Item 1.01 Entry Into a Material Definitive Agreement
Purchase Agreement
On October 6, 2016, CIT Group Inc. (“CIT”)
and C.I.T. Leasing Corporation, a Delaware corporation and wholly owned subsidiary of CIT (“CIT Leasing”), entered
into a Purchase and Sale Agreement (the “Purchase Agreement”) by and among CIT, CIT Leasing, Park Aerospace Holdings
Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands and wholly-owned subsidiary
of Avolon (“Purchaser”), Avolon Holdings Limited, an exempted company with limited liability under the laws of the
Cayman Islands and wholly-owned subsidiary of Bohai (“Avolon”) and Bohai Financial Investment Holding Co., Ltd., a
limited company under the laws of the People’s Republic of China (“Bohai”).
The Purchase Agreement provides that
Purchaser will acquire the commercial aircraft leasing business (the “Business”) of CIT (the “Transaction”)
through (a) the acquisition by 1995370 Alberta Inc., a wholly owned subsidiary of Purchaser (“Canadian Purchaser”),
of the issued and outstanding shares of CIT Holdings Canada ULC, a wholly-owned subsidiary of CIT, which owns the Canadian portion
of the Business (the “Canadian Sale”) and (b) Purchaser’s acquisition of all of the capital stock or other equity
interests of C2 Aviation Capital, Inc. (“C2 Aviation Capital”), a wholly owned subsidiary of CIT Leasing (the “C2
Share Sale”), which following certain internal restructuring transactions, will own the remainder of the Business.
The aggregate purchase
price payable by Purchaser and its subsidiaries to CIT and its subsidiaries for the Transaction (the “Purchase
Price”) is an amount in cash equal to (a) the adjusted net asset amount of the Business (the “Net Asset
Value”) as of the closing of the Transaction (the “Closing”) plus (b) a premium of $627 million. As of June
30, 2016, the Net Asset Value was approximately $9.4 billion, which would have resulted in an aggregate purchase price of
approximately $10.0 billion. The Net Asset Value is subject to fluctuation in the ordinary course of business between June
30, 2016 and closing and there can be no assurances as to whether the Net Asset Value at closing will be higher, lower or the
same as the Net Asset Value as of June 30, 2016. As of the signing date, $3.5 billion of the Purchase Price relates to the
Canadian Sale and is payable under the Canadian Local Transfer Agreement (which is described below). The amount related to
the Canadian Sale may be amended prior to closing to reflect changes between the signing date and closing, but this will not
affect the Purchase Price.
The Transaction is subject to certain
closing conditions, including (1) the expiration or early termination of the applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended; (2) the receipt of required clearances or approvals from antitrust regulators in
specified foreign jurisdictions, the applicable regulatory authorities in the People’s Republic of China (including the Ministry
of Commerce, the National Development and Reform Commission, the State Administration of Foreign Exchange and the Shenzhen Stock
Exchange), and the Committee on Foreign Investment in the United States (“CFIUS”); (3) no Order or Law (as such terms
are defined in the Purchase Agreement) having been enacted, entered, promulgated, enforced or issued by any Governmental Authority
(as defined in the Purchase Agreement) being in effect restraining, enjoining or otherwise prohibiting the Transaction; and (4)
the approval of the Transaction by Bohai’s shareholders by the affirmative vote of
two thirds of the common shares of Bohai present and voting
at the meeting. Each party's obligation to consummate the Transaction is also subject to (x) the accuracy of the other party's
(and its subsidiaries’) representations and warranties contained in the Purchase Agreement and the Canadian Local Transfer
Agreement (generally subject to a Material Adverse Effect standard, other than with respect to specified fundamental representations)
and (y) the other party's (and its subsidiaries’) performance in all material respects of its covenants and agreements contained
in the Purchase Agreement and Canadian Local Transfer Agreement.
The Purchase Agreement contains certain
customary representations, warranties and covenants by each party, including, among others, covenants with respect to the conduct
by CIT Leasing and C2 Aviation Capital and their subsidiaries during the interim period between the execution of the Purchase Agreement
and the Closing. As noted above, the Purchase Agreement provides that CIT Leasing will complete in all material respects certain
internal restructuring transactions, including the transfer of assets and incurrence of intercompany debt, with certain steps to
be completed on or prior to January 20, 2017. In connection with obtaining the approval of Bohai’s shareholders, CIT Leasing
will also be required to use reasonable best efforts to provide Purchaser with interim audited financial statements for C2 Aviation
Capital on or prior to January 20, 2017 but in any event no later than January 25, 2017.
Purchaser has obtained committed debt
financing for the transaction which is subject to customary conditions precedent and has agreed to use reasonable best efforts
to consummate the debt financing. The closing of the Transactions may not occur until the expiration of a Marketing Period (as
defined in the Purchase Agreement) relating to the debt financing.
The Purchase Agreement also includes
certain termination provisions in favor of both CIT Leasing, on the one hand, and Purchaser, on the other hand. A termination of
the Purchase Agreement by CIT Leasing under certain specified circumstances, including as a result of failure to obtain the receipt
of Chinese regulatory approvals, CFIUS approval, foreign antitrust clearances or Bohai shareholder approval, will entitle CIT Leasing
to receive from Purchaser a reverse termination fee equal to either $500 million or $600 million (such amount being increased following
the completion of certain of the internal restructuring transactions referenced above), subject to the terms of the Purchase Agreement
(the “Reverse Termination Fee”). Each of CIT Leasing and Purchaser also has the right to terminate the Purchase Agreement
if the Closing has not occurred on or before June 30, 2017, or if extended pursuant to the Purchase Agreement, September 30, 2017,
unless such party’s failure to perform any material covenant or obligation under the Purchase Agreement has been the cause
of or resulted in the failure of the Closing to occur by such date. To secure the Reverse Termination Fee, Purchaser deposited
$500 million into escrow with JPMorgan Chase Bank NA prior to the execution of the Purchase Agreement pursuant to the Escrow Agreement
(as described below), and, within a specified time following irrevocable notice that CIT Leasing has completed or will promptly
complete certain restructuring steps, will deposit an additional $100 million into escrow.
Both CIT Leasing and Purchaser have agreed
to indemnify the other party for losses arising from certain breaches of the Purchase Agreement and for certain other liabilities,
subject to certain limitations.
The Purchase Agreement provides that
each of CIT and Avolon will guarantee the full and timely payment and performance of all liabilities of CIT Leasing and Purchaser,
respectively, incurred under or arising out of the Purchase Agreement and the Ancillary Agreements (as defined below).
A copy of the Purchase Agreement is attached
as Exhibit 2.1 hereto and incorporated herein by reference. The foregoing summary of the Purchase Agreement and the transactions
contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the
Purchase Agreement.
The representations, warranties and covenants
set forth in the Purchase Agreement and the Ancillary Agreements described below have been made only for the purposes of the Purchase
Agreement and the Ancillary Agreements and solely for the benefit of the parties thereto and may be subject to limitations agreed
upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual
risk between the parties to the Purchase Agreement and the Ancillary Agreements instead of establishing these matters as facts.
In addition, such representations and warranties were made only as of the dates specified in the Purchase Agreement and Ancillary
Agreements and information regarding the subject matter thereof may change after the date of the Purchase Agreement and Ancillary
Agreements. Accordingly, the Purchase Agreement and Ancillary Agreements are included with this filing only to provide investors
with information regarding their terms and not to provide investors with any other factual information regarding CIT, its subsidiaries
or its or their respective businesses as of the date of the Purchase Agreement and the Ancillary Agreements or as of any other
date.