other than as set forth on
Section 4.9 of the Newcourt Disclosure Schedule, neither Newcourt nor any of the
Newcourt Subsidiaries shall be a party to any legal, administrative, arbitral or
other proceedings, claims, actions or governmental or regulatory investigations
against Newcourt or any of the Newcourt Subsidiaries which has had or is
reasonably expected to have a Material Adverse Effect on Newcourt.
(j) Regulatory Conditions. No Primary Approval shall have imposed any
condition or restriction that would so materially adversely affect the economic
or business benefits of the transactions contemplated by this Agreement
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so as to render inadvisable, in the reasonable good faith judgment of CIT, the
consummation of the transactions contemplated hereby.
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), 5.7, 5.11(a) 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), 5.7, 5.11(a) 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.
(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) 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,
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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.
(f) Litigation. As of the Closing Date, other than as set forth on
Section 5.9 of the CIT Disclosure Schedule, neither CIT nor any of the CIT
Subsidiaries shall be a party to any legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations
against CIT or any of the CIT Subsidiaries which has had or is reasonably
expected to have a Material Adverse Effect on CIT.
(g) Regulatory Conditions. No Primary Approval shall have imposed any
condition or restriction that would so 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.
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 relate to the business, activities or investments of
Newcourt or CIT or any of their respective Subsidiaries but do not relate to the
business, activities or investments of DKB or any of its Subsidiaries (other
than Newcourt, 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 Financial Supervisory
Agency of Japan or any other Japanese regulatory authority shall have imposed
any requirement on DKB with respect to the transactions contemplated
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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 and its Subsidiaries), 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 7.13 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.
(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
Sections 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
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the members of its entire Board;
(b) by either CIT or Newcourt upon written notice to the other
party (i) from and after the 30th day after the date on which any request or
application for a Primary Approval shall have been denied or withdrawn at the
request or recommendation of the Governmental Entity which must grant such
Primary 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
the party seeking to terminate this Agreement shall have failed to perform or
observe the covenants and agreements of such party set forth herein (including
Section 7.4(b)); provided further, however, that in no event shall either party
have the right to terminate this Agreement pursuant to this Section 9.1(b) at
any time before December 31, 1999; 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;
(c) by either CIT or Newcourt if the Arrangement shall not have been
consummated on or before January 31, 2000 (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;
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(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 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, without any further action, if Newcourt shall have
entered into an Acquisition Agreement with any party other than CIT as permitted
by and in accordance with Section 7.3 hereof;
(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(d)
and 8.2(e) shall have otherwise become incapable of being satisfied; or
(j) by CIT, if, at any time after the date of this Agreement, any of
the persons listed on Section 8.2(f) of the Newcourt Disclosure Schedule shall
not be serving as an officer of Newcourt.
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
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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 $105 million; provided, however, that if the Stock Option
Agreement shall terminate pursuant to the last sentence of Section 2(a) of the
Stock Option Agreement, the Newcourt Fee Amount shall be $120 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 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.
75
<PAGE>
(d) In the event that an Acquisition Proposal 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 upon the
first occurrence of any of the events contemplated by clause (y) CIT shall pay
Newcourt a termination fee equal to $120 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
76
<PAGE>
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.
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
third business day 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, provided, however,
that if such third business day is the sixteenth day or later day of a month,
then the Closing Date shall be the last day of such month so as to permit the
preparation and delivery of the Final Net Worth Statement as of the end of the
immediately preceding month.
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
77
<PAGE>
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).
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.
78
<PAGE>
and
(b) if to Newcourt, to:
Newcourt Credit Group Inc.
2 GateHall Center
Parsippany, New Jersey 07924
Attention: David F. Banks, Chairman
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 August 5, 1999. No
provision of this Agreement shall be construed to require Newcourt, CIT or any
of their respective Subsidiaries or
79
<PAGE>
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.
10.7. Entire Agreement. This Agreement (including the documents and the
instruments referred to herein or delivered in connection herewith) 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 and the other documents delivered in
connection herewith (including the Releases) 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.
80
<PAGE>
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 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 or 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 or 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.
81
<PAGE>
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.
NEWCOURT CREDIT GROUP INC.
By /s/ David F. Banks
-----------------------------------------
Name: David F. Banks
Title: Chairman
By /s/ David McKerroll
-----------------------------------------
Name: David McKerrol
Title: President, Corporation Finance
THE CIT GROUP, INC.
By /s/ Albert R. Gamper
-----------------------------------------
Name: Albert R. Gamper
Title: President and Chief Executive Officer
<PAGE>
APPENDIX I
Executive Officers Signing Voting Agreement
Steven K. Hudson
Bradley D. Nullmeyer
David D. McKerroll
Daniel A. Jauernig
Scott J. Moore
David J. Sharpless
I-1
Exhibit 99.1
CIT AND NEWCOURT AGREE ON REVISED EXCHANGE RATIO
- -- Acquisition Will Create World's Largest Publicly-Traded Commercial Finance
Company; Deal Expected To Close In Fourth Quarter --
LIVINGSTON, NJ. August 5, 1999 -- The CIT Group, Inc. (NYSE: CIT) and
Newcourt Credit Group Inc. (NYSE, TSE, MSE: NCT) today announced that the
companies have signed a new definitive agreement under which CIT will acquire
Newcourt in an exchange of .70 share of CIT stock for each share of Newcourt.
The combined company will be the largest publicly-held commercial finance
company, with leadership positions in a diverse range of business segments.
The transactions, which is expected to close during the
fourth quarter of 1999, has been approved by the Board of Directors of both
companies. Completion of this transactions is conditioned upon, among other
things, customary regulatory and shareholder approvals.
"We are pleased that after an extensive reassessement of
Newcourt's value, we have arrived at a reasonable and fair exchange ratio," said
Albert R. Gamper, Jr., CIT President and CEO. "Our mission now is to complete
this deal as quickly as possible so that we can begin taking full advantage of
the potent combination of CIT's balance sheet and credit capabilities and
Newcourt's exceptional origination platform."
"Through this bold and transforming transaction CIT will
make significant gains in terms of scale, geographic reach and business
diversification. Specifically, with the addition of relationships with top tier
vendors such as Lucent, Dell, Snap-On Tools and Western Star, as well as
Newcourt's experienced capital finance team, we believe we have put together a
powerful engine for sustained, disciplined growth and value creation," he added.
David F. Banks, Chairman of the Board of Newcourt said,
"We have always agreed that an acquisition by CIT affords Newcourt a number of
strong benefits, particularly in the critical areas of
<PAGE>
funding costs and management disciplines. The synergies in this combination are
tremendous. We look forward to the swift completion of this transaction and a
smooth integration process."
Mr. Gamper will remain Chief Executive Officer of The CIT Group. Mr.
Banks, Newcourt's current Chairman, will be named non-executive Vice Chairman of
CIT and a member of its Board of Directors. Following the close of the
transactions, CIT's Board will have 16 members, including 12 directors from CIT
and four directors from Newcourt.
On a combined basis, The CIT Group will have more than $50 billion in
managed assets and $2.2 billion in revenues, with more than 8,000 employees in
locations throughout the world. The combined company will have its principal
offices in New Jersey.
Following the acquisition, which will be accounted for on a purchase
basis, CIT shareholders will own approximately 61% of the combined company and
Newcourt shareholders will own approximately 39%. The Dai-Ichi Kangyo Bank,
CIT's largest shareholder, will own approximately 26.7% of the combined company
and CIBC and Nomura Securities, two of Newcourt's largest shareholders, will own
approximately 3.7% and 4.6% respectively.
J.P. Morgan and Donaldson, Lufkin & Jenrette acted as financial advisors
and provided fairness opinions to CIT, Goldman Sachs and CIBC Wood Gundy
Securities acted as financial advisors and provided fairness opinions to
Newcourt.
###
For further information:
Media Contacts: Michael J. McGowan, The CIT Group (973) 535-3506
Rick Perkins, Newcourt Services (416) 507-5437;
Investor Contacts: Jeffrey D. Simon, The CIT Group (973) 535-5911
Geoff Ichii, Newcourt Services (416) 507-6151
###
Jeffrey Simon
Senior Vice President
Investor Relations
(973) 535-5911
FROM: THE CIT GROUP, INC.
1211 AVENUE OF THE AMERICAS
NEW YORK, NY 10036
FOR IMMEDIATE RELEASE
THE CIT GROUP ANNOUNCES RECORD SECOND QUARTER NET INCOME
OF $96.3 MILLION, $.59 PER SHARE AND RECORD SIX MONTH NET
INCOME OF $188.2 MILLION, $1.16 PER SHARE
NEW YORK, NEW YORK, AUGUST 5, 1999 --- The CIT Group, Inc. (NYSE: CIT)
today announced record second quarter net income of $96.3 million, up from $83.7
million for the same period of 1998. Six month earnings totaled a record $188.2
million, up from $165.4 million in 1998.
Earnings per diluted share for the second quarter of 1999 were $.59, up
15.7% from $.51 for the second quarter of last year, with six month earnings per
diluted share increasing 14.9% to $1.16 from $1.01. The strong 1999 earnings
were driven by higher portfolio growth, notably a very strong year over year
increase in commercial financing and leasing assets, continued high credit
quality, and further improvements in operating efficiency.
"I am extremely pleased with our second quarter performance. The strong
3,200 member team at CIT continued its focus on generating solid internal
growth, and managing credit exposure and expenses, while developing new
-1-
<PAGE>
growth strategies. We maintained our emphasis on core operating fundamentals and
made strides in improving consumer finance operating efficiencies," said Albert
R. Gamper, Jr., CIT President and Chief Executive Officer. "During the quarter,
we completed several significant value creating initiatives. We acquired a
factoring operation from Congress Financial Corp. that has already been
converted onto our servicing platform. We entered into contracts to purchase at
least 40 new commercial aircraft beginning in 2000 from both Airbus and Boeing.
We aligned some of our business franchises into strategic business groups to
further improve our already strong operating efficiency. Our increasing growth
and strong financial performance along with the completion of these initiatives
further demonstrates the strengths and diversity of CIT."
Financial Highlights:
Total managed assets increased to $28.4 billion at June 30, 1999, up
18.7% from $23.9 billion a year ago, and up 8.3% from $26.2 billion at December
31, 1998. Commercial financing and leasing assets grew to $20.2 billion, up
approximately $3.4 billion or 20.5% from June 30, 1998 and $1.8 billion or 9.8%
from year-end 1998. Consumer managed assets increased to $8.1 billion, up
approximately $1.0 billion or 14.4% from $7.1 billion a year ago and up 4.9%
from December 31, 1998.
Net finance income improved to $273.6 million in the second quarter
compared with $240.4 million in the second quarter of 1998. Second quarter 1999
net finance income as a percentage of average earning assets was 4.72%
-2-
<PAGE>
compared to 4.79% in the second quarter of 1998.
Fees and other income for the second quarter of 1999 increased to $74.8
million, up 23.2% from $60.7 million for the second quarter of 1998 due to
increased gains on sales of equipment coming off lease as well as continued
strong growth in factoring and lending fees.
Salaries and general operating expenses for the second quarter of 1999
totaled $113.0 million, up 8.7% from $104.0 million for the second quarter of
1998 as a result of the factoring acquisition and continued portfolio growth and
product expansion in the commercial financing and leasing businesses. The
efficiency ratio improved to 39.7% in the 1999 second quarter from 40.6% in the
same quarter of 1998. Salaries and general operating expenses as a percentage of
average managed assets improved to 1.74% for the second quarter of 1999 compared
to 1.86% in the same quarter of 1998. These improvements reflect ongoing
productivity initiatives, particularly in the consumer finance area, and our
proven ability to leverage our existing operating infrastructure.
The provision for credit losses was $23.8 million in the second quarter
of 1999, an increase of $1.9 million over the second quarter of 1998. Second
quarter 1999 net charge-offs were $21.4 million, 0.41% of average finance
receivables, compared to $16.4 million, 0.36%, for the second quarter of 1998.
At June 30, 1999, the reserve for credit losses increased to $276.8 million
(1.32%), up from $263.7 million (1.33%) at year-end 1998, principally the result
of portfolio growth.
-3-
<PAGE>
Additionally, The Board of Directors of CIT has authorized the
repurchase of up to 2 million shares of the Company's common stock to provide
for the Company's employee stock option plan, the employee share purchase plan
and for other corporate purposes. The stock repurchase program is authorized to
take place over the next 12 months from time to time in the open market or in
privately negotiated transactions. This program is an extension to the one-year
program approved last August. Through June 30, 1999, CIT has purchased 1.6
million of the 2 million shares previously authorized.
The CIT Group, Inc., is a leading diversified finance organization
offering secured commercial and consumer financing primarily in the United
States to smaller, middle-market and larger businesses and to individuals
through a nationwide distribution network.
(SEE ATTACHED TABLES FOR ADDITIONAL FINANCIAL DATA).
-4-
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Dollars in Millions, except Net Income per Share)
<TABLE>
<CAPTION>
For the Quarter For the Six Months
Ended June 30, Ended June 30,
-------------------------- ---------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Finance income $ 554.4 $ 498.2 $1,095.9 $ 970.8
Interest expense 280.8 257.8 554.1 502.4
--------- --------- --------- ---------
Net finance income 273.6 240.4 541.8 468.4
Fees and other income 74.8 60.7 139.5 127.1
--------- --------- --------- ---------
Operating revenue 348.4 301.1 681.3 595.5
--------- --------- --------- ---------
Salaries and general operating expenses 113.0 104.0 222.0 205.7
Provision for credit losses 23.8 21.9 45.7 44.4
Depreciation on operating lease equipment 59.2 40.4 115.3 78.7
Minority interest in subsidiary trust holding
solely debentures of the Company 4.8 4.8 9.6 9.6
--------- --------- --------- ---------
Operating expenses 200.8 171.1 392.6 338.4
--------- --------- --------- ---------
Income before provision for income taxes 147.6 130.0 288.7 257.1
Provision for income taxes 51.3 46.3 100.5 91.7
--------- --------- --------- ---------
Net income $ 96.3 $ 83.7 $ 188.2 $ 165.4
========= ========= ========= =========
Basic net income per share $0.60 $0.52 $1.17 $1.02
Weighted average shares outstanding 160,879,207 162,225,000 161,021,757 162,225,000
Diluted net income per share $0.59 $0.51 $1.16 $1.01
Weighted average shares outstanding 162,119,883 163,655,210 162,267,941 163,579,696
</TABLE>
-5-
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Millions)
June 30, December 31,
1999 1998
---- ----
Assets
Financing and leasing assets
Loans
Commercial $12,482.2 $11,415.5
Consumer 4,176.4 4,266.9
Lease receivables 4,239.0 4,173.6
--------- ---------
Finance receivables 20,897.6 19,856.0
Reserve for credit losses (276.8) (263.7)
--------- ---------
Net finance receivables 20,620.8 19,592.3
Operating lease equipment, net 3,433.2 2,774.1
Consumer finance receivables held for sale 864.4 987.4
Cash and cash equivalents 92.9 73.6
Other assets 1,133.0 875.7
--------- ---------
Total assets $26,144.3 $24,303.1
========= =========
Liabilities and Stockholders' Equity
Debt
Commercial paper $ 5,674.3 $ 6,144.1
Variable rate senior notes 5,349.7 4,275.0
Fixed rate senior notes 8,611.3 8,032.3
Subordinated fixed rate notes 200.0 200.0
--------- ---------
Total debt 19,835.3 18,651.4
Credit balances of factoring clients 1,761.6 1,302.1
Accrued liabilities and payables 675.9 694.3
Deferred federal income taxes 775.1 703.7
--------- ---------
Total liabilities 23,047.9 21,351.5
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely debentures of the Company 250.0 250.0
Stockholders' equity
Class A common stock, par value $0.01 per share;
Authorized 700,000,000 shares
Issued: 163,186,543 shares in 1999 and 163,144,879
shares in 1998
Outstanding: 161,712,782 shares in 1999 and 1.7 1.7
162,176,949 shares in 1998
Paid-in capital 957.2 952.5
Retained earnings 1,928.5 1,772.8
Treasury stock at cost (1,473,761 shares in 1999 and
967,930 shares in 1998; Class A) (41.0) (25.4)
--------- ---------
Total stockholders' equity 2,846.4 2,701.6
--------- ---------
Total liabilities and stockholders' equity $26,144.3 $24,303.1
========= =========
-6-
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Quarter For the Six Months
Ended June 30, Ended June 30,
----------------- --------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Selected Data and Ratios
Profitability
Net income per diluted share $ 0.59 $ 0.51 $ 1.16 $ 1.01
Return on average stockholders' equity 13.7% 13.2% 13.6% 13.2%
Return on AEA 1.66% 1.67% 1.64% 1.69%
Efficiency ratio 39.7% 40.6% 39.9% 40.6%
Other
Net interest margin as a percentage of AEA 4.72% 4.79% 4.73% 4.79%
Salaries and general operating expenses as a
percentage of AMA(1) 1.74% 1.86% 1.73% 1.88%
Net credit losses as a percentage of average:
Finance receivables 0.41% 0.36% 0.41% 0.41%
Managed assets 0.47% 0.39% 0.45% 0.42%
Commercial finance receivables 0.23% 0.19% 0.22% 0.23%
Consumer finance receivables 1.14% 1.12% 1.16% 1.15%
Consumer managed assets 1.03% 0.91% 1.00% 0.91%
Average Balances (in millions)
Average Stockholders' Equity $ 2,807.6 $ 2,542.5 $ 2,770.1 $ 2,507.9
Average Finance Receivables $20,633.2 $18,234.3 $20,358.8 $17,981.4
Average Earning Assets $23,166.2 $20,086.0 $22,905.3 $19,578.9
Average Managed Assets $26,019.7 $22,321.1 $25,608.6 $21,857.8
</TABLE>
<TABLE>
<CAPTION>
At June 30, At December 31, At June 30,
1999 1998 1998
---- ---- ----
<S> <C> <C> <C>
Credit Quality=
60+ days contractual delinquency as a
percentage of finance receivables
Commercial 1.14% 1.17% 1.43%
Consumer 3.64% 3.89% 3.37%
Total 1.64% 1.75% 1.83%
Total nonperforming assets as a percentage
of finance receivables (2) 1.28% 1.40% 1.48%
Reserve for credit losses as a percentage
of finance receivables 1.32% 1.33% 1.34%
Ratio of reserve for credit losses to
trailing twelve-month net credit losses 3.27x 3.35x 3.00x
Capital and Leverage
Total debt to stockholders' equity and
Company-obligated
mandatorily redeemable preferred
securities of subsidiary
trust holding solely debentures of the Company 6.41x 6.32x 5.89x
Total debt to stockholders' equity (3) 7.06x 7.00x 6.56x
</TABLE>
(1) "AMA" means the sum of average earning assets, which are net of credit
balances of factoring clients, and the average of consumer finance
receivables previously securitized and currently managed by the Company.
(2) Total nonperforming assets reflect both commercial and consumer finance
receivables on nonaccrual status and assets received in satisfaction of
loans.
(3) Total debt includes, and stockholders' equity excludes, $250.0 million of
Company-obligated mandatorily redeemable preferred securities of subsidiary
trust holding solely debentures of the Company.
-7-
<PAGE>
THE CIT GROUP, INC. AND SUBSIDIARIES
(Amounts in Millions)
MANAGED ASSETS BY SEGMENT & STRATEGIC BUSINESS UNIT
<TABLE>
<CAPTION>
At June 30, At December 31, At June 30,
1999 1998 1998
---- ---- ----
<S> <C> <C> <C>
Equipment Financing:
Finance receivables $ 8,787.4 $ 8,497.6 $ 7,649.2
Operating lease equipment, net 822.0 765.1 641.0
--------- --------- ---------
Total 9,609.4 9,262.7 8,290.2
--------- --------- ---------
Capital Finance:
Finance receivables 1,632.3 1,655.4 1,679.4
Operating lease equipment, net 2,589.6 1,982.0 1,476.1
--------- --------- ---------
4,221.9 3,637.4 3,155.5
Liquidating portfolio* 339.1 466.9 568.9
--------- --------- ---------
Total 4,561.0 4,104.3 3,724.4
--------- --------- ---------
Total Equipment Financing & Leasing 14,170.4 13,367.0 12,014.6
--------- --------- ---------
Commercial Services 3,215.0 2,481.8 2,295.3
Business Credit 1,674.1 1,477.9 1,448.1
Credit Finance 1,094.9 1,036.5 965.9
--------- --------- ---------
Total Commercial Finance 5,984.0 4,996.2 4,709.3
--------- --------- ---------
Total Commercial Segments 20,154.4 18,363.2 16,723.9
--------- --------- ---------
Other - Equity Investments 91.7 81.9 75.5
--------- --------- ---------
Consumer Finance 2,432.4 2,244.4 2,397.3
Sales Financing 2,608.4 3,009.9 2,277.2
--------- --------- ---------
Total Consumer Segment 5,040.8 5,254.3 4,674.5
--------- --------- ---------
Total Financing and Leasing Assets 25,286.9 23,699.4 21,473.9
--------- --------- ---------
Finance receivables previously securitized:
Consumer Finance 502.1 607.6 374.6
Sales Financing 2,606.5 1,909.3 2,071.4
--------- --------- ---------
Total 3,108.6 2,516.9 2,446.0
--------- --------- ---------
Total Managed Assets - Consumer Segment 8,149.4 7,771.2 7,120.5
--------- --------- ---------
Total Managed Assets $28,395.5 $26,216.3 $23,919.9
========= ========= =========
Sales Financing managed assets by product line:
Recreation vehicles $ 1,935.9 $ 1,884.6 $ 1,710.5
Manufactured housing 1,910.2 1,695.9 1,487.6
Recreational boat 1,109.7 1,038.6 966.5
Wholesale inventory financing 259.1 300.1 184.0
--------- --------- ---------
$ 5,214.9 $ 4,919.2 $ 4,348.6
========= ========= =========
</TABLE>
* Consists primarily of oceangoing maritime and project finance.
<TABLE>
<CAPTION>
FEES AND OTHER INCOME Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Factoring commissions $29.0 $22.6 $ 53.0 $ 45.6
Fees and other income 20.4 22.1 51.3 44.2
Gains on sales of leasing equipment 20.7 8.9 29.9 23.7
Gains on securitizations 4.7 5.2 5.3 5.2
Gains on sales of venture capital investments -- 1.9 -- 8.4
----- ----- ------ ------
$74.8 $60.7 $139.5 $127.1
===== ===== ====== ======
</TABLE>
-8-
Exhibit 99.3
Certain of the following information, which was set forth in the
Analysts' Presentation made on August 5, 1999, 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 adjustment to the combined companies' balance sheet, 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 by 8% in 2001 and cash accretion of 5% in 2000 and 10%+ in
2001
o 15% EPS growth
o 15%+ return on tangible common equity
o 14% cash return on common equity
o Securitization gains reduced to less than 15% of net income by year 2000
o Synergies:
-- $150 million in cost savings identified
-- 70+ bps funding advantage for Newcourt on-balance sheet assets
CIT also disclosed the following financial statistics:
<PAGE>
Projected Combined Income Statement
- --------------------------------------------------------------------------------
Pro forma
1999E 2000E 2001E
- --------------------------------------------------------------------------------
Operating results
CIT-I/B/E/S 383 431 487
Newcourt-as adjusted 160(1) 180 220
-------------------------
Combined 543 611 707
After-tax impact of transaction
Cost savings(2) 65 75
Funding benefit 66 97
Change in securitization
levels (net)(3) (35) 4
Incremental goodwill
amortization(4) (8) (8)
-------------------------
Net transaction benefits/(costs) 88 168
Net income 699 875
Original GAAP EPS(5) $2.65 $3.00 Long-term
Pro forma GAAP EPS $2.63 $3.24 EPS growth
GAAP accretion(6) (1.0%) 7.9% target
-------------
EPS growth 12% 23% 15%
Pro forma cash EPS $2.87 $3.48
Cash EPS accretion 5.4% 13.2%
Return on tangible equity 15% 17%
Cash return on common equity 13% 14%
- -------------------
1 Excludes $56 million pre-tax hedge gain recorded by Newcourt in its first
quarter and $34 million pre-tax auto unit sale gain recorded by Newcourt in
its second quarter. Net income totals $209 million including these items.
($49 million combined after tax)
2 Total identified cost savings equal to $150 million, $50 million already
reflected in Newcourt expense line.
3 Reflects lowered securitization volumes (reduced by $1.8 billion in 2000 and
$1.5 billion in 2001 from Newcourt's stand-alone projection) and higher loan
provision due to higher levels of on-balance sheet finance receivables offset
by higher level of finance income due to increased on-balance sheet finance
receivables.
4 Calculated based on CIT share price of $26.00 and exchange ratio of .7,
subject to adjustment based on CIT share price fluctuation. Assumes 25-year
amortization schedule.
5 Analysts' pre-March transaction consensus EPS estimate of $2.65 for 2000 and
an assumed EPS for 2001 based on analysts' pre-March transaction consensus
13% long-term growth rate.
6 Analysts' pre-March transaction consensus EPS estimate of $2.65 for 2000 and
an assumed EPS for 2001 based on analysts' pre-March transaction consensus
13% long-term growth rate.
<PAGE>
Projected Year 2000 Transaction Impact
- --------------------------------------------------------------------------------
Estimated 2000
-------------------------------------
1st half 2nd half Full year
- --------------------------------------------------------------------------------
Operating results
CIT $210 $221 $431
Newcourt - as adjusted 80 100 180
-------------------------------------
Combined earnings 290 321 611
After-tax impact of transaction
Cost savings 26 39 65
Funding benefit 31 35 66
Change in securitization levels (net) (23) (12) (35)
Incremental goodwill amortization (4) (4) (8)
-------------------------------------
Total 30 58 88
Pro forma earnings 320 379 699
Original GAAP EPS $1.29 $1.36 $2.65
Pro forma EPS $1.20 $1.43 $2.63
GAAP accretion (7.0%) 5.1% (1.0%)
- -------------------------------------------------------------------------------
<PAGE>
Projected Capital Generation
- -------------------------------------------------------------------------------
$ millions
2000E 2001E
- -------------------------------------------------------------------------------
Beginning tangible equity(1) $4,433 $5,126
+ net income $699 $875
+ goodwill amortization $64 $64
- - dividend $(70) $(88)
Ending tangible equity(1) $5,126 $5,977
Internal capital generated $693 $851
Internal capital generation rate (%) 16% 17%
Total managed asset growth (%)(2) 12% 12%
Core managed asset growth 13+% 13+%
- --------------------------------------------------------------------------------
- -------------------
1 Tangible equity defined as common and preferred equity less goodwill
2 Net of dispositions of non-strategic business units and pruning of lower
profitability volumes
<PAGE>
Estimated Pro Forma Balance Sheet
Adjustment at June 30, 1999
- --------------------------------------------------------------------------------
$ millions
Estimated pro forma
adjustments(1)
--------------------
Fair value adjustments
Commercial loans $200(2)
Lease receivables 175(3)
Other assets 100(4)
Fixed rate senior notes 250(5)
--------------------
Pre-tax fair value adjustments 725
Tax effects on fair value adjustments (300)
--------------------
After-tax fair value adjustments $425
Restructuring charge $200(6)
Total net adjustments to net assets acquired $625
- ---------------
1 These estimates and the allocation of the purchase price have not been
finalized and the portion of the purchase price allocated to fair value
adjustments and goodwill is subject to change. The fair value of net assets
acquired will be determined as of the closing date and is subject to revision
as additional information becomes available
2 Adjustment reflects the estimated decrease in carrying value required in
connection with the acquisition to conform to CIT's credit policies and
practices, as well as post-acquisition strategies for problem loan resolution
3 Adjustment to reflect the future realizability of estimated lease residuals
4 Adjustment to fair value of other assets, including retained interest in
securitizations
5 Mark-to-market of fixed rate debt and debt-related hedges based upon current
market interest rates
6 Preliminary estimate
<PAGE>
Pro Forma Capitalization
- --------------------------------------------------------------------------------
$ millions
June 1999
--------------------------------------- Leverage
CIT Newcourt Pro forma(1) targets
- --------------------------------------------------------------------------------
Managed finance assets $28,396 $22,388(2) $50,409
Market capitalization(3) 4,218 2,699 6,917
Total debt 19,835 11,846 31,931
Total equity(4) 3,096 3,103 5,700
Tangible equity 2,748 1,851 3,974
Tangible common equity 2,498 1,851 3,724
Debt/tangible equity 7.2x 6.4x 8.0x 7.50x-7.75x
Tangible equity/managed
finance assets 9.7% 8.3% 7.9% 8.5%-9.0%
- --------------------------------------------------------------------------------
- ---------------------
1 Transaction adjustments include a $625 million after-tax purchase accounting
adjustment
2 Managed finance assets exclude $2,075 million in Newcourt syndications
3 Based on CIT share price of $26, and Newcourt market capitalization based
upon transaction exchange ratio
4 Includes preferred equity
