CIT GROUP INC (Form: 10-Q, Received: 05/05/2020 17:09:49)

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Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934		☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended March 31, 2020

Commission File Number: 001-31369

CIT GROUP INC.

(Exact name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		65-1051192 (IRS Employer Identification Number)

11 West 42nd Street New York, New York (Address of Registrant’s principal executive offices)		10036 (Zip Code)

(212) 461-5200 (Registrant’s telephone number)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	CIT	New York Stock Exchange
5.625% Non-Cumulative Perpetual Preferred Stock, Series B, par value $0.01 per share	CITPRB	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of ‘large accelerated filer,’ ‘accelerated filer’, ‘smaller reporting company’ and ‘emerging growth company’ in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of April 24, 2020, there were 98,366,723 shares of the registrant’s common stock outstanding.

Table of Contents

CONTENTS

Part One — Financial Information:

Item 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets (Unaudited)	2
	Condensed Consolidated Statements of Income (Unaudited)	3
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	4
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	46
	and
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	46
Item 4.	Controls and Procedures	98

Part Two — Other Information:

Item 1.	Legal Proceedings	99
Item 1A.	Risk Factors	99
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	100
Item 4.	Mine Safety Disclosures	100
Item 6.	Exhibits	101
Signatures		103

Table of Contents

Part One — Financial Information

Item 1. Financial Statements

CIT GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (dollars in millions — except share data)

	March 31,			December 31,
	2020			2019
Assets
Cash and due from banks, including restricted balances of $29.6 at March 31, 2020 and $875.2 at December 31, 2019 (see Note 9 for amounts pledged)	$	220.7		$	990.1
Interest bearing cash, including restricted balances of $2.1 at March 31, 2020 and $2.2 at December 31, 2019 (see Note 9 for amounts pledged)		3,477.8			1,695.5
Securities purchased under agreement to resell		-			950.0
Investment securities, including securities carried at fair value with changes recorded in net income of $0.0 at March 31, 2020 and $47.2 at December 31, 2019 (see Notes 6 and 9 for amounts pledged)		6,128.6			6,276.8
Assets held for sale		73.2			32.1
Loans (see Note 9 for amounts pledged)		38,530.4			30,998.9
Allowance for credit losses		(1,111.1	)		(482.6	)
Total loans, net of allowance for credit losses		37,419.3			30,516.3
Operating lease equipment, net (see Note 9 for amounts pledged)		7,488.1			7,319.7
Bank-owned life insurance		1,100.9			1,043.2
Goodwill		146.8			369.9
Other assets, including $546.5 at March 31, 2020 and $190.7 at December 31, 2019, at fair value		2,881.3			1,639.2
Total Assets	$	58,936.7		$	50,832.8
Liabilities
Deposits	$	42,162.1		$	35,139.5
Credit balances of factoring clients		1,023.7			1,176.2
Other liabilities, including $164.4 at March 31, 2020 and $100.8 at December 31, 2019, at fair value		1,795.8			1,704.7
Borrowings, including $514.0 at March 31, 2020 and $14.3 at December 31, 2019 contractually due within twelve months		8,094.3			6,473.4
Total Liabilities		53,075.9			44,493.8
Stockholders’ Equity
Preferred Stock: $0.01 par value, 100,000,000 shares authorized, 8,325,000 shares issued and outstanding at March 31, 2020 and December 31, 2019		525.0			525.0
Common Stock: $0.01 par value, 600,000,000 shares authorized
Issued: 163,014,943 at March 31, 2020 and 162,188,287 at December 31, 2019		1.6			1.6
Outstanding: 98,366,114 at March 31, 2020 and 94,742,564 at December 31, 2019
Paid-in capital		6,873.3			6,853.7
Retained earnings		1,552.1			2,307.6
Accumulated other comprehensive income (loss)		66.8			(52.1	)
Treasury stock: 64,648,829 shares at March 31, 2020 and 67,445,723 shares at December 31, 2019 at cost		(3,158.0	)		(3,296.8	)
Total Common Stockholders’ Equity		5,335.8			5,814.0
Total Equity		5,860.8			6,339.0
Total Liabilities and Equity	$	58,936.7		$	50,832.8

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

CIT GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (dollars in millions — except per share data)

	Quarters Ended March 31,
	2020			2019
Interest income
Interest and fees on loans	$	467.6		$	451.3
Other interest and dividends		46.0			65.2
Interest income		513.6			516.5
Interest expense
Interest on deposits		156.6			153.8
Interest on borrowings		69.1			81.8
Interest expense		225.7			235.6
Net interest revenue		287.9			280.9
Provision for credit losses		513.9			33.0
Net interest revenue, after credit provision		(226.0	)		247.9
Non-interest income
Rental income on operating leases		209.8			217.7
Other non-interest income		130.6			96.8
Total non-interest income		340.4			314.5
Total revenue, net of interest expense and credit provision		114.4			562.4
Non-interest expenses
Depreciation on operating lease equipment		78.3			79.4
Maintenance and other operating lease expenses		53.6			49.8
Operating expenses		334.4			276.1
Goodwill impairment		344.7			-
Loss on debt extinguishment and deposit redemption		-			0.1
Total non-interest expenses		811.0			405.4
(Loss) income from continuing operations before (benefit) provision for income taxes		(696.6	)		157.0
(Benefit) provision for income taxes		(72.3	)		37.8
(Loss) income from continuing operations		(624.3	)		119.2
Discontinued operations
Loss from discontinued operations, net of taxes		-			(0.3	)
Net (loss) income	$	(624.3	)	$	118.9
Preferred stock dividends		3.8			-
Net (loss) income available to common shareholders	$	(628.1	)	$	118.9
(Loss) income from continuing operations available to common shareholders	$	(628.1	)	$	119.2
Basic (loss) income per common share
(Loss) income from continuing operations	$	(6.40	)	$	1.19
Loss from discontinued operations		-			(0.01	)
Basic (loss) income per share	$	(6.40	)	$	1.18
Diluted (loss) income per common share
(Loss) income from continuing operations	$	(6.40	)	$	1.18
Income (loss) from discontinued operations		-			-
Diluted (loss) income per share	$	(6.40	)	$	1.18
Average number of common shares (thousands)
Basic		98,089			100,420
Diluted		98,089			101,096

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

CIT GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (dollars in millions)

	Quarters Ended March 31,
	2020			2019
Net (loss) income	$	(624.3	)	$	118.9
Other comprehensive income, net of tax
Foreign currency translation adjustments		(0.9	)		5.7
Net unrealized gains on available for sale securities		117.0			45.2
Changes in benefit plans net gains and prior service (cost)/credit		2.8			2.2
Other comprehensive income, net of tax	$	118.9		$	53.1
Comprehensive (loss) income	$	(505.4	)	$	172.0

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

CIT GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) (dollars in millions)

	Preferred Stock		Common Stock		Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock, at cost			Total Equity
December 31, 2019	$	525.0	$	1.6	$	6,853.7	$	2,307.6		$	(52.1	)	$	(3,296.8	)	$	6,339.0
Adoption of ASU 2016-13		—		—		—		(82.4	)		—			—			(82.4	)
Net loss		—		—		—		(624.3	)		—			—			(624.3	)
Other comprehensive income, net of tax		—		—		—		—			118.9			—			118.9
Dividends paid ($0.35 per Common Share and $0.48 per Series B Preferred Share)		—		—		—		(38.7	)		—			—			(38.7	)
Issuance of common stock - acquisition		—		—		—		(10.1	)		—			151.3			141.2
Amortization of stock compensation expenses		—		—		18.8		—			—			(12.5	)		6.3
Employee stock purchase plan		—		—		0.8		—			—			—			0.8
March 31, 2020	$	525.0	$	1.6	$	6,873.3	$	1,552.1		$	66.8		$	(3,158.0	)	$	5,860.8

December 31, 2018	$	325.0	$	1.6	$	6,810.8	$	1,924.4		$	(178.3	)	$	(2,936.9	)	$	5,946.6
Net income		—		—		—		118.9			—			—			118.9
Other comprehensive income, net of tax		—		—		—		—			53.1			—			53.1
Dividends paid ($0.25 per Common Share)		—		—		—		(25.7	)		—			—			(25.7	)
Share repurchases		—		—		—		—			—			(179.7	)		(179.7	)
Amortization of stock compensation expenses		—		—		13.7		—			—			(18.1	)		(4.4	)
Employee stock purchase plan		—		—		0.7		—			—			—			0.7
March 31, 2019	$	325.0	$	1.6	$	6,825.2	$	2,017.6		$	(125.2	)	$	(3,134.7	)	$	5,909.5

The accompanying notes are an integral part of these consolidated financial statements.

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CIT GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (dollars in millions)

	Quarters Ended March 31,
	2020			2019
Cash Flows from Operations
Net (loss) income	$	(624.3	)	$	118.9
Adjustments to reconcile net (loss) income to net cash flows from operations:
Provision for credit losses		513.9			33.0
Depreciation on operating lease equipment		78.3			79.4
Amortization of stock compensation expenses		18.8			13.7
Net gain on asset sales and impairments on assets held for sale		(54.6	)		(21.6	)
Loss on debt extinguishment and deposit redemption		-			0.1
Provision for deferred income taxes		104.1			23.0
(Increase) decrease in loans held for sale		(57.9	)		28.9
Goodwill impairment		344.7			—
Increase in other assets		(536.2	)		(116.7	)
Decrease in other liabilities		(159.3	)		(71.9	)
Other operating activities		28.0			18.8
Net cash flows (used in) provided by operations		(344.5	)		105.6
Cash Flows from Investing Activities
Changes in loans, net		(1,403.3	)		(651.9	)
Purchases of investment securities and securities purchased under agreement to resell		(1,519.6	)		(2,546.2	)
Proceeds from sales and maturities of investment securities and securities purchased under agreement to resell		4,055.8			790.4
Proceeds from asset and receivable sales		171.6			126.3
Purchases of assets to be leased and other equipment		(280.9	)		(102.4	)
Proceeds from sale of OREO, net of repurchases		4.5			12.3
Purchase of bank owned life insurance		(50.0	)		(155.0	)
Acquisition, net of cash received		(727.1	)		—
Other investing activities		—			11.2
Net cash flows provided by (used in) investing activities		251.0			(2,515.3	)
Cash Flows from Financing Activities
Proceeds from the issuance of term debt and FHLB advances		1,700.0			—
Repayments of term debt, FHLB advances, and net settlements		(393.0	)		(1,552.6	)
Net increase in deposits		33.5			3,708.9
Repurchase of common stock		—			(179.7	)
Dividends paid		(38.7	)		(25.7	)
Other financing activities		(189.5	)		(18.5	)
Net cash flows provided by financing activities		1,112.3			1,932.4
Effect of exchange rate changes on cash and cash equivalents		(5.9	)		1.9
Increase (decrease) in cash, cash equivalents and restricted cash		1,012.9			(475.4	)
Cash, cash equivalents, and restricted cash beginning of period		2,685.6			1,795.6
Cash, cash equivalents, and restricted cash end of period	$	3,698.5		$	1,320.2
Supplementary Cash Flow Disclosures
Interest paid	$	(270.5	)	$	(277.8	)
Federal, foreign, state and local income taxes refunded, net		1.3			0.9
Supplementary Non Cash Flow Disclosure
Transfer of assets from held for investment to held for sale		52.3			98.0
Transfer of assets from held for sale to held for investment		12.5			0.7
Transfers of assets to OREO		0.3			9.0
Commitments extended during the period on affordable housing investment credits		12.5			20.0
Issuance of common stock - acquisition		141.2			—

The following tables shows a reconciliation of cash, cash equivalents and restricted cash on the Balance Sheet to that presented in the above Statements of Cash Flow.

	Quarters Ended March 31,
	2020		2019
Cash and due from banks, including restricted balances of $29.6 and $22.9 at March 31, 2020 and 2019, respectively	$	220.7	$	130.1
Interest-bearing cash, including restricted balances of $2.1 and $2.3 at March 31, 2020 and 2019, respectively		3,477.8		1,190.1
Total cash, cash equivalents, and restricted cash shown in the Statements of Cash Flows	$	3,698.5	$	1,320.2

The accompanying notes are an integral part of these consolidated financial statements.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1 — BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CIT Group Inc., together with its subsidiaries (collectively "we", "our", "CIT" or the "Company"), is a bank holding company ("BHC") and a financial holding company ("FHC"). CIT was formed in 1908 and provides financing, leasing and advisory services, principally to middle-market companies in a wide variety of industries, primarily in North America. We also provide banking and related services to commercial and individual customers through our banking subsidiary, CIT Bank, N.A. ("CIT Bank" or the "Bank"), which includes a regional branch network of approximately 90 branches and its online bank.

CIT is regulated by the Board of Governors of the Federal Reserve System ("FRB") and the Federal Reserve Bank of New York ("FRBNY") under the U.S. Bank Holding Company Act of 1956, as amended. CIT Bank is regulated by the Office of the Comptroller of the Currency of the U.S. Department of the Treasury ("OCC"). In addition, CIT Bank, as an insured depository institution, is supervised by the Federal Deposit Insurance Corporation (“FDIC”).

BASIS OF PRESENTATION

Basis of Financial Information

These consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q for interim financial information and accordingly do not include all information and note disclosures required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements. The financial statements in this Form 10-Q, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of CIT’s financial position, results of operations and cash flows in accordance with GAAP. These consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2019 ("2019 Form 10-K").

The accounting and financial reporting policies of CIT conform to GAAP and the preparation of the consolidated financial statements is in conformity with GAAP, which requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates and assumptions. Some of the more significant estimates include: Allowance for Credit Losses (“ACL”), realizability of deferred tax assets, and goodwill. Additionally, where applicable, the policies conform to accounting and reporting guidelines prescribed by bank regulatory authorities.

Principles of Consolidation

The accompanying consolidated financial statements include financial information related to CIT and its majority-owned subsidiaries and those variable interest entities (“VIEs”) where the Company is the primary beneficiary (“PB”).

In preparing the consolidated financial statements, all significant inter-company accounts and transactions have been eliminated. Assets held in an agency or fiduciary capacity are not included in the consolidated financial statements.

The current period’s results of operations do not necessarily indicate the results that may be expected for any other interim period or for the full year as a whole.

Discontinued Operations

There were no discontinued operations as of March 31, 2020 and December 31, 2019. See further discussion in Note 2 – Acquisition and Discontinued Operations.

Acquisition

On January 1, 2020, CIT acquired Mutual of Omaha Bank (“MOB”), the savings bank subsidiary of Mutual of Omaha Insurance Company and Omaha Financial Holdings, Inc. (“OFHI”) for approximately $1 billion in cash and stock (the “MOB Acquisition” or “MOB Transaction”).

The results for the quarter ended March 31, 2020 include the activity of MOB whereas no MOB activity for the comparable March 31, 2019 quarter is included. See further discussion in Note 2 – Acquisition and Discontinued Operations.

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and Interagency Statement

On March 27, 2020, the CARES Act was signed into law. Section 4013 of the CARES Act gives financial institutions temporary relief from the accounting and disclosure requirements related to troubled debt restructurings (“TDRs”) under ASC 310-40 and past due and non-accrual reporting in certain situations. Under the CARES Act, banks may elect to deem that loan modifications do not result in TDRs if they are: (1) related to the novel coronavirus disease (“COVID-19”) pandemic; (2) executed on a loan that was not more than 30 days past due as of December 31, 2019; and (3) executed between March 1, 2020, and the earlier of (A) 60 days after the date of termination of the national emergency declared by the President under the National Emergencies Act with respect to COVID-19 (the “National Emergency”) or (B) December 31, 2020. With respect to past due and non-accrual

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

loans, the CARES Act provides that financial institutions are not expected to designate loans with payment accommodations granted due to COVID-19 as past due or non-accrual if they were current on the date used to determine borrower’s delinquency status for the purpose of providing the deferment.

Additionally, on April 7, 2020, a group of federal and state government banking agencies issued an Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) (the “Interagency Statement”) that offers some practical expedients for evaluating whether loan modifications that occur in response to the COVID-19 pandemic are TDRs. The Interagency Statement indicates that a lender can conclude that a borrower is not experiencing financial difficulty if either (1) short-term (e.g., six months or less) modifications are made in response to COVID-19, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant related to loans in which the borrower is less than 30 days past due on its contractual payments at the time a modification program is implemented, or (2) the modification or deferral program is mandated by the federal government or a state government (e.g., a state program that requires all institutions within that state to suspend mortgage payments for a specified period). The Interagency Statement interprets, but does not suspend, ASC 310-40 as any loan modification made in response to the COVID-19 pandemic that meets either of these practical expedients would not be considered a TDR because the borrower is not experiencing financial difficulty. As provided for under the CARES Act, a financial institution may account for an eligible loan modification either under Section 4013 or in accordance with ASC Subtopic 310-40. The Interagency Statement provides that with respect to loans not otherwise reportable as past due, financial institutions are not expected to designate loans with deferrals granted due to COVID-19 as past due because of the deferral, and that “each financial institution should refer to the applicable regulatory reporting instructions, as well as its internal accounting policies, to determine if loans to stressed borrowers should be reported as non-accrual assets in regulatory reports.” However, during the short-term arrangements discussed in the Interagency Statement, these current loans generally should not be reported as non-accrual.

CIT intends to apply the TDR provisions of the CARES Act on a product-type basis, or on a loan-by-loan basis, for eligible loan modifications. For eligible loans for which the CARES Act is not applied, CIT intends to follow the applicable guidance of the Interagency Statement. For such deferrals, CIT has elected to continue to recognize interest income (at a modified effective rate) subject to consideration of whether the loan should be placed on non-accrual status.

SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies are included in the Company's 2019 Form 10-K. Effective January 1, 2020, CIT changed its accounting policy for the measurement of credit losses on financial instruments resulting from the adoption of ASU 2016-13 Financial Instruments — Credit Losses (Topic 326), and subsequent related Accounting Standards Updates ("ASUs"). There were no other material changes to policies during the three months ended March 31, 2020. In addition to the Company’s adoption of the new credit losses standard outlined below, refer to the Other Newly Adopted Accounting Standards section for other ASUs adopted in the three months ended March 31, 2020.

ASU 2016-13 Financial Instruments – Credit Losses (Topic 326)

On January 1, 2020, CIT adopted ASU 2016-13 Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequent related ASUs. Topic 326 introduces a forward-looking “expected loss” model (the “Current Expected Credit Losses” or “CECL” model) to estimate credit losses over the full remaining expected life of the portfolio upon adoption, rather than the incurred loss model under legacy GAAP. Estimates of expected credit losses (“ECL”) under the CECL model are based on relevant information about past events, current conditions, and reasonable and supportable forecasts regarding the collectability of reported amounts. The CECL model is applicable to financial assets measured on an amortized cost basis. It also applies to off-balance sheet credit exposures where CIT has contractual obligations to extend credit and such obligations are not unconditionally cancelable by CIT. In addition, Topic 326 amends accounting for available-for-sale (“AFS”) debt securities to incorporate an allowance, which allows for reversals of impairment losses if the credit of an issuer improves. Such changes require credit losses to be presented as an allowance rather than as a write-down on AFS debt securities that management does not intend to sell or for which the Company believes it is “more likely than not” that it will not be required to sell.

ASU 2016-13 was adopted using a modified-retrospective approach with a cumulative-effect adjustment to the opening balance of retained earnings. As of January 1, 2020, retained earnings was decreased by $82.4 million due to the adoption of this new standard. Comparative prior period financial information was not adjusted and will continue to be reported under previously applicable accounting guidance.

Allowance Methodology

Topic 326 requires estimating and recognizing expected credit losses over the remaining expected life for applicable financial assets. However, the standard does not prescribe a specific credit loss methodology, requiring CIT to use judgment in determining the relevant information and estimation methods that are appropriate, as long as they are applied consistently over time. Determining an appropriate ACL requires significant judgment that may change based on management’s ongoing process for analyzing the credit quality of the Company’s loan portfolio.

Loans are first bifurcated between commercial and consumer loans. CIT then estimates the ACL for financial assets with similar risk characteristics on a collective basis. A financial asset is measured individually only if it does not share similar risk characteristics with other financial assets. The ACL for AFS debt securities is estimated by using the discounted cash flow method, which reflects the differences between the amortized cost basis and the present value of the principal and interest cash flows expected to be collected. The ACL for loans is estimated by using a method other than a discounted cash flow method, and therefore reflects CIT’s expected credit losses on the amortized cost basis of the financial assets as of the reporting date. The estimate of ACL is based on relevant information about past events, current conditions and reasonable and supportable

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

forecasts that affect the collectability of the reported amounts. CIT utilizes a forecast that extends over the contractual term of the loans, and which CIT considers reasonable and supportable for the life of the loan. This forecast uses historical information and takes into consideration current conditions and economic expectations before converging to a long-run trend.

The ACL is a valuation account that is deducted from the amortized cost basis of the financial asset to present the net amount expected to be collected on the financial asset. At the reporting date, CIT records an ACL on the amortized cost of financial assets, including purchased financial assets. Any changes in the current estimate of the ACL from the estimated ACL previously recorded are reported in net income as provision for credit losses expense or reversal of provision for credit losses.

Amortized cost basis is defined as the amount at which a loan or investment is originated or acquired, adjusted for applicable accrued interest, accretion, or amortization of premium, discount, and net deferred fees or costs, collection of cash, write-offs, foreign exchange, and fair value hedge accounting adjustments.

Accrued interest is separately reported from the loan’s amortized cost basis as Accrued Interest Receivable within Other Assets. The total amount that is excluded from the amortized cost basis is disclosed in Note 3 – Loans. As permitted by CECL, the Company has elected not to measure an ACL for accrued interest receivable, rather, all previously accrued but uncollected interest is reversed and charged against interest income when an account is placed on non-accrual status (for commercial loans) or is contractually delinquent for 90 days or more (for consumer mortgages and small ticket commercial loans).

Commercial Loans

With respect to commercial loans, the Company monitors various factors, including expected and historical losses and levels of, and trends in, past due loans, non-performing assets, collateral values and economic conditions. These risk factors are considered when Commercial Loans are graded according to the Company’s internal rating system with respect to probability of default (“PD”) and loss given default (“LGD”) (severity). The PD and severity are derived through historical observations of default and subsequent losses within each risk grading. Credit quality indicators used in determining risk ratings are monitored and updated at least annually. CECL models are employed to develop a lifetime PD which is used to establish the ACL for financial assets that are measured on a collective basis. These models utilize external and internal historical loan performance data together with historical macroeconomic data to identify correlations and select macro variables such as unemployment rate and gross domestic product growth rate that would be appropriate predictors of loan losses in the future to determine the ACL. See Note 3 – Loans for additional information regarding credit quality indicators. For individually reviewed financial assets, see detail provided in the Individually Reviewed Loans section below.

Consumer Loans

With respect to consumer loans, there are two main single family residential (“SFR”) loan portfolios – a consumer lending mortgage portfolio that includes new business originations and purchases, and a run-off portfolio that was acquired in 2015 as part of the OneWest acquisition (within the LCM division). For SFR loans, the Company monitors loan performance metrics, including delinquency and non-accrual status, and credit quality risk indicators such as the Loan-to-Value Ratio (“LTV”) of the underlying collateral and the credit score developed by the Fair, Isaac and Company (the “FICO score”) of borrowers excluding government insured loans (refer to Zero Loss Assumption section below). LTV refers to the ratio comparing the loan's unpaid principal balance to the property's current collateral value as an indicator of the potential loss severity in the event of default. The Company periodically updates the property values of real estate collateral (for home equity and residential mortgages) to calculate current LTV ratios, adjusted based on home price indices compiled by the Case-Shiller Home Price Indices, or more often if events require (e.g., a loan secured by the collateral is placed on non-accrual). The Company examines LTV migration and stratifies LTV into categories to monitor the risk in the loan classes. The borrower’s current or “refreshed” FICO score, which is obtained at least quarterly, is a secondary credit quality indicator for certain loans, as FICO scores are an indication of the borrower’s credit payment history. Thus, a loan to a borrower with a low FICO score (less than 660) is considered to be of higher risk than a loan to a borrower with a higher FICO score. Further, a loan to a borrower with a high LTV ratio and a low FICO score is at greater risk of default than a loan to a borrower that has both a high LTV ratio and a high FICO score. For consumer loans that are evaluated collectively, ACL and cash flow projections are developed with models that utilize historical loan performance data together with historical macroeconomic data to identify correlations and select macro variables that would be appropriate in estimating future loan losses. The macroeconomic variables considered include measurements of the regional economy, home price changes and unemployment rates, which may have an impact on credit quality. Refer to Note 3 – Loans for additional information regarding credit quality. For individually reviewed financial assets, see detail provided in the Individually Reviewed Loans section below.

Purchased Credit Deteriorated (“PCD”) Financial Assets

PCD assets are acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer’s assessment. A single asset can be deemed a PCD asset, or a group of assets acquired together that have similar risk characteristics can be classified as PCD assets. PCD assets are recorded at their purchase price plus the ACL expected at the time of acquisition, or “gross up” of the amortized cost basis. Day 1 ACL is established for these loans without an income statement effect. Any changes in the current estimate of the ACL after acquisition from the estimated ACL previously recorded are reported in net income as provision for credit losses expense or reversal of provision for credit losses in subsequent periods as they arise. A purchased financial asset that does not qualify as a PCD asset is accounted for similarly to originated assets, whereby an ACL is recognized with a corresponding increase to the income statement provision for credit losses.

Determining which assets meet the PCD definition requires management’s judgment as there is no definition provided for “more-than-insignificant deterioration in credit quality”. Credit deterioration attributes such as credit risk ratings, FICO score, delinquency status and other standard indicators (i.e., TDR, non-accrual status, charge-offs and bankruptcy) are used to classify

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

PCD assets either at the level of the individual asset or on the basis of a group or pool in an asset acquisition or business combination.

In terms of CIT’s former purchased credit-impaired loans (“PCI”) under ASC 310-30, the Company elected to transition from pool level to loan level by using the undiscounted expected cash flows for each asset within the pool to allocate the respective non-credit discount pursuant to ASC 326-20. PCI assets became PCD assets via the re-characterization of existing non-accretable discount as ACL using the undiscounted contractual cash flows method at the loan level with no equity impact at transition. In transitioning from PCI to PCD, accrued interest was recognized separately from the loan balance given the Company’s accounting policy election not to measure an ACL on accrued interest receivable within other assets.

Zero Loss Assumption

Measurement of expected credit losses is not required for a financial asset or group of financial assets if historical credit loss information adjusted for current conditions and reasonable and supportable forecasts results in an expectation of nonpayment of the amortized cost basis of zero. Government-insured consumer loans (e.g., Federal Housing Administration (“FHA”)), U.S. treasury securities, U.S. government agency issued securities and certain commercial agency securities are within the scope of the zero loss assumption under CECL given these securities have the highest credit ratings, a long history of no credit losses, and are guaranteed by high credit quality entities.

MOB Acquisition

In connection with the MOB Acquisition, the Company incorporated MOB’s financial assets into CIT’s CECL framework. CIT was required to record an allowance for non-PCD assets with a corresponding increase to the income statement provision for credit losses. For acquired PCD loans, an allowance was required with a corresponding increase to the amortized cost basis as of the acquisition date. For PCD loans where all or a portion of the loan balance has been previously written-off, or would be subject to write-off under CIT’s charge-off policy, the CECL allowance included as part of the grossed-up loan balance at acquisition was immediately written-off, resulting in a zero period-end allowance balance and no impact on the ACL rollforward.

Refer to Note 2 – Acquisition and Discontinued Operations for additional details.

Other Allowance Factors

With respect to loans transferred from held for investment (“HFI”) to assets held for sale (“AHFS”), prior to transfer to AHFS a write-down of the amortized cost basis is recognized with a charge to the provision for credit losses, to the extent the carrying value exceeds the fair value and the difference relates to credit quality. After the asset is transferred to AHFS, the amount by which the amortized cost basis exceeds fair value is accounted for as a valuation allowance in other income, and changes in valuation are included in the determination of net income of the period in which the change occurs.

With respect to loans transferred from AHFS to HFI, any valuation allowance previously recorded on the AHFS is reversed through earnings prior to the transfer. CIT then reclassifies the loan into HFI at its amortized cost basis (which is reduced by any previous charge-offs but excludes any valuation allowance). After transferring back into HFI, the loan is evaluated in accordance with CIT’s normal credit review policies with any necessary ACL recognized with a corresponding increase to the income statement provision for credit losses.

An approach similar to the ACL process is utilized to calculate the allowance for off-balance-sheet credit exposures related to unfunded loan commitments, letters of credit and deferred purchase agreements (“DPAs”). The allowance for off-balance-sheet credit exposures is maintained to absorb estimated credit losses related to these facilities and includes an assumption of the likelihood that funding will occur prior to an obligor defaulting. The allowance for off-balance-sheet credit exposures is recorded as a liability within other liabilities on the Consolidated Balance Sheets. Net adjustments to the allowance for off-balance-sheet credit exposures are included in the provision for credit losses.

A loan or lease is determined to be collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. Collateral dependent loans and leases are recorded at their amortized cost basis. An ACL is established for an excess of amortized cost of collateral-dependent loans or leases over the fair value of the underlying collateral (less costs to sell, if applicable) at the reporting date. Collateral-dependent loans and leases are identified on a quarterly basis. The underlying collateral is primarily equipment and real estate.

CECL requires that entities do not extend the contractual term for expected extensions, renewals, and modifications unless it has a reasonable expectation at the reporting date that it will execute a TDR with the borrower. In addition, extension or renewal options (excluding those that are accounted for as a derivative) that are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the entity are considered when determining the contractual term of a loan. Under CIT’s allowance methodology, CIT defines a TDR as reasonably expected when the Company has identified and approved a TDR for commercial loans and when CIT as a Lender has approved the terms of a trial modification for a borrower experiencing financial difficulty (i.e., typically the beginning of the trial period) for consumer loans. Borrower extension options exist exclusively in the Real Estate Finance division. The amount of the reserve required for these contracts is affected by (1) the size of the portfolio with extension options at the discretion of the borrower; (2) the length and number of extensions for which the borrower is eligible, and (3) the probability the borrower will elect and qualify for the extension.

Past Due and Non-Accrual Loans

A loan is considered past due for financial reporting purposes if a default of contractual principal or interest exists for a period of 30 days or more. For consumer mortgage loans, under the Mortgage Bankers Association’s method of reporting delinquencies, a loan is delinquent if a monthly payment has not been received by the end of the day immediately preceding the loan’s next due

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

date. All other loans use a method of reporting delinquencies that considers a loan delinquent if a monthly payment has not been received by the close of business on the loan’s next due date. Past due loans consist of loans that are still accruing interest as well as loans on non-accrual status.

Loans are placed on non-accrual status when the financial condition of the borrower has deteriorated and payment in full of principal or interest is not expected or the scheduled payment of principal and interest has been delinquent for 90 days or more, unless the loan is both well secured and in the process of collection.

The Company elected that at the time a loan is placed on non-accrual status (for Commercial Loans) or is contractually delinquent for 90 days or more (for consumer mortgages and small ticket Commercial Loans), all previously accrued but uncollected interest is reversed and charged against interest income. All future interest accruals, as well as amortization of deferred fees, costs, purchase premiums or discounts are suspended if a loan is placed on non-accrual status. Subsequent interest received is applied to the outstanding principal balance until the account is collected, charged-off or returned to accrual status. Loans that are on cash basis non-accrual do not accrue interest income; however, payments designated by the borrower as interest payments may be recorded as interest income. To qualify for this treatment, the remaining recorded investment in the loan must be deemed fully collectable. Regarding payment deferrals granted due to COVID-19, as there are no contractual payments due during the deferral period, these loans will generally not be assessed as being past due or on non-accrual during the period of the deferral.

Individually Reviewed Loans

CECL guidance provides that a financial asset is measured individually if it does not share similar risk characteristics with other financial assets. For CIT, loans which are identified to be individually reviewed under CECL typically would have been evaluated individually as impaired loans using accounting guidance in effect in periods prior to the adoption of CECL.

Loans of $500 thousand or greater that are placed on non-accrual status are subject to periodic individual review by the Company’s problem loan management (“PLM”) function. The Company excludes certain loan portfolios from its individually reviewed loans disclosures as charge-offs are typically determined and recorded for such loans beginning at 90-150 days, depending on loan type, of contractual delinquency. These excluded loan portfolios include small-ticket loans, primarily in Business Capital, as well as short-term factoring receivables in Commercial Finance.

Charge-Offs on Loans

Charge-offs on loans are recorded after considering such factors as the borrower’s financial condition, the value of underlying collateral and guarantees (including recourse to dealers and manufacturers), and the status of collection activities. Such charge-offs are deducted from the carrying value of the related loans. This policy is largely applicable in the loan classes within Commercial Banking. In general, charge-offs of large ticket commercial loans ($500 thousand or greater) are determined based on the facts and circumstances related to the specific loan and the underlying borrower and the use of judgment by the Company. Charge-offs of small ticket commercial loans are recorded beginning at 90-150 days, depending on loan type, of delinquency.

Charge-offs of consumer loans are recorded beginning at 120 days of delinquency. The value of the underlying collateral will be considered when determining the charge-off amount if repossession is reasonably assured and in process.

Charge-offs on the Company’s loans are reflected in the provision for credit losses. Expected recoveries of amounts previously written off and expected to be written off are included in CIT’s loss estimates as decreases to the ACL and the provision for credit losses. In some circumstances, the ACL for a specific portfolio or loan may be negative because the amount expected to be collected, including expected recoveries, exceeds the financial asset’s amortized cost basis. The negative ACL is limited to the amounts previously written off and expected to be written off by the Company.

For acquired PCD loans where all or a portion of the loan balance had been charged off prior to acquisition, and for which active collection efforts are still underway, the CECL allowance included as part of the grossed-up loan balance at acquisition is immediately charged off if required by CIT’s existing charge off policy. Additionally, CIT is required to consider its existing policies in determining whether to charge off any financial assets, regardless of whether a charge-off was recorded by the predecessor company. The initial ACL recognized on PCD assets includes the gross-up of the loan balance reduced by immediate charge-offs for loans previously charged off by the predecessor company or which meet CIT’s charge-off policy on the date of acquisition. Charge-offs against the allowance related to such acquired PCD loans do not result in an income statement impact. See Note 4 – Allowance for Credit Losses for additional details.

Investments

Financial Assets with Collateral Maintenance Provisions

The Company has elected to measure the ACL by comparing the amortized cost basis of the financial asset with the fair value of collateral at the reporting date. Such financial assets include reverse repurchase agreements that are collateralized by securities. The Company marks the collateral assets for these transactions on a daily basis and any change, (e.g. decrease in value of collateral), results in additional collateral being called such that the Company is not exposed to default risk of the counterparty. The collateral placed or received are High Quality Liquid Securities. This election may result in an estimate of zero expected credit losses when the collateral levels are required to be adjusted and replenished to be always equal to or greater than the amortized cost basis of the financial assets. The fair value of collateral is reviewed at each reporting period to ensure zero loss assumption is appropriately applied.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

Evaluating AFS Debt Securities for Credit Losses

An unrealized loss exists when the current fair value of an individual debt security is less than its amortized cost basis. Debt securities classified as AFS that are in an unrealized loss position, which the Company does not intend to sell or is not likely to be required to sell, are evaluated to determine whether the decline in fair value has resulted from credit losses or other factors at the individual security level, if they do not qualify for zero-loss assumption. If evidence of credit loss exists, the present value of expected cash flows is compared with the amortized cost basis and an allowance is recorded as a deduction from the security balance, with a corresponding increase in the provision for credit losses, limited by the amount that the fair value is less than the amortized cost basis. Non-credit related impairment losses are recorded in Other Comprehensive Income (“OCI”). Any changes in the current estimate of the ACL from the estimated ACL previously recorded are reported in net income as provision for credit losses expense or reversal of provision for credit losses. Losses are charged against the ACL when the uncollectibility of an AFS debt security is confirmed by management. Change in the ACL due to changes in time value is reported as provision for credit losses. If the Company intends to sell the debt security, or more likely than not will be required to sell the security before recovery of its amortized cost basis, any existing ACL is written off and the amortized cost basis of the security is written down to the fair value at the reporting date with any incremental impairment reported in earnings.

Accrued Interest Receivable on AFS

The Company elected to present the accrued interest receivable balance separately within Other Assets. Accrued interest is excluded from both the fair value and the amortized cost basis of the AFS debt security for the purpose of identifying and measuring impairment. The Company elected not to measure an ACL for accrued interest receivable, rather, all previously accrued but uncollected interest is reversed and charged against interest income when the AFS security is deemed uncollectible by management.

Regulatory Capital

In March 2020, the OCC, FRB and Federal Deposit Insurance Corporation (“FDIC”) collectively issued an interim final rule on the Revised Transition of the Current Expected Credit Losses Methodology for Allowances (“Revised CECL Transition Rule”) for regulatory capital. See Note 13 – Regulatory Capital for more details.

Other Newly Adopted Accounting Standards

In addition to ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) outlined above, the following pronouncements were issued by the Financial Accounting Standards Board (“FASB”) and adopted by CIT as of January 1, 2020. Refer to Note 1 – Business and Summary of Significant Accounting Policies in 2019 Form 10-K for a detailed description of these pronouncements:

•

ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The adoption of this standard did not have a material impact on CIT’s consolidated financial statements and disclosures.

•

ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The adoption of this standard did not have a material impact on CIT’s consolidated financial statements and disclosures.

Recent Accounting Pronouncements

The following accounting pronouncements were issued by the FASB but are not yet effective for CIT.

Standard

Summary of Guidance

Effect on CIT's Financial Statements

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

ASU 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting

Issued March 2020

•The amendments in this update provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

•The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

•For contract modifications, the amendments provide the optional relief of accounting for the modification as a continuation of the existing contract without additional analysis. In addition, companies can consider embedded features to be clearly and closely related to the host contract without

reassessment.

•For hedge accounting, entities can continue hedge accounting when certain critical terms of a hedging relationship change. Moreover, companies can perform some effectiveness assessments in ways that disregard certain potential sources of ineffectiveness.

•For held-to-maturity (“HTM”) debt securities, entities have the optional relief of one-time sale and/or transfer to AFS or trading for HTM debt securities that both reference an eligible reference rate and were classified as HTM before January 1, 2020.

•The ASU applies prospectively to contract modifications and hedging relationships.

•Entities can apply the amendments in this update as of the beginning of the interim period that includes March 12, 2020 (January 1, 2020 for calendar year-end companies) or any date thereafter. However, the guidance will only be available for a limited time (generally through December 31, 2022).

•The one-time election to sell and/or transfer debt securities classified as HTM may be made at any time after March 12, 2020.

•CIT is currently evaluating the timing of the election of this standard, and its impact on the Company’s consolidated financial statements and disclosures.

ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes

Issued November 2019

•The amendments in this update add new guidance to simplify accounting for income taxes, change the accounting for certain income tax transactions and make minor improvements to the codification.

•The amendments in this Update have different transition requirements depending on the topic.

•Effective for CIT as of January 1, 2021. Early adoption is permitted.

•Although CIT is currently evaluating the impact of this standard, the Company does not anticipate a material impact on its consolidated financial statements and disclosures.

NOTE 2 — ACQUISITION AND DISCONTINUED OPERATIONS

ACQUISITION

On January 1, 2020, CIT Bank acquired MOB, the savings bank subsidiary of Mutual of Omaha Insurance Company and OFHI, for approximately $1 billion in exchange for 100% of all outstanding shares of MOB common stock. The consideration was comprised of approximately $850 million in cash and approximately 3.1 million shares of CIT Group Inc. common stock (valued at approximately $141 million based on the closing market price on December 31, 2019, the last trading price before the acquisition).

The acquisition enhances CIT’s deposit and commercial banking capabilities, by adding a new channel of deposits related to homeowners’ associations (“HOA”) and enhances CIT’s middle-market commercial banking business through the addition of relationship banking teams and expanded product and technology solutions. The acquisition was accounted for as a business combination.

Assets acquired totaled approximately $8.6 billion, including $121.6 million of goodwill and $102.6 million of intangible assets and included $7.6 billion of assumed liabilities and 25 bank branches. The assets acquired, liabilities assumed and consideration exchanged were recorded at their preliminary estimated fair value on the acquisition date.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

Consideration and Net Assets Acquired (dollars in millions)

Purchase price	$	993.1
Recognized amounts of identifiable assets acquired and liabilities assumed, at fair value
Assets
Cash and interest-bearing cash	$	123.1
Investment securities		1,717.6
Loans		6,297.9
Other assets		199.5
Total assets	$	8,338.1
Liabilities
Deposits	$	6,992.9
Securities sold under agreements to repurchase		193.2
Other liabilities		93.1
Borrowings		290.0
Total liabilities	$	7,569.2
Total fair value of identifiable net assets		768.9
Intangible assets		102.6
Goodwill	$	121.6

The determination of estimated fair values required management to make certain estimates about discount rates, future expected cash flows (that may reflect collateral values), market conditions at the time of the acquisition and other future events that are highly subjective in nature and may require adjustments. As of March 31, 2020, the final purchase price remains subject to true up adjustments pursuant to the Agreement and Plan of Merger which provides CIT the opportunity to review the seller’s final consolidated balance sheet as of the closing date, and the purchase price allocation and fair value measurements remain preliminary due to the timing of the acquisition. CIT continues to review information relating to events or circumstances existing at the acquisition date and expects to finalize its analysis of the acquired assets and assumed liabilities over the next few months, within one year of the acquisition. Management anticipates that this review could result in adjustments to the acquisition date valuation amounts presented herein but does not anticipate that these adjustments would be material.

Cash and interest-bearing cash

The Company acquired cash and interest-bearing cash of $123.1 million, which includes cash on deposit with the FRB and other banks, deposits in transit, vault cash and highly liquid money market investments with original maturities of three months or less. Given the short-term nature and insignificant risk of changes in value because of changes in interest rates, the carrying amount of the acquired cash and interest-bearing cash was determined to equal the fair value.

Investment securities

The Company acquired a portfolio of debt securities and other equity investments valued at approximately $1.7 billion as of the acquisition date. The debt securities portfolio contains U.S. Government guaranteed / sponsored agency commercial and residential mortgage-backed securities, private label asset-backed securities and state and municipal bonds. These securities are classified as AFS debt securities. The acquisition date fair value of the securities was based on third-party dealer quotes which reflect exit prices pursuant to the guidance on fair value measurement.

Loans

The acquired loan portfolio, with an aggregate unpaid principal balance (“UPB”) and a fair value of approximately $6.3 billion at the acquisition date, is comprised of various types of loan products. The loan portfolio has been bucketed considering similar risk characteristics and product types and was further segmented into a commercial loan portfolio and a consumer loan portfolio to align with CIT’s business segmentation. The following table presents the loan valuations by division in each segment.

Loans (dollars in millions)	UPB		Fair Value
Commercial Banking
Commercial Finance	$	2,316.4	$	2,249.4
Real Estate Finance		2,107.3		2,106.4
Consumer Banking
Consumer and Community Banking		1,926.7		1,942.1
Total loans	$	6,350.4	$	6,297.9

The acquired loan portfolios above were valued using the direct method under the income approach. The income approach derives an estimate of value based on the present value of the projected future cash flows of each loan using a discount rate that incorporates the relevant risks associated with the asset and time value of money. To perform the valuation, the loan portfolio was divided into approximately twenty cohorts based on risk characteristics, nature and collateral of the underlying loans and product type. The loan cohorts were further bifurcated for fixed and adjustable rate loans and then stratified based on credit risk rating for commercial loans and FICO scores for consumer loans. The key cash flow assumptions related to the above acquired loan portfolios were: prepayment rate, default rate, severity rate and discount rate, as applicable.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

The Company applied the recovery approach to value the commercial loans identified as individually impaired loans. The fair value of the loans was estimated by discounting the estimated recovery amount to be collected at the selected discount rate through the expected liquidation timeline of each loan. The discount rate and liquidation timeline were selected based on market observations for these types of assets.

The table below summarizes the key valuation input assumptions by division for the acquired loans, excluding the individually impaired loans:

	Discount Rate		Severity Rate		Prepayment Rate		Default Rate
Loan portfolio	Range	Weighted Avg.	Range	Weighted Avg.	Range	Weighted Avg.	Range	Weighted Avg.
Commercial Banking
Commercial Finance	3.25% -15.50%	4.33%	15.00% - 60.00%	18.59%	1.25% - 26.75%	17.99%	0.25% - 7.00%	1.90%
Real Estate Finance	3.25% - 5.50%	3.86%	15.00% - 30.00%	18.37%	0.50% - 26.75%	17.77%	0.10% - 7.00%	2.67%
Consumer Banking
Consumer and Community Banking	2.50% - 6.75%	3.42%	5.00% - 35.00%	9.95%	1.50% - 30.0%	21.93%	0.05% - 7.00%	0.33%

Goodwill and intangible assets

The goodwill recorded is attributable to advancing CIT’s bank deposit strategy by establishing a leading market share in HOA banking, improving CIT’s competitive position in the financial services industry, and the related synergies that are expected to result from the acquisition. The $121.6 million of preliminary goodwill recorded represents the excess of the purchase price over the estimated fair value of the net assets acquired by CIT, including intangible assets. See Note 18 – Goodwill and intangible assets for a description of goodwill recognized. Goodwill related to this transaction is deductible for income tax purposes.

The following table presents the intangible assets recorded in conjunction with the MOB Transaction related to the valuation of core deposits, customer relationships and trade name.

Intangible Assets (dollars in millions)	Fair Value		Estimated Useful Life	Amortization Method
Core deposit intangibles	$	96.1	10 years	Straight line
Customer relationships		3.5	10 years	Accelerated
Trade name		3.0	10 years	Straight line
Total intangible assets	$	102.6

•

Core Deposit Intangibles — Certain core deposits were acquired as part of the transaction, which provide an additional source of funds for CIT. The core deposit intangibles represent the costs saved by CIT by acquiring the core deposits and not needing to source the funds elsewhere. This intangible was valued using the income approach: after-tax cost savings method.

•

Customer Relationships — Certain customer relationships were acquired as part of the transaction related to the various MOB product offerings. These relationships include those that are both consumer and commercial based, as well as those related to Community Association Banking (“CAB”) products. The acquired customer relationships were valued using the income approach: multi-period excess earnings method.

•	Trade Name — CIT acquired the CAB name, which is commercially recognized and expected to drive value for the HOA business. The acquired trade name was valued using the income approach: relief from royalty method.

See Note 18 – Goodwill and Intangible assets for further discussion of the accounting for goodwill and other intangible assets.

Other assets

Other assets of $199.5 million include $45.5 million of Right of Use (“ROU”) assets related to the application of ASC 842, $23.9 million of equity investments, $19.9 million of fair value on derivative instruments, $16.0 million of accrued interest receivable on loans, $14.9 million of property, furniture and fixtures, $12.5 million of technology assets, $10.3 million of Mortgage Servicing Rights (“MSR”) and $56.6 million of other assets.

As of the acquisition date, MOB held investments in certain restricted equity, low income housing tax credits (“LIHTC”), equity equivalents in not for profits, limited partner interests in CRA funds and FHLB Stock. The fair value of the LIHTC investments considered the ongoing equity installments that are regularly allocated to each of the underlying tax credit funds comprising the LIHTC Investments, along with changes to projected tax benefits and the impact this has on future capital contributions, and an appropriately determined discount rate. At acquisition, MOB also held equity interests in four limited partnerships, which have been valued using the net asset value (“NAV”) published by each fund.

The acquisition included various property, furniture and fixtures inclusive of leasehold improvements. CIT considered the income, market and cost approaches in estimating the fair value of the property, furniture and fixtures. Leasehold improvements, machinery and equipment and computer software were valued under the cost approach. Computer hardware was valued using

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

the percent of cost method under the market approach. Office furniture and equipment were valued under market and cost approaches. The fair value of the property, furniture and fixtures was estimated at $14.9 million. In addition, certain acquired technologies used to carry out day-to-day business activities were valued using the cost replacement method resulting in an assessed value of $12.5 million.

The Company acquired MSRs, which represent a contract for the right to receive future revenue associated with the servicing of financial assets and thus are considered a non-financial asset. The estimated fair value of the MSRs was valued under the income approach using the discounted cash flow model which utilizes certain key assumptions including prepayment speed, discount rates and cost to service.

Deposits

Deposits of $7.0 billion includes $1.2 billion of certificate of deposits (“CDs”), which allow depositors to lock in interest rates for varying periods of time, and $5.8 billion of deposits with no stated maturities. CDs had contractual maturities ranging from 30 days to 5 years. These deposits were valued using the indirect method of the income approach, which is based on discounting the cash flows associated with the CDs. Value under the indirect method was a function of the projected contractual cash flows of the CDs and a credit adjusted discount rate, as observed from similar risk instruments. In order to best capture the features and risks of the CDs, they were grouped along two dimensions; maturity groups, based on the remaining fixed term of the deposits (e.g., 0 to 1 year, 1 to 2 years, etc.), and balance (e.g., less than $100,000 and greater than or equal to $100,000).

The valuation of term deposits resulted in a purchase accounting adjustment (“PAA”) premium of $14.3 million. For non-maturity deposits (primarily checking, savings and money market deposits), the fair value was assumed to equal the carrying value, therefore no PAA was recorded.

Securities sold under agreement to repurchase

Securities sold under agreements to repurchase (“Repos”) of $193.2 million were accounted for as collateralized financing transactions as the terms of sale agreements do not qualify for sale accounting and are therefore recorded at the amount of cash received. Accrued interest payables are recorded in Other liabilities. Interest incurred is recorded in Interest expense. Repos are collateralized by securities reported as assets on the condensed Consolidated Balance Sheets. The fair value of collateral is monitored daily and additional collateral is provided or excess collateral is returned for margin maintenance purposes. All Repos were overnight and collateralized by securities issued or guaranteed by U.S. government/sponsored agencies. Given that the Repos mature each business day, the carrying values were assumed to approximate the fair value.

Borrowings

Borrowings reflects the Federal Home Loan Bank (“FHLB”) advances of $290.0 million. The fair value is assumed to be equal to the outstanding balance since these advances mature the next day with the interest rate set to the overnight market rate.

Other liabilities

Other liabilities of $93.1 million includes lease liabilities related to the application of ASC 842 Leases, various amounts accrued for compensation related costs and other payables.

Unaudited Pro Forma Information

The amount of MOB interest income, non-interest income and net loss of $74.7 million, $14.1 million and $92.6 million, respectively, were included in CIT’s Consolidated Income Statement for the quarter ended March 31, 2020.The MOB net loss includes $44.8 million of MOB Day 1 provision for credit losses related to the non-PCD loans. Upon integrating MOB, complete separate records for MOB as a stand-alone business will not be maintained as the operations will be fully integrated into CIT. MOB’s interest income, non-interest income and net income noted above reflect management’s best estimates, based on information available at the reporting date.

The following table presents certain unaudited pro forma financial information for illustrative purposes only, for the quarters ended March 31, 2020 and 2019 as if MOB had been acquired on January 1, 2019. The unaudited estimated pro forma information combines the historical results of MOB with the Company’s consolidated historical results and includes certain adjustments for the respective periods. The key adjustments made to reflect the pro forma results as if the acquisition occurred on January 1, 2019 are the (a) removal of the MOB Day 1 provision for credit losses noted above; (b) transfer of $17.1 million of merger and integration costs from 2020 to 2019; and (c) inclusion of estimated PAA on interest income and interest expense and the recording of intangible asset amortization in 2019. CIT expects to achieve operating cost savings and other business synergies as a result of the acquisition that are not reflected in the pro forma amounts that follow. The pro forma information is not indicative of what would have occurred had the acquisition taken place on January 1, 2019. Therefore, actual results may differ from the unaudited pro forma information presented and the differences could be significant.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

Selected Unaudited Pro Forma Financial Information for Consolidated CIT (dollars in millions)

	Quarters Ended March 31,
	2020			2019
Interest income	$	513.6		$	601.1
Non-interest income		340.4			318.9
Net (loss) income	$	(577.1	)	$	127.0

DISCONTINUED OPERATIONS

There were no discontinued operations as of March 31, 2020 and December 31, 2019. Loss from discontinued operations of $0.3 million reflects the activities of the Business Air and Financial Freedom businesses for the quarter ended March 31, 2019. Net cash flows used in operations totaled $5.1 million and net cash provided by investing activities totaled $23.4 million for the quarter ended March 31, 2019. See the Company’s 2019 Form 10-K, Note 2 – Discontinued Operations, for further information.

NOTE 3 — LOANS

The following tables and data as of March 31, 2020 include the loan balances acquired in the MOB Transaction, which were recorded at fair value on the acquisition date. See Note 2 — Acquisition and Discontinued Operations for further information.

Unless otherwise noted, loans held for sale are not included.

Loans by Product (dollars in millions)

	March 31, 2020		December 31, 2019
Commercial loans	$	28,445.3	$	22,765.1
Financing Leases and Leverage Leases		2,251.5		2,254.4
Total commercial		30,696.8		25,019.5
Consumer loans		7,833.6		5,979.4
Total loans	$	38,530.4	$	30,998.9

The following table presents loans by segment, based on obligor location:

Loans (dollars in millions)

	March 31, 2020						December 31, 2019
	Domestic		Foreign		Total		Domestic		Foreign		Total
Commercial Banking	$	28,414.2	$	1,608.5	$	30,022.7	$	22,866.0	$	1,527.4	$	24,393.4
Consumer Banking⁽¹⁾		8,507.7		—		8,507.7		6,605.5		—		6,605.5
Total	$	36,921.9	$	1,608.5	$	38,530.4	$	29,471.5	$	1,527.4	$	30,998.9

⁽¹⁾	The Consumer Banking segment includes certain commercial loans, primarily consisting of a portfolio of Small Business Administration ("SBA") loans. These loans are excluded from the Consumer loan balances and included in the Commercial loan balances in product related tables in this note.

The following table presents selected components of the net investment in loans:

Components of Net Investment (dollars in millions)

	March 31,			December 31,
	2020			2019
Unearned income	$	(440.2	)	$	(430.0	)
Unamortized premiums / (discounts)		(550.4	)		30.0
Accretable yield on PCI loans		—			(745.4	)
Net unamortized deferred costs and (fees)⁽¹⁾		49.7			50.9

⁽¹⁾Due to CECL,accretable yield is eliminated. At December 31, 2019, accretable yield on PCI loans were shown as a separate component of net investment.

Certain of the following tables present credit-related information at the “class” level. A class is generally a disaggregation of a portfolio segment. In determining the classes, CIT considered the loan characteristics and methods it applies in monitoring and assessing credit risk and performance.

Credit Quality Information

Management monitors credit quality of commercial loans based upon risk rating consistent with bank regulatory guidance and consumer loans based upon LTV and FICO score. The following table summarizes commercial loans disaggregated by year of origination and by risk rating. The consumer loan LTV ratios and FICO scores by year of origination are also presented below. In accordance with CIT’s policy election not to measure an ACL for accrued interest, accrued interest receivable (within other assets) is separately reported from the loan’s amortized cost basis. Following the Company’s adoption of CECL, prior period risk rating disclosures were not conformed to current disclosure requirements and will continue to be reported under previously applicable accounting guidance.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

Commercial Loans — Risk Rating by Class (dollars in millions)

															Revolving
															Loans
															Converted
													Revolving		to Term
													Loans		Loans
March 31, 2020	Term Loans Amortized Cost Basis by Origination Year												Amortized		Amortized
											2015 &		Cost		Cost
Grade	2020		2019		2018		2017		2016		Prior		Basis		Basis		Total⁽¹⁾
Commercial Finance
Pass	$	2,714.0	$	3,256.1	$	2,903.2	$	1,080.7	$	518.6	$	1,350.1	$	3,572.5	$	98.2	$	15,493.4
Special Mention		54.2		68.1		86.7		54.0		27.7		139.6		257.2		5.8		693.3
Classified-accrual		27.8		18.9		27.2		152.3		69.0		238.3		241.7		1.6		776.8
Classified-non-accrual		—		—		58.5		15.6		30.8		82.3		42.6		—		229.8
Total Commercial Finance		2,796.0		3,343.1		3,075.6		1,302.6		646.1		1,810.3		4,114.0		105.6		17,193.3
Real Estate Finance
Pass		574.1		2,300.8		1,712.7		907.6		789.7		909.7		56.6		—		7,251.2
Special Mention		—		109.0		59.0		167.6		26.4		49.0		—		—		411.0
Classified-accrual		—		3.2		9.0		28.6		3.6		8.8		—		—		53.2
Classified-non-accrual		—		—		0.3		—		—		1.2		—		—		1.5
Total Real Estate Finance		574.1		2,413.0		1,781.0		1,103.8		819.7		968.7		56.6		-		7,716.9
Business Capital
Pass		564.4		1,845.7		1,192.0		546.3		230.1		70.4		18.0		0.6		4,467.5
Special Mention		16.9		98.8		83.3		38.7		23.9		4.0		—		—		265.6
Classified-accrual		8.9		87.2		83.4		46.6		20.5		6.4		—		—		253.0
Classified-non-accrual		0.1		13.9		17.4		23.3		7.7		3.3		—		—		65.7
Total Business Capital		590.3		2,045.6		1,376.1		654.9		282.2		84.1		18.0		0.6		5,051.8
Rail
Pass		—		0.9		—		—		3.2		56.6		—		—		60.7
Total Rail		—		0.9		—		—		3.2		56.6		—		—		60.7
Commercial Banking
Pass	$	3,852.5	$	7,403.5	$	5,807.9	$	2,534.6	$	1,541.6	$	2,386.8	$	3,647.1	$	98.8	$	27,272.8
Special Mention		71.1		275.9		229.0		260.3		78.0		192.6		257.2		5.8		1,369.9
Classified-accrual		36.7		109.3		119.6		227.5		93.1		253.5		241.7		1.6		1,083.0
Classified-non-accrual		0.1		13.9		76.2		38.9		38.5		86.8		42.6		—		297.0
Total Commercial Banking		3,960.4		7,802.6		6,232.7		3,061.3		1,751.2		2,919.7		4,188.6		106.2		30,022.7
Consumer Banking - Consumer and Community Banking (Primarily SBA Loans)
Pass		50.4		202.3		118.5		90.7		62.9		90.8		10.0		—		625.6
Special Mention		—		1.0		2.0		0.5		—		3.0		—		—		6.5
Classified-accrual		—		1.4		7.6		8.8		6.0		17.2		0.3		—		41.3
Classified-non-accrual		—		—		—		0.2		—		0.5		—		—		0.7
Total Consumer Banking		50.4		204.7		128.1		100.2		68.9		111.5		10.3		-		674.1
Total	$	4,010.8	$	8,007.3	$	6,360.8	$	3,161.5	$	1,820.1	$	3,031.2	$	4,198.9	$	106.2	$	30,696.8

⁽¹⁾	Amortized cost excludes accrued interest receivable of $59.3 million that is included in other assets.

Commercial Loans — Risk Rating by Class (dollars in millions)

Grade:	Pass		Special Mention		Classified- accrual		Classified- non-accrual		PCI Loans⁽¹⁾		Total
December 31, 2019
Commercial Banking
Commercial Finance	$	12,601.1	$	450.7	$	614.3	$	246.7	$	—	$	13,912.8
Real Estate Finance		5,007.0		341.0		6.3		0.4		27.8		5,382.5
Business Capital		4,527.5		233.1		217.0		60.9		—		5,038.5
Rail		59.6		—		—		—		—		59.6
Total Commercial Banking		22,195.2		1,024.8		837.6		308.0		27.8		24,393.4
Consumer Banking
Consumer and Community Banking - Primarily SBA Loans		589.6		2.4		33.9		0.2		—		626.1
Total Consumer Banking		589.6		2.4		33.9		0.2		—		626.1
Total	$	22,784.8	$	1,027.2	$	871.5	$	308.2	$	27.8	$	25,019.5

⁽¹⁾	PCI Loans had $20.7 million of non-criticized loans and $7.1 million of criticized loans (special mention or classified).

The following table provides a summary of the consumer loan LTV distribution and the covered loans held for investment

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

balances for primarily single-family residential (“SFR”) mortgage loans. The average LTV was 61% and 63% for the total consumer loans included below at March 31, 2020 and December 31, 2019, respectively.

Following the Company’s adoption of CECL, the comparative prior period financial information was not adjusted for the Consumer Loan LTV Distribution and will continue to be reported under previously applicable accounting guidance.

Consumer Loan LTV Distribution (dollars in millions)







	Term Loans Amortized Cost Basis by Origination Year																	Revolving Loans Amortized Cost			Revolving Loans Converted to Term Loans Amortized Cost
LTV Range	2020		2019			2018			2017			2016			2015 & Prior			Basis			Basis			Total ⁽⁴⁾
As of March 31, 2020
Legacy Consumer Mortgages
Greater than 125%	$	—		$	—		$	—		$	—		$	—		$	57.4		$	—		$	0.4		$	57.8
101% – 125%		—			—			—			—			—			94.3			—			1.1			95.4
80% – 100%		—			—			—			—			—			303.4			—			4.7			308.1
Less than 80%		—			—			—			—			—			1,553.4			—			26.9			1,580.3
Government-guaranteed ⁽¹⁾		—			—			—			—			—			23.8			—			—			23.8
No LTV available ⁽²⁾		—			—			—			—			—			3.8			—			23.2			27.0
Total Legacy Consumer Mortgages		—			—			—			—			—			2,036.1			—			56.3			2,092.4
Consumer and Community Banking
Greater than 125%		—			—			—			—			—			—			0.4			—			0.4
80% – 100%		15.2			68.5			26.5			3.3			0.3			1.7			3.0			—			118.5
Less than 80%		338.2			1,636.0			880.7			807.9			507.8			1,156.9			15.3			9.2			5,352.0
Government-guaranteed ⁽¹⁾		0.8			50.1			23.0			92.8			11.1			8.4			—			—			186.2
No LTV available ⁽²⁾		0.1			0.1			0.1			0.4			0.2			5.8			44.3			9.8			60.8
No LTV required ⁽³⁾		—			1.3			1.1			0.5			0.9			15.4			4.1			—			23.3
Total Consumer and Community Banking		354.3			1,756.0			931.4			904.9			520.3			1,188.2			67.1			19.0			5,741.2
Total Consumer Loans ⁽⁴⁾	$	354.3		$	1,756.0		$	931.4		$	904.9		$	520.3		$	3,224.3		$	67.1		$	75.3		$	7,833.6

⁽¹⁾ Represents loans with principal repayments insured by the FHA and U.S. Department of Veterans Affairs (“VA”).

⁽²⁾ Represents primarily junior lien loans for which LTV is not available.

⁽³⁾ Represents overdrafts, personal line of credit and third-party guaranteed loans with servicer recourse option for which LTV is not required.

⁽⁴⁾ Amortized cost excluded accrued interest receivable of $24.5 million that was included in other assets.

Consumer Loan LTV Distribution (dollars in millions)

	Covered Loans ⁽²⁾				Non-covered Loans				Total Consumer
LTV Range	Non-PCI		PCI		Non-PCI		PCI		Loans
December 31, 2019
Greater than 125%	$	—	$	2.8	$	5.2	$	53.2	$	61.2
101% – 125%		—		8.5		6.6		93.0		108.1
80% – 100%		0.3		48.1		183.4		239.3		471.1
Less than 80%		307.5		234.3		4,225.5		570.6		5,337.9
Not Applicable⁽¹⁾		—		—		1.1		—		1.1
Total	$	307.8	$	293.7	$	4,421.8	$	956.1	$	5,979.4

⁽¹⁾	Certain Consumer Loans do not have LTV's.

⁽²⁾	Covered loans at December 31, 2019 are limited to loans with indemnifications provided by the FDIC under loss share agreements (“LSA”) related to the First Federal and La Jolla transactions described below.

The SFR amounts represent the carrying value, which differ from unpaid principal balances, and include the unamortized premiums or discounts. Prior to March 31, 2020, certain consumer SFR loans are “covered loans” for which the Company can be reimbursed for a portion of certain future losses with indemnifications provided by the FDIC under LSAs. At December 31, 2019, the covered loans relate to the FDIC-assisted transactions of First Federal Bank of California in December 2009 (“First Federal Transaction”) and La Jolla Bank, FSB in February 2010 (“La Jolla Transaction”) with the indemnification period ending in December 2019 and February 2020, respectively. As of March 31, 2020, all of the LSAs have expired and there are no covered loans.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table provides a summary of the FICO score distribution for consumer loans by origination year and revolving loans. The average FICO score was 752 and 751 for the total consumer loans included below at March 31, 2020 and December 31, 2019, respectively.

Current FICO Score Distribution (dollars in millions)







		Term Loans Amortized Cost Basis by Origination Year																												Revolving Loans Amortized Cost							Revolving Loans Converted to Term Loans Amortized Cost
Current FICO Score		2020				2019						2018						2017						2016							2015 & Prior						Basis						Basis						Total ⁽⁴⁾
As of March 31, 2020
Legacy Consumer Mortgages
Greater than or equal to 730		$			—			$		—				$		—				$		—			$			—				$			784.6			$			—			$			24.3			$			808.9
Greater than or equal to 660 and less than 730					—					—						—						—						—							639.5						—						18.4						657.9
Less than 660					—					—						—						—						—							538.3						—						13.0						551.3
Government-guaranteed ⁽¹⁾					—					—						—						—						—							23.8						—						-						23.8
No FICO score available ⁽²⁾					—					—						—						—						—							49.9						—						0.6						50.5
Total Legacy Consumer Mortgages					—					—						—						—						—							2,036.1						—						56.3						2,092.4
Consumer and Community Banking
Greater than or equal to 730			306.7				1,460.3						786.7						741.9							452.9								931.4						46.8						12.9						4,739.6
Greater than or equal to 660 and less than 730				45.7							229.5						105.7						59.3						45.9							151.1						12.6						3.7						653.5
Less than 660				1.0							13.7						13.6						8.4						8.0							60.7						4.4						2.3						112.1
Government-guaranteed ⁽¹⁾				0.8							50.1						23.0						92.8						11.1							8.4						—						—						186.2
No FICO score available ⁽²⁾				—							1.5						1.4						2.0						1.5							21.4						2.2						0.1						30.1
FICO score not required ⁽³⁾				0.1							0.9						1.0						0.5						0.9							15.2						1.1						—						19.7
Total Consumer and Community Banking				354.3							1,756.0						931.4						904.9						520.3							1,188.2						67.1						19.0						5,741.2
Total Consumer Loans ⁽⁴⁾	$			354.3					$		1,756.0				$		931.4				$		904.9				$		520.3				$			3,224.3			$			67.1			$			75.3			$			7,833.6

⁽¹⁾ Represents loans with principal repayments insured by the FHA and VA.

⁽²⁾ Represents loans with no FICO score available due to borrower bankruptcy or limited credit history.

⁽³⁾ Represents overdrafts, personal lines of credit and third-party guaranteed loans with servicer recourse option for which FICO score is not required.

⁽⁴⁾ Amortized cost excluded accrued interest receivable of $24.5 million that was included in other assets.

Current FICO Score Distribution (dollars in millions)

	Covered Loans⁽³⁾				Non-covered Loans				Total Consumer
FICO Range	Non-PCI		PCI		Non-PCI		PCI		Loans
December 31, 2019
Legacy Consumer Mortgages
Greater than or equal to 730	$	202.2	$	98.6	$	320.0	$	252.5	$	873.3
Greater than or equal to 660 and less than 730		71.3		98.8		123.2		324.7		618.0
Less than 660		16.8		89.8		51.0		370.5		528.1
Government-guaranteed ⁽¹⁾		—		—		24.5		—		24.5
No FICO score available ⁽²⁾		17.5		6.5		5.2		8.4		37.6
Total Legacy Consumer Mortgages		307.8		293.7		523.9		956.1		2,081.5
Consumer and Community Banking
Greater than or equal to 730		—		—		3,319.0		—		3,319.0
Greater than or equal to 660 and less than 730		—		—		332.6		—		332.6
Less than 660		—		—		29.6		—		29.6
Government-guaranteed ⁽¹⁾		—		—		193.8		—		193.8
No FICO score available		—		—		21.8		—		21.8
FICO score not required⁽²⁾		—		—		1.1		—		1.1
Total Consumer and Community Banking		—		—		3,897.9		—		3,897.9
Total Consumer Banking	$	307.8	$	293.7	$	4,421.8	$	956.1	$	5,979.4

⁽¹⁾ Represents loans with principal repayments insured by the FHA.

⁽²⁾Represents overdrafts for which FICO score is not required.

⁽³⁾Covered loans at December 31, 2019 are limited to loans with indemnifications provided by the FDIC under the LSA related to the First Federal and La Jolla transactions.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

As of March 31, 2020 and December 31, 2019, there was no remaining amount of negative amortization contractually permitted on consumer loans with terms that permitted negative amortization.

Past Due and Non-accrual Loans—

For additional information on reporting of past due and non-accrual loans, see discussion of the CARES Act and Interagency Statement in Note 1 – Business and Summary of Significant Accounting Policies.

The table that follows presents portfolio delinquency status, regardless of accrual/non-accrual classification:

Loans - Delinquency Status (dollars in millions)

	Past Due						Total
	30-59		60-89		90 or more		Past Due		Current		PCI Loans ⁽¹⁾		Total ⁽²⁾
March 31, 2020
Commercial Banking
Commercial Finance	$	70.7	$	1.8	$	60.9	$	133.4	$	17,059.9	$	—	$	17,193.3
Real Estate Finance		21.0		1.5		0.9		23.4		7,693.5		—		7,716.9
Business Capital		129.3		34.1		25.2		188.6		4,863.2		—		5,051.8
Rail		—		—		—		—		60.7		—		60.7
Total Commercial Banking		221.0		37.4		87.0		345.4		29,677.3		—		30,022.7
Consumer Banking
Legacy Consumer Mortgages		120.1		25.2		59.7		205.0		1,887.4		—		2,092.4
Consumer and Community Banking		42.3		5.6		10.3		58.2		6,357.1		—		6,415.3
Total Consumer Banking		162.4		30.8		70.0		263.2		8,244.5		—		8,507.7
Total	$	383.4	$	68.2	$	157.0	$	608.6	$	37,921.8	$	—	$	38,530.4
December 31, 2019
Commercial Banking
Commercial Finance	$	58.7	$	27.8	$	49.0	$	135.5	$	13,777.3	$	—	$	13,912.8
Real Estate Finance		0.6		46.6		—		47.2		5,307.5		27.8		5,382.5
Business Capital		113.8		35.0		22.0		170.8		4,867.7		—		5,038.5
Rail		—		—		—		—		59.6		—		59.6
Total Commercial Banking		173.1		109.4		71.0		353.5		24,012.1		27.8		24,393.4
Consumer Banking
Legacy Consumer Mortgages		15.5		3.3		17.7		36.5		795.2		1,249.8		2,081.5
Consumer and Community Banking		16.4		3.3		7.6		27.3		4,496.7		—		4,524.0
Total Consumer Banking		31.9		6.6		25.3		63.8		5,291.9		1,249.8		6,605.5
Total	$	205.0	$	116.0	$	96.3	$	417.3	$	29,304.0	$	1,277.6	$	30,998.9

⁽¹⁾

Before the adoption of CECL,PCI loans were categorized separately, as the balances represent an estimate of cash flows deemed to be collectible and therefore were not subject to past due or non-accrual status classification. Although these former PCI (now PCD) loans may have been contractually past due, we expected to fully collect the carrying values. As of March 31, 2020, total past due included $172.6 million of PCD loans previously excluded as PCI loans (within LCM), of which $44.0 million are 90 days or more past due.

⁽²⁾	The $1.6 billion of PCD loans were included in the total balance as of March 31, 2020.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table sets forth non-accrual loans, assets received in satisfaction of loans (OREO and repossessed assets) and loans 90 days or more past due and still accruing.

Loans on Non-Accrual Status (dollars in millions)⁽²⁾⁽³⁾


	December 31, 2019		Legacy CIT⁽⁶⁾ CECL Adoption		MOB Acquisition		January 1, 2020		March 31, 2020		With No Allowance Recorded⁽⁴⁾
Commercial Banking
Commercial Finance⁽¹⁾	$	246.7	$	—	$	61.1	$	307.8	$	229.8	$	35.1
Business Capital		60.9		—		—		60.9	65.7		4.4
Real Estate Finance		0.4		0.6		—		1.0	1.5			—
Total Commercial Banking		308.0	0.6		61.1		369.7			297.0		39.5
Consumer Banking
Consumer and Community Banking		4.0		—		7.2		11.2		7.0		2.1
Legacy Consumer Mortgages⁽⁵⁾		14.3		81.6		—		95.9		77.8		10.4
Total Consumer Banking		18.3		81.6		7.2		107.1		84.8		12.5
Total	$	326.3	$	82.2	$	68.3	$	476.8	$	381.8	$	52.0
Repossessed assets and OREO	20.1									20.6
Total non-performing assets	$	346.4							$	402.4
Commercial loans past due 90 days or more accruing	25.6								7.4
Consumer loans past due 90 days or more accruing	11.3								11.5
Total accruing loans past due 90 days or more	$	36.9							$	18.9

⁽¹⁾

Factored receivables within our Commercial Finance division do not accrue interest and therefore are not considered within non-accrual loan balances; however factored receivables are considered for credit provisioning purposes. Loans that are 90 or more days past due guaranteed by government agencies are not placed on non-accrual status.

⁽²⁾	Interest recorded on non-accrual loans was $0.4 million for the quarter ended March 31, 2020.

⁽³⁾	Accrued interest that was reversed when the loan went to non-accrual status was $0.9 million for the quarter ended March 31, 2020.

⁽⁴⁾	Includes loans that have been charged off to their net realizable value and loans where the collateral or enterprise value exceeds the expected pay off value.

⁽⁵⁾	March 31, 2020 balance includes $67 million of PCD loans that were previously classified as PCI loans not subject to non-accrual classification.

⁽⁶⁾	Legacy CIT is before the MOB Acquisition, detail of which is separately disclosed.

Payments received on non-accrual loans are generally applied first against outstanding principal, though in certain instances where the remaining recorded investment is deemed fully collectible, interest income is recognized on a cash basis.

Loans are in the process of foreclosure when repayment is expected to be provided substantially through the sale of the underlying real estate and the borrower is experiencing financial difficulty. The table below summarizes the residential mortgage loans in the process of foreclosure. In March 2020, CIT has suspended residential property foreclosures and evictions for at least 60 days to single family homeowners due to the coronavirus national emergency to align with government agency guidance.

Loans in Process of Foreclosure (dollars in millions)

	March 31,		December 31,
	2020		2019
Loans in process of foreclosure⁽¹⁾	$	27.3	$	38.9

⁽¹⁾ At December 31, 2019, the reported balance includes $25.4 million of PCI loans in process of foreclosure.

Impaired Loans

The following table contains prior period information about impaired loans and the related allowance for loan losses by class, pre-adoption of CECL. CECL did not carry forward the concept of impaired loans, therefore only the prior period is presented. PCI loans, which were excluded from impaired loan balances, included loans that were identified as impaired at the date of the OneWest Transaction (the “Acquisition Date”) for which the Company is applying the income recognition and disclosure guidance in ASC 310-30 (Loans and Debt Securities Acquired with Deteriorated Credit Quality), are disclosed further below in Loans Acquired with Deteriorated Credit Quality.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

Impaired Loans (dollars in millions)

							Average Recorded Investment
December 31, 2019	Recorded Investment		Unpaid Principal Balance		Related Allowance		Year Ended December 31, 2019⁽²⁾
With no related allowance recorded:
Commercial Banking
Commercial Finance	$	46.5	$	69.0	$	—	$	68.0
Business Capital		4.8		5.5		—		6.0
Real Estate Finance		—		—		—		1.6
Consumer Banking
Consumer and Community Banking		4.0		4.0		—		4.9
Legacy Consumer Mortgages		20.6		22.4		—		24.7
With an allowance recorded:
Commercial Banking
Commercial Finance		223.9		267.3		86.0		166.6
Business Capital		19.4		19.4		10.0		11.6
Real Estate Finance		—		—		—		0.8
Consumer Banking
Consumer and Community Banking		0.1		0.2		—		—
Legacy Consumer Mortgages		1.4		1.4		0.2		0.4
Total Impaired Loans⁽¹⁾		320.7		389.2		96.2		284.6
Total Loans Impaired at Acquisition Date		1,277.6		1,936.1		17.4		1,504.4
Total	$	1,598.3	$	2,325.3	$	113.6	$	1,789.0

⁽¹⁾	Interest income recorded for the year ended December 31, 2019 while the loans were impaired was approximately $2.1 million, of which none was recognized using the cash-basis method of accounting.

⁽²⁾	Average recorded investment for the year ended December 31, 2019.

Loans Acquired with Deteriorated Credit Quality

Effective with the adoption of CECL, PCD loans are recorded at an initial amortized cost comprised of the sum of 1) the purchase price and 2) the estimate of credit losses which is recorded in the ACL. Subsequent to the initial recognition, PCD loans are accounted for under the same methodology as non-PCD loans. The following table provides a reconciliation of the purchase price and the unpaid principal balance / contractual cash flows owed to CIT as of the acquisition date for loans acquired during the respective period. For the quarter ended March 31, 2020, the PCD loans acquired related to the MOB Transaction.

PCD Loans during the quarter ended March 31, 2020 (dollars in millions)

	Commercial Banking			Consumer Banking			Total
Par Value (UPB)	$	347.8		$	58.4		$	406.2
Allowance for Credit Losses ⁽¹⁾		(56.1	)		(2.7	)		(58.8	)
(Discount) Premium		(9.0	)		2.4			(6.6	)
Purchase Price	$	282.7		$	58.1		$	340.8

⁽¹⁾

Under the new CECL standard, the initial ACL recognized on PCD assets was $58.8 million, of which $38.6 million was charged-off for loans that had been written-off prior to acquisition (whether full or partial) or which met CIT’s charge-off policy at the time of acquisition. After considering loans that were immediately charged-off upon acquisition, the net impact was $20.2 million of additional PCD reserves on January 1.

Pre-adoption of CECL, the Company applied the income recognition and disclosure guidance in ASC 310-30 to loans that were identified as PCI as of the Acquisition Date. PCI loans were initially recorded at estimated fair value with no allowance for loan losses carried over, since the initial fair values reflected credit losses expected to be incurred over the remaining lives of the loans. The acquired loans are subject to the Company’s internal credit review. See Note 4 — Allowance for Credit Losses.

PCI Loans (dollars in millions)

December 31, 2019	Carrying Value		Unpaid Principal Balance		Allowance for Loan Losses
Commercial Banking
Real Estate Finance	$	27.8	$	30.4	$	9.8
Consumer Banking
Legacy Consumer Mortgages		1,249.8		1,905.7		7.6
	$	1,277.6	$	1,936.1	$	17.4

Accretable Yield

See the Company’s 2019 Form 10-K, Note 1 — Business and Summary of Significant Accounting Policies for further details. Changes in the accretable yield for PCI loans are summarized below. Prior to 2020, the changes in the accretable yield was

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

presented for PCI loans. Due to CECL, PCI accounting was eliminated and superseded by PCD guidance.

Change in Accretable Yield (dollars in millions)

	Quarter Ended March 31,
	2019
Balance, beginning of period	$	903.8
Accretion into interest income		(40.7	)
Reclassification from non-accretable difference		2.4
Disposals and Other		(1.9	)
Balance, end of period	$	863.6

Troubled Debt Restructuring

The Company periodically modifies the terms of loans in response to borrowers’ difficulties. Modifications that include a financial concession to the borrower are accounted for as TDRs. A restructuring of a debt constitutes a TDR for purposes of ASC 310-40 when CIT, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. A concession may be either by agreement between CIT and the debtor or imposed by law or a court of law. See the Company's 2019 Form 10-K for discussion of policies on TDRs.

The Interagency Statement offers some practical expedients for evaluating whether loan modifications that occur in response to the COVID-19 pandemic are TDRs. It indicates that a lender can conclude that a borrower is not experiencing financial difficulty if either (1) short-term (e.g., six months or less) modifications are made in response to the COVID-19 pandemic, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant related to loans in which the borrower is less than 30 days past due on its contractual payments at the time a modification program is implemented, or (2) the modification or deferral program is mandated by the federal government or a state government (e.g., a state program that requires all institutions within that state to suspend mortgage payments for a specified period). Accordingly, any loan modification made in response to the COVID-19 pandemic that meets either of these practical expedients would not be considered a TDR because the borrower is not experiencing financial difficulty.

Modified loans that meet the definition of a TDR are subject to the Company's individually reviewed loans policy.

The following table presents recorded investment of TDRs, excluding those within a trial modification period of $1.5 million at March 31, 2020 and $5.5 million at December 31, 2019, and those previously classified as PCI at December 31, 2019:

TDRs (dollars in millions)

	March 31, 2020						December 31, 2019
	Recorded Investment			% Total TDR			Recorded Investment			% Total TDR
Commercial Banking	$	123.1			86	%	$	129.5			87	%
Consumer Banking		19.6			14	%		19.3			13	%
Total	$	142.7			100	%	$	148.8			100	%
Percent non-accrual		72	%					71	%

Modifications (dollars in millions)

	Quarters Ended March 31,
	2020		2019
Recorded investment related to modifications qualifying as TDRs that occurred during the quarters	$	51.4	$	10.0
Recorded investment at the time of default of TDRs that experienced a payment default (payment default is one missed payment) during the quarters and for which the payment default occurred within one year of the modification	$	0.7	$	0.8

There were $18.2 million and $23.6 million as of March 31, 2020 and December 31, 2019, respectively, of commitments to lend additional funds to borrowers whose loan terms have been modified in TDRs.

The financial impact of the various modification strategies that the Company employs in response to borrower difficulties is presented below. Although the focus is on the March 31, 2020 amounts, the overall nature and impact of modification programs were comparable in the prior year period.

Modifications qualifying as TDRs based upon recorded investment at March 31, 2020 were comprised of payment deferrals (49%) and covenant relief and/or other (51%). At December 31, 2019, TDR recorded investment was comprised of payment deferrals (52%) and covenant relief and/or other (48%).

▪	Payment deferrals result in lower net present value of cash flows, if not accompanied by additional interest or fees, and increased provision for credit losses to the extent applicable. The financial impact of these modifications is not significant given the moderate length of deferral periods.

▪

Interest rate reductions result in lower amounts of interest being charged to the customer, but are a relatively small part of the Company’s restructuring programs. The weighted average change in interest rates for all TDRs occurring during the quarters ended March 31, 2020 and 2019 was not significant.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

▪

Debt forgiveness, or the reduction in amount owed by borrower, results in incremental provision for credit losses, in the form of higher charge-offs. While these types of modifications have the greatest individual impact on the allowance, the amounts of principal forgiveness for TDRs occurring during quarters ended March 31, 2020 and 2019 was not significant, as debt forgiveness is a relatively small component of the Company’s modification programs.

▪	The other elements of the Company’s modification programs that are not TDRs do not have a significant impact on financial results given their relative size, or do not have a direct financial impact, as in the case of covenant changes.

NOTE 4 — ALLOWANCE FOR CREDIT LOSSES

As described in Note 1 – Business and Summary of Significant Accounting Policies, the Company adopted CECL on January 1, 2020. The following tables reflect CIT’s adoption of CECL. The Company maintains an ACL for estimated credit losses in its HFI loan portfolio.

Allowance for Credit Losses and Recorded Investment in Loans (dollars in millions)

	Commercial Banking			Consumer Banking			Total			Commercial Banking			Consumer Banking			Total
	Quarter Ended March 31, 2020									Quarter Ended March 31, 2019
Balance - beginning of period	$	460.4		$	22.2		$	482.6		$	460.2		$	29.5		$	489.7
Legacy CIT⁽¹⁾ CECL adoption		74.7			148.9			223.6			-			-			-
Provision for credit losses⁽³⁾		508.9			5.0			513.9			35.1			(2.1	)		33.0
The initial ACL recognized on PCD assets⁽²⁾		18.8			1.4			20.2			-			-			-
Other⁽⁴⁾		(73.4	)		(2.2	)		(75.6	)		(1.3	)		(0.3	)		(1.6	)
Gross charge-offs⁽²⁾		(60.8	)		(2.2	)		(63.0	)		(38.9	)		(0.7	)		(39.6	)
Recoveries		9.0			0.4			9.4			5.7			0.3			6.0
Balance - end of period	$	937.6		$	173.5		$	1,111.1		$	460.8		$	26.7		$	487.5

										Commercial Banking			Consumer Banking			Total
										Allowance Balance at December 31, 2019
Loans individually evaluated for impairment										$	96.0		$	0.2		$	96.2
Loans collectively evaluated for impairment											354.6			14.4			369.0
Loans acquired with deteriorated credit quality⁽⁵⁾											9.8			7.6			17.4
Allowance for credit losses										$	460.4		$	22.2		$	482.6
Other reserves⁽¹⁾										$	36.4		$	0.7		$	37.1
										Loans at December 31, 2019
Loans individually evaluated for impairment										$	294.6		$	26.1		$	320.7
Loans collectively evaluated for impairment											24,071.0			5,329.6			29,400.6
Loans acquired with deteriorated credit quality⁽⁵⁾											27.8			1,249.8			1,277.6
Ending balance										$	24,393.4		$	6,605.5		$	30,998.9
Percent of loans to total loans											78.7	%		21.3	%		100.0	%

⁽¹⁾	Legacy CIT represents the Company before the MOB Acquisition.

⁽²⁾

The quarter ended March 31, 2020 excludes the MOB day 1 charge-offs. Under the new CECL standard, the initial ACL recognized on PCD assets was $58.8 million, of which $38.6 million was charged-off for loans that had been written-off prior to acquisition (whether full or partial) or which met CIT’s charge-off policy at the time of acquisition. After considering loans that were immediately charged-off upon acquisition, the net impact was $20.2 million of additional PCD reserves on January 1, 2020.

⁽³⁾	Includes a provision for off-balance sheet credit exposures of $75.1 million, which is not part of the ACL and is offset in the “Other” line.

⁽⁴⁾	“Other” primarily includes the transfer of the “Allowance for off balance sheet credit exposures,” which represents credit loss reserves for unfunded lending commitments, letters of credit and DPA’s, to Other liabilities.

⁽⁵⁾	Represents PCI loans.

The Provision for credit losses was $513.9 million, compared to $33.0 million in the prior year quarter. The significant increase in the provision for credit losses primarily reflects the impact of the COVID-19 pandemic and the ensuing adverse impact on the macroeconomic environment across our portfolio under the CECL standard and the impact of the MOB Acquisition.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 5 — LEASES

Lessee

CIT leases primarily include office space and bank branches; and substantially all of our lease liabilities relate to United States real estate leases under operating lease arrangements. Our lessee finance leases are not significant. Our real estate leases have remaining lease terms of up to 15 years. Our lease terms may include options to extend or terminate the lease. The options are included in the lease term when it is determined that it is reasonably certain the option will be exercised.

The following tables present supplemental balance sheet and cash flow information related to operating leases. ROU assets are included in Other assets and lease liabilities are included in Other liabilities.

Supplemental Lease Balance Sheet Information (dollars in millions)

	March 31,		December 31,
	2020		2019
ROU assets	$	232.4	$	194.9
Lease liabilities		280.6		242.6

Supplemental Cash Flow Information (dollars in millions):

	Quarters Ended March 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities	$	13.9	$	10.2
ROU assets obtained in exchange for new lease liabilities		5.6		-

Lessor

The Company leases equipment to commercial end-users under operating lease and finance lease arrangements. The majority of operating lease equipment is long-lived rail equipment which is typically leased several times over the equipment’s life. We also lease technology and office equipment and large and small industrial, medical, and transportation equipment under both operating leases and finance leases.

Our Rail operating leases typically do not include purchase options. Many of our finance leases, and other equipment operating leases, offer the lessee the option to purchase the equipment at fair market value or for a nominal fixed purchase option; and many of the leases that do not have a nominal purchase option include renewal provisions resulting in some leases continuing beyond initial contractual term. Our leases typically do not include early termination options; and continued rent payments are due if leased equipment is not returned at the end of the lease.

The table that follows presents lease income related to the Company’s operating and finance leases:

Lease Income (dollars in millions)

	Quarters Ended March 31,
	2020		2019
Lease income – Operating leases	$	197.8	$	203.3
Variable lease income – Operating leases ⁽¹⁾		12.0		14.4
Rental income on operating leases		209.8		217.7
Interest income - Sales type and direct financing leases		43.7		49.2
Variable lease income included in Other non-interest income ⁽²⁾		10.9		11.5
Leveraged lease income		2.6		1.9
Total lease income	$	267.0	$	280.3

⁽¹⁾ Primarily includes per diem railcar operating lease rental income earned on a time or mileage usage basis.

⁽²⁾ Includes leased equipment property tax reimbursements due from customers of $4.6 million and $6.1 million for the quarters ended March 31, 2020 and 2019, respectively, and revenue related to insurance coverage on Business Capital leased equipment of $6.3 million and $5.4 million for the quarters ended March 31, 2020 and 2019, respectively.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 6 — INVESTMENT SECURITIES

Investment securities include debt and equity securities. See Note 1 — Business and Summary of Significant Accounting Policies in the Company’s 2019 Form 10-K for information on accounting for investment securities. The following table presents carrying value of investment securities.

Carrying Value of Investment Securities (dollars in millions)

	March 31,		December 31,
	2020		2019
Available-for-sale Securities
Debt securities	$	5,854.7	$	6,011.8
Securities carried at fair value with changes in net income
Equity securities		-		47.2
Non-marketable securities⁽¹⁾		273.9		217.8
Total investment securities	$	6,128.6	$	6,276.8

⁽¹⁾

Non-marketable investments include restricted stock of the FRB and FHLB carried at cost of $240.1 million and $187.9 million at March 31, 2020 and December 31, 2019, respectively. The remaining non-marketable investments without readily determinable fair values measured under the measurement exception totaled $33.8 million and $29.9 million at March 31, 2020 and December 31, 2019, respectively.

Realized gains on AFS securities totaled $12.5 million and $1.1 million for the quarters ended March 31, 2020 and 2019, respectively, and exclude losses from impairment.

The Company had $3.5 billion and $1.7 billion of interest-bearing cash at banks at March 31, 2020 and December 31, 2019, respectively, which are cash and cash equivalents and are classified separately on the balance sheet.

The following table presents interest and dividends on investments and interest-bearing cash.

Interest and Dividend Income (dollars in millions)

	Quarters Ended March 31,
	2020		2019
Interest income - debt securities⁽¹⁾	$	39.2	$	48.0
Interest income - interest-bearing cash		5.6		14.5
Dividends - equity securities		1.2		2.7
Total interest and dividends	$	46.0	$	65.2

⁽¹⁾	Includes interest income on securities purchased under agreement to resell.

The following table presents amortized cost and fair value of securities AFS.

Amortized Cost and Fair Value (dollars in millions)

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2020
Debt securities AFS
Mortgage-backed securities
U.S. government/sponsored agency – Residential	$	4,259.0	$	135.2	$	(2.2	)		$	4,392.0
U.S. government/sponsored agency – Commercial		1,119.5		37.7		(0.6	)			1,156.6
U.S. government/sponsored agency obligations		228.5		0.8		—				229.3
U.S. Treasury securities		9.3		—		—				9.3
Agency asset-backed securities		1.8		—		—				1.8
Corporate bonds – foreign⁽¹⁾		65.9		—		(0.2	)			65.7
Total debt securities AFS	$	5,684.0	$	173.7	$	(3.0	)		$	5,854.7

December 31, 2019
Debt securities AFS
Mortgage-backed securities
U.S. government/sponsored agency – Residential	$	4,766.4	$	24.1	$	(16.7	)		$	4,773.8
U.S. government/sponsored agency – Commercial		554.5		12.1		(1.8	)			564.8
U.S. government/sponsored agency obligations		449.4		—		(5.4	)			444.0
U.S. Treasury securities		11.2		0.1		—				11.3
Supranational securities		149.8		—		—				149.8
State & municipal bonds		1.0		—		—				1.0
Corporate bonds - foreign		65.9		1.2		—				67.1
Total debt securities AFS	$	5,998.2	$	37.5	$	(23.9	)		$	6,011.8

⁽¹⁾	There was an immaterial amount of ACL under CECL as of March 31, 2020.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents the debt securities AFS by contractual maturity dates.

Maturities - Debt Securities AFS (dollars in millions)

	March 31, 2020
	Amortized Cost		Fair Value		Weighted Average Yield
Mortgage-backed securities — U.S. government/sponsored agency – Residential
After 5 through 10 years	$	9.7	$	10.2		2.67	%
Due after 10 years		4,249.3		4,381.8		2.60	%
Total		4,259.0		4,392.0		2.60	%
Mortgage-backed securities — U.S. government/sponsored agency – Commercial
After 1 through 5 years		17.0		17.4		2.95	%
After 5 through 10 years		362.3		388.6		2.81	%
Due after 10 years		740.2		750.6		2.30	%
Total		1,119.5		1,156.6		2.48	%
U.S. government/sponsored agency obligations
After 5 through 10 years		118.2		118.8		2.69	%
Due after 10 years		110.3		110.5		2.78	%
Total		228.5		229.3		2.73	%
U.S. Treasury securities
Due in 1 year or less		4.3		4.3		2.48	%
After 1 through 5 years		5.0		5.0		0.53	%
Total		9.3		9.3		1.44	%
Agency asset-backed securities
Due after 10 years		1.8		1.8		2.24	%
Total		1.8		1.8		2.24	%
Corporate bonds — foreign
Due in 1 year or less		65.9		65.7		6.09	%
Total		65.9		65.7		6.09	%
Total debt securities AFS	$	5,684.0	$	5,854.7		2.62	%

At March 31, 2020 and December 31, 2019, certain securities AFS were in unrealized loss positions. The following table summarizes by investment category the gross unrealized losses, respective fair value and length of time that those securities have been in a continuous unrealized loss position.

Gross Unrealized Loss (dollars in millions)

	March 31, 2020
	Less than 12 months					12 months or greater
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss
Debt securities AFS
Mortgage-backed securities
U.S. government/sponsored agency - Residential	$	195.8	$	(1.4	)	$	37.2	$	(0.8	)
U.S. government/sponsored agency - Commercial		175.4		(0.6	)		—		—
Corporate bonds - foreign⁽¹⁾		65.7		(0.2	)		—		—
Total debt securities AFS	$	436.9	$	(2.2	)	$	37.2	$	(0.8	)

	December 31, 2019
	Less than 12 months					12 months or greater
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss
Debt securities AFS
Mortgage-backed securities
U.S. government/sponsored agency - Residential	$	1,396.5	$	(4.6	)	$	861.3	$	(12.1	)
U.S. government/sponsored agency - Commercial		282.7		(1.7	)		17.6		(0.1	)
U.S. government/sponsored agency obligations		398.9		(5.4	)		—		—
Total debt securities AFS	$	2,078.1	$	(11.7	)	$	878.9	$	(12.2	)

⁽¹⁾	There was an immaterial amount of credit-related unrealized loss recorded in earnings for the quarter ended March 31, 2020.

Securities Carried at Fair Value with Changes Recorded in Net Income

As of March 31, 2020, equity securities were carried at a fair value of $0.0 million with an amortized cost of $0.4 million and unrealized losses were $0.4 million. As of December 31, 2019, the fair value and amortized cost of equity securities were $47.2 million and $48.2 million, respectively, and unrealized losses were $1.0 million.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

Impairment of Investment Securities

There were no impairment losses recognized for the quarter ended March 31, 2020. There were no Other Than Temporary Impairment losses recognized for the quarter ended March 31, 2019.

There were no adjustments related to impairment for securities without readily determinable fair values measured under the measurement exception. There were immaterial unrealized losses on non-marketable investments.

Pledged Securities

Securities with a carrying value of $3,167.0 million were pledged as of March 31, 2020 to secure public funds, securities sold under agreements to repurchase, FHLB financing availability, and derivative contracts and for other purposes as required or permitted by law. Securities with a carrying value of $50.4 million were pledged as of December 31, 2019 to secure FHLB financing availability.

NOTE 7 — DEPOSITS

The following table provides detail on deposit types. The increase in the deposit balance from the prior period reflects the MOB Acquisition, as described in Note 2 – Acquisition and Discontinued Operations.

Deposits — Deposit types (dollars in millions)

	March 31,		December 31,
	2020		2019
Interest-bearing	$	39,372.3	$	33,546.4
Non-interest bearing		2,789.8		1,593.1
Total deposits	$	42,162.1	$	35,139.5

The following table presents the maturities of time deposits.

Deposits —Maturities (dollars in millions)

	March 31,
Time deposits, remaining contractual maturity:	2020
Within one year	$	9,011.2
One to two years		1,889.5
Two to three years		394.5
Three to four years		456.3
Four to five years		561.9
Over five years		117.4
Total Time deposits	$	12,430.8

The following table presents the maturity profile of time deposits with a denomination of $100,000 or more.

Time Deposits $100,000 or More (dollars in millions)

	March 31,
	2020
Time Deposits:
Three months or less	$	1,626.8
After three months through six months		1,821.8
After six months through twelve months		3,420.8
After twelve months		2,967.0
Total	$	9,836.4

The Company also had aggregate time deposits of $2,612.4 million and $4,705.6 million in denominations of more than $250,000 at March 31, 2020 and December 31, 2019, respectively.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 8 — VARIABLE INTEREST ENTITIES

Variable Interest Entities (“VIE”)

Described below are the results of the Company’s assessment of its variable interests in order to determine its current status with regard to being the VIE primary beneficiary (“PB”). See Note 1 — Business and Summary of Significant Accounting Policies in the 2019 Form 10-K for additional information on accounting for VIEs.

Consolidated VIEs

At March 31, 2020 and December 31, 2019, there were no consolidated VIEs.

Unconsolidated VIEs

Unconsolidated VIEs include agency and non-agency securitization structures, limited partnership interests and joint ventures where the Company’s involvement is limited to an investor interest and the Company does not have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance or obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

The table below presents potential losses that would be incurred under hypothetical circumstances, such that the value of its interests and any associated collateral declines to zero and assuming no recovery or offset from any economic hedges. The Company believes the possibility is remote under this hypothetical scenario; accordingly, this required disclosure is not an indication of expected loss.

Unconsolidated VIEs Carrying Value (dollars in millions)

	March 31, 2020				December 31, 2019
	Securities		Partnership Investment		Securities		Partnership Investment
Agency securities	$	5,550.4	$	—	$	5,338.6	$	—
Tax credit equity investments		—		287.3		—		277.1
Equity investments		—		102.9		—		84.0
Total Assets	$	5,550.4	$	390.2	$	5,338.6	$	361.1
Commitments to tax credit investments⁽¹⁾	$	—	$	119.1	$	—	$	120.1
Total Liabilities	$	—	$	119.1	$	—	$	120.1
Maximum loss exposure⁽²⁾	$	5,550.4	$	390.2	$	5,338.6	$	361.1

⁽¹⁾	Represents commitments to invest in affordable housing investments, and other investments qualifying for community reinvestment tax credits. These commitments are payable on demand and are recorded in Other liabilities.

⁽²⁾	Maximum loss exposure to the unconsolidated VIEs excludes the liability for representations and warranties, for corporate guarantees, and excludes servicing advances.

NOTE 9 — BORROWINGS

The following table presents the carrying value of outstanding borrowings.

Borrowings (dollars in millions)

	March 31, 2020						December 31, 2019
	CIT Group Inc.		Subsidiaries		Total		Total
Senior unsecured	$	3,428.4	$	547.1	$	3,975.5	$	3,967.9
Subordinated debt		494.5		—		494.5		494.4
Secured borrowings:
FHLB advances		—		3,050.0		3,050.0		1,650.0
Other secured and structured financings		—		561.3		561.3		361.1
Securities sold under agreement to repurchase		—		13.0		13.0		—
Total borrowings	$	3,922.9	$	4,171.4	$	8,094.3	$	6,473.4

Unsecured Borrowings

Revolving Credit Facility

The Revolving Credit Facility had a total commitment amount of $300 million at March 31, 2020, which was reduced from a total commitment amount of $400 million at December 31, 2019. The applicable margin charged under the facility is 1.75% for LIBOR Rate loans and 0.75% for Base Rate loans. The facility was amended to extend the final maturity date of the lenders’ commitments from March 1, 2021 to November 1, 2021, reduce the Tier 1 capital ratio requirement and lower the applicable margin.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

The Revolving Credit Facility includes a covenant that requires that the Company maintain a minimum Tier 1 capital ratio of 8.5%. At March 31, 2020, the Revolving Credit Facility was unsecured and was guaranteed by three of the Company’s domestic operating subsidiaries. In addition, the applicable required minimum guarantor asset coverage ratio ranges from 1.0:1.0 to 1.5:1.0 based on CIT’s credit ratings and was 1.25:1.00 at March 31, 2020.

The Revolving Credit Facility may be drawn, prepaid and redrawn at the option of CIT. The unutilized portion of any commitment under the Revolving Credit Facility may be reduced permanently or terminated by CIT at any time without penalty. The $300 million total commitment amount consisted of a $200 million revolving loan tranche and a $100 million revolving loan tranche that can also be utilized for issuance of letters of credit. At March 31, 2020, approximately $40 million was utilized for CIT’s issuances of letters of credit.

Senior Unsecured Notes and Subordinated Unsecured Notes

The principal amounts and maturity dates of the senior unsecured notes and subordinated unsecured notes remained unchanged from December 31, 2019. See Note 10 – Borrowings in the 2019 Form 10-K.

Secured Borrowings

At March 31, 2020, the Company had pledged $15.8 billion of assets to several financing facilities (including collateral for the FRB discount window that is currently not drawn) which included $12.8 billion of loans and $3.0 billion of investment securities. Under the FHLB Facility, CIT Bank, N.A. may at any time grant a security interest in, sell, convey or otherwise dispose of any of the assets used for collateral, provided that CIT Bank, N.A. is in compliance with the collateral maintenance requirement immediately following such disposition and all other requirements of the facility at the time of such disposition.

FHLB Advances

As of March 31, 2020, the Company had $8,758.5 million of financing availability with the FHLB, of which $5,708.5 million was unused and available. Included in the financing availability, was $2,879.5 million of availability related to High Quality Liquid Securities of $3,006.3 million for which there were no outstanding borrowings. FHLB Advances at March 31, 2020 and December 31, 2019 had weighted average rates of 1.03% and 2.04%, respectively. FHLB Advances and pledged assets at March 31, 2020, were $3,050.0 million and $10,314.3 million, respectively. FHLB Advances and pledged assets at December 31, 2019, were $1,650.0 million and $6,987.6 million, respectively.

FHLB Balances (dollars in millions)

									December 31,
	March 31, 2020								2019
	Lending Assets			High Quality Liquid Securities		Total			Total
Total borrowing capacity	$	5,879.0		$	2,879.5	$	8,758.5		$	6,350.5
Less:
Advances		(3,050.0	)		—		(3,050.0	)		(1,650.0	)
Available capacity	$	2,829.0		$	2,879.5	$	5,708.5		$	4,700.5

Pledged assets⁽¹⁾	$	7,308.0		$	3,006.3	$	10,314.3		$	6,987.6
Weighted Average Rate							1.03	%		2.04	%

⁽¹⁾	December 31, 2019 pledged assets included $50.4 million of High Quality Liquid Securities.

Other Secured and Structured Financings

Other secured (other than FHLB) and structured financings of CIT-owned subsidiaries totaled $561.3 million and $361.1 million at March 31, 2020 and December 31, 2019, respectively. Pledged assets related to these borrowings totaled $2,388.5 million and $2,205.9 million at March 31, 2020 and December 31, 2019, respectively. These transactions do not meet accounting requirements for sales treatment and are recorded as secured borrowings. The secured and structured financings as of March 31, 2020 had a weighted average rate of 2.27%, with rates ranging from 2.24% to 3.58%, compared to a weighted average rate of 3.03% at December 31, 2019.

FRB

There were no outstanding borrowings with the FRB Discount Window at March 31, 2020 and December 31, 2019.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 10 — DERIVATIVE FINANCIAL INSTRUMENTS

See Note 1 — Business and Summary of Significant Accounting Policies in the Company’s 2019 Form 10-K for the description of its derivative products and transaction policies.

The following table presents notional amount and fair value of derivative financial instruments on a gross basis.

Notional Amount and Fair Value of Derivative Financial Instruments (dollars in millions)

	March 31, 2020								December 31, 2019
	Notional Amount		Asset Fair Value			Liability Fair Value			Notional Amount		Asset Fair Value			Liability Fair Value
Derivatives designated as hedging instruments (Qualifying hedges)
Foreign exchange contracts	$	39.6	$	0.7		$	-		$	676.3	$	-		$	(10.6	)
Interest rate contracts⁽¹⁾⁽³⁾		500.0		-			-			1,250.0		-			-
Total derivatives designated as hedging instruments		539.6		0.7			-			1,926.3		-			(10.6	)
Derivatives not designated as hedging instruments (Non-qualifying hedges)
Interest rate contracts⁽¹⁾⁽³⁾		19,740.1		524.8			(80.1	)		17,588.1		176.9			(14.5	)
Foreign exchange contracts		524.4		20.2			(12.4	)		982.9		13.7			(6.1	)
Other contracts⁽²⁾		785.4		0.8			(2.6	)		714.7		0.1			(0.8	)
Total derivatives not designated as hedging instruments		21,049.9		545.8			(95.1	)		19,285.7		190.7			(21.4	)
Gross derivatives fair values presented in the Consolidated Balance Sheets	$	21,589.5	$	546.5		$	(95.1	)	$	21,212.0	$	190.7		$	(32.0	)
Less: Gross amounts offset in the Consolidated Balance Sheets				-			-					-			-
Net amount presented in the Consolidated Balance Sheet				546.5			(95.1	)				190.7			(32.0	)
Less: Amounts subject to master netting agreements⁽⁴⁾				(17.2	)		17.2					(11.8	)		11.8
Less: Cash collateral pledged(received) subject to master netting agreements⁽⁵⁾				(2.2	)		47.5					(1.2	)		14.3
Total net derivative fair value			$	527.1		$	(30.4	)			$	177.7		$	(5.9	)

⁽¹⁾	Fair value balances include accrued interest.

⁽²⁾	Other derivative contracts not designated as hedging instruments include risk participation agreements.

⁽³⁾

The Company accounts for swap contracts cleared by the Chicago Mercantile Exchange and LCH Clearnet as “settled-to-market”. As a result, variation margin payments are characterized as settlement of the derivative exposure and variation margin balances are netted against the corresponding derivative mark-to-market balances. Gross amounts of recognized assets and liabilities were lowered by $13.2 million and $416.1 million, respectively at March 31, 2020 and $16.2 million and $142.8 million, respectively at December 31, 2019.

⁽⁴⁾

The Company’s derivative transactions are governed by ISDA agreements that allow for net settlements of certain payments as well as offsetting of all contracts with a given counterparty in the event of bankruptcy or default of one of the two parties to the transaction. The Company believes its ISDA agreements meet the definition of a master netting arrangement or similar agreement for purposes of the above disclosure.

⁽⁵⁾

In conjunction with the ISDA agreements described above, the Company has entered into collateral arrangements with its counterparties, which provide for the exchange of cash depending on change in the market valuation of the derivative contracts outstanding. Such collateral is available to be applied in settlement of the net balances upon an event of default of one of the counterparties. Collateral pledged or received is included in Other assets or Other liabilities, respectively.

Qualifying Hedges

CIT enters into interest rate swap agreements to manage interest rate exposure on its fixed-rate borrowings. The agreements that qualify for hedge accounting are designated as fair value hedges. The following table represents gains (losses) of fair value hedges recognized as interest expense on the condensed consolidated statements of income.

Gains (Losses) on Qualifying Hedges (dollars in millions)

	Quarters Ended March 31,
	2020			2019
Recognized on derivatives	$	6.1		$	1.0
Recognized on hedged item		(6.1	)		(1.0	)
Net recognized on fair value hedges (No ineffectiveness)	$	-		$	-

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents the carrying value of hedged items and associated cumulative hedging adjustment relating for fair value hedges.

Cumulative Fair Value Hedging Adjustments (dollars in millions)

			Cumulative Fair Value Hedging Adjustment Included in the Carrying Value of Hedged Items
	Carrying Value of Hedged Items⁽¹⁾		Currently Designated		No Longer Designated
March 31, 2020
Long-term Debt	$	1,752.1	$	6.9	$	2.6
December 31, 2019
Long-term Debt	$	1,747.0	$	2.1	$	1.5

⁽¹⁾	Carrying value includes $1,246.4 million and $499.4 million of carrying value of hedged items no longer designated as of March 31, 2020 and December 31, 2019, respectively.

The following table presents the pre-tax net gains (losses) recorded in the condensed consolidated statements of income and in the consolidated statements of comprehensive income relating to derivatives designated as net investment hedges:

Pre-tax Net Gains (Losses) Relating to Derivatives Designated as Net Investment Hedges (dollars in millions)

			Amounts
	Amounts		recorded in Other
	reclassified from		Comprehensive			Total change in
	AOCI to income		Income			AOCI for period
Contract Type
Quarter Ended March 31, 2020
Foreign currency forward contracts - net investment hedges	$	-	$	1.1		$	1.1
Quarter Ended March 31, 2019
Foreign currency forward contracts - net investment hedges	$	-	$	(13.3	)	$	(13.3	)

Non-Qualifying Hedges

The following table presents gains (losses) of non-qualifying hedges recognized as other non-interest income on the condensed consolidated statements of income:

Gains (Losses) on Non-Qualifying Hedges (dollars in millions)

	Quarters Ended March 31,
	2020			2019
Interest rate contracts	$	-		$	0.1
Foreign currency forward contracts		10.9			13.3
Other contracts		(2.4	)		0.1
Total non-qualifying hedges - income statement impact	$	8.5		$	13.5

NOTE 11 — FAIR VALUE

Fair Value Hierarchy

The Company measures certain financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP also establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels. See Note 1 — Business and Summary of Significant Accounting Policies in the Company's 2019 Form 10-K for a description of its valuation process for assets and liabilities measured at fair value and the fair value hierarchy.

The Company considered the impact of the COVID-19 pandemic on the markets related to the Company’s assets and liabilities for the purpose of fair value measurement. The Company observed increased volatility in those markets with significant effects on market prices and interest rates, in addition to significant decreases in the level of activity in the markets for its assets and liabilities. However, the Company did not identify persuasive evidence to conclude that the markets were not orderly. As a result, the fair value of the Company’s assets and liabilities were measured based on market conditions that existed as of March 31, 2020.

Disclosures that follow in this note exclude assets and liabilities classified as discontinued operations.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes the Company’s assets and liabilities measured at estimated fair value on a recurring basis.

Assets and Liabilities Measured at Fair Value on a Recurring Basis (dollars in millions)

	Total			Level 1		Level 2			Level 3
March 31, 2020
Assets
Residential MBS – U.S. government/sponsored agency	$	4,392.0		$	—	$	4,392.0		$	—
U.S. treasury securities		9.3			—		9.3			—
Other securities		1,453.4			—		1,387.7			65.7
Total debt securities AFS		5,854.7			—		5,789.0			65.7

Interest rate contracts — non-qualifying hedges		524.8			—		524.1			0.7
Other derivative — non-qualifying hedges		21.0			—		20.2			0.8
Total derivative assets at fair value — non-qualifying hedges⁽¹⁾		545.8			—		544.3			1.5
Foreign currency forward contracts — net investment qualifying hedges		0.7			—		0.7			—
Total Derivative assets at fair value — qualifying hedges⁽¹⁾		0.7			—		0.7			—
Total	$	6,401.2		$	—	$	6,334.0		$	67.2
Liabilities
Interest rate contracts — non-qualifying hedges	$	(80.1	)	$	—	$	(80.1	)	$	—
Other derivative— non-qualifying hedges		(15.0	)		—		(12.4	)		(2.6	)
Total derivative liabilities at fair value — non-qualifying hedges⁽¹⁾		(95.1	)		—		(92.5	)		(2.6	)
FDIC True-up liability		(69.3	)		—		—			(69.3	)
Total	$	(164.4	)	$	—	$	(92.5	)	$	(71.9	)
December 31, 2019
Assets
Residential MBS – U.S. government/sponsored agency	$	4,773.8		$	—	$	4,773.8		$	—
U.S. treasury securities		11.3			4.7		6.6			—
Other securities		1,226.7			—		1,159.6			67.1
Total debt securities AFS		6,011.8			4.7		5,940.0			67.1
Securities carried at fair value with changes recorded in net income		47.2			0.1		47.1			—

Interest rate contracts — non-qualifying hedges		176.9			—		176.7			0.2
Other derivative — non-qualifying hedges		13.8			—		13.7			0.1
Total derivative assets at fair value — non-qualifying hedges⁽¹⁾		190.7			—		190.4			0.3
Total	$	6,249.7		$	4.8	$	6,177.5		$	67.4
Liabilities
Interest rate contracts — non-qualifying hedges	$	(14.5	)	$	—	$	(14.5	)	$	—
Other derivative— non-qualifying hedges		(6.9	)		—		(6.1	)		(0.8	)
Total derivative liabilities at fair value — non-qualifying hedges⁽¹⁾		(21.4	)		—		(20.6	)		(0.8	)
Foreign currency forward contracts — net investment qualifying hedges		(10.6	)		—		(10.6	)		—
Total derivative liabilities at fair value — qualifying hedges		(10.6	)		—		(10.6	)		—
FDIC True-up liability		(68.8	)		—		—			(68.8	)
Total	$	(100.8	)	$	—	$	(31.2	)	$	(69.6	)

⁽¹⁾	Derivative fair values include accrued interest.

The methods and assumptions used to estimate the fair value of each class of financial instruments measured at fair value on a recurring basis are as follows:

Debt securities AFS — Investments in U.S. government agency and sponsored agency guaranteed mortgage-backed securities, U.S. government agency and sponsored agency obligations, U.S. Treasury securities and supranational securities were valued using Level 2 inputs. The market for certain corporate bonds is not active, therefore the estimated fair value was determined using a discounted cash flow technique. Given the lack of observable market data, the estimated fair value of the corporate bonds was classified as Level 3. See Note 1 – Business and Summary of Significant Accounting Policies in the Company's 2019 Form 10-K for details on significant inputs and valuation techniques.

Securities carried at fair value with changes recorded in net income — Most equity securities were valued using Level 2 inputs based on published net asset value, with the remaining securities being valued using Level 1 inputs.

Derivative Assets and Liabilities — Derivatives were valued using models that incorporate inputs depending on the type of derivative. Besides the fair value of credit derivatives, which were estimated using Level 3 inputs, most derivative instruments were valued using Level 2 inputs based on quoted prices for similar assets and liabilities and model-based valuation techniques for which all significant assumptions are observable in the market. See Note 1 – Business and Summary of Significant Accounting Policies in the Company's 2019 Form 10-K for details on significant inputs and valuation techniques. See Note 10 — Derivative Financial Instruments for notional principal amounts and fair values.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

FDIC True-up Liability — The FDIC True-up liability was recorded at estimated fair value as of the date of the OneWest transaction related to the FDIC-assisted transaction of La Jolla and was measured at fair value at each reporting date until the contingency is resolved. Due to the significant unobservable inputs used, these measurements were classified as Level 3. As of March 31, 2020, the fair value of the liability was measured based on the accrued amount of FDIC True-up payment, which was settled in April 2020.

The following tables summarize information about significant unobservable inputs related to the Company’s categories of Level 3 financial assets and liabilities measured on a recurring basis.

Quantitative Information about Level 3 Fair Value Measurements — Recurring (dollars in millions)

Financial Instrument	Estimated Fair Value			Valuation Technique(s)	Significant Unobservable Inputs	Range of Inputs	Weighted Average
March 31, 2020
Assets
Debt Securities — AFS	$	65.7		Discounted cash flow	Discount Rate	6.0% - 6.2%	6.1%
Derivative assets — non-qualifying		1.5		Internal valuation model	Borrower Rate	2.6% - 4.8%	3.2%
Total Assets	$	67.2
Liabilities
FDIC True-up liability	$	(69.3	)	FDIC True-up payment
Derivative liabilities — non-qualifying		(2.6	)	Internal valuation model
Total Liabilities	$	(71.9	)
December 31, 2019
Assets
Debt Securities — AFS	$	67.1		Discounted cash flow	Discount Rate	6.0% - 6.2%	6.0%
Derivative assets — non-qualifying		0.3		Internal valuation model	Borrower Rate	2.8% - 5.0%	3.6%
Total Assets	$	67.4
Liabilities
FDIC True-up liability	$	(68.8	)	Discounted cash flow	Discount Rate	2.2%	2.2%
Derivative liabilities — non-qualifying		(0.8	)	Market comparable
Total Liabilities	$	(69.6	)

The following table summarizes the changes in estimated fair value for all assets and liabilities measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3).

Changes in Estimated Fair Value of Level 3 Financial Assets and Liabilities Measured on a Recurring Basis (dollars in millions)

	Securities- AFS			Derivative Assets- Non- Qualifying			Derivative Liabilities- Non- Qualifying			FDIC True-up Liability
Balance as of December 31, 2019	$	67.1		$	0.3		$	(0.8	)	$	(68.8	)
Included in earnings		—			1.2			(1.8	)		(0.5	)
Included in comprehensive income		(1.4	)		—			—			—
Balance as of March 31, 2020	$	65.7		$	1.5		$	(2.6	)	$	(69.3	)
Balance as of December 31, 2018	$	65.9		$	0.4		$	—		$	(66.9	)
Included in earnings		—			(0.1	)		(0.1	)		(0.5	)
Included in comprehensive income		1.3			—			—			—
Balance as of March 31, 2019	$	67.2		$	0.3		$	(0.1	)	$	(67.4	)

Assets Measured at Estimated Fair Value on a Non-recurring Basis

Certain assets or liabilities are required to be measured at estimated fair value on a non-recurring basis subsequent to initial recognition. Generally, these adjustments are the result of LOCOM or other impairment accounting. In determining the estimated fair values, the Company determined that substantially all the changes in estimated fair value were due to declines in market conditions versus instrument specific credit risk. This was determined by examining the changes in market factors relative to instrument specific factors.

Assets and liabilities acquired in the MOB Transaction were recorded at fair value on the acquisition date pursuant to ASC 805. See Note 2-Acquisition and Discontinued Operations for balances and assumptions used in the valuation.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents assets measured at estimated fair value on a non-recurring basis for which a non-recurring change in fair value has been recorded in the current year.

Carrying Value of Assets Measured at Fair Value on a Non-recurring Basis (dollars in millions)

	Carrying Value		Fair Value Measurements at Reporting Date Using:
	Total		Level 1		Level 2		Level 3		Total Gains (Losses)
March 31, 2020
Assets held for sale	$	27.1	$	—	$	2.7	$	24.4	$	(4.0	)
Collateral-dependent loans		12.8		—		—		12.8		(26.6	)
Mortgage Servicing Rights		7.8		—		—		7.8		(2.0	)
Total	$	47.7	$	—	$	2.7	$	45.0	$	(32.6	)
December 31, 2019
Assets held for sale	$	22.6	$	—	$	1.9	$	20.7	$	2.2
Impaired loans		244.8		—		—		244.8		(73.5	)
Tax credit investments		82.0		—		—		82.0		(5.1	)
Total	$	349.4	$	—	$	1.9	$	347.5	$	(76.4	)

The methods and assumptions used to estimate the fair value of each class of financial instruments measured at fair value on a non-recurring basis are as follows:

Assets Held for Sale — The fair value of Level 2 assets was primarily estimated based on the prices of recent trades of similar assets. The carrying value of level 3 assets approximates fair value.

Collateral-dependent loans – ACL is established for an excess of amortized cost of collateral-dependent loans over the fair value of the underlying collateral less costs to sell. The fair value of collateral-dependent loans is classified as Level 3 as the fair value of underlying collateral is estimated primarily based on third party appraisals discounted based on the Company’s experience with liquidation value or other valuation techniques such as income, market and cost approaches.

Mortgage Servicing Rights – Under the amortization method, the amortized cost basis of the MSRs was reduced to its fair value for the impairment loss recognized. The fair value of the MSRs was valued under the income approach using the discounted cash flow model based on level 3 inputs including prepayment speed, discount rates and cost to service.

Impaired Loans — The value of impaired loans was assessed through the evaluation of their aggregate carrying values relative to contractual amounts owed (unpaid principal balance) from customers. See Note 3 – Loans in the Company's 2019 Form 10-K for methods and assumptions used.

Tax Credit Investments – The fair value was estimated based on remaining future tax benefits and Level 3 inputs including market yields of comparable investments. During the fourth quarter of 2019, the Company recognized an impairment loss of $5.1 million on certain tax credit investments.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

Financial Instruments not Measured at Fair Value

The carrying values and estimated fair values of financial instruments not measured at fair value presented below exclude leases and certain other assets and liabilities, which were not required for disclosure.

Carrying Value and Fair Value of Financial Instruments (dollars in millions)

				Estimated Fair Value
	Carrying Value			Level 1		Level 2			Level 3			Total
March 31, 2020
Financial Assets
Cash and interest-bearing deposits	$	3,698.5		$	3,698.5	$	—		$	—		$	3,698.5
Assets held for sale (excluding leases)		49.2			—		21.3			28.1			49.4
Loans (excluding leases)⁽¹⁾		36,278.9			—		855.9			32,406.9			33,262.8
Investment securities⁽²⁾		273.9			—		—			273.9			273.9
Other assets subject to fair value disclosure ⁽³⁾		566.2			—		—			566.2			566.2
Financial Liabilities
Deposits⁽⁴⁾		(42,182.0	)		—		—			(42,334.2	)		(42,334.2	)
Borrowings⁽⁴⁾		(8,121.4	)		—		(7,430.6	)		(551.9	)		(7,982.5	)
Credit balances of factoring clients		(1,023.7	)		—		—			(1,023.7	)		(1,023.7	)
Other liabilities subject to fair value disclosure⁽⁵⁾		(637.2	)		—		—			(637.2	)		(637.2	)
December 31, 2019
Financial Assets
Cash and interest-bearing deposits	$	2,685.6		$	2,685.6	$	—		$	—		$	2,685.6
Assets held for sale (excluding leases)		29.6			—		7.5			22.2			29.7
Loans (excluding leases)⁽¹⁾		28,744.5			—		1,114.5			27,684.3			28,798.8
Securities purchased under agreement to resell		950.0			—		950.0			—			950.0
Investment securities⁽²⁾		217.8			—		—			217.8			217.8
Other assets subject to fair value disclosure ⁽³⁾		418.2			—		—			418.2			418.2
Financial Liabilities
Deposits⁽⁴⁾		(35,156.2	)		—		—			(35,263.8	)		(35,263.8	)
Borrowings⁽⁴⁾		(6,549.6	)		—		(6,532.0	)		(365.2	)		(6,897.2	)
Credit balances of factoring clients		(1,176.2	)		—		—			(1,176.2	)		(1,176.2	)
Other liabilities subject to fair value disclosure⁽⁵⁾		(831.6	)		—		—			(831.6	)		(831.6	)

⁽¹⁾	Carrying value of loans (excluding leases) excludes the ACL.

⁽²⁾	Non-marketable investments carried at cost. See Assets and Liabilities Measured at Fair Value on a Recurring Basis in this note above for debt securities AFS and securities carried at fair value with changes recorded in net income.

⁽³⁾	Other assets subject to fair value disclosure primarily include accrued interest receivable and miscellaneous receivables. The remaining assets have carrying values that approximated fair value, generally due to their short-term nature.

⁽⁴⁾	Deposits and borrowings include accrued interest, which is included in “Other liabilities”.

⁽⁵⁾	Other liabilities subject to fair value disclosure include accounts payable, accrued liabilities, customer security and maintenance deposits and miscellaneous liabilities. The carrying value of these approximated fair value.

The methods and assumptions used to estimate the fair value of each class of financial instruments not measured at fair value are as follows:

Loans

▪

Commercial and Consumer Loans — Commercial and consumer loans are generally valued individually. As there is no liquid secondary market for most loans, the fair value was primarily estimated based on analysis that used significant Level 3 inputs. See Note 1 – Business and Summary of Significant Accounting Policies in the Company's 2019 Form 10-K for details on significant inputs and valuation techniques.

▪

PCD loans — These loans were valued by separating the loans into performing and non-performing groups and stratifying them based on common risk characteristics such as product type, FICO score and other economic attributes. Due to the significance of the unobservable inputs, these loans are classified as Level 3.

Securities Purchased Under Agreement to Resell – The fair value of securities purchased under agreement to resell (reverse repo) was determined using a discount cash flow technique. Interest rates appropriate to the maturity and underlying collateral are used for discounting the estimated cash flows. As observable market interest rates are used, the fair value of securities purchased under agreement to resell was classified as Level 2. As of March 31, 2020, there were no outstanding reverse repo transactions.

Investment Securities

▪

Non-marketable securities - Utilize Level 3 inputs to estimate fair value and were generally recorded under the cost method of accounting. FHLB and FRB stock carrying values approximate fair value. Of the remaining non-marketable securities, the fair value is determined based on techniques that use significant assumptions that are not observable in the market.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

Deposits — The estimated fair value of deposits with no stated maturity, such as demand deposit accounts, money market accounts, and savings accounts was the amount payable on demand at the reporting date. The fair value of time deposits is estimated using Level 3 inputs.

Borrowings

The Level 2 fair value of borrowings were valued using market inputs and discounted value of the contractual cash flows using current estimated market discount rates for borrowings with similar terms, remaining maturities and put dates and did not require significant judgment. These borrowings included:

▪	Unsecured debt — Unsecured debt consisted of both senior debt and subordinated debt with a par value of $4.5 billion at March 31, 2020 and December 31, 2019.

▪

Secured borrowings — Secured borrowings consisted of FHLB advances with a par value of $3.1 billion and $1.7 billion at March 31, 2020 and December 31, 2019, respectively. The estimated fair value of FHLB advances was based on a discounted cash flow model. The cash flows were calculated using the contractual features of the advance and then discounted using observable rates.

▪

Securities sold under agreements to repurchase - The fair value of securities sold under agreements to repurchase (repo) was determined using a discount cash flow technique. Interest rates appropriate to the maturity and underlying collateral are used for discounting the estimated cash flows. As observable market interest rates are used, the fair value of repo transactions was classified as Level 2.

The Level 3 fair value of borrowings included:

▪

Secured borrowings — Secured borrowings consisted of structured financings with a par value of $0.6 billion and $0.4 billion at March 31, 2020 and December 31, 2019, respectively. The fair values of structured financings were estimated based on Level 3 inputs since market estimates were not available.

Credit balances of factoring clients — The impact of the time value of money from the unobservable discount rate for credit balances of factoring clients is inconsequential due to the short term nature of these balances, therefore, the carrying value approximated fair value, and the credit balances were classified as Level 3.

NOTE 12 — STOCKHOLDERS' EQUITY

In conjunction with the MOB Transaction, consideration paid included the issuance of approximately 3.1 million shares of CIT Group Inc. common stock. A roll forward of common stock activity is presented in the following table.

Number of Shares of Common Stock

	Issued		Less Treasury			Outstanding
Common stock - December 31, 2019		162,188,287		(67,445,723	)		94,742,564
Common stock issuance - acquisition		-		3,094,697			3,094,697
Restricted stock issued		777,774		-			777,774
Shares held to cover taxes on vesting restricted shares and other		-		(297,803	)		(297,803	)
Employee stock purchase plan participation		48,882		-			48,882
Common stock - March 31, 2020		163,014,943		(64,648,829	)		98,366,114

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

Accumulated Other Comprehensive Income (Loss) ("AOCI")

The following table details the components of AOCI, net of tax:

Components of Accumulated Other Comprehensive Income (Loss) (dollars in millions)

	March 31, 2020									December 31, 2019
	Gross Unrealized			Income Taxes			Net Unrealized			Gross Unrealized			Income Taxes			Net Unrealized
Foreign currency translation adjustments	$	(2.5	)	$	(7.5	)	$	(10.0	)	$	(1.9	)	$	(7.2	)	$	(9.1	)
Changes in benefit plans net loss and prior service (cost)/credit		(47.5	)		(2.3	)		(49.8	)		(51.3	)		(1.3	)		(52.6	)
Unrealized net gains on securities AFS⁽¹⁾		170.8			(44.2	)		126.6			13.6			(4.0	)		9.6
Total other accumulated comprehensive income (loss)	$	120.8		$	(54.0	)	$	66.8		$	(39.6	)	$	(12.5	)	$	(52.1	)

⁽¹⁾	ACL related to securities AFS was immaterial as of March 31, 2020.

The following table details the changes in the components of AOCI, net of income taxes:

Changes in Accumulated Other Comprehensive Income (Loss) by Component (dollars in millions)

	Foreign currency translation adjustments			Changes in benefit plan net gain (loss) and prior service (cost) credit			Unrealized net gains (losses) on AFS securities			Total AOCI
Balance as of December 31, 2019	$	(9.1	)	$	(52.6	)	$	9.6		$	(52.1	)
AOCI activity before reclassifications		(0.9	)		2.6			126.3			128.0
Amounts reclassified from AOCI		—			0.2			(9.3	)		(9.1	)
Net current period AOCI		(0.9	)		2.8			117.0			118.9
Balance as of March 31, 2020	$	(10.0	)	$	(49.8	)	$	126.6		$	66.8

Balance as of December 31, 2018	$	(20.9	)	$	(70.2	)	$	(87.2	)	$	(178.3	)
AOCI activity before reclassifications		5.7			2.2			46.0			53.9
Amounts reclassified from AOCI		—			—			(0.8	)		(0.8	)
Net current period AOCI		5.7			2.2			45.2			53.1
Balance as of March 31, 2019	$	(15.2	)	$	(68.0	)	$	(42.0	)	$	(125.2	)

Other Comprehensive Income

The amounts included in the Condensed Consolidated Statements of Comprehensive Income are net of income taxes. The following table presents the pretax and after-tax components of other comprehensive income.

Before- and After-Tax components of OCI (dollars in millions)

Quarters Ended March 31,	2020									2019
	Gross Amount			Tax			Net Amount			Gross Amount			Tax			Net Amount			Income Statement Line Item
Foreign currency translation adjustments gains
AOCI activity before reclassification	$	(0.6	)	$	(0.3	)	$	(0.9	)	$	2.3		$	3.4		$	5.7
Net change		(0.6	)		(0.3	)		(0.9	)		2.3			3.4			5.7
Changes in benefit plan net loss and prior service (cost)/credit losses
AOCI activity before reclassification		3.6			(1.0	)		2.6			2.9			(0.7	)		2.2
Reclassifications Out of AOCI		0.2			—			0.2			—			—			—		Operating expenses
Net change		3.8			(1.0	)		2.8			2.9			(0.7	)		2.2
Unrealized net gains on securities AFS
AOCI activity before reclassification		169.7			(43.4	)		126.3			62.0			(16.0	)		46.0
Reclassifications Out of AOCI		(12.5	)		3.2			(9.3	)		(1.1	)		0.3			(0.8	)	Other non-interest income
Net change		157.2			(40.2	)		117.0			60.9			(15.7	)		45.2
Net current period AOCI	$	160.4		$	(41.5	)	$	118.9		$	66.1		$	(13.0	)	$	53.1

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 13 — REGULATORY CAPITAL

The Company and the Bank are each subject to various regulatory capital requirements administered by the FRB and the OCC. Quantitative measures established by regulation to ensure capital adequacy require that the Company and the Bank each maintain minimum amounts and ratios of Total, Tier 1 and Common Equity Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. We compute capital ratios in accordance with Federal Reserve capital guidelines and OCC capital rules for assessing adequacy of capital for the Company and CIT Bank, respectively. The regulatory capital rules applicable to the Company and the Bank were the Basel III Rule and the Simplification Final Rule for the period ended on March 31, 2020, and the Basel III Rule and the Transition Final Rule for the period ended December 31, 2019. CIT and CIT Bank are also subject to certain capitalization levels based on Regulation Y for Bank Holding Companies (“BHC”) and Change in Bank Control and the FDIC’s Prompt Corrective Action (“PCA”) framework. CIT Group and CIT Bank capital ratios were all in excess of minimum capital ratios to be considered well-capitalized under Regulation Y and the PCA framework, respectively, at March 31, 2020 and December 31, 2019.

In March 2020, the OCC, FRB and FDIC collectively issued an interim final rule on the Revised CECL Transition Rule for regulatory capital. The Revised CECL Transition Rule provides banking organizations that implement CECL during the 2020 calendar year with the option to delay for two years the impact of CECL’s effect on regulatory capital, followed by a three-year transition period. During the first two years of the transition period, CIT will delay the day one impact of CECL to retained earnings ($82.4 million), plus a scaling factor of 25 percent of the change in the Adjusted Allowance for Credit Losses (“AACL”) from initial CECL implementation to the end of the quarter, excluding the impact of the initial non-PCD charge related to MOB, or $424 million times 25 percent ($106 million). After the initial two-year delay period, there will be a three-year phase in period starting January 1, 2022. The day one impact of CECL and the 25% scaling factor of the change in non-PCD ACL from Day 1 to the end of the second year will be phased out: 75 percent of transitional benefits are recognized in regulatory capital in year three; 50 percent in year four; and 25 percent in year five. After that point the banking organization would have fully reversed out the temporary regulatory capital benefits of the two-year delay and adjustments. These changes are only applicable to regulatory capital, which resulted in an increase to CET1 capital of $188 million as of March 31, 2020. There was no impact to the balance sheet or the income statement.

The following table summarizes the actual and required capital ratios:

Capital Components and Ratios (dollars in millions)

	CIT				CIT Bank, N.A.
	March 31,		December 31,		March 31,		December 31,
	2020		2019		2020		2019
Common Equity Tier 1 Capital	$	5,158.1	$	5,444.4	$	4,677.7	$	4,879.6
Tier 1 Capital		5,682.9		5,969.3		4,677.7		4,879.6
Total Capital		6,842.3		6,983.3		5,545.7		5,644.3
Risk-Weighted Assets	$	52,973.0	$	45,262.0	$	45,160.2	$	37,150.5

Common Equity Tier 1 Capital Ratio:
Actual	9.7%		12.0%		10.4%		13.1%
Effective minimum ratios under Basel III guidelines⁽¹⁾	7.0%		7.0%		7.0%		7.0%
BHC and PCA Well-Capitalized	⁽²⁾		⁽²⁾		6.5%		6.5%
Tier 1 Capital Ratio:
Actual	10.7%		13.2%		10.4%		13.1%
Effective minimum ratios under Basel III guidelines⁽¹⁾	8.5%		8.5%		8.5%		8.5%
BHC and PCA Well-Capitalized	6.0%		6.0%		8.0%		8.0%
Total Capital Ratio:
Actual	12.9%		15.4%		12.3%		15.2%
Effective minimum ratios under Basel III guidelines⁽¹⁾	10.5%		10.5%		10.5%		10.5%
BHC and PCA Well-Capitalized	10.0%		10.0%		10.0%		10.0%
Tier 1 Leverage Ratio:
Actual	9.8%		11.9%		8.9%		11.0%
Required minimum ratios under Basel III guidelines⁽¹⁾	4.0%		4.0%		4.0%		4.0%
BHC and PCA Well-Capitalized	⁽²⁾		⁽²⁾		5.0%		5.0%

⁽¹⁾	Required minimum ratios include stated minimums of 4.5%, 6% and 8% for CET1 capital, Tier 1 capital and Total capital ratios, respectively, plus the fully phased-in capital conservation buffer of 2.5%.

⁽²⁾	Regulation Y for the bank holding company does not define well-capitalized ratios for CET1 ratio and Tier 1 leverage ratio.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 14 — INCOME TAXES

The Company’s global effective income tax rate was 10.4% and 24.1% for the three months ended March 31, 2020 and 2019, respectively. The decrease was primarily due to the impact of lower pre-tax book income on permanent adjustments and the impact of the non-deductible portion of the goodwill impairment.

The quarterly income tax expense is based on a projection of the Company’s annual effective tax rate. This annual effective tax rate is applied to the year-to-date consolidated pre-tax income to determine the interim provision for income taxes before discrete items. The effective tax rate each period is also impacted by a number of factors, including the relative mix of domestic and international earnings, effects of changes in enacted tax laws, adjustments to the valuation allowances, and discrete items. The currently forecasted effective tax rate may vary from the actual year-end 2020 effective tax rate due to the changes in these factors.

Uncertain Tax Benefits

The Company recognizes tax benefits when it is more likely than not that the position will prevail, based solely on the technical merits under the tax law of the relevant jurisdiction. The Company will recognize the tax benefit if the position meets this recognition threshold determined based on the largest amount of the benefit that is more than likely to be realized.

NOTE 15 — COMMITMENTS

The accompanying table summarizes credit-related commitments and other purchase and funding commitments:

Commitments (dollars in millions)

	March 31, 2020						December 31, 2019
	Due to Expire
	Within One Year		After One Year		Total Outstanding		Total Outstanding
Financing Commitments
Financing assets	$	3,477.0	$	4,893.9	$	8,370.9	$	6,459.7
Letters of credit
Standby letters of credit		52.5		178.8		231.3		199.6
Other letters of credit		7.3		3.1		10.4		6.7
Deferred purchase agreements		1,556.1		—		1,556.1		2,060.6
Purchase and Funding Commitments
Rail and other purchase commitments⁽¹⁾	$	690.6	$	—	$	690.6	$	813.7

⁽¹⁾	Other purchase commitments primarily relate to Equipment Finance businesses.

Financing Commitments

Financing commitments, referred to as loan commitments or lines of credit, primarily reflect CIT’s agreements to lend to its customers, subject to the customers’ compliance with contractual obligations. At March 31, 2020, substantially all undrawn financing commitments were senior facilities. Most of the Company’s undrawn and available financing commitments are in the Commercial Banking segment.

Financing commitments also include credit line agreements to Commercial Finance clients that are cancellable by us only after a notice period. The notice period is typically 90 days or less. The amount available under these credit lines, net of the amount of receivables assigned to us, was $175 million and $172 million at March 31, 2020 and December 31, 2019, respectively.

As financing commitments may not be fully drawn, may expire unused, may be reduced or canceled at the customer’s request, and may require the customer to be in compliance with certain conditions, total commitment amounts do not necessarily reflect actual future cash flow requirements.

The table above excludes uncommitted revolving credit facilities extended by Commercial Finance to its clients for working capital purposes. In connection with these facilities, Commercial Finance has the sole discretion throughout the duration of these facilities to determine the amount of credit that may be made available to its clients at any time and whether to honor any specific advance requests made by its clients under these credit facilities.

Letters of Credit

In the normal course of meeting the needs of clients, CIT sometimes enters into agreements to provide financing and letters of credit. Standby letters of credit are issued by CIT to guarantee payment to the beneficiary if a client on whose behalf the letter of credit was issued does not meet its obligation. These financial instruments generate fees and involve, to varying degrees, elements of credit risk in excess of amounts recognized in the Consolidated Balance Sheets. To minimize potential credit risk, CIT generally requires collateral, and, in some cases, additional forms of credit support from the client.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

Deferred Purchase Agreements

A DPA is a guarantee provided in conjunction with factoring, whereby CIT provides a client with credit protection for trade receivables without purchasing the receivables. The trade receivables terms generally require payment in 90 days or less. If the client’s customer is unable to pay an undisputed receivable solely as the result of credit risk, CIT is then required to purchase the receivable from the client, less any borrowings for such client. The outstanding amount in the table above, less $131.2 million of borrowings for such clients, is the maximum amount that CIT would be required to pay under all DPAs. This maximum amount would only occur if all receivables subject to DPAs default in the manner described above, thereby requiring CIT to purchase all such receivables from the DPA clients.

The table above includes $1,492 million and $1,966 million of DPA credit protection at March 31, 2020 and December 31, 2019, respectively, related to receivables which have been presented to us for credit protection after shipment of goods has occurred and the customer has been invoiced. The table also includes $64 million and $94 million available under DPA credit line agreements, net of the amount of DPA credit protection provided at March 31, 2020 and December 31, 2019, respectively. The DPA credit line agreements specify a contractually committed amount of DPA credit protection and are cancellable by us only after a notice period. The notice period is typically 90 days or less.

NOTE 16 — CONTINGENCIES

Litigation and other Contingencies

CIT is involved, and from time to time in the future may be involved, in a number of pending and threatened judicial, regulatory, and arbitration proceedings as well as proceedings, investigations, examinations and other actions brought or considered by governmental and self-regulatory agencies. These matters arise in connection with the conduct of CIT’s business. At any given time, CIT may also be in the process of responding to subpoenas, requests for documents, data and testimony relating to such matters and engaging in discussions to resolve the matters (all of the foregoing collectively being referred to as “Litigation”). While most Litigation relates to individual claims, CIT is also subject to putative class action claims and similar broader claims and indemnification obligations.

In view of the inherent difficulty of predicting the outcome of Litigation matters and indemnification obligations, particularly when such matters are in their early stages or where the claimants seek indeterminate damages, CIT cannot state with confidence what the eventual outcome of the pending Litigation will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, fines, or penalties related to each pending matter will be, if any. In accordance with applicable accounting guidance, CIT establishes reserves for Litigation when those matters present loss contingencies as to which it is both probable that a loss will occur and the amount of such loss can be reasonably estimated. Based on currently available information, CIT believes that the outcome of Litigation that is currently pending will not have a material adverse effect on the Company’s financial condition, but may be material to the Company’s operating results or cash flows for any particular period, depending in part on its operating results for that period. The actual results of resolving such matters may be substantially higher than the amounts reserved.

For certain Litigation matters in which the Company is involved, the Company is able to estimate a range of reasonably possible losses in excess of established reserves and insurance. For other matters for which a loss is probable or reasonably possible, such an estimate cannot be determined. For Litigation and other matters where losses are reasonably possible, management currently estimates the aggregate range of reasonably possible losses as up to $35 million in excess of any established reserves and any insurance we reasonably believe we will collect related to those matters. This estimate represents reasonably possible losses (in excess of established reserves and insurance) over the life of such Litigation, which may span a currently indeterminable number of years, and is based on information currently available as of March 31, 2020. The Litigation matters underlying the estimated range will change from time to time, and actual results may vary significantly from this estimate.

Those Litigation matters for which an estimate is not reasonably possible or as to which a loss does not appear to be reasonably possible, based on current information, are not included within this estimated range and, therefore, this estimated range does not represent the Company’s maximum loss exposure.

The foregoing statements about CIT’s Litigation are based on the Company’s judgments, assumptions, and estimates and are necessarily subjective and uncertain. The Company has several hundred threatened and pending judicial, regulatory and arbitration proceedings at various stages. One of the Company’s significant Litigation matters is described below.

Hawaiian Foreclosure Litigation Claims

Based on recent rulings of the Hawaii Supreme Court, 43 individual lawsuits were filed against CIT in Hawaii alleging technical violations in non-judicial foreclosures. Similar cases have been filed against other mortgage lenders in Hawaii. The Hawaii Supreme Court did not establish a clear methodology for calculating alleged damages if a violation is proven and there is substantial dispute in this regard. In many instances the borrower had no equity in the home at the time of foreclosure. Damages sought in these cases include any lost equity, compensation for loss of use of the house and, in some cases, treble or punitive damages under Hawaii's unfair practices law. The Company has settled all of the individual lawsuits alleging foreclosure violations. In addition to the individual lawsuits, plaintiffs’ counsel filed six putative class actions alleging the same foreclosure defects violate Hawaii’s unfair and deceptive acts and practices statute. The Company was not named as a defendant in any of the class actions, but serviced loans at the time of foreclosure on behalf of various securitization trusts. In November 2019, the Company signed a class settlement agreement to resolve the claims of the putative class members in the class actions for approximately $9.25 million. In order to effectuate the settlement, a new class action was filed against the Company on February 7, 2020, and concurrently plaintiffs’ counsel filed a motion seeking preliminary approval of the settlement. The court granted the

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

motion for preliminary approval of the settlement after a hearing on March 19, 2020. The final approval hearing is currently scheduled for July 22, 2020. Based on existing reserves, CIT does not expect the settlement will have a material impact.

NOTE 17 — BUSINESS SEGMENT INFORMATION

Segment Profit and Assets

After closing the MOB Acquisition, we reported the acquired businesses within our existing business segments. The transaction diversifies and enhances CIT’s funding profile with stable, lower-cost deposits from MOB’s leading HOA banking business, which extends CIT’s commercial banking capabilities. Refer to Note 24 — Business Segment Information in our 2019 Form 10-K for detail on the segments.

The following table presents segment data related to continuing operations.

Segment Pre-tax Income (Loss) (dollars in millions)

	Commercial Banking			Consumer Banking			Corporate			Total CIT
Quarter Ended March 31, 2020
Interest income	$	367.9		$	101.6		$	44.1		$	513.6
Interest expense (benefit)		163.5			(10.1	)		72.3			225.7
Provision for credit losses		508.9			5.0			-			513.9
Rental income on operating leases		209.8			-			-			209.8
Other non-interest income		87.3			14.0			29.3			130.6
Depreciation on operating lease equipment		78.3			-			-			78.3
Maintenance and other operating lease expenses		53.6			-			-			53.6
Goodwill impairment		301.5			43.2			-			344.7
Operating expenses/loss on debt extinguishment and deposit redemption		213.3			102.1			19.0			334.4
(Loss) income from continuing operations before provision (benefit) for income taxes	$	(654.1	)	$	(24.6	)	$	(17.9	)	$	(696.6	)
Select Period End Balances
Loans	$	30,022.7		$	8,507.7		$	-		$	38,530.4
Credit balances of factoring clients		(1,023.7	)		-			-			(1,023.7	)
Assets held for sale		48.3			24.9			-			73.2
Operating lease equipment, net		7,488.1			-			-			7,488.1
Quarter Ended March 31, 2019
Interest income	$	356.6		$	95.5		$	64.4		$	516.5
Interest expense (benefit)		199.4			(39.3	)		75.5			235.6
Provision (benefit) for credit losses		35.1			(2.1	)		-			33.0
Rental income on operating leases		217.7			-			-			217.7
Other non-interest income		77.6			4.7			14.5			96.8
Depreciation on operating lease equipment		79.4			-			-			79.4
Maintenance and other operating lease expenses		49.8			-			-			49.8
Operating expenses/loss on debt extinguishment and deposit redemption		180.7			93.8			1.7			276.2
Income from continuing operations before provision (benefit) for income taxes	$	107.5		$	47.8		$	1.7		$	157.0
Select Period End Balances
Loans	$	24,641.3		$	6,605.7		$	-		$	31,247.0
Credit balances of factoring clients		(1,651.3	)		-			-			(1,651.3	)
Assets held for sale		56.1			4.5			18.8			79.4
Operating lease equipment, net		6,989.5			-			-			6,989.5

NOTE 18 — GOODWILL AND INTANGIBLE ASSETS

Goodwill (dollars in millions)

	Commercial Banking			Consumer Banking			Total
December 31, 2019	$	326.7		$	43.2		$	369.9
Additions		116.4			5.2			121.6
Impairment		(301.5	)		(43.2	)		(344.7	)
March 31, 2020	$	141.6		$	5.2		$	146.8

The December 31, 2019 goodwill included amounts from CIT's emergence from bankruptcy in 2009 and the 2015 acquisition of IMB HoldCo LLC, the parent company of OneWest Bank. As detailed in Note 2 – Acquisition and Discontinued Operations, on January 1, 2020, CIT Bank acquired MOB, and the acquired assets and liabilities were recorded at their estimated fair value as

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

of the acquisition date resulting in $121.6 million of goodwill. The Company allocated $116.4 million of the goodwill to Commercial Banking and $5.2 million to Consumer Banking. Additionally, intangible assets of $102.6 million were recorded related to the valuation of core deposit intangibles, trade name and customer relationships, as detailed in the table below.

Once goodwill has been assigned, it no longer retains its association with a particular event or acquisition, and all of the activities within a RU, whether acquired or internally generated, are available to support the value of goodwill.

In accordance with ASC 350, Intangibles — Goodwill and other, goodwill is assessed for impairment at least annually, or more often if events or circumstances have changed significantly from the annual test date that would indicate a potential reduction in the fair value of the RU below its carrying value. The Company performs its annual goodwill impairment test during the fourth quarter of each year or more often if events or circumstances have changed significantly from the annual test date, utilizing data as of September 30 to perform the test. The overall deterioration in the macroeconomic environment, challenges in the banking industry, including the low rate environment, and, in particular, the sustained decrease in CIT’s and its peer companies’ stock prices triggered the need for an interim goodwill impairment test in the first quarter of 2020.

CIT defines its RUs as Commercial Finance, Real Estate Finance, Rail and Consumer Banking. Currently, the goodwill associated with the MOB Acquisition remains its own separate RUs within the Commercial Banking and Consumer Banking segments as MOB has not yet been fully integrated with CIT.

Fair Value

Determining the value of the RUs as part of the quantitative impairment test involves significant judgment. The methodology used to assess impairment during the first quarter of 2020 was largely consistent with that used in our annual analysis whereby a combination of the income approach (i.e. discounted cash flow (“DCF”) method) and the market approach (i.e. Guideline Public Company ("GPC") method) were used to determine the fair value. In the application of the Income Approach, the Company determined the fair value of the RUs using a DCF analysis. See Note 25 -- Goodwill and Intangible Assets in the Company’s 2019 Form 10-K for details.

For the annual impairment test, the DCF model used earnings projections and respective capitalization assumptions based on two-year financial plans presented to the Board of Directors. For purposes of the interim test, the Company’s financial plans for 2020 and 2021 were updated for the projected impact of COVID-19 on the net revenue growth and asset utilization. Beyond the initial two-year period, the projections converge toward a constant long-term net revenue growth rate of up to 3% based on the projected revenues of the RU, as well as expectations for the development of gross domestic product and inflation, which are captured in the terminal value. Estimating future earnings and capital requirements involves judgment and the consideration of past and current performance and overall macroeconomic and regulatory environments.

The cash flows determined based on the process described above were discounted to their present value. The discount rate (cost of equity) applied is comprised of a risk-free interest rate, an equity risk premium, a size premium and a factor covering the systemic market risk (RU-specific beta) and, where applicable, a company specific risk premium. The values for the factors applied are determined primarily using external sources of information. The RU-specific betas are determined based on a group of peer companies. The discount rates applied to the RUs ranged from 10.25% to 11.25%.

In our application of the market approach, for the GPC Method, the Company applied market-based multiples derived from the stock prices of companies considered by management to be comparable to each of the RUs, to various financial metrics for each of the RUs, as determined applicable to those RUs, including tangible book or book value, earnings and projected earnings. In addition, the Company applied a 40% control premium based on our review of transactions observable in the market place that we determined were comparable to the current economic environment. The control premium is management's estimate of how much a market participant would be willing to pay over the fair market value for control of the business. There was a significant reduction in the values determined under this methodology as a result of the sustained depression in CIT’s peer company stock prices.

A weighting is ascribed to each of the results of the income and market approaches to determine the concluded fair value of each RU. The weighting is judgmental and is based on the perceived level of appropriateness of the valuation methodology for each specific RU. Estimating the fair value of RUs involves the use of estimates and significant judgments that are based on a number of factors including actual operating results. If current conditions change from those expected, it is reasonably possible that the judgments and estimates described above could change in future periods.

Based on the quantitative analysis, as described above, the Company concluded that the carrying amount of the Commercial Finance, Real Estate Finance and Consumer Banking RUs exceeded their estimated fair value and thus the Company recorded an impairment of the goodwill in the Commercial Finance, Real Estate Finance and Consumer Banking RUs of $159.9 million, $141.6 million and $43.2 million, respectively, representing the full amount of goodwill assigned to the RUs.

Goodwill associated with Rail of $25.2 million was determined not to be impaired as the fair value of the RU exceeded the book value. With respect to the $121.6 million goodwill associated with RUs from the MOB Acquisition, there was no trigger event identified.

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CIT Group Inc. and Subsidiaries – Notes to Condensed Consolidated Financial Statements (Unaudited)

Management will continue to monitor the remaining goodwill for additional impairment, particularly in light of the COVID-19 pandemic’s impact to the macro-economic environment.

Intangible Assets

The following table presents the gross carrying value and accumulated amortization for intangible assets, excluding fully amortized intangible assets.

Intangible Assets (dollars in millions)

	March 31, 2020							December 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Core deposit intangibles	$	222.4	$	(86.6	)	$	135.8	$	126.3	$	(79.7	)	$	46.6
Trade names		27.7		(13.6	)		14.1		24.7		(12.7	)		12.0
Customer relationships		27.4		(17.2	)		10.2		23.9		(16.2	)		7.7
Other		7.4		(7.4	)		—		7.4		(7.7	)		(0.3	)
Total intangible assets	$	284.9	$	(124.8	)	$	160.1	$	182.3	$	(116.3	)	$	66.0

The following table presents the changes in intangible assets:

Intangible Assets Rollforward (dollars in millions)

	Core Deposit Intangibles			Trade Names			Customer Relationships			Other			Total
December 31, 2019	$	46.6		$	12.0		$	7.7		$	(0.3	)	$	66.0
Additions		96.1			3.0			3.5			—			102.6
Amortization		(6.9	)		(0.9	)		(1.0	)		0.3			(8.5	)
March 31, 2020	$	135.8		$	14.1		$	10.2		$	—		$	160.1

The addition to intangible asset balances in 2020 reflect the intangibles recognized as a result of the acquisition of MOB. The largest component related to the valuation of core deposits. Core deposit intangibles (“CDIs”) represent future benefits arising from noncontractual customer relationships (e.g., account relationships with the depositors) acquired from the purchase of demand deposit accounts, including interest and non-interest bearing checking accounts, money market and savings accounts. CDIs have a finite life and are amortized on a straight line basis over the estimated useful life of seven years related to the OneWest acquired CDI and ten years for the MOB acquired CDI. Amortization expense for the intangible assets is recorded in Operating expenses.

Accumulated amortization totaled $124.8 million at March 31, 2020. Projected amortization for the years ended March 31, 2021 through March 31, 2025, is approximately $33.7 million, $32.2 million, $19.5 million, $13.4 million, and $13.3 million, respectively.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3. Quantitative and Qualitative Disclosures about Market Risk

CIT Group Inc., together with its subsidiaries (collectively "we", "our", "CIT" or the "Company"), is a bank holding company ("BHC") and regulated by the Board of Governors of the Federal Reserve System ("FRB") and the Federal Reserve Bank of New York ("FRBNY") under the U.S. Bank Holding Company Act of 1956, as amended. CIT Bank, N.A. is regulated by the Office of the Comptroller of the Currency of the U.S. Department of the Treasury ("OCC"). Visit cit.com.

Management's Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market Risk ("MD&A") contain financial terms that are relevant to our business, and a Glossary of new key terms is included later in this MD&A. This adds to the Glossary included in Item 1. Business Overview in our Annual Report on Form 10-K for the year ended December 31, 2019 (“2019 Form 10-K”).

Management uses certain non-GAAP financial measures in its analysis of the financial condition and results of operations of the Company. See "Non-GAAP Financial Measurements" for a reconciliation of these financial measures to comparable financial measures in accordance with U.S. GAAP.

Throughout this MD&A we reference specific "Notes" to our financial statements. These are notes to the Condensed Consolidated Financial Statements in Item 1. Financial Statements (“Item 1”).

MUTUAL OF OMAHA BANK ACQUISITION

On January 1, 2020, CIT acquired Mutual of Omaha Bank (“MOB”), the savings bank subsidiary of Mutual of Omaha Insurance Company and Omaha Financial Holdings, Inc. (“OFHI”). CIT paid approximately $1 billion as consideration, comprised of approximately $850 million in cash and approximately 3.1 million shares of CIT Group Inc. common stock (valued at approximately $141 million at the time of closing). Some key items related to the acquisition are as follows:

•

MOB’s total assets acquired were $8.3 billion, which mainly consisted of approximately $6.3 billion of loans and approximately $1.7 billion of investment securities. Loans consisted of commercial and industrial loans and real estate loans, which were included in our Commercial Banking segment and consumer loans (primarily correspondent residential mortgages), in our Consumer Banking segment.

•

Deposits acquired were $7.0 billion and included approximately $4.5 billion of homeowner’s association (“HOA”) deposits. CIT also acquired 25 bank branches, primarily in the Southwest, Midwest and Southeast.

•

Accretion of purchase accounting adjustments on the acquired commercial loans is expected essentially to offset amortization on consumer loans. Net accretion after 2020 is expected to be minimal.

•

CIT equity increased by $141 million related to the 3.1 million common shares issued from treasury stock.

•

As discussed in Critical Accounting Estimates below, while no allowance for loan losses was carried over, CIT recorded an Allowance for Credit Losses (“ACL”) for non-purchase credit deteriorated (“non-PCD”) loans through an increase to the provision for credit losses.

•

CIT recorded goodwill of $122 million, representing the excess of the purchase price over the fair value of the net assets acquired, and $103 million of intangible assets, which we expect will increase amortization expense by approximately $10 million in 2020.

The transaction diversifies and enhances CIT’s funding profile with stable, lower-cost HOA deposits from MOB’s leading Community Association Banking (“CAB”) business. In addition, it advances CIT’s strategic plan, extends its commercial banking capabilities and is expected to enhance profitability. Financial data for the prior period has not been restated to include the acquisition and therefore, are not directly comparable to subsequent periods. See Note 2 — Acquisition and Discontinued Operations in Item 1 for additional information.

The consolidated financial statements include the effects of Purchase Accounting Adjustments (“PAA”) upon completion of the MOB Acquisition. The assets acquired and liabilities assumed in this transaction were recorded at their estimated fair values as of the closing date and the Company’s results of operations include the results of the acquisition beginning with the closing date. Consideration paid in excess of the net fair values of the acquired assets, intangible assets and assumed liabilities was recorded as Goodwill. Accretion and amortization of certain PAA are included in the Consolidated Statements of Income, primarily impacting Net Finance Revenue (“NFR”) (interest income and interest expense) and non-interest expenses. The purchase accounting accretion and amortization on loans, borrowings and deposits is recorded in interest income and interest expense over the weighted-average life of the financial instruments using the effective yield method. Intangible assets related to the MOB Acquisition were recorded related to the valuation of core deposits and other intangible assets. Intangible assets have finite lives, and as detailed in Note 2 — Acquisition and Discontinued Operations and Note 18 — Goodwill and Intangible Assets in Item 1, are amortized on an accelerated or straight-line basis, as appropriate, over the estimated useful lives and recorded in non-interest expenses.

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SUMMARY OF 2020 FINANCIAL RESULTS

The following table summarizes the Company’s results in accordance with U.S. GAAP as included in the Condensed Consolidated Statements of Income for the quarters ended March 31, 2020 and 2019, and also for the quarter ended December 31, 2019. We similarly provide results that exclude noteworthy items, which are reconciled to GAAP in the Non-GAAP Financial Measurements section at the end of the MD&A. As explained further in the Non-GAAP Financial Measurements section, we exclude noteworthy items to reflect how management views the underlying performance of the business.

Our financial results and trends in the first quarter 2020 reflect three key events during the quarter:

•

The impact of the global pandemic from the spread of the novel strain of coronavirus disease 2019 (“COVID-19”) virus and the ensuing adverse impact on the macroeconomic environment.

•

The adoption of the CECL standard, which requires the estimation of credit losses over the full remaining expected life of the portfolio, along with the impact from the macroeconomic conditions resulted in a provision for credit losses of $514 million. See Credit section of COVID-19 Pandemic Response below.

•

The acquisition of MOB on January 1, 2020 impacted the comparability of current quarter results to prior periods.

Although we grew assets during the quarter, reflecting the MOB Acquisition, results for the quarter were impacted by a provision for credit losses of $514 million, reflecting the current economic stress and the associated impact on the ACL due to the adoption of CECL. In addition, the impact of the global pandemic related to the COVID-19 virus and the ensuing adverse impact on the macroeconomic environment were contributing factors that led to a $339 million after-tax impairment of goodwill, which was primarily related to the OneWest Bank acquisition.

Results of Operations (dollars in millions)

	Quarters Ended
	March 31,			December 31,		March 31,
GAAP Results	2020			2019		2019
(Loss) income from continuing operations available to common shareholders	$	(628.1	)	$	121.1	$	119.2
Loss from discontinued operations, net of taxes		-			-		(0.3	)
Net (Loss) income available to common shareholders	$	(628.1	)	$	121.1	$	118.9
Diluted (loss) income per common share
(Loss) income from continuing operations available to common shareholders	$	(6.40	)	$	1.27	$	1.18
Income (loss) from discontinued operations, net of taxes		-			-		-
Diluted (loss) income per common share available to common shareholders	$	(6.40	)	$	1.27	$	1.18
Average number of common shares - diluted (thousands)		98,089			95,143		101,096

Non-GAAP Results, excluding noteworthy items
(Loss) income from continuing operations available to common shareholders	$	(238.4	)	$	121.1	$	119.2
Loss from discontinued operations, net of taxes		-			-		(0.3	)
Net (Loss) income available to common shareholders	$	(238.4	)	$	121.1	$	118.9
Diluted (loss) income per common share
(Loss) income from continuing operations available to common shareholders	$	(2.43	)	$	1.27	$	1.18
Income (loss) from discontinued operations, net of taxes		-			-		-
Diluted (loss) income per common share available to common shareholders	$	(2.43	)	$	1.27	$	1.18

First quarter loss to common shareholders was $628 million or $6.40 per diluted common share. Excluding noteworthy items, the first quarter loss to common shareholders was $238 million or $2.43 per diluted common share¹, primarily reflecting a $469 million provision for credit losses, of which $405 million ($3.38 per diluted common share) relates to the forecasted macroeconomic environment.

NFR² benefited from the addition of MOB but was adversely impacted by the macroeconomic environment and Federal Reserve rate reductions of 150 bps in March 2020. Although the reduction in interest rates benefited our deposit costs, this was more than offset by the impact on our loan and securities portfolio. Average outstanding deposit costs decreased compared to the prior quarter, including a benefit from the addition of lower-cost MOB deposits. Income on loans also reflected lower interest recoveries and a decline in prepayment fees, as prepayment rates slowed. Net operating lease revenue was down on lower rail car utilization, continued lease rates compression, as well as higher maintenance costs. See Net Finance Revenue section for more details.

Other non-interest income benefited from the addition of MOB, reflecting higher fee income driven by the addition of our CAB business, and an increase in capital markets fees. We recognized strong gains on investment and asset sales, prior to the market disruption in March. The disruption in the markets gave rise to a negative mark-to-market in the current quarter on credit valuation adjustments (“CVA”) related to customer derivatives. See Non-Interest Income section for more details.

The deterioration of the macroeconomic environment as a result of COVID-19 and the related effects on CIT’ results of operations and decrease in our stock price, triggered a goodwill impairment assessment, which resulted in an impairment charge of $345 million in the current quarter. See Note – 18 Goodwill and Intangible Assets in Item 1 and Non-Interest Expense section for more details.

¹	Loss to common shareholders excluding noteworthy items is a non-GAAP measure. See “Non-GAAP Measurements” for a reconciliation of non-GAAP to GAAP financial information.

²	Net finance revenue is a non-GAAP measure. See “Non-GAAP Measurements” for a reconciliation of non-GAAP to GAAP financial information.

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On a per diluted common share basis, the results also reflect an increase in the average number of diluted common shares outstanding due to the issuance of approximately 3.1 million common shares for the acquisition of MOB.

Financial results for the first quarter included the following noteworthy items:

•

$339 million (after-tax) ($3.46 per diluted common share) in goodwill impairment charges, primarily related to goodwill recorded for the OneWest Bank acquisition.

•

$37 million (after tax) ($0.37 per diluted common share) charge to the day 1 provision for credit losses from the MOB Acquisition.

•

$14 million (after tax) ($0.14 per diluted common share) in merger and integration costs related to the MOB Acquisition.

The following table reflects the impact of noteworthy items on our GAAP results for the quarter ended March 31, 2020. See Non-GAAP Financial Measurements section.

Noteworthy Adjustments (dollars in millions, except diluted per share amounts)

	Net Loss Available to Common Shareholders
GAAP Results	$	(628.1	)	$	(6.40	)
Goodwill impairment		339.0			3.46
MOB day 1 provision for credit losses		36.7			0.37
MOB merger and integration costs		14.0			0.14
Non-GAAP Results (certain EPS balances may not sum due to rounding)	$	(238.4	)	$	(2.43	)

The net loss excluding noteworthy items reflects a pre-tax $469 million provision for credit losses, of which $405 million ($3.38 per diluted common share) relates to the forecasted macroeconomic environment.

COVID-19 PANDEMIC RESPONSE

Since December 2019, the outbreak of COVID-19, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown and a significant increase in unemployment. Global equity and credit markets have experienced significant volatility and weakness. Governments and central banks have responded with significant monetary and fiscal policy measures designed to stabilize economic conditions and the functioning of the global financial markets. The duration and impact of the COVID-19 pandemic is still evolving, as are the government and central bank interventions. Thus, it is too early to estimate the impact to our financial results in future periods.

Our business had prepared for crises that could disrupt operations, such as natural disasters, terrorist activities, pandemics and economic disruption, although the impact of the COVID-19 pandemic on the U.S. economy has been faster and more severe than could have reasonably been predicted. CIT’s Business Continuity Team (“BCT”) monitored the progression of COVID-19 as it spread throughout the world. Our BCT comprises leaders from Technology & Operations, Human Resources, Risk, Legal, Consumer Banking, and Communications, with established routines coordinating all enterprise activities. In response to the growing concerns regarding the COVID-19 pandemic, the BCT was activated on February 26th, leveraging the Business Continuity Plan, which includes a pandemic plan, and began continuous monitoring activity and meeting daily with the Executive Management Committee (“EMC”) and regularly with the Board of Directors to discuss impacts and developments. Throughout this time, regular updates have been provided to our regulators.

Early in the process, we had emergency notifications tested to confirm that all employees could be reached in the event of a facility closure or other event. We also confirmed that key employees had the capability to work remotely and tested our ability to conduct the monthly accounting close for February from remote locations. Although our branches remain open, in consideration of the severity of the virus, we created reduced density work plans for activities that cannot be fully performed remotely and implemented additional cleaning measures that are being conducted in our facilities. We continue to execute our business continuity plan, as discussed below, and will continue to monitor and adapt our plans to meet this evolving situation.

Supporting our employees, communities and customers during these times has been our top priority.

Supporting our Employees

We have effectively leveraged important investments that we made in our infrastructure and processes, which has allowed us to keep our employees safe and healthy, as well as continue to run our business and service our customers’ needs. Over 90% of employees are successfully working remotely, leveraging the significant hardware and software upgrades that we have made over the last few years. We implemented reduced density and social distancing protocols for employees in branches and lockbox operations. We also introduced the CIT Emergency COVID-19 Pay Program (“ECPP”), which provides additional pay to certain front-line branch and operations employees whose jobs cannot be performed remotely.

The Company created a special internal web page for a summary of all COVID-19 updates that includes employee support, communications and access to resources, both internal and external, and referral links to the Centers for Disease Control and Prevention (“CDC”) website. In addition, our CEO and EMC are hosting weekly Town Halls, where they discuss the events as they unfold and how CIT is prepared and responding.

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In early March we instituted the following protocols within CIT:

•

If for personal or business reasons an employee, or someone they have close personal contact with (e.g. spouse, roommate), recently traveled to, or had flight stopovers in, any countries assigned a Risk Assessment Level 1-3 by the CDC, that employee was directed to work remotely for 14 calendar days from the time of their arrival home.

•

If an employee has been diagnosed with or exposed to COVID-19 that employee must work remotely for 14 calendar days from the time of such diagnosis or exposure.

•

Employees were reminded regularly to practice social distancing by keeping appropriate space between individuals when possible and to avoid shaking hands.

•

Employees were reminded to limit large group gatherings or forums to no more than 10 people in one meeting or gathering and to use technology such as video conferences and conference calling to conduct business.

Effective March 13, we instituted a work-from-home policy for New York City and Chicago-based employees for an initial period of two weeks. Effective March 17, all employees that were equipped to work from home in our other locations were authorized to do so. We modified this directive throughout the company to comply with local mandates from all levels of governments where we operate. Although over 90% of our employees are equipped and effectively working remotely, there are some functions that cannot perform their work remotely, such as lockbox operations and branch operations, where we have implemented reduced density and social distancing protocols. Business travel has effectively been suspended until further notice.

Additional precautions, such as spreading out workstations, adding more supplies, and increasing cleaning schedules, are being taken at those facilities following CDC guidelines. We prepared for on-demand deep cleaning and disinfectant protocols to address any specific issues that may arise. In our branches, we have taken additional measures to support the health and wellbeing of our staff and customers, including using hospital grade germicide solution, regularly cleaning counters, door handles and other frequently-touched surface areas, disinfecting ATMs and practicing social distancing whenever possible.

Supporting our Communities

CIT understands the stresses to the communities brought on by the COVID-19 pandemic. CIT made a $1 million community commitment to support those affected by COVID-19. These resources will provide some immediate relief to New York City and L.A. County, the respective headquarters for the company and its bank subsidiary. In addition, it will provide support for several community initiatives across our footprint that aim to provide relief to those impacted by the pandemic, with approximately half of the funding supporting nonprofits assisting small businesses in California.

Another way CIT is supporting the fight against COVID-19 is by providing financing, including to a customer to help it procure millions of advanced N95 surgical masks that will protect medical professionals battling the COVID-19 pandemic.

Supporting our Customers

The well-being of our customers is a top priority and we know our customers need access to their deposits. We have taken all steps possible to allow our customers to maintain access to their accounts. We updated our CIT Bank website to include a COVID-19 link, where we keep our retail customers updated and list contact numbers to discuss questions they may have regarding access to their deposits or on mortgages.

We have worked to keep our branches accessible throughout this event, with modified service hours. For those branches that offer drive-thru service, the lobby area has been closed. We have taken the following additional measures in our branches to support the health and wellbeing of our branch staff and customers.

•

Using CDC-approved sanitizers and germicide solutions each night to clean the branch.

•

Enhanced cleaning of frequently-touched surface areas like counters and door handles.

•

Disinfecting ATMs.

•

Furnished branch staff with protective gloves to handle cash and other high-touch materials.

•

Displayed posters outlining healthy habits and tips, as suggested by health officials.

•

We have limited the number of customers in the branch at any given time.

Our strength is our client service. We are staying in touch with our commercial clients to understand the possible financial impact the COVID-19 pandemic may have on their businesses and to help them navigate through this period. We know our customers are closely monitoring possible impacts of the pandemic on their businesses, including supply chain issues, changes in business pipelines and demand and the possible impact on their liquidity and access to capital.

We have implemented business specific procedures and processes to receive, track and evaluate client inquiries. Inquiries are being evaluated on a case-by-case basis. Managing accounts online and via mobile banking is also available, and for additional guidance on financial matters, the Company offers its free Personal Finance Empowered digital learning modules. This free, online educational tool, centers on topics critical to personal finance management, including building savings, mortgage education and retirement planning.

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Relief Measures for Our Depositors and Retail Customers

•

We are assisting customers with accessing needed funds by waiving fees for ATMs, overdrafts or early withdrawal of CDs for customers that are affected by COVID-19.

•

Impacted mortgage customers have been encouraged to reach out for relief.

•

CIT has suspended residential property foreclosures and evictions for at least 60 days for single family homeowners due to the coronavirus national emergency to align with government agency guidance.

•

The Company may provide payment or other contract modifications, including payment deferrals, which allows for mortgage payments to be suspended or reduced temporarily for a certain period due to hardship caused by COVID-19. Each loan is evaluated on the specific facts and circumstances of the affected borrower. As of April 24, 2020, approximately 1,600 consumer customers have requested and been granted deferment arrangements, totaling approximately $600 million in carrying value.

Relief Measures for Our Commercial Customers

CIT is proactively engaging with our clients to understand the possible financial impacts the COVID-19 pandemic is having on their business and providing our expertise and advice on possible solutions during this period.

Commercial customers impacted by COVID-19 may qualify for up to 3 months of deferred payments beginning with the next payment due date. Loans may be restructured with up to 3 months added to the current term. As of April 24, 2020, there have been approximately $1.6 billion of contract modifications approved for approximately 10,000 customers, of which approximately 70% of the balance related to payment deferrals. In addition, approximately $900 million of factored invoices have extended their terms by 30 to 90 days, of which approximately 65% related to exposures on balance sheet and approximately 35% related to our off-balance sheet DPA program. Extended rent terms on operating leases, including Rail, were insignificant.

In addition, on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. Included within Title I of the CARES Act was a provision for $349 billion in small business loans through the Paycheck Protection Program (“PPP”) for small businesses to keep their employees paid during the COVID-19 pandemic. Effective April 3, 2020, we began accepting applications from existing borrowers for the PPP. To be eligible, the borrower must be a CIT client as of February 15, 2020 and have a business operating account, combined with treasury management services, or a loan. The initial amount authorized was fully committed by the SBA by April 16, 2020. On April 24, 2020, the Paycheck Protection Program and Health Care Enhancement Act was signed into law (the “Act”). The Act amends the CARES Act to authorize additional funding of $310 billion for the SBA to commit for loans under the PPP. Of the additional $310 billion of PPP funding, the Act sets aside (i) $30 billion for loans made by insured depository institutions and credit unions with consolidated assets of less than $10 billion, and community financial institutions, (ii) $30 billion for loans made by insured depository institutions and credit unions with consolidated assets of between $10 billion and $50 billion, and (iii) $250 billion for loans made by any PPP authorized lender. The SBA began accepting additional applications on April 27, 2020. CIT Bank is a participating PPP lender.

Our Business

Prior to the onset of the COVID-19 pandemic, CIT completed a significant business transformation, strengthened our risk profile and focused our priorities. Over the past five years, we have divested over $14 billion of non-core assets, including our Commercial Air, Financial Freedom, and NACCO businesses, along with Business Capital international businesses. 84% of our funding profile at March 31, 2020 was comprised of deposits, diversified across multiple channels, and our unsecured debt maturity schedule has been flattened and extended. We have strengthened our risk management framework and focused on prudent growth and robust capital and liquidity levels informed by stress testing that includes both market and idiosyncratic stress environments. We have made substantial investments in technology and systems to automate more processes and to upgrade our system infrastructure, that enable us to work effectively under current conditions.

Funding and Liquidity

As a result of our strategic transformation, we have strong and diversified sources of funding and liquidity. We have diversified sources of deposits, including our Online Bank, a branch network of approximately 90 Branches, 64 of which are in top MSAs in Southern California, commercial deposits and, with the recent MOB Acquisition, a leading national HOA deposit channel, which reaches over 4.5 million households. We have access to the unsecured debt markets in both CIT Bank and CIT as well as committed secured facilities described below.

We have a strong level of Liquid Assets comprised of the majority of our cash and securities along with a robust liquidity risk management process to provide us the ability to meet expected and contingent funding needs under both normal and stressed environments (both idiosyncratic and market stresses). Our funding and liquidity remain strong.

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At March 31, 2020 we had $9.5 billion of total Liquid Assets and $3.5 billion of contingent liquidity sources available, most of which is held at the Bank, commensurate with our assets.

•

At March 31, 2020, our Liquid Assets comprised 16% of total assets and included approximately $3.5 billion of Available Cash³ (of which $0.9 billion is available at the BHC) and $6.0 billion of High Quality Liquid Securities, of which approximately $3.0 billion is pledged but not drawn against at the FHLB and available for sale.

•

At March 31, 2020, our contingent liquidity sources include:

A committed and secured ABL facility of $1.0 billion available to the parent and non-bank subsidiaries, of which approximately $420 million was unused, provided that eligible assets are available to serve as collateral.

A committed Revolving Credit Facility of $300 million, of which approximately $260 million was available to be drawn at the parent.

FHLB capacity of $5.9 billion (collateralized by lending assets), of which $3.1 billion was outstanding, resulting in approximately $2.8 billion of available capacity for CIT Bank. (The $5.9 billion capacity amount excludes capacity to borrow against approximately $3.0 billion of High Quality Liquid Securities, which are pledged at the FHLB but are available for sale until CIT borrows against the securities).

We continue to expand our tools to monetize High Quality Liquid Securities through the additional FHLB capacity and unutilized repo lines.

In addition, the Company has access to a borrowing facility with the FRB Discount Window. The borrowing capacity is determined by the FRB based on the collateral pledged. Beginning May 1, 2020, CIT Bank has access to a secured borrowing facility with the FRB Paycheck Protection Program Liquidity Facility.

We have minimal repayments of borrowings over the near-term. In calendar year 2020, we have no unsecured debt repayments nor FHLB advances due. Over the next twelve months, we have $500 million of unsecured borrowings due in March 2021, and $14 million of other structured financings. As of March 31, 2020, our certificates of deposit with maturities over the coming twelve months was approximately $9 billion. We added a maturity table in Funding and Liquidity that details our obligations.

See Funding and Liquidity section for further information and Note 9 – Borrowings in Item 1.

Capital

We have diversified sources of capital and our capital ratios remain well above regulatory minimum thresholds at CIT and at CIT Bank. We operate a sound enterprise risk management function, including a robust stress testing process. Capital stress testing is a key component of CIT’s capital planning process and is used to assess whether capital levels and capital actions are appropriate for CIT’s risk profile. Management sets capital targets at levels intended to provide for CIT’s continuing operation throughout economic cycles and periods of stress including a severely adverse scenario.

During August 2019, in anticipation of the MOB Acquisition, we ceased our share repurchase program and in the fourth quarter of 2019, we issued $200 million in Tier 1 qualifying preferred stock and $100 million of Tier 2 qualifying subordinate debt.

We ended 2019 with capital ratios of 12.0% CET1, 13.2% tier 1 capital and 15.4% total capital. On January 1, 2020 we issued $141 million in common equity as part of the acquisition price, resulting in pro forma CET1 ratio of 10.0% and total capital ratio of 13.0%, after accounting for a fully transitioned CECL impact and the acquisition of MOB.

³	Available cash consists of the unrestricted portions of balances as ‘Cash and due from banks’ and ‘Interest-bearing cash’, with additional restrictions to account for cash not accessible for liquidity, such as vault cash and deposits in transit.

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The following table summarized the Common Equity Tier 1 (“CET1”) Capital Ratio rollforward reflecting the CECL adoption, the MOB Acquisition, the first quarter CECL COVID-19 impact, and the Revised CECL Transition Rule:

CET1 Capital and Risk-Weighted Asset (“RWA”) Rollforward (dollars in millions)


Common Equity Tier 1	CET1 Capital	RWA	Ratio⁽¹⁾
Balance at December 31, 2019	$ 5,444.4	$ 45,262.0	12.0%
Legacy CIT CECL adoption	(82.4)	28.5	-0.2%
Balance at January 1, 2020	5,362.0	45,290.5	11.8%
MOB Acquisition	(116.3)	6,847.1	-1.8%
Post MOB Acquisition CET1 at January 1, 2020	5,245.7	52,137.6	10.0%
First quarter CECL COVID-19 impact⁽²⁾	(347.0)	(423.6)	-0.7%
All other first quarter activity	71.0	1,042.5	0.1%
Balance at March 31, 2020, before new 5-year transition	4,969.7	52,756.5	9.4%
New 5-Year Transition Benefit - both Day 1 and 25% of increase in AACL	188.4	216.5	0.3%
Balance at March 31, 2020	$ 5,158.1	$ 52,973.0	9.7%

⁽¹⁾

Ratios are rounded based on underlying amounts.

⁽²⁾

The first quarter of 2020 change in AACL is calculated based on the formula prescribed by the Interagency Interim Final Rule allowing Banks that adopt CECL before the end of 2020 the option to delay the impact of CECL’s effect on regulatory capital for two years followed by a three-year transition period – the ‘5-year transition’. This includes $405 million of allowance build primarily driven by the impact of the COVID-19 pandemic.

•

The CET1 capital impact has been tax effected at 18.1%

•

The RWA decrease reflects the reduction for AACL in excess of the 1.25% regulatory threshold for inclusion in Tier 2 capital

On January 1, 2020 CIT implemented CECL and completed the MOB Acquisition, both of which impacted CIT’s capital ratios. CIT has elected the 5-year transition option under the Revised CECL Transition Rule which delays the CECL day one impact and part of the COVID-19 reserve impact to CET1 capital of $188.4 million for two years and then it will phase-in over a three-year period (see changes to CECL transition below).

The acquisition of MOB resulted in an increase in RWA totaling approximately $6.8 billion, as well as provision for credit losses of $45 million related to the non-PCD portion of the ACL. The MOB Acquisition also impacted regulatory capital due to the additional goodwill ($122 million) and intangible assets ($103 million) and the common stock issuance of $141 million.

Leading up to the completion of the acquisition, during 2019, CIT Bank issued $550 million of senior unsecured bank notes and CIT issued $100 million of Tier 2 qualifying subordinated notes as well as $200 million of Tier 1 qualifying preferred stock to fund the cash portion of the purchase price. CIT’s CET1 capital ratio following the CECL implementation and the MOB Acquisition on January 1, 2020 was 10.0%.

In March 2020, the OCC, FRB and FDIC collectively issued Revised CECL Transition Rule for regulatory capital, which provides for the option to delay for two years the impact of CECL’s effect on regulatory capital, followed by a three-year transition period. During the first two years of the transition period, CIT will delay the day one impact of CECL to retained earnings ($82.4 million), plus a scaling factor of 25 percent of the quarterly change in the Adjusted Allowance for Credit Losses “AACL”) from initial CECL implementation to the end of the quarter, excluding the impact of the initial non-PCD charge related to MOB, equal to $424 million times 25 percent ($106 million). After the initial two-year delay period, there will be a three-year phase in period starting January 1, 2022. These changes are only applicable to regulatory capital, which resulted in an increase to CET1 capital of $188.4 million as of March 31, 2020. There was no impact to the balance sheet or the income statement.

CIT’s CET1 ratio as of March 31, 2020 of 9.7% was lower than the post CECL adoption and post-MOB Acquisition CET1 ratio of 10.0%. CET1 capital as of March 31, 2020 was approximately $5.2 billion, which represented a decrease of $286 million relative to December 31, 2019. The reduction in capital and capital ratios was driven by the first quarter provision for credit losses, partially offset by the Revised CECL Transition Rule benefit. The provision for credit losses drove an increase in CIT’s ACL for loans and allowance for off-balance sheet credit exposures to a combined $1.2 billion. See Critical Accounting Estimates for additional information on the development of our ACL and related sensitivity analysis.

CIT’s RWAs following the CECL implementation and the MOB Acquisition were $52 billion and increased approximately $1 billion during the quarter mainly due to an increase in loans which included funding of some off-balance sheet commitments, increased derivatives mark to market and other factors.

See Critical Accounting Estimates - CECL section for further information on CECL adoption and Capital section for further information on our current capital ratios and RWA.

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Credit

We have enhanced the makeup of our loan and lease portfolio since the last credit cycle by exiting certain risky asset classes. We have shifted our focus to lending against assets with higher-quality collateral and better structural protection and reduced our cash flow loan exposure. We have reduced asset risk and liquidity risk with the sale of Commercial Air, including the off-balance sheet order book. We sold off our international businesses, including NACCO, our European railcar leasing business, and the international financing business of Business Capital. We transformed our business to mainly a national bank, by selling essentially all international equipment financing portfolios.

In 2019, we reduced our criticized loans by 28% and with the acquired MOB loans, criticized loans remain below the March 31, 2019 level. In addition, we continued to improve the risk profile of our portfolio by selling non-core LCM loans of approximately $237 million in carrying value in 2019, which included primarily nonperforming loans, and sold another $29 million in carrying value in the first quarter of 2020.

The adoption of the CECL standard requires the estimation of credit losses over the full remaining expected life of the portfolio, rather than the incurred loss model under previous U.S. GAAP, which required it to be over a loss emergence period. Since the CECL standard introduces economic forecasting into the allowance setting process, the macroeconomic impact of the global pandemic significantly increased our first quarter provision for credit losses, which totaled $514 million.

The table below presents a roll forward of the ACL and the allowance for off-balance sheet credit exposures from amounts reported at December 31, 2019, under the legacy accounting, to amounts as of March 31, 2020, including the impact of the MOB Acquisition. This supplemental presentation expands upon the rollforward included in Note 4 – Allowance for Credit Losses to separately present January 1, 2020 balances resulting from the adoption of CECL and the MOB Acquisition. We also segregate PCD and non-PCD impacts, given the gross up treatment of the former, versus the corresponding retained earnings and income statement charges related to the latter.

Rollforwards of the ACL and Allowance for Off-balance Sheet Credit Exposures (dollars in millions)

	Commercial Banking			Consumer Banking			Total CIT			ACL as a % Loans
Allowance Balance at December 31, 2019	$	460.4		$	22.2		$	482.6			1.56	%
Legacy CIT⁽¹⁾ CECL adoption
PCD		(8.2	)		128.7			120.5
Non-PCD		82.9			20.2			103.1
Allowance Balance at January 1, 2020		535.1			171.1			706.2			2.27	%
MOB Acquisition
PCD⁽²⁾		18.8			1.4			20.2
Non-PCD⁽³⁾		33.5			3.2			36.7
Adjusted ACL Balance at January 1, 2020		587.4			175.7			763.1			2.04	%
Provision - ACL⁽³⁾		402.2			(0.1	)		402.1
Net charge-offs		(51.8	)		(1.8	)		(53.6	)
Other		(0.2	)		(0.3	)		(0.5	)
Allowance Balance at March 31, 2020	$	937.6		$	173.5		$	1,111.1			2.88	%

Allowance for off-balance sheet credit exposures at December 31, 2019	$	36.4		$	0.7		$	37.1
Legacy CIT⁽¹⁾ CECL adoption		8.1			(0.3	)		7.8
Allowance for off-balance sheet credit exposures at January 1, 2020		44.5			0.4			44.9
MOB Acquisition⁽³⁾		8.0			0.5			8.5
Adjusted allowance for off-balance sheet credit exposures at January 1, 2020		52.5			0.9			53.4
Provision – off-balance sheet credit exposures⁽³⁾		65.2			1.4			66.6
Allowance for off-balance sheet credit exposures at March 31, 2020	$	117.7		$	2.3		$	120.0

⁽¹⁾	Legacy CIT is before the MOB Acquisition, detail of which is separately disclosed.

⁽²⁾

⁽³⁾	The combination of the line item balances total to the provision for credit losses in the Condensed Consolidated Statement of Income.

The provision for credit losses drove an increase in CIT’s ACL and, as a result, the ACL coverage ratio increased from 2.0% post-CECL implementation and post-MOB Acquisition to 2.9% at March 31, 2020. See Credit Metrics for details of the rollforward and Critical Accounting Estimates for the key assumptions that drove the CECL adjustments and other key metrics.

We are closely monitoring sectors that are most vulnerable to current economic uncertainty, from a focus on supply chain disruption to broader demand-driven dislocations. We are also closely monitoring our retail exposures in our factoring business. We are applying additional focus to certain at-risk sectors, including oil and gas, hospitality (hotels, gaming and restaurants) and senior living and continue to monitor the developments in the aviation and maritime sectors. See Concentrations section for more information.

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Accounting Impact of Key Government and Reporting Guidance

The following provide brief overviews of recently issued guidance. See above sections for summary of CIT’s relief measures offered to customers and the change related to CECL.

The CARES Act and Interagency Statement

On March 27, 2020, the CARES Act was signed into law. Section 4013 of the CARES Act gives financial institutions temporary relief from the accounting and disclosure requirements related to troubled debt restructurings (“TDRs”) under ASC 310-40 and past due and non-accrual reporting in certain situations. Under the CARES Act, banks may elect to deem that loan modifications do not result in TDRs if they are: (1) related to the COVID-19 pandemic; (2) executed on a loan that was not more than 30 days past due as of December 31, 2019; and (3) executed between March 1, 2020, and the earlier of (A) 60 days after the date of termination of the national emergency declared by the President under the National Emergencies Act with respect to COVID-19 (the “National Emergency”) or (B) December 31, 2020. With respect to past due and non-accrual loans, the CARES Act provides that financial institutions are not expected to designate loans with payment accommodations granted due to COVID-19 as past due or non-accrual if they were current on the date used to determine borrower’s delinquency status for the purpose of providing the deferment.

Additionally, on April 7, 2020, a group of federal and state government banking agencies issued an Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) (the “Interagency Statement”) that offers some practical expedients for evaluating whether loan modifications that occur in response to the COVID-19 pandemic are TDRs. The Interagency Statement indicates that a lender can conclude that a borrower is not experiencing financial difficulty if either (1) short-term (e.g., six months or less) modifications are made in response to COVID-19, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant related to loans in which the borrower is less than 30 days past due on its contractual payments at the time a modification program is implemented, or (2) the modification or deferral program is mandated by the federal government or a state government (e.g., a state program that requires all institutions within that state to suspend mortgage payments for a specified period). The Interagency Statement interprets, but does not suspend, ASC 310-40 as any loan modification made in response to the COVID-19 pandemic that meets either of these practical expedients would not be considered a TDR because the borrower is not experiencing financial difficulty. As provided for under the CARES Act, a financial institution may account for an eligible loan modification either under Section 4013 or in accordance with ASC Subtopic 310-40. The Interagency Statement provides that with respect to loans not otherwise reportable as past due, financial institutions are not expected to designate loans with deferrals granted due to COVID-19 as past due because of the deferral, and that “each financial institution should refer to the applicable regulatory reporting instructions, as well as its internal accounting policies, to determine if loans to stressed borrowers should be reported as non-accrual assets in regulatory reports”. However, during the short-term arrangements discussed in the Interagency Statement, these current loans generally should not be reported as non-accrual.

Other Government and Reporting Guidance

The U.S. Department of Housing and Urban Development (“HUD”) on March 18, 2020, authorized the Federal Housing Administration (“FHA”) to put an immediate moratorium on foreclosures and evictions for the next sixty days for single-family homeowners who are unable to pay their FHA-backed mortgages amid the coronavirus pandemic.

Homeowners with loans backed by two government-sponsored companies, Fannie Mae and Freddie Mac, also will be granted foreclosure relief, according to the Federal Housing Finance Agency, which regulates the companies. Forbearance allows mortgage payments to be suspended for up to 12 months because of economic hardship that was caused by the coronavirus outbreak.

As noted above, CIT is providing relief to certain qualifying commercial borrowers who are being impacted by COVID-19 and who contact us. For consumer customers, CIT is also providing relief to those that contact us, and we are closely monitoring and following the directives from the Government and agencies.

CECL – Interim Final Rule

In March 2020, the OCC, FRB and FDIC collectively issued an interim final rule on the Revised Transition of the Current Expected Credit Losses Methodology for Allowances (“Revised CECL Transition Rule”) for regulatory capital. See the Capital section mentioned above for further details. See also the Capital section later in the MDA for details on our current capital ratios and RWA.

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Summary

In summary, the uncertainty surrounding the COVID-19 pandemic and the related reduction in the Federal Funds rate, as well as the impacts on various industries, has created volatility in the market and for banks in particular. Although CIT has felt the effects of this, our financial profile is strong, notably:

•

As a result of its strategic transformation, we have improved our risk profile and have diversified sources of funding, liquidity and capital.

•

We have minimal maturing borrowings in 2020.

•

We have adopted a bank model with 84% of our March 31, 2020 total funding provided by diversified sources of deposits, including lower cost, stable HOA deposits acquired with the MOB Acquisition.

•

We have strong cash and liquidity levels, and a robust internal liquidity stress testing process to confirm that we have appropriate funding to meet expected and contingent funding needs under both normal and stressed environments.

•

We have diversified sources of capital, including preferred and subordinated debt, and our capital ratios remain well above regulatory minimum thresholds.

•

We have a prudent risk appetite framework and comprehensive stress testing processes to inform our risk appetite, risk tolerance limits and capital requirements.

•

We significantly reduced risk in our portfolio and shifted toward more collateral-based lending.

•

We reduced our criticized assets by 28% during 2019; and with the added MOB loans, remain below our March 31, 2019 level.

Despite market volatility, our underlying fundamentals are strong and our ability to lead through times of change and to deliver for customers is a core strength that we will continue to fully embrace.

We see future potential business opportunities once this COVID-19 health crisis has passed and opportunities to lend prudently after economic activity resumes.

DISCONTINUED OPERATIONS

At March 31, 2020 and December 31, 2019, there were no discontinued operations. Discontinued operations in the year-ago quarter are discussed in Note 2 — Acquisition and Discontinued Operations.

RESULTS FROM CONTINUING OPERATIONS

The discussions and data presented throughout the following sections reflect CIT balances on a continuing operations basis.

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NET FINANCE REVENUE

Net interest revenue reflects our interest income less interest expense and is included as a line item on the Condensed Consolidated Statements of Income. Net interest revenue was $288 million for the quarter ended March 31, 2020, up from $281 million in the year-ago quarter and $252 million in the prior quarter.

As mentioned in our overview, key events that transpired later in the first quarter may not be reflected fully in the following metrics and have continued through the current date and therefore are expected to significantly impact our second quarter. Key events either directly or indirectly associated with the COVID-19 pandemic included the Federal Funds rate being lowered 150 bps, non-essential retail and many businesses in the hospitality sectors being closed due to stay-at-home mandates, and transportation being impacted by travel restrictions.

Key metrics used by management to measure the profitability of our earning assets are NFR⁴ and Net Finance Margin⁴ ("NFM"). NFR is a non-GAAP measurement that includes net interest revenue (interest and fees on loans, interest on interest-bearing cash, and interest/dividends on investments less interest expense on deposits and borrowings) plus net operating lease revenue⁴ (rental income on operating lease equipment less depreciation on operating lease equipment and maintenance and other operating lease expenses). Due to the nature of our portfolio, which includes a higher proportion of operating lease equipment than most BHCs, certain financial measures commonly used by other BHCs, such as net interest income (“NII”), are not as meaningful for CIT. NII is not used because it includes the impact of debt costs of our operating lease assets but excludes the associated rental income.

NFM is NFR calculated as a percentage of average earning assets⁴(“AEA”). NFM is used by management, instead of net interest margin (“NIM”), for the same reasons noted for NFR.

The consolidated financial statements include the effects of purchase accounting accretion ("PAA"). Accretion and amortization of certain purchase accounting adjustments primarily impact interest income and interest expense and are summarized in a table in this section.

The following table presents the average balance sheet and related rates, along with NFR and NFM.

Average Balances and Rates⁽¹⁾ (dollars in millions)

	Quarters Ended
	March 31, 2020								December 31, 2019								March 31, 2019
	Average Balance			Income / Expense		Yield / Rate			Average Balance			Income / Expense		Yield / Rate			Average Balance			Income / Expense		Yield / Rate
Interest-bearing cash	$	1,817.1		$	5.6		1.23	%	$	1,403.7		$	6.5		1.85	%	$	2,622.9		$	14.5		2.21	%
Investment securities and securities purchased under agreements to resell		7,957.9			40.4		2.03	%		7,859.4			46.7		2.38	%		7,178.3			50.7		2.82	%
Loans (including held for sale)⁽²⁾⁽³⁾		36,493.6			467.6		5.13	%		30,015.0			428.2		5.71	%		29,377.7			448.8		6.11	%
Total interest earning assets⁽²⁾⁽³⁾		46,268.6			513.6		4.44	%		39,278.1			481.4		4.90	%		39,178.9			514.0		5.25	%
Operating lease equipment, net (including held for sale)⁽⁴⁾		7,416.1			77.9		4.20	%		7,225.6			98.2		5.44	%		6,982.7			88.5		5.07	%
Indemnification assets		-			-		-			-			-		-			7.7			2.5	NM
Average earning assets⁽²⁾⁽⁵⁾		53,684.7			591.5		4.41	%		46,503.7			579.6		4.99	%		46,169.3			605.0		5.24	%
Non-interest earning assets
Cash and due from banks		228.1								150.8								129.8
Allowance for credit losses		(763.7	)							(487.2	)							(493.0	)
All other non-interest bearing assets		3,552.0								3,158.8								2,840.0
Assets of discontinued operations		-								-								230.1
Total assets	$	56,701.1							$	49,326.1							$	48,876.2

Interest-bearing deposits and borrowings
Deposits	$	39,045.0		$	156.6		1.60	%	$	33,984.4		$	163.4		1.92	%	$	31,666.2		$	153.8		1.94	%
Borrowings		6,951.4			69.1		3.98	%		5,864.5			66.4		4.53	%		7,802.7			81.8		4.19	%
Total interest-bearing liabilities		45,996.4			225.7		1.96	%		39,848.9			229.8		2.31	%		39,468.9			235.6		2.39	%
Non-interest bearing deposits		2,657.9								1,605.1								1,611.3
Other non-interest bearing liabilities		1,599.5								1,673.6								1,558.4
Liabilities of discontinued operations		-								-								286.0
Stockholders' equity		6,447.3								6,198.5								5,951.6
Total liabilities and stockholders' equity	$	56,701.1							$	49,326.1							$	48,876.2
Net revenue spread							2.45	%							2.68	%							2.85	%
Impact of non-interest bearing sources							0.28	%							0.33	%							0.35	%
NFR ($) / NFM (%)⁽²⁾⁽⁵⁾				$	365.8		2.73	%				$	349.8		3.01	%				$	369.4		3.20	%

^(1)….(5)See footnotes below table on next page; NM – Not meaningful

⁴

Net finance revenue, net finance margin, net operating lease revenue and average earnings assets are non-GAAP measures. See “Non-GAAP Measurements” for reconciliation of non-GAAP to GAAP financial information. Although net finance revenue, net finance margin, net operating lease revenue and average earnings assets are non-GAAP measures, each is derived from information in our income statement or balance sheet, presented in a different order and with different subtotals than those presented in our financial statements.

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The following table presents disaggregated quarter-over-quarter changes in net interest revenue and operating lease margins as presented in the preceding table between volume (level of lending or borrowing) and rate (rates charged to customers or incurred on borrowings). Volume change is calculated as change in volume times the previous rate, while rate change is calculated as change in rate times the previous volume. The rate/volume change, change in rate times change in volume, is allocated between volume change and rate change at the ratio each component bears to the absolute value of their total.

Average Balances and Rates⁽¹⁾ (dollars in millions)

	March 2020 Over December 2019 Comparison								March 2020 Over March 2019 Comparison
	Increase (Decrease) Due To Change In:								Increase (Decrease) Due To Change In:
	Volume		Rate			Net			Volume			Rate			Net
Interest-bearing cash	$	1.6	$	(2.5	)	$	(0.9	)	$	(3.6	)	$	(5.3	)	$	(8.9	)
Investment securities and securities purchased under agreement to resell		0.7		(7.0	)		(6.3	)		5.0			(15.3	)		(10.3	)
Loans and loans held for sale⁽²⁾⁽³⁾		85.9		(46.5	)		39.4			97.7			(78.9	)		18.8
Operating lease equipment, net (including held for sale)⁽⁴⁾		2.5		(22.8	)		(20.3	)		5.2			(15.8	)		(10.6	)
Indemnification assets		-		-			-			(1.2	)		(1.3	)		(2.5	)
AEA⁽²⁾⁽⁵⁾	$	90.7	$	(78.8	)	$	11.9		$	103.1		$	(116.6	)	$	(13.5	)

Interest-bearing deposits	$	22.5	$	(29.3	)	$	(6.8	)	$	32.4		$	(29.6	)	$	2.8
Borrowings		11.4		(8.7	)		2.7			(8.7	)		(4.0	)		(12.7	)
Total interest-bearing liabilities	$	33.9	$	(38.0	)	$	(4.1	)	$	23.7		$	(33.6	)	$	(9.9	)

⁽¹⁾	Average balances are based on daily balances. Tax exempt income was not significant in any of the periods presented. Average rates are impacted by PAA.

⁽²⁾	The balance and rate presented is calculated net of average credit balances for factoring clients.

⁽³⁾	Non-accrual loans and related income are included in the respective categories.

⁽⁴⁾

Net Operating lease revenue includes rental revenues, net of depreciation and net of maintenance and other operating lease expenses, as these are directly associated with the equipment. Net operating lease revenue is a non-GAAP measure. See “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information.

⁽⁵⁾	AEA, NFR and NFM, and adjusted amounts are non-GAAP measures. See “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information.

NFR was $366 million for the quarter ended March 31, 2020, down slightly from $369 million in the year-ago quarter and up from $350 million in the prior quarter.

Compared to the year-ago quarter, higher income on loans and lower borrowing costs were offset by lower net operating lease revenue and interest on our cash and investment securities. Interest on loans was up, driven by growth in the portfolio, reflecting the acquisition of MOB and a 6% increase in core average loans and leases⁵ excluding MOB, partially offset by lower interest rates and lower interest recoveries and prepayment fees, as prepayment rates slowed considerably. Interest expense was up, as discussed after the following tables. Net operating lease revenue is down, driven by lower utilization rates, continued lease rate compression on new equipment and renewals, as well as higher maintenance costs in Rail. See the end of this section for more details on our operating lease portfolio. Lower interest rates were a driver in the reduced interest income on cash and investment securities.

Compared to the prior quarter, NFR increased, driven by higher interest income on loans and lower deposit costs, partially offset by lower net operating lease revenue and interest on our investment securities. Higher interest income on loans was driven by volume, primarily the acquisition of MOB, which offset the impact from lower interest recoveries and prepayment fees, as prepayment rates slowed considerably later in the quarter and lower market rates. Lower deposit costs resulted from the addition of lower-cost HOA and commercial deposits from the MOB Acquisition and lower rates in all deposit channels. Lower net operating lease revenue in Rail was due to the trends discussed above and the absence of higher rental income from excess mileage in the prior quarter. The lower yields in investment securities was driven by an acceleration of the premium amortization on agency mortgage-backed securities (“MBS”) within the investment portfolio of $9 million due to higher actual and forecasted prepayment speeds.

NFM was 2.73% for the quarter ended March 31, 2020, down from 3.20% in the year-ago quarter and 3.01% in the prior quarter.

NFM declined from the year-ago quarter, reflecting lower yields on loans from the addition of lower-yielding MOB loans and from lower market rates. In addition, there were lower prepayment fees from the decline in prepayment rates. Operating lease yields were down, driven by lease railcar rates that re-priced down and lower railcar utilization in Rail. Lower yields on investment securities were driven by lower market rates. Partially offsetting these declines was lower weighted average deposit and borrowing rates. Deposits and borrowing rates are discussed further below.

The decline in NFM compared to the prior quarter was driven by the 150 bps reduction in the Federal Funds rate, and lower LIBOR levels which resulted in a significant reduction in the yields on our floating rate loans and securities. The reduction in asset yields also reflects the addition of the MOB loans and securities that are lower yielding. We also recognized $9 million of accelerated premium amortization in our MBS portfolio, reducing margin by 6 basis points. In addition, loan prepayment levels fell as a result of the current environment, resulting in lower prepayment related benefits. Net yields in our Rail portfolio declined on lower utilization and renewal rates and higher maintenance costs. Lower weighted average deposit and borrowing rates

⁵	Core average loans and leases excluding MOB is a non-GAAP measure that excludes loans and leases from certain portfolios, including LCM, NACCO, and NSP for core average loans and leases and also excludes MOB. See “Non-GAAP Measurements” for reconciliation of non-GAAP to GAAP financial information.

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partially offset the decline on noted asset yields.

AEA was up compared to the year-ago and prior quarters, reflecting the MOB Acquisition and organic growth in loans and leases. Average loans and leases make up the substantial portion of AEA. Average loans and leases were up 21% from the year-ago quarter and 18% from the prior quarter, both primarily driven by the MOB Acquisition. Average core loans and leases, excluding MOB, were up 6% from the year-ago quarter and 1% from the prior quarter. Compared to the year-ago quarter, growth was in each of the divisions of Commercial Banking, and in Consumer and Community Banking.

The composition of our average funding mix in the current quarter compared to the year-ago quarter, reflects our continued growth in deposit funding. The acquisition of MOB added approximately $7 billion of deposits, but did not noticeably impact the funding mix, as we also increased the use of FHLB advances in the quarter.

Average Funding Mix

	Quarters Ended
	March 31,			December 31,			March 31,
	2020			2019			2019
Deposits		86	%		86	%		81	%
Unsecured borrowings		9	%		11	%		9	%

Secured Borrowings:
FHLB advances		4	%		2	%		8	%
Structured financings		1	%		1	%		2	%

These proportions will fluctuate in the future depending upon our funding activities.

The following table details further the rates of interest-bearing liabilities.

Interest-Bearing Deposits and Borrowings — Average Balances and Rates for the Quarters Ended (dollars in millions)

	March 31, 2020							December 31, 2019							March 31, 2019
	Average Balance		Interest Expense		Annualized Rate (%)			Average Balance		Interest Expense		Annualized Rate (%)			Average Balance		Interest Expense		Annualized Rate (%)
Total interest-bearing deposits
Time deposits	$	11,899.7	$	61.2		2.06	%	$	11,956.5	$	69.5		2.33	%	$	13,914.2	$	75.5		2.17	%
Interest-bearing checking		2,927.3		3.1		0.42	%		1,216.5		1.7		0.56	%		1,462.0		2.0		0.54	%
Savings and money market		24,218.0		92.3		1.52	%		20,811.4		92.2		1.77	%		16,290.0		76.3		1.87	%
Total interest-bearing deposits		39,045.0		156.6		1.60	%		33,984.4		163.4		1.92	%		31,666.2		153.8		1.94	%
Borrowings
Senior unsecured	$	3,970.7	$	46.9		4.72	%	$	3,969.2	$	47.6		4.80	%	$	3,413.4	$	43.4		5.09	%
Subordinated unsecured		494.6		7.2		5.82	%		448.4		6.8		6.07	%		395.5		6.2		6.27	%
FHLB advances		1,949.9		8.9		1.83	%		1,008.2		5.4		2.14	%		3,280.0		23.1		2.82	%
Other secured and structured borrowings		357.9		3.4		3.80	%		438.7		4.2		3.83	%		713.8		7.0		3.92	%
Other credit facilities⁽¹⁾		-		2.2		-			-		2.4		-			-		2.1		-
Securities sold under agreement to repurchase		178.3		0.5		1.12	%		-		-		-			-		-		-
Total borrowings		6,951.4		69.1		3.98	%		5,864.5		66.4		4.53	%		7,802.7		81.8		4.19	%
Total interest-bearing liabilities	$	45,996.4	$	225.7		1.96	%	$	39,848.9	$	229.8		2.31	%	$	39,468.9	$	235.6		2.39	%

⁽¹⁾	Amounts include interest expense related to facility fees and amortization of deferred costs on unused portions of credit facilities.

The following table reflects our total deposit base, interest bearing and non-interest-bearing deposits, and related rate:

Total Deposits — Average Balances and Rates for the Quarters Ended (dollars in millions)

	March 31, 2020							December 31, 2019							March 31, 2019
	Average Balance		Interest Expense		Annualized Rate (%)			Average Balance		Interest Expense		Annualized Rate (%)			Average Balance		Interest Expense		Annualized Rate (%)
Interest-bearing deposits	$	39,045.0	$	156.6		1.60	%	$	33,984.4	$	163.4		1.92	%	$	31,666.2	$	153.8		1.94	%
Non-interest bearing deposits		2,657.9		-		-			1,605.1		-		-			1,611.3		-		-
Total deposits	$	41,702.9	$	156.6		1.50	%	$	35,589.5	$	163.4		1.84	%	$	33,277.5	$	153.8		1.85	%

In response to market disruptions, the Federal Funds rate was lowered by 150 bps in March 2020. Given the timing of the actions, the impact may not be fully reflected in the lower interest costs during the quarter, which could decline in the second quarter, giving effect to an entire quarter impact.

We remain focused on optimizing our mix of deposits. The growth in average deposits from the year-ago and prior quarters was driven by the HOA, commercial and retail deposits acquired in the MOB Transaction. The weighted average rate on average outstanding deposits decreased from the year-ago quarter, primarily from the addition of $4.9 billion of HOA deposits with an average cost of 51 bps, along with lower rates in the online and brokered channels. Compared to the prior quarter, average total deposit costs declined 34 basis points to 150 basis points, which reflected a 21 bps benefit from the addition of lower-cost MOB deposits, along with continued downward repricing in all other channels. See Funding and Liquidity section for tables that reflect period end deposits by type and by channel.

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Interest expense on borrowings decreased compared to the year-ago quarter, driven by lower FHLB advances, reflecting both lower usage and lower rates. Borrowing costs were up from the prior quarter as we increased the average FHLB advances. The average rate was down, however, reflecting the lower rate environment. The securities sold under agreement to repurchase were part of the MOB Acquisition, and were mostly repaid by the end of the quarter. The weighted average maturity profile of the combined unsecured senior and subordinated notes is 4.1 years at March 31, 2020, compared to 4.3 years at December 31, 2019.

Deposits and borrowings are also discussed in Funding and Liquidity.

The following table depicts selected earning asset yields and margin-related data for our segments and divisions within the segments.

Segment Average Yield and Other Data (dollars in millions)

	Quarters Ended
	March 31,			December 31,			March 31,
	2020			2019			2019
Commercial Banking
Average Earning Assets (AEA)
Commercial Finance	$	15,609.2		$	13,480.7		$	12,942.5
Business Capital		5,318.7			5,238.4			5,049.6
Rail		6,867.4			6,693.4			6,570.3
Real Estate Finance		7,611.4			5,303.9			5,426.2
Total	$	35,406.7		$	30,716.4		$	29,988.6

Net Finance Revenue
Commercial Finance	$	130.9		$	105.0		$	100.7
Business Capital		70.8			73.3			66.3
Rail		30.7			51.2			40.5
Real Estate Finance		49.9			38.0			38.2
Total	$	282.3		$	267.5		$	245.7

Gross Yield
Commercial Finance		5.20	%		5.79	%		6.25	%
Business Capital		9.21	%		9.53	%		9.53	%
Rail		9.76	%		10.40	%		10.66	%
Real Estate Finance		4.45	%		5.03	%		5.65	%
Total		6.53	%		7.30	%		7.66	%

Net Finance Margin
Commercial Finance		3.35	%		3.11	%		3.11	%
Business Capital		5.33	%		5.60	%		5.25	%
Rail		1.78	%		3.06	%		2.47	%
Real Estate Finance		2.62	%		2.86	%		2.82	%
Total		3.19	%		3.48	%		3.28	%

Consumer Banking
Average Earning Assets (AEA)
Consumer and Community Banking	$	6,509.9		$	4,510.0		$	3,827.5
Legacy Consumer Mortgages		2,155.8			2,158.8			2,747.2
Total	$	8,665.7		$	6,668.8		$	6,574.7

Net Finance Revenue
Consumer and Community Banking	$	76.0		$	73.7		$	91.3
Legacy Consumer Mortgages		35.7			36.8			43.5
Total	$	111.7		$	110.5		$	134.8

Gross Yield
Consumer and Community Banking		3.53	%		3.46	%		3.77	%
Legacy Consumer Mortgages		8.20	%		8.56	%		8.66	%
Total		4.69	%		5.11	%		5.81	%

Net Finance Margin
Consumer and Community Banking		4.67	%		6.54	%		9.54	%
Legacy Consumer Mortgages		6.61	%		6.81	%		6.34	%
Total		5.15	%		6.63	%		8.20	%

The increase in AEA in the current quarter in Commercial Banking reflects loans acquired from MOB of $4.4 billion with approximately $2.3 billion and $2.1 billion in the Commercial Finance and Real Estate Finance divisions, respectively whereas the increase in Consumer Banking includes $1.9 billion in mortgage loans acquired from MOB, all reported in the Consumer and Community Banking division.

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Gross yield (interest income plus rental income on operating leases as a percent of AEA) in Commercial Banking for the quarter ended March 31, 2020 was down from the year-ago and prior quarters. Gross yields in Commercial Finance were down from the year-ago and prior quarters, primarily driven by lower interest rates, lower prepayment fee income and lower interest recoveries. The increase in NFM for this division reflects the interest benefit it receives for the addition of the low-cost funding associated with the HOA deposits. Gross yields in Business Capital were down compared with the year-ago quarter and from the prior quarter, reflecting changes in interest rates and asset mix. Gross yields in Rail were down from the year-ago and prior quarters, primarily reflecting lease rates that continued to re-price lower and lower utilization. Real Estate Finance gross yields were down from the year-ago and prior quarters, reflecting lower interest rates and lower PAA.

Consumer Banking gross yields for the quarter ended March 31, 2020 were down from the year-ago and prior quarters. Gross yields in the Consumer and Community Banking division were down from the year-ago quarter, as yields on new business have contracted reflecting the lower market rate environment. The increase in gross yield compared to the prior quarter reflects the change in asset mix. Gross yields in LCM were down compared to the year-ago and prior quarters, primarily due to lower AEA from the run-off and sale of the LCM loans offset by the increase in PCD loans upon adoption of CECL. NFM in Consumer Banking is higher than gross yields as this segment receives an interest benefit from the other segments for the value of excess deposits it generates. NFM is lower compared to the year-ago and prior quarters due to lower interest benefits received from other segments.

The following table displays PAA by segment and division for both interest income and interest expense. The increase in the benefit from interest expense accretion reflects the impact of the MOB Acquisition, which included a total of $14 million PAA for term deposits. As of March 31, 2020, the remaining accretable purchase accounting adjustment was $581 million, of which $51 million related to Commercial Banking and $530 million related to Consumer Banking. This compares to $500 million of remaining accretable purchase accounting adjustment as of December 31, 2019, of which $39 million related to Commercial Banking and $461 million related to Consumer Banking. The remaining accretable purchase accounting adjustment in Consumer Banking is expected to run off at a rate consistent with the run-off of the underlying mortgages, which was about 25% over the prior year and approximately 15% excluding loan sales, and we are expecting accretion of the remaining Commercial Banking purchase accounting adjustment to continue to trend lower.

However, amounts may vary quarter to quarter from fluctuations in prepayments, which results in a loan's remaining purchase accounting adjustments being accelerated into interest income. (See footnote 1 to the following table).

Purchase Accounting Accretion for the Quarters Ended (dollars in millions)

	March 31, 2020							December 31, 2019						March 31, 2019
	PAA Accretion Recognized in:							PAA Accretion Recognized in:						PAA Accretion Recognized in:
	Interest Income⁽¹⁾			Interest Expense⁽²⁾		NFR		Interest Income⁽¹⁾		Interest Expense		NFR		Interest Income⁽¹⁾		Interest Expense		NFR
Commercial Banking
Commercial Finance	$	2.2		$	2.2	$	4.4	$	1.4	$	-	$	1.4	$	1.5	$	-	$	1.5
Real Estate Finance		0.9			-		0.9		3.9		-		3.9		3.6		-		3.6
Total Commercial Banking		3.1			2.2		5.3		5.3		-		5.3		5.1		-		5.1
Consumer Banking
Consumer and Community Banking		(0.8	)		2.4		1.6		0.3		0.4		0.7		-		0.4		0.4
Legacy Consumer Mortgages		17.0			-		17.0		16.4		-		16.4		20.1		-		20.1
Total Consumer Banking		16.2			2.4		18.6		16.7		0.4		17.1		20.1		0.4		20.5
Total CIT	$	19.3		$	4.6	$	23.9	$	22.0	$	0.4	$	22.4	$	25.2	$	0.4	$	25.6

⁽¹⁾	Included in the above are accelerated recognition, due to prepayments, of approximately $11 million, $4 million, and $5 million for the quarters ended March 31, 2020 and 2019 and December 31, 2019, respectively.

⁽²⁾	Mostly reflects PAA accretion on deposits acquired in the MOB Acquisition. All of the interest expense for the period ended March 31, 2020 is associated with the PAA from the MOB Acquisition, while PAA from prior periods is associated with the OneWest Bank acquisition.

The following table sets forth the details on net operating lease revenues.

Net Operating Lease Data (dollars in millions)

	Quarters Ended
	March 31, 2020				December 31, 2019				March 31, 2019
Rental income on operating leases	$	209.8	11.32	%	$	215.3	11.92	%	$	217.7	12.47	%
Depreciation on operating lease equipment		78.3	4.22	%		76.4	4.23	%		79.4	4.55	%
Maintenance and other operating lease expenses		53.6	2.89	%		40.7	2.25	%		49.8	2.85	%
Net operating lease revenue and %	$	77.9	4.20	%	$	98.2	5.44	%	$	88.5	5.07	%
Average operating lease equipment, including amounts held for sale	$	7,416.1			$	7,225.6			$	6,982.7

Net operating lease revenue, which is a component of NFR, is driven principally by the performance of the Rail portfolio within the Commercial Banking segment. While our rail portfolio grew, net operating lease revenue and as a percent of average operating lease equipment for the quarter ended March 31, 2020 was down from the year-ago and prior quarters, reflecting lease rates that continued to re-price lower on average across the portfolio and lower utilization. The decline from the prior quarters was also driven by the increase in maintenance costs which includes a higher level of off-lease equipment.

Railcar utilization, including commitments to lease, was 91% at March 31, 2020, down from a little under 94% at December 31, 2019 and 97% at March 31, 2019, reflecting excess capacity in the industry. Given the economic environment, we expect further deterioration and believe our lease rates will reprice down approximately 20% in 2020 and utilization could decline to the mid to high 80% area over the next 12 months which could result in a decrease in rental income and an increase in maintenance

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expense, depending on the duration of lower oil prices and the COVID-19 pandemic. Rail car loadings have generally been down due to weak growth across the industrial sector. This weakness, which began in early 2019, persisted through the first quarter.

Depreciation is recognized on railcars and other operating lease equipment and was relatively flat with the year-ago and prior quarters. Maintenance and other operating lease expenses tend to be variable and relate to the Rail portfolio. The increase from the year-ago and prior quarters reflects the increased activity of railcars returned and an increase in storage costs.

CREDIT METRICS

The following provides information on the provision for credit losses and ACL, as well as certain credit metrics, including net charge-off and non-accrual loan levels, that management uses to track the credit quality of the portfolio. Management also utilizes other metrics and statistics such as risk ratings, loan-to-value (“LTV”) distribution, concentration limits, migration trends, key portfolio stress testing and FICO score on the consumer loans, to monitor the credit quality of the portfolio. See Note 3 – Loans and Note 4 – Allowance for Credit Losses in Item 1 for various tables.

Our credit metrics and trends reflect three key events during the quarter: (1) the market disruptions related to COVID-19 and other events, (2) the adoption of the CECL standard, and (3) the MOB Acquisition.

On January 1, 2020, CIT adopted the FASB’s revised guidance for the measurement of credit losses on financial instruments (the CECL standard). The guidance requires estimation of credit losses over the full remaining expected life of the portfolio, rather than the incurred loss model under previous U.S. GAAP. Given the introduction of economic forecasting into the allowance-setting process, the detrimental economic impact resulting from COVID-19 resulted in a significant increase to our first quarter provision for credit losses. Also, on January 1, 2020 CIT acquired MOB, which included $6.3 billion of loans. The results of adopting CECL and the acquisition of MOB are reflected in the tables and accompanying descriptions below.

In preparation for economic stress such as what is occurring in the markets in 2020, we had enhanced the composition of our portfolio since the last credit cycle by exiting certain riskier asset classes. We shifted our focus to lending against assets with higher-quality collateral and better structural protection, exited mezzanine and sub-prime lending and reduced our cash flow loan exposure. We reduced asset risk and liquidity risk with the sale of Commercial Air, including the off-balance sheet order book. We transformed our business to a national bank by selling NACCO, our former European rail business, and essentially all international Equipment Finance portfolios. In 2019, we reduced our criticized loans by 28% and with the acquired MOB loans, criticized loans remain below the March 31, 2019 level. In addition, we continued to improve the risk profile of our portfolio by selling the non-core LCM loans of approximately $237 million in carrying value in 2019, which included primarily nonperforming loans, and sold another $29 million in carrying value in the first quarter of 2020.

The provision for credit losses was $514 million for the quarter ended March 31, 2020, up from $23 million and $33 million in the prior and year-ago quarters, respectively. The increase in the provision for credit losses from the prior quarters was driven primarily by the impact of COVID-19 on the macroeconomic forecasts used in the ACL calculation process. More information on CIT’s first quarter ACL and provision for credit losses can be found in Critical Accounting Estimates.

Net charge-offs were $54 million (0.57% of average loans) in the current quarter. Net charge-offs were up from $32 million (0.40%) and $34 million (0.43%) in the prior and year-ago quarters, respectively. The increase in net charge offs was primarily driven by an increase in oil and gas related loans, most of which were acquired in the MOB Acquisition, and an increase in the Business Capital division of Commercial Banking, mostly related to transportation. Net charge-offs are discussed and presented in a table by segment and division later in this section.

Non-accrual loans totaled $382 million (0.99% of loans) at March 31, 2020, compared to $326 million (1.05% of loans) at December 31, 2019. The increase in the current quarter is driven by Consumer Banking non-accrual loans which include loans previously accounted for as PCI loans ($67 million), which were previously excluded from non-accrual status. Upon the adoption of CECL, those loans became PCD loans, which are subject to the same presentation and disclosures as non-PCD loans. Non-accruals are discussed and presented in a table by segment and division later in this section.

54% of our non-accrual loans are paying currently but have not met the conditions to return to accrual status (e.g., six months of consecutive payments or demonstration of the ability to repay), and reflect loan specific items, as opposed to signs of industry trends. Given the governmental agency guidance issued in response to COVID-19 (outlined below), the Company’s charge-offs, non-accruals, past dues and TDRs did not increase significantly this quarter as a direct result of the pandemic.

The following table presents a roll forward of the ACL and the allowance for off-balance sheet credit exposures from amounts reported at December 31, 2019, under the legacy accounting, to amounts as of March 31, 2020, including the impact of the MOB Acquisition. This supplemental presentation expands upon the rollforward included in Note 4 – Allowance for Credit Losses to separately present January 1, 2020 balances resulting from the CECL adoption and the MOB Acquisition. We also segregate PCD and non-PCD impacts given the gross up treatment of the former, versus the corresponding retained earnings and income statement charges related to the latter.

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Rollforwards of the ACL and Allowance for Off-balance Sheet Credit Exposures (dollars in millions)

	Commercial Banking			Consumer Banking			Total CIT			ACL as a % Loans
Allowance Balance at December 31, 2019	$	460.4		$	22.2		$	482.6			1.56	%
Legacy CIT⁽¹⁾ CECL adoption
PCD		(8.2	)		128.7			120.5
Non-PCD		82.9			20.2			103.1
Allowance Balance at January 1, 2020		535.1			171.1			706.2			2.27	%
MOB Acquisition
PCD⁽²⁾		18.8			1.4			20.2
Non-PCD⁽³⁾		33.5			3.2			36.7
Adjusted ACL Balance at January 1, 2020		587.4			175.7			763.1			2.04	%
Provision - ACL⁽³⁾		402.2			(0.1	)		402.1
Net charge-offs		(51.8	)		(1.8	)		(53.6	)
Other		(0.2	)		(0.3	)		(0.5	)
Allowance Balance at March 31, 2020	$	937.6		$	173.5		$	1,111.1			2.88	%

Allowance for off-balance sheet credit exposures at December 31, 2019	$	36.4		$	0.7		$	37.1
Legacy CIT⁽¹⁾ CECL adoption		8.1			(0.3	)		7.8
Allowance for off-balance sheet credit exposures at January 1, 2020		44.5			0.4			44.9
MOB Acquisition⁽³⁾		8.0			0.5			8.5
Adjusted allowance for off-balance sheet credit exposures at January 1, 2020		52.5			0.9			53.4
Provision - Off balance sheet credit exposures⁽³⁾		65.2			1.4			66.6
Allowance for off-balance sheet credit exposures at March 31, 2020	$	117.7		$	2.3		$	120.0

⁽¹⁾	Legacy CIT is before the MOB Acquisition, detail of which is separately disclosed.

⁽²⁾

⁽³⁾	The combination of the line item balances total to the provision for credit losses in the Condensed Consolidated Statement of Income.

The following table presents detail on our ACL, including charge-offs and recoveries and provides summarized components of the provision and allowance:

ACL and Provision for Credit Losses (dollars in millions)

	Quarters Ended
	March 31,			December 31,			March 31,
	2020			2019			2019
Allowance - beginning of period	$	482.6		$	486.2		$	489.7
Legacy CIT CECL adoption		223.6			-			-
Provision for credit losses		513.9			22.6			33.0
Other⁽¹⁾		(75.6	)		5.5			(1.6	)
Net additions		438.3			28.1			31.4
The initial ACL recognized on PCD assets⁽²⁾		20.2			-			-
Gross charge-offs⁽²⁾		63.0			39.7			39.6
Less: Recoveries		9.4			8.0			6.0
Net charge-offs		53.6			31.6			33.6
Allowance - end of period	$	1,111.1		$	482.6		$	487.5
Provision for credit losses
Provision for loans individually reviewed	$	18.3		$	26.5		$	5.5
Provision for loans collectively reviewed		495.6			(3.9	)		27.5
Total	$	513.9		$	22.6		$	33.0
Allowance for credit losses
Allowance on loans individually reviewed	$	125.5		$	96.2		$	52.9
Allowance on loans collectively reviewed		985.6			386.4			434.6
Total	$	1,111.1		$	482.6		$	487.5
Ratio
ACL as a percentage of total loans		2.88	%		1.56	%		1.56	%
ACL as a percentage of total Commercial Banking Loans		3.12	%		1.89	%		1.87	%
ACL as a percentage of total Consumer Banking Loans		2.04	%		0.34	%		0.40	%

⁽¹⁾

The provision for credit losses also includes amounts related to the allowance for off balance sheet credit exposures on unfunded lending commitments, letters of credit, and DPAs, which are recorded in other liabilities. The allowance for off balance sheet credit exposures totaled $120 million, $37 million, and $43 million at March 31, 2020, December 31, 2019 and March 31, 2019, respectively. The balance in other is primarily related to the transfer of the allowance for off-balance sheet credit exposures to other liabilities.

⁽²⁾

See Note 3 — Loans in Item 1 for details regarding the unpaid principal balance, carrying value and ACL related to PCD loans.

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On December 31, 2019 CIT reported an allowance for loan losses of $482.6 million which was 1.6% of total loans. On January 1, 2020, upon the implementation of CECL, CIT’s reserve increased by $223.6 million to $706.2 million. Under transition accounting, $120.5 million of the ACL increase related to reclassifying PCI loans to PCD with the credit-related portion of the purchase discount added to the loan balance with no impact on capital. In addition, the allowance for off-balance sheet credit exposures increased from $37.1 million to $44.9 million. The reduction to retained earnings as a result of the CECL implementation was $82.4 million. There was no impact to the income statement. Management elected the recently implemented Revised CECL Transition Rule on regulatory capital. While this election will not impact GAAP equity, it will defer the incremental CECL impact in the calculation of our regulatory capital ratios. See Capital and Critical Accounting Estimates sections for more information.

As noted above, the acquisition of MOB included $6.3 billion of loans. The ACL for these loans was $56.9 million, net of day 1 charge-offs, thereby increasing CIT’s ACL to $763.1 million. Under CECL, the ACL associated with acquired loans that are not considered PCD ($36.7 million) was recorded as provision for credit losses on the income statement and thereby impacts capital. In addition, the allowance for off-balance sheet credit exposures resulted in an incremental $8.5 million provision for credit losses, resulting in total provision for credit losses generated by the non-PCD MOB loan portfolio of approximately $45 million.

The consolidated ACL as of March 31, 2020 was approximately $1.1 billion, which represented an increase of $348.0 million relative to the January 1, 2020 ACL post-CECL implementation and post-MOB Acquisition. This includes an increase of approximately $340 million driven by the impact to lifetime losses of the change in macroeconomic forecasts resulting from the spread of the COVID-19 virus. See Critical Accounting Estimates for additional information on the development of our ACL.

Loan Net Carrying Value (dollars in millions)

	Loans		Allowance for Credit Losses			Net Carrying Value
March 31, 2020
Commercial Banking	$	30,022.7	$	(937.6	)	$	29,085.1
Consumer Banking		8,507.7		(173.5	)		8,334.2
Total	$	38,530.4	$	(1,111.1	)	$	37,419.3
December 31, 2019
Commercial Banking	$	24,393.4	$	(460.4	)	$	23,933.0
Consumer Banking		6,605.5		(22.2	)		6,583.3
Total	$	30,998.9	$	(482.6	)	$	30,516.3

The following table presents charge-offs, by class and business segment. See Results by Business Segment for additional information.

Net Charge-offs⁽¹⁾(dollars in millions)

	Quarters Ended
	March 31,				December 31,					March 31,
	2020				2019					2019
Gross Charge-offs
Commercial Finance	$	33.5	0.81	%	$	17.9		0.50	%	$	17.9	0.50	%
Business Capital		27.3	2.18	%		21.7		1.75	%		21.0	1.75	%
Commercial Banking		60.8	0.83	%		39.6		0.64	%		38.9	0.63	%
Legacy Consumer Mortgages		2.2	0.40	%		0.1		0.02	%		0.7	0.11	%
Consumer Banking		2.2	0.10	%		0.1		0.01	%		0.7	0.05	%
Total	$	63.0	0.67	%	$	39.7		0.51	%	$	39.6	0.51	%
Less: Recoveries
Commercial Finance	$	2.2	0.05	%	$	1.4		0.04	%	$	1.2	0.03	%
Business Capital		6.8	0.54	%		5.8		0.47	%		4.5	0.38	%
Real Estate Finance		-	-	%		0.2		0.02	%		-	-	%
Commercial Banking		9.0	0.12	%		7.4		0.12	%		5.7	0.09	%
Legacy Consumer Mortgages		0.4	0.06	%		0.7		0.14	%		0.3	0.04	%
Consumer Banking		0.4	0.02	%		0.7		0.05	%		0.3	0.02	%
Total	$	9.4	0.10	%	$	8.1		0.11	%	$	6.0	0.08	%
Net Charge-offs
Commercial Finance	$	31.3	0.76	%	$	16.5		0.46	%	$	16.7	0.47	%
Business Capital		20.5	1.64	%		15.9		1.28	%		16.5	1.37	%
Real Estate Finance		-	-	%		(0.2	)	(0.02	%)		-	-	%
Commercial Banking		51.8	0.71	%		32.2		0.52	%		33.2	0.54	%
Legacy Consumer Mortgages		1.8	0.34	%		(0.6	)	(0.12	%)		0.4	0.07	%
Consumer Banking		1.8	0.08	%		(0.6	)	(0.04	%)		0.4	0.03	%
Total	$	53.6	0.57	%	$	31.6		0.40	%	$	33.6	0.43	%

⁽¹⁾	Excludes the MOB day 1 charge-offs of $38.6 million.

Net charge-offs were $53.6 million, compared to $31.6 million in the prior quarter and $33.6 million in the year-ago quarter, primarily driven by charge-offs related to oil & gas related loans in Commercial Finance, most of which were acquired in the MOB Acquisition, and an increase in the Business Capital division of Commercial Banking, mostly related to transportation.

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The following tables present information on non-accruing loans, which includes loans in AHFS for each period, and when added to other real estate owned (“OREO”) and other repossessed assets, sums to non-performing assets.

Non-accrual Loans and Troubled Debt Restructurings (dollars in millions)⁽¹⁾

	March 31,		December 31,
	2020		2019
Non-accrual loans
U.S.	$	381.8	$	318.6
Foreign		—		7.7
Non-accrual loans	$	381.8	$	326.3
Troubled Debt Restructurings
U.S.	$	142.7	$	148.8
Restructured loans	$	142.7	$	148.8
Accruing loans past due 90 days or more
Accruing loans past due 90 days or more	$	18.9	$	36.9

⁽¹⁾	Factored receivables within our Commercial Finance division do not accrue interest and therefore are not considered within non-accrual loans but are considered for credit provisioning purposes.

Non-accrual Loans (dollars in millions)

	March 31, 2020				December 31, 2019
Commercial Finance	$	229.8	1.34	%	$	246.7	1.77	%
Business Capital		65.7	1.30	%		60.9	1.21	%
Real Estate Finance		1.5	0.02	%		0.4	0.01	%
Commercial Banking		297.0	0.99	%		308.0	1.26	%
Consumer and Community Banking		7.0	0.11	%		4.0	0.09	%
Legacy Consumer Mortgages		77.8	3.72	%		14.3	0.69	%
Consumer Banking		84.8	1.00	%		18.3	0.28	%
Total	$	381.8	0.99	%	$	326.3	1.05	%

Non-accrual loans were up $55.5 million from December 31, 2019, as an increase related to Consumer Banking non-accrual loans, which include loans previously accounted for as PCI loans ($67 million) that had been excluded from non-accrual status, was partially offset by non-accrual loan reductions resulting from LCM sales and other activity during the first quarter. PCI loans were previously excluded from non-accrual reporting; however, upon the adoption of CECL, these loans are subject to the same presentation and disclosure requirements as non-PCD loans. In prior quarters, non-accruals in Consumer Banking consisted primarily of non-PCI loans in LCM. We did not experience any notable trends in any specific industry or geographic area.

54% of our non-accrual accounts were paying currently at March 31, 2020 compared to 72% at December 31, 2019. We discuss our policy of placing loans on non-accrual status in Note 1 – Business and Summary of Significant Accounting Policies in Item 1. We may place accounts that are presently paying current on non-accrual status when the financial condition of the borrower deteriorates and payment in full is not expected.

Total delinquency (30 days or more) was 1.6% of loans at March 31, 2020 and 1.3% at December 31, 2019.

Delinquency status of loans is presented in Note 3 — Loans in Item 1.

Loan Modifications for Customers Affected by the COVID-19 Pandemic

CIT is working prudently with borrowers who are or may be unable to meet their current contractual payment obligations because of the effects of COVID-19. See COVID-19 Pandemic Response for details regarding relief measures to our commercial and consumer customers.

With respect to the non-accrual, past due and TDR information provided below, the Company is following regulatory and governmental agency guidance within the CARES Act and Interagency Statement, which essentially provides that financial institutions are not expected to designate loans with payment accommodations granted due to COVID-19 as past due or to be placed on non-accrual (i.e., the Company will continue accruing interest during the deferral period) if they were current as of the time of the modification. In addition, HUD on March 18, 2020, authorized the FHA to put an immediate moratorium on foreclosures and evictions for the next sixty days for single-family homeowners who are unable to pay their FHA-backed mortgages amid COVID-19.

Our regulators, the FRB, the FDIC, and the OCC, noted in an interagency statement that efforts to work with borrowers of one-to-four family residential mortgages, where the loans are prudently underwritten, and not past due or carried in non-accrual status, will not result in the loans being considered restructured or modified for the purposes of their respective risk-based capital rules.

See COVID-19 Pandemic Response—Our Business—Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus and Other Government and Reporting Guidance sections for additional detail.

CECL does not affect how a TDR is defined. However, it does affect the timing of TDR identification and potentially how the ACL is determined when a financial asset is determined to be a TDR. In connection with the MOB Acquisition, the Company assessed whether MOB had identified any loans for which there was a reasonable expectation that the loan would be modified in a TDR;

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these loans were then assessed by CIT pursuant to its existing TDR policy. Based on this analysis, no loans were identified where CIT would consider the modifications a TDR.

The tables that follow reflect loan carrying values of accounts that have been modified, excluding loans in trial modification of $1.5 million and $5.5 million as of March 31, 2020 and December 31, 2019, respectively.

TDRs and Modifications⁽¹⁾(dollars in millions)

	March 31, 2020						December 31, 2019
				% Compliant						% Compliant
Troubled Debt Restructurings
Deferral of principal and/or interest	$	70.2			94	%	$	76.9			94	%
Covenant relief and other		72.5			98	%		71.9			98	%
Total TDRs	$	142.7			96	%	$	148.8			96	%
Percent non-accrual		72	%					71	%
Modifications
Covenant relief		122.8			90	%		89.3			77	%
Interest rate increase		121.2			85	%		75.2			100	%
Extended maturity	$	14.3			100	%	$	43.5			100	%
Other		309.6			95	%		337.3			89	%
Total Modifications	$	567.9			92	%	$	545.3			90	%
Percent non-accrual		14	%					18	%

⁽¹⁾	Table depicts the predominant element of each modification, which may contain several of the characteristics listed.

⁽²⁾	PCI loans are excluded from TDR reporting at December 31, 2019 under prior ASC 310-30 guidance.

PCD loans, TDRs and other credit quality information is included in Note 3 — Loans in Item 1.

NON-INTEREST INCOME

Non-interest Income (dollars in millions)

	Quarters Ended
	March 31,		December 31,		March 31,
	2020		2019		2019
Rental income on operating leases	$	209.8	$	215.3	$	217.7
Other non-interest income		130.6		111.3		96.8
Total non-interest income	$	340.4	$	326.6	$	314.5
Other non-interest income
Fee income	$	33.9	$	29.3	$	30.7
Gains on leasing equipment, net of impairments		23.3		19.6		16.6
Factoring commissions		23.0		25.8		24.0
Gains on investment securities, net of impairments		13.5		0.9		1.6
BOLI income		7.6		7.7		6.4
Property tax income		4.6		5.2		6.1
Other income		24.7		22.8		11.4
Total other non-interest income	$	130.6	$	111.3	$	96.8

Factoring volume	$	6,080.8	$	7,165.1	$	7,814.1

Rental Income on Operating Lease Equipment

Rental income on operating leases from equipment we lease is generated in the Rail, Commercial Finance and Business Capital divisions in the Commercial Banking segment. Rental income is discussed in “Net Finance Revenue” and “Results by Business Segment”.

Other Non-Interest Income

For the quarter ended March 31, 2020, other non-interest income was up compared to the year-ago and prior quarters, reflecting higher gains on equipment sales, primarily rail cars, higher gains on investment securities, driven by sales of legacy MBS and the sale of certain investment securities acquired in the MOB Transaction in our Corporate segment, higher fee income in Commercial Banking from the addition of fee income from CAB, a business that was acquired as part of the MOB Acquisition and an increase in capital markets fees, partially offset by lower factoring fees in Commercial Banking, as volume was impacted by the macroeconomic events brought about by COVID-19. The increase in other income in the current quarter reflects higher gains on sales of loans, primarily LCM loans in Consumer Banking, partially offset by a negative mark-to-market of $8 million on CVA related to customer derivatives.

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NON-INTEREST EXPENSES

Non-Interest Expense (dollars in millions)

	Quarters Ended
	March 31,			December 31,			March 31,
	2020			2019			2019
Depreciation on operating lease equipment	$	78.3		$	76.4		$	79.4
Maintenance and other operating lease expenses		53.6			40.7			49.8
Operating expenses		334.4			258.5			276.1
Goodwill impairment		344.7			-			-
Loss on debt extinguishments and deposit redemptions		-			0.1			0.1
Total non-interest expenses	$	811.0		$	375.7		$	405.4
Operating expenses
Compensation and benefits	$	182.1		$	142.0		$	146.2
Technology		38.8			34.5			32.5
Professional fees		24.9			19.7			18.6
Net occupancy expense		18.9			15.9			15.9
Advertising and marketing		16.6			7.0			13.2
Insurance		13.3			10.6			14.4
Intangible asset amortization		8.5			5.8			5.8
Property tax expense		4.8			6.0			6.3
Other expenses		26.5			17.0			23.2
Total operating expenses		334.4			258.5			276.1
Intangible asset amortization		8.5			5.8			5.8
Noteworthy items		17.1			-			-
Total operating expenses, excluding intangible asset amortization and noteworthy items⁽¹⁾	$	308.8		$	252.7		$	270.3
Headcount, actuals		4,413			3,609			3,644
Net efficiency ratio⁽²⁾		65.6	%		54.8	%		58.0	%
Net efficiency ratio, excluding noteworthy items⁽²⁾		62.2	%		54.8	%		58.0	%

⁽¹⁾	Total operating expenses, excluding intangible asset amortization and noteworthy items is a non-GAAP measurement. The above table provides a reconciliation to GAAP measurement. See “Non-GAAP Financial Measurements” for a description of the balance and usage.

⁽²⁾

Net efficiency ratio (excludes intangible asset amortization) and net efficiency ratio excluding intangible asset amortization and noteworthy items (adjusted for noteworthy items) are non-GAAP measurements used by management to measure operating expenses (before intangible asset amortization and noteworthy items) to the level of total net revenues. See “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information of total net revenues and description of the calculation.

Depreciation on Operating Lease Equipment

Depreciation expense is driven by rail equipment and small and large ticket equipment, in the Rail, Business Capital and Commercial Finance divisions in Commercial Banking.

Maintenance and Other Operating Lease Expenses

Maintenance and other operating lease expenses relate to equipment ownership and leasing costs associated with the Rail portfolio and tend to be variable. Rail provides railcars primarily pursuant to full-service lease contracts under which Rail as lessor is responsible for railcar maintenance and repair. The increase from the prior quarters reflected the higher railcar return activity and storage costs associated with lower utilization. The decline in railcar utilization is discussed in Net Finance Revenue section.

Depreciation, along with Maintenance and Other Operating Lease Expenses, are components of NFR, see discussion in “Net Finance Revenue.”

Operating Expenses

Operating expenses were up compared to the year-ago and prior quarters, primarily due to the acquisition of MOB and a noteworthy item related to merger and integration costs associated with the MOB Acquisition. We remain focused on reducing our operating expenses while also investing in our businesses.

Operating expenses excluding intangible asset amortization and noteworthy items was up compared to the prior quarters due to:

•

higher employee costs from the MOB Acquisition, an acceleration of expenses related to retirement-eligible employees, and compared specifically with the prior quarter, annual benefit restarts;

•

higher advertising and marketing costs primarily related to deposit gathering;

•

higher occupancy expense from the addition of the MOB branch locations;

•

higher FDIC insurance premiums reflecting increased deposits; and

•

higher other expenses from the addition of MOB-related expenses.

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The increase in technology and professional fees was driven by merger and integration costs. Merger and integration costs incurred during the quarter relate to the MOB Acquisition and primarily include transaction advisor fees and other professional services, retention compensation, and information technology costs for data migration and conversion to CIT’s system applications. The noteworthy item related to merger and integration costs consisted of the following:

Noteworthy Item (dollars in millions)

	Quarter Ended
	March 31,
	2020
Operating expenses
Compensation and benefits	$	4.5
Technology		3.1
Professional fees		6.9
Advertising and marketing		2.3
Other expenses		0.3
Noteworthy items	$	17.1

The net efficiency ratio increased to 66% (62% excluding noteworthy items) from 55% in the prior quarter, reflecting an increase in operating expenses, partially offset by the increase in other non-interest income (see Non-GAAP Financial Measurements for components). The net efficiency ratio was 58% in the year-ago quarter. The increase from the year-ago quarter was driven by higher operating expenses, partially offset by an increase in total net revenue.

Goodwill Impairment

The deterioration of the macroeconomic environment triggered a goodwill impairment assessment that resulted in an impairment in the current quarter. The impairment reflected goodwill associated primarily with the OneWest Bank acquisition. See Note 18 – Goodwill and Intangible Assets in Item 1 and Critical Accounting Estimates section for further discussion.

INCOME TAXES

Income Tax Data (dollars in millions)

	Quarters Ended
	March 31,			December 31,			March 31,
	2020			2019			2019
(Benefit) provision for income taxes, excluding noteworthy and tax discrete items	$	(52.4	)	$	46.1		$	40.2
Tax on noteworthy items and other tax discrete items		(19.9	)		3.2			(2.4	)
(Benefit) provision for income taxes	$	(72.3	)	$	49.3		$	37.8
Effective tax rate		10.4	%		27.4	%		24.1	%
Effective tax rate, excluding tax discrete items and noteworthy items⁽¹⁾		18.1	%		25.6	%		25.6	%

⁽¹⁾	Effective tax rate, excluding discrete items and noteworthy items are non-GAAP measures. See “Non-GAAP Financial Measurements” for reconciliation of non-GAAP financial information.

The Company’s current quarter effective tax rate (“ETR”) was impacted by noteworthy and discrete tax items. The tax on noteworthy items are included in a table in the Non-GAAP Financial Measurements section. The Company’s current quarter ETR before noteworthy and discrete items was 18.1%. This compares to 25.6% in the prior and year-ago quarters. The ETR before tax discrete and noteworthy items was lower in the current quarter compared to the prior and year-ago quarters, primarily due to the impact of lower pre-tax income on permanent adjustments and credits.

The ETR each quarter is impacted by a number of factors, including the relative mix of domestic and international earnings, effects of changes in enacted tax laws, adjustments to valuation allowances (“VA”), and discrete items. The future period’s ETR may vary from the actual year-end 2020 ETR due to changes in these factors.

Federal cash income taxes paid will remain minimal until the Company's net operating loss (“NOLs”) carry-forwards are fully utilized.

See Note 14 — Income Taxes in Item 1 for additional information.

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RESULTS BY BUSINESS SEGMENT

CIT manages its business and reports its financial results in two operating segments, Commercial Banking and Consumer Banking, and a non-operating segment, Corporate. Detailed descriptions of the divisions within Commercial Banking and Consumer Banking is included in Item 1. Business Overview of our 2019 Form 10-K. See “Net Finance Revenue,” “Non-Interest Income,” “Non-Interest Expenses” and “Credit Metrics,” which reference the segments on these topics.

Commercial Banking

Commercial Banking is comprised of four divisions: Commercial Finance, Rail, Real Estate Finance and Business Capital. Revenue is generated from interest earned on loans, rents on equipment leased, fees and other revenue from lending and leasing activities and banking services, along with capital markets transactions and commissions earned on factoring and related activities. Complimentary businesses and assets from MOB were included with Commercial Finance and Real Estate Finance and impact the segment’s financial comparisons to prior periods. In addition, the HOA deposits were included in Commercial Banking.

Commercial Banking: Financial Data and Metrics (dollars in millions)

	Quarters Ended
	March 31,			December 31,			March 31,
Earnings Summary	2020			2019			2019
Interest income	$	367.9		$	345.6		$	356.6
Rental income on operating leases		209.8			215.3			217.7
Finance revenue		577.7			560.9			574.3
Interest expense		163.5			176.3			199.4
Depreciation on operating lease equipment		78.3			76.4			79.4
Maintenance and other operating lease expenses		53.6			40.7			49.8
Net finance revenue ("NFR")		282.3			267.5			245.7
Provision for credit losses		508.9			24.6			35.1
Other non-interest income		87.3			88.6			77.6
Operating expenses		213.3			170.3			180.7
Goodwill Impairment		301.5			-			-
(Loss) income before income taxes		(654.1	)		161.2			107.5
Noteworthy items		343.1			-			-
(Loss) income before income taxes, excluding noteworthy items	$	(311.0	)	$	161.2		$	107.5
Select Period End Balance
Loans and leases	$	37,559.1		$	31,736.2		$	31,686.9
Earning assets (net of credit balances of factoring clients)		36,646.6			30,691.7			30,163.9
Deposits		8,255.7			2,159.0			1,773.9
Select Average Balances
Average loans (includes HFS, and net of credit balances of factoring clients)	$	27,856.3		$	23,366.8		$	22,803.1
Average operating leases ("AOL")* (includes HFS)		7,416.1			7,225.6			6,982.7
Average earning assets ("AEA")		35,406.7			30,716.4			29,988.6
Statistical Data
Net finance margin - NFR as a % of AEA		3.19	%		3.48	%		3.28	%
Net operating lease revenue — rental income, net of depreciation and maintenance and other operating lease expenses*	$	77.9		$	98.2		$	88.5
Operating lease margin as a % of AOL*		4.20	%		5.44	%		5.07	%
Net efficiency ratio		56.7	%		47.5	%		55.5	%
Pretax return on AEA		(7.39	%)		2.10	%		1.43	%
New business volume	$	3,076.6		$	3,047.4		$	2,373.5

Pre-tax results for the quarter were down from the year-ago and prior quarters, reflecting a goodwill impairment charge and a $42 million charge to the provision for credit losses related to the MOB Acquisition. Pre-tax loss, excluding noteworthy items was $311 million, down from the year ago and prior quarters driven by the increase in provision for credit losses. The impact of the global pandemic from the spread of the COVID-19 virus and the ensuing adverse impact on the macroeconomic environment resulted in a significant increase in the provision for credit losses. (See “Credit Metrics” and “Critical Accounting Estimates”). In addition, the deterioration of the macroeconomic environment triggered a goodwill impairment assessment that resulted in an impairment in the current quarter. Results for the current quarter also reflected higher NFR, discussed below, offset by higher operating expenses, reflecting added costs from MOB.

AEA consisted primarily of loans and leases. Average loans were up from the year-ago and prior quarters, reflecting approximately $4.4 billion of loans from the MOB Acquisition, along with organic growth in Real Estate Finance and Business Capital. Growth was also recorded in our rail portfolio. Deposits attributed to this segment at March 31, 2020 include the $5.1 billion of HOA deposits, along with other commercial deposits of $3.2 billion. Commercial deposits totaled $2.2 billion and $1.8 billion at December 31, 2019 and March 31, 2019, respectively. The added low-cost HOA deposits benefited NFM as noted below.

Compared to the year-ago and prior quarters, new business volume was up, as the impact from the macroeconomic environment may not be completely reflected due to the timing.

Factored volume of $6.1 billion was down from $7.8 billion in the year-ago quarter and $7.2 billion in the prior quarter as we began to experience the impact in retail from the macroeconomic environment, with store closings reducing demand.

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Trends included:

•	NFR was up from the year-ago and prior quarters, reflecting the benefit from the MOB Acquisition and lower interest costs, which were partially offset by lower net operating lease revenue, as discussed below. Our NFR and NFM are discussed in detail in the Net Finance Revenue section.

•

Net operating lease revenue, which is a component of NFR, is driven primarily by the performance of our Rail portfolio and reflects continued compression on our lease rates on new equipment and renewals, as well as the impact of lower utilization, and higher maintenance and other operating lease expenses. See further discussion in the Net Finance Revenue section.

•	See Purchase Accounting Accretion table in Net Finance Revenue section for amounts of PAA by division.

•	NFM decreased compared to the year-ago and prior quarters due to the drivers noted in NFR discussed above. Partially offsetting the decline in NFM was a benefit related to the addition of the low-cost HOA deposits from the MOB Acquisition.

•	Gross yields (interest income plus rental income on operating leases as a % of AEA) were down from the year-ago and prior quarters. See Select Segment and Division Margin Metrics table and discussion that follows that table in Net Finance Revenue section for commentary on gross yields by division.

Consumer Banking

Consumer Banking includes Retail Banking, Consumer Lending, and SBA Lending, which are grouped together for purposes of discussion as Consumer and Community Banking, and LCM. Revenue is generated from interest earned on residential mortgages, and small business loans, and from fees for banking services.

Consumer Banking: Financial Data and Metrics (dollars in millions)

	Quarters Ended
	March 31,			December 31,			March 31,
Earnings Summary	2020			2019			2019
Interest income	$	101.6		$	85.1		$	95.5
Interest benefit		(10.1	)		(25.4	)		(39.3	)
Net finance revenue ("NFR")		111.7			110.5			134.8
Provision (benefit) for credit losses		5.0			(2.0	)		(2.1	)
Other non-interest income		14.0			15.9			4.7
Operating expenses		102.1			79.2			93.8
Goodwill impairment		43.2			-			-
(Loss) income before income taxes		(24.6	)		49.2			47.8
Noteworthy items		46.4			-			-
Income before income taxes, excluding noteworthy items	$	21.8		$	49.2		$	47.8
Select Period End Balance
Loans (includes HFS)	$	8,532.6		$	6,614.4		$	6,610.2
Earning assets		8,561.2			6,640.4			6,625.5
Deposits		30,946.4			30,244.5			30,034.8
Select Average Balances
Average loans (includes HFS)	$	8,637.3		$	6,647.6		$	6,555.5
Average earning assets ("AEA")		8,665.7			6,668.8			6,574.7
Statistical Data
Net finance margin - NFR as a % of AEA		5.15	%		6.63	%		8.20	%
Net efficiency ratio		77.4	%		59.0	%		64.0	%
Pretax return on AEA		(1.13	%)		2.95	%		2.90	%
New business volume	$	515.5		$	571.4		$	310.6

Pre-tax results for the quarter were down from the year-ago and prior quarters, reflecting two noteworthy items, an impairment charge related to the goodwill associated with the OneWest Transaction and a $3 million charge to the provision for credit losses from the MOB Acquisition. Absent the noteworthy items, pre-tax income was down due to the lower interest benefit received from other segments for the value of the excess deposits Consumer Banking generates, and higher operating expenses from the addition of MOB, partially offset by higher interest income from the addition of MOB. In addition, compared to the prior quarter, pre-tax income was down due to higher advertising and marketing costs. Other non-interest income in the current and prior quarters benefited from gains on LCM loan sales of $13 million and $9 million, respectively. The deterioration in the macroeconomic environment triggered a goodwill impairment assessment that resulted in an impairment in the current quarter.

AEA consisted primarily of loans. AEA was up for the quarter ended March 31, 2020 primarily due to the loans acquired in the MOB Acquisition of approximately $1.9 billion and residential mortgage loan growth in the retail and correspondent channels, which outpaced loan sales and run-off and sales in the LCM portfolio. In the first quarter of 2020, we sold approximately $29 million of loans in the LCM portfolio.

Deposits, which include deposits from the branch and online channels, increased from the prior and year-ago quarters, driven by deposits acquired in the MOB Acquisition of $1.3 billion, which offset a decrease in online savings deposits compared to the prior quarter and a decrease in time deposits compared to the year-ago quarter. See discussions in Net Finance Revenue and Funding and Liquidity sections.

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Trends included:

•	NFR decreased compared to the year-ago quarter, primarily due to lower interest benefit received from other segments for the value of the excess deposits, and lower yield on loans, partially offset by higher interest income from the addition of MOB.

•

NFR increased slightly for the quarter ended March 31, 2020 compared to the prior quarter, primarily due to the acquired loans and loan growth in Consumer and Community Banking, as the interest income on the LCM portfolio for the comparable periods was effectively flat, partially offset by the lower interest benefit.

•	PAA for loans and deposits totaled $19 million in the current quarter, compared to $21 million in the year-ago quarter and $17 million in the prior quarter.

Corporate

Corporate includes certain items that are not allocated to operating segments. Some of the more significant and recurring items include interest income on investment securities, a portion of interest expense primarily related to corporate funding costs, mark-to-market adjustments on foreign currency hedges and income on BOLI (other non-interest income), restructuring charges, as well as certain unallocated costs and intangible assets amortization expenses (operating expenses) and loss on debt extinguishments.

Corporate and Other: Financial Data and Metrics (dollars in millions)

	Quarters Ended
	March 31,			December 31,			March 31,
Earnings Summary	2020			2019			2019
Interest income	$	44.1		$	50.7		$	64.4
Interest expense		72.3			78.9			75.5
Net finance revenue ("NFR")		(28.2	)		(28.2	)		(11.1	)
Other non-interest income		29.3			6.8			14.5
Operating expenses/loss on debt extinguishment		19.0			9.1			1.7
(Loss) income before income taxes		(17.9	)		(30.5	)		1.7
Noteworthy items		17.1			-			-
(Loss) income before income taxes, excluding noteworthy items	$	(0.8	)	$	(30.5	)	$	1.7
Select Period End Balance
Loans and leases	$	-		$	0.1		$	18.8
Earning assets		9,466.6			8,764.7			9,509.4
Select Average Balances
Average earning assets ("AEA")	$	9,612.3		$	9,118.5		$	9,606.0
Statistical Data
Net finance margin — NFR as a % of AEA		(1.17	%)		(1.23	%)		(0.47	%)
Pretax return on AEA		(0.74	%)		(1.33	%)		0.07	%

Pre-tax loss in the quarter ended March 31, 2020, included one noteworthy item, $17 million of MOB merger and integration costs. There were no noteworthy items in the prior quarters. Noteworthy items are listed in the Non-GAAP Financial Measurements section.

The pre-tax loss excluding noteworthy items for the quarter ended March 31, 2020 was $1 million. Compared to the year-ago quarter, the increase in other non-interest income, driven by gains on sales of legacy MBS and the sale of certain investment securities acquired in the MOB Transaction along with higher BOLI income, were offset by lower interest income from a lower rate environment. Compared to the prior quarter, the lower loss reflects the higher investment gains and the prior quarter included $7 million of MOB Transaction costs.

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LOANS AND LEASES

The following table presents our period end loans and leases by segment.

Loans and Leases Composition (dollars in millions)

	March 31,		December 31,
	2020		2019
Commercial Banking
Commercial Finance
Loans	$	17,193.3	$	13,912.8
Operating lease equipment, net		319.1		332.8
Assets held for sale		22.1		6.8
Total loans and leases		17,534.5		14,252.4
Business Capital
Loans		5,051.8		5,038.5
Operating lease equipment, net		316.8		280.9
Total loans and leases		5,368.6		5,319.4
Rail
Loans		60.7		59.6
Operating lease equipment, net		6,852.2		6,706.0
Assets held for sale		0.4		0.4
Total loans and leases		6,913.3		6,766.0
Real Estate Finance
Loans		7,716.9		5,382.5
Assets held for sale		25.8		15.9
Total loans and leases		7,742.7		5,398.4
Total Segment - Commercial Banking
Loans		30,022.7		24,393.4
Operating lease equipment, net		7,488.1		7,319.7
Assets held for sale		48.3		23.1
Total loans and leases		37,559.1		31,736.2
Consumer Banking
Consumer and Community Banking
Loans		6,415.3		4,524.0
Assets held for sale		21.1		7.4
Total loans and leases		6,436.4		4,531.4
Legacy Consumer Mortgages
Loans		2,092.4		2,081.5
Assets held for sale		3.8		1.5
Total loans and leases		2,096.2		2,083.0
Total Segment - Consumer Banking
Loans		8,507.7		6,605.5
Assets held for sale		24.9		8.9
Total loans and leases		8,532.6		6,614.4
Corporate
Assets held for sale		-		0.1
Total loans and leases		-		0.1
Total loans	$	38,530.4	$	30,998.9
Total operating lease equipment, net		7,488.1		7,319.7
Total assets held for sale		73.2		32.1
Total loans and leases	$	46,091.7	$	38,350.7

Total loans and leases grew significantly, reflecting the MOB Acquisition of $6.3 billion of loans. Within Commercial Banking, $2.3 billion were added to Commercial Finance and $2.1 billion were added to Real Estate Finance. In Consumer and Community Banking $1.9 billion of loans were added. In addition to the acquired assets, Commercial Banking volume of $3.1 billion more than offset repayments and sales. Within Consumer Banking, absent the acquired loans, both Consumer and Community Banking loans and LCM had a slight increase. The increase in LCM is due to the gross-up from PCI to PCD transition under CECL partially offset by sales of $29 million in the current quarter and continued run-off.

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The following table reflects the contractual maturities of our loans, which excludes certain items such as purchase accounting adjustments, unearned income and other yield-related fees and costs.

Contractual Maturities of Loans at March 31, 2020 (dollars in millions)

	Commercial				Consumer
Fixed-rate	U.S.		Foreign		U.S.		Total
1 year or less	$	4,575.9	$	122.2	$	142.5	$	4,840.6
Year 2		2,022.5		44.8		142.8		2,210.1
Year 3		1,449.0		74.5		145.2		1,668.7
Year 4		1,003.8		90.5		149.4		1,243.7
Year 5		593.7		88.2		154.6		836.5
2-5 years		5,069.0		298.0		592.0		5,959.0
After 5 years		923.2		144.0		4,361.8		5,429.0
Total fixed-rate		10,568.1		564.2		5,096.3		16,228.6
Adjustable-rate
1 year or less		3,400.5		218.1		77.6		3,696.2
Year 2		2,820.4		176.1		78.7		3,075.2
Year 3		3,663.0		216.5		84.1		3,963.6
Year 4		3,417.7		178.6		100.4		3,696.7
Year 5		2,651.2		200.1		103.1		2,954.4
2-5 years		12,552.3		771.3		366.3		13,689.9
After 5 years		3,417.2		76.4		2,787.4		6,281.0
Total adjustable-rate		19,370.0		1,065.8		3,231.3		23,667.1
Total	$	29,938.1	$	1,630.0	$	8,327.6	$	39,895.7

The following table presents the changes to our total loans and leases:

Changes in Loans and Leases (dollars in millions)	Commercial Banking			Consumer Banking			Corporate			Total
Balance as of December 31, 2019	$	31,736.2		$	6,614.4		$	0.1		$	38,350.7
Acquisition of MOB		4,355.8			1,942.1			-			6,297.9
New business volume		3,076.6			515.5			-			3,592.1
Loan and portfolio sales		(38.2	)		(55.5	)		-			(93.7	)
Equipment sales		(62.8	)		-			(0.3	)		(63.1	)
Depreciation		(78.3	)		-			-			(78.3	)
Gross charge-offs		(60.8	)		(2.2	)		-			(63.0	)
Collections and other		(1,369.4	)		(481.7	)		0.2			(1,850.9	)
Balance as of March 31, 2020	$	37,559.1		$	8,532.6		$	-		$	46,091.7

Portfolio activities are discussed in the respective segment descriptions in “Results by Business Segment”.

The following tables present new business, along with loan and portfolio sales and equipment sales by segment:

	Quarters Ended
New Business (dollars in millions)	March 31,		December 31,		March 31,
	2020		2019		2019
Commercial Banking	$	3,076.6	$	3,047.4	$	2,373.5
Consumer Banking		515.5		571.3		310.6
Total	$	3,592.1	$	3,618.7	$	2,684.1
Factoring volume	$	6,080.8	$	7,165.1	$	7,814.1

	Quarters Ended
Loan and Portfolio Sales (dollars in millions)	March 31,		December 31,		March 31,
	2020		2019		2019
Commercial Banking	$	38.2	$	121.5	$	13.8
Consumer Banking		55.5		121.4		19.5
Total	$	93.7	$	242.9	$	33.3

	Quarters Ended
Equipment Sales (dollars in millions)	March 31,		December 31,		March 31,
	2020		2019		2019
Commercial Banking	$	62.8	$	54.6	$	51.0
Corporate		0.3		2.3		-
Total	$	63.1	$	56.9	$	51.0

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CONCENTRATIONS

Geographic Concentrations

The following table represents CIT’s combined commercial and consumer loans and leases, including assets held for sale, by geographical regions:

Total Loans and Leases by Geographic Region (dollars in millions)

	March 31, 2020				December 31, 2019
West	$	15,693.5	34.0	%	$	12,474.3	32.5	%
Northeast		9,532.2	20.7	%		8,716.7	22.7	%
Midwest		6,313.2	13.7	%		4,915.1	12.8	%
Southwest		6,140.2	13.3	%		5,178.9	13.5	%
Southeast		5,354.6	11.6	%		4,084.4	10.7	%
Total U.S.		43,033.7	93.3	%		35,369.4	92.2	%
Canada		1,421.3	3.1	%		1,395.1	3.6	%
Europe		553.6	1.2	%		464.5	1.2	%
Asia / Pacific		408.9	0.9	%		461.6	1.2	%
All other countries		674.2	1.5	%		660.1	1.8	%
Total	$	46,091.7	100.0	%	$	38,350.7	100.0	%

Ten Largest Accounts

Our ten largest loan and lease accounts, primarily lessors of rail assets and factoring clients, in the aggregate represented approximately 5.2% and 5.5%of our total loans and leases at March 31, 2020 and December 31, 2019, respectively (the largest account was less than 1.0%).

COMMERCIAL CONCENTRATIONS

Geographic Concentrations

The following table represents the commercial loans and leases, including assets held for sale, by obligor geography:

Commercial Loans and Leases by Obligor - Geographic Region (dollars in millions)

	March 31, 2020				December 31, 2019
West	$	9,966.6	26.1	%	$	7,695.0	23.8	%
Northeast		8,844.9	23.1	%		8,113.4	25.1	%
Midwest		6,010.5	15.7	%		4,767.9	14.7	%
Southwest		5,684.3	14.9	%		5,089.5	15.7	%
Southeast		4,669.0	12.2	%		3,715.2	11.5	%
Total U.S.		35,175.3	92.0	%		29,381.0	90.8	%
Canada		1,421.3	3.7	%		1,395.1	4.3	%
Europe		553.6	1.4	%		464.5	1.4	%
Asia / Pacific		408.9	1.1	%		461.6	1.4	%
All other countries		674.2	1.8	%		660.1	2.1	%
Total	$	38,233.3	100.0	%	$	32,362.3	100.0	%

The following table summarizes both state concentrations greater than 5.0% and international country concentrations in excess of 1.0% of our loans and leases:

Commercial Loans and Leases by Obligor - State and Country (dollars in millions)

	March 31, 2020				December 31, 2019
State
California	$	6,869.1	18.0	%	$	5,651.4	17.5	%
Texas		4,571.0	12.0	%		4,073.8	12.6	%
New York		3,232.9	8.5	%		2,993.7	9.3	%
Florida		1,966.7	5.1	%		1,484.7	4.6	%
All other states		18,535.6	48.5	%		15,177.4	46.8	%
Total U.S.		35,175.3	92.0	%		29,381.0	90.8	%
Country
Canada		1,421.3	3.7	%		1,395.1	4.3	%
Marshall Islands		341.3	0.9	%		362.6	1.1	%
All other countries		1,295.4	3.4	%		1,223.6	3.8	%
Total International	$	3,058.0	8.0	%	$	2,981.3	9.2	%

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Industry Concentrations

The following table represents loans and leases, including assets held for sale, by industry of obligor:

Commercial Loans and Leases by Obligor – Industry⁽³⁾ (dollars in millions)

	March 31, 2020				December 31, 2019
Real Estate	$	7,652.3	20.0	%	$	5,280.2	16.3	%
Manufacturing⁽¹⁾		5,180.8	13.6	%		4,869.1	15.0	%
Service industries		3,060.0	8.0	%		1,723.4	5.3	%
Retail⁽²⁾		2,961.5	7.7	%		2,619.0	8.1	%
Energy and utilities		2,289.4	6.0	%		2,151.7	6.6	%
Wholesale		2,161.9	5.7	%		2,034.2	6.3	%
Business Services		2,083.2	5.4	%		1,992.4	6.2	%
Healthcare		1,812.9	4.7	%		1,576.4	4.9	%
Transportation		1,772.0	4.6	%		1,645.1	5.1	%
Oil and gas extraction / services		1,696.7	4.4	%		1,672.0	5.2	%
Rail		1,669.9	4.4	%		1,518.2	4.7	%
Finance and insurance		1,335.2	3.5	%		1,085.7	3.4	%
Maritime		1,115.0	2.9	%		1,118.2	3.5	%
Communications		700.2	1.8	%		650.1	2.0	%
Other (no industry greater than 2%)		2,742.3	7.3	%		2,426.6	7.4	%
Total	$	38,233.3	100.0	%	$	32,362.3	100.0	%

⁽¹⁾	At March 31, 2020, includes manufacturers of chemicals, including pharmaceuticals (3.7%), petroleum and coal, including refining (2.4%), and stone, clay, glass and concrete (1.4%).

⁽²⁾	At March 31, 2020, includes retailers of general merchandise (2.9%), food and beverage providers (1.4%) and miscellaneous (1.1%).

⁽³⁾	In addition to the rail industry category, exposure in the Rail division is also included in other obligor industries, with the largest being $2.6 billion in manufacturing, $1.0 billion in Oil and gas extraction / services and $0.8 million in wholesale.

Operating Lease Equipment — Rail

Rail serves over 500 customers, including all of the U.S. and Canadian Class I railroads (i.e., railroads with annual revenues of approximately USD $490 million and greater), other railroads and non-rail companies, such as shippers and power and energy companies. At March 31, 2020 our total operating lease fleet consisted of approximately 117,000 railcars. The following table reflects the proportion of railcars by type based on units and net investment, respectively.

Operating lease Railcar Portfolio by Type as of March 31, 2020 (units and net investment)


Railcar Type	Total Owned Fleet - % Total Units	Total Owned Fleet - % Total Net Investment
Covered Hoppers	40	32
Tank Cars	28	50
Mill/Coil Gondolas	9	4
Coal	9	4
Boxcars	7	5
Flatcars	3	1
Other	4	4
Total	100	100

CONSUMER CONCENTRATIONS

The following table presents our total outstanding consumer loans, including loans held for sale.

Consumer Loans (dollars in millions)

	March 31, 2020					December 31, 2019
	Net Investment		% of Total			Net Investment		% of Total
Single family residential	$	7,713.0		98.1	%	$	5,934.8		99.1	%
Home equity lines of credit and other		145.4		1.9	%		53.6		0.9	%
Total loans	$	7,858.4		100.0	%	$	5,988.4		100.0	%

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Loan concentrations may exist when multiple borrowers could be similarly impacted by economic or other conditions. The following table summarizes state concentrations greater than 5.0% based upon property address.

Consumer Loans Geographic Concentrations (dollars in millions)

	March 31, 2020					December 31, 2019
	Net Investment		% of Total			Net Investment		% of Total
California	$	4,474.2		56.9	%	$	4,172.2		69.7	%
Washington		422.4		5.4	%		222.3		3.7	%
Texas		420.4		5.3	%		76.3		1.3	%
Other states		2,541.4		32.4	%		1,517.6		25.3	%
Total loans	$	7,858.4		100.0	%	$	5,988.4		100.0	%

OTHER ASSETS AND OTHER LIABILITIES

The following tables present the components of other assets and other liabilities. The acquisition of MOB added $199 million and $93 million of other assets and other liabilities, respectively, on January 1, 2020.

Other Assets (dollars in millions)

	March 31,		December 31,
	2020		2019
Fair value of derivative financial instruments	$	546.5	$	190.7
Tax credit investments and investments in unconsolidated subsidiaries		394.3		365.6
Current and deferred federal and state tax assets		272.6		55.6
Right of use assets		232.4		194.9
Counterparty receivables		204.4		126.5
Property, furniture and fixtures		190.2		160.0
Intangible assets, net		160.1		66.0
Other⁽¹⁾		880.8		479.9
Total other assets	$	2,881.3	$	1,639.2

⁽¹⁾

“Other” increased primarily due to trade settlement timing differences for investment securities sold. In addition, other includes executive retirement plan and deferred compensation, prepaid expenses, accrued interest and dividends, MSRs and servicing advances, OREO, and other miscellaneous assets.

Other Liabilities (dollars in millions)

	March 31,		December 31,
	2020		2019
Accrued expenses and accounts payable	$	508.1	$	565.4
Current and deferred taxes payable		317.8		167.2
Lease liabilities		280.6		242.6
Allowance for off-balance sheet credit exposure		120.0		37.1
Commitment to fund tax credit investments		118.4		119.5
Fair value of derivative financial instruments		95.1		32.0
Accrued interest payable		46.6		92.9
Other liabilities⁽¹⁾		309.2		448.0
Total other liabilities	$	1,795.8	$	1,704.7

⁽¹⁾	Other consists of liabilities for taxes other than income, equipment maintenance liabilities, cash collateral deposits, and contingent and other miscellaneous liabilities.

RISK MANAGEMENT

CIT is subject to a variety of risks that may arise through the Company's business activities, including the following principal forms of risk that are explained further in our 2019 Form 10-K.

•

Credit risk is the risk of loss when a borrower or series of borrowers do not meet their financial obligations to the Company, or their performance weakens, and increased reserving is required. Credit risk may arise from lending, leasing, the purchase of accounts receivable in factoring and/or counterparty activities.

•

Asset risk is the equipment valuation and residual risk of leased equipment owned by the Company that arises from fluctuations in the supply and demand for the underlying leased equipment. The Company is exposed to the risk that, at the end of the lease term, the value of the asset will be lower than expected, resulting in either reduced future lease income over the remaining life of the asset or a lower sale value.

•

Market risk includes interest rate and foreign currency risk and price risk. Interest rate risk is the risk that fluctuations in interest rates can have an adverse impact on the Company’s NFR and on the market or liquidity value of the Company’s assets, liabilities and off-balance sheet obligations. Foreign currency risk is the risk that fluctuations in exchange rates between currencies can have an adverse impact on the Company’s non-dollar denominated assets, liabilities and cash flows. Price risk is the risk that changes in the value of portfolios of financial instruments can have an adverse impact on the Company’s revenue and on the market value of the Company’s assets. See detailed discussion in the Interest Rate Risk section below.

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•	Liquidity risk is the risk that the Company has an inability to maintain adequate cash or collateral resources and funding capacity to meet its obligations, including in stressed environments. See detailed discussion in the Funding and Liquidity section below.

•	Capital adequacy risk is the risk that the Company does not have adequate capital to cover its risks and to support its growth and strategic objectives.

•

Strategic risk is the risk of the impact on earnings or capital arising from adverse strategic business decisions, improper implementation of strategic decisions, or lack of responsiveness to changes in the industry, including changes in the financial services industry as well as fundamental changes in the businesses in which our customers and our firm engage.

•	Operational risk is the risk of financial loss, damage to the Company’s reputation, or other adverse impacts resulting from inadequate or failed internal processes and systems, people or external events.

•

Technology Risk is the risk of financial loss, damage to the Company’s reputation or other adverse impacts resulting from unauthorized (malicious or accidental) disclosure, modification, or destruction of information, including cyber-crime, unintentional errors and omissions, Information Technology (“IT”) disruptions due to natural or man-made disasters, or failure to exercise due care and diligence in the implementation and operation of an IT system.

•	Compliance Risk is the risk that the Company is not in compliance with applicable laws, regulations, and standards of conduct, which may result in fines, regulatory criticism or business restrictions, or damage to the Company’s reputation.

•	Reputational Risk is the potential that negative publicity, whether true or not, will cause a decline in the value of the Company due to changes in the customer base, costly litigation, missed opportunities, or other revenue reductions or expense increases.

Interest Rate Risk (a component of Market Risk)

CIT is exposed to the risk that changes in market conditions may affect interest rates and negatively impact earnings. The risk arises from the composition of CIT’s balance sheet and changes in the magnitude or shape of the yield curve. CIT looks to strategically manage this inherent risk based on prescribed guidelines and Board approved limits.

Interest rate risk can arise from many of CIT’s business activities, such as lending, leasing, investments, deposit taking and funding choices. This risk is a result of assets and liabilities repricing at different times as interest rates change. We evaluate and monitor interest rate risk primarily through two metrics.

•	Net Interest Income Sensitivity (“NII Sensitivity”), which measures the net impact of hypothetical changes in interest rates on forecasted NFR, for our interest rate sensitive assets, liabilities, and off-balance sheet instruments, assuming a static balance sheet over a twelve-month period; and

•	Economic Value of Equity Sensitivity (“EVE Sensitivity"), which measures the net impact of these hypothetical changes on the value of equity by assessing the economic value of assets, liabilities and off-balance sheet instruments.

The composition of our interest rate sensitive assets and liabilities generally results in a net asset-sensitive position, concentrated at the short end of the yield curve, mostly driven by moves in LIBOR, whereby our assets will reprice faster than our liabilities. Our interest rate sensitive assets generally consist of interest-bearing cash, investment securities and commercial and consumer loans. Approximately 50% of our total Commercial and Consumer loans are indexed to either 1-month LIBOR, 3-month LIBOR, or the Prime rate.

Our exposure to interest rate risk is guided by the company’s Risk Appetite Framework and a series of risk metrics including measurements of changes in income given a change in rates. While we remain asset sensitive, we have been focused on rebalancing our balance sheet to better position us for a declining-rate environment. We utilize tools such as shifts in wholesale funding, the investment portfolio, or hedging to adjust our interest rate risk exposures.

In 2017, the U.K. Financial Conduct Authority, which is the authority responsible for regulating LIBOR, announced that the publication of LIBOR is not guaranteed beyond 2021. LIBOR is a benchmark interest rate for some of our floating rate earning assets, particularly in Commercial Finance, Real Estate Finance and Consumer Banking (primarily mortgages), as well as certain liabilities and off-balance sheet exposures. We continue to monitor industry and regulatory developments and have a well-established transition program in place to manage the implementation of alternative reference rates as the market transitions away from LIBOR. As part of the transition to alternative rates, during the third quarter of 2019, CIT Bank issued unsecured fixed-to-floating rate notes linked to the Secured Overnight Funding Rate (“SOFR”). During the first quarter of 2020, we began linking FHLB advances to SOFR consistent with the Federal Housing Finance Agency’s directive to the FHLB. CIT will continue to assess the use of SOFR and other alternative rates as the market and best practices for transitioning to alternative rates develop.

Our funding sources consist primarily of non-maturity deposits and time deposits generated through the core deposit channels -Online, Branch, Homeowners association and Commercial as well as our network of deposit brokers. We also support our funding needs through wholesale funding sources (unsecured and secured debt) including FHLB advances.

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At March 31, 2020, deposits totaled approximately $42 billion. The deposit rates we offer can be influenced by market conditions and competitive factors. Market rates are the key drivers of deposit costs and we continue to optimize deposit costs by improving our deposit mix, which includes the addition of relatively low cost HOA deposits acquired as part of the MOB Acquisition. Changes in interest rates, expected funding needs, as well as actions by competitors, can affect our deposit taking activities and deposit pricing. We continue to believe our targeted non-maturity deposit customer retention is strong and we remain focused on optimizing our mix of deposits. We regularly test the effect of deposit rate changes and seek to achieve optimal alignment between assets and liabilities. As CIT continues to evolve its deposit strategies through the interest rate cycle and in response to the competitive landscape, management may periodically revise its deposit modelling assumptions and approaches in accordance with CIT’s governance structure.

The table below summarizes the results of simulation modeling produced by our asset/liability management system. The simulations we run require assumptions about rates, time horizons, balance sheet volumes, prepayment speeds, pricing and deposit behaviors, along with other inputs. The results presented below reflect the simulation of the NII Sensitivity over the next twelve months and the EVE Sensitivity over the life of the interest rate sensitive assets, liabilities and off-balance sheet items. These simulations assume an immediate 100 basis point parallel increase or decrease and a 200 basis point parallel increase in interest rates from the market-based forward curve. Sensitivity measures are calculated assuming market rates floor at 0% and therefore CIT suspended the immediate parallel down 200 basis point scenario due to the observed low level of interest rates. This scenario will be reinstated when interest rates rise sufficiently to make the scenario meaningful. The NII Sensitivity is presented based on an assumption that the balance sheet composition and size remain static over the 12 month projection period.

NII Sensitivity and EVE Sensitivity (dollars in millions)

	March 31, 2020								December 31, 2019
	+200 bps			+100 bps		-100 bps/0% floor			+200 bps			+100 bps			-100 bps
NII Sensitivity	$	132		$	81	$	(18	)	$	49		$	28		$	(62	)
EVE Sensitivity	$	(77	)	$	27	$	(591	)	$	(442	)	$	(188	)	$	(62	)

The NII Sensitivity and EVE Sensitivity results presented above assume that we take no action in response to the changes in interest rates and includes only impacts from interest rate related influences. NII Sensitivity generally assumes cash flows from portfolio run-off are reinvested in similar products or cash to keep the balance sheet static. For that reason and others, the estimated impacts do not reflect the likely actual results but serve as estimates of interest rate risk. NII Sensitivity is not comparable to actual results disclosed elsewhere or directly predictive of future values of other measures provided.

As a result of the current low market rate environment, a down 100 bps rate shock scenario as of March 31, 2020 provides limited information on sensitivity, because the full 100 bps market rate shock across all rates may not be achieved due to the assumption of rate floors in our modelling. As part of its broader interest rate risk management practices, CIT also runs various other market rate scenario analyses to assess the down rate risk to the institution. Such scenarios include smaller parallel market rate shocks as well as negative market rate environments. We would expect relatively greater NII sensitivity and relatively less EVE exposure under the full impact of market rate changes where rates are allowed to go negative.

As of March 31, 2020, both the NII Sensitivity and EVE Sensitivity changes from December 31, 2019 (see table above) were largely driven by the significantly lower market rates as well as the integration of the MOB balance sheet into CIT’s balance sheet. Higher cash levels and lower deposit betas and attrition also contributed to the sensitivity changes. Deposit beta represents the correlation, or relative rate change, between changes in the rates paid on deposits and changes in overall market interest rates.

On a net basis, we generally have more floating rate/re-pricing interest sensitive assets than liabilities in the near term. As a result, the interest rate risk sensitivity of our current portfolio is more impacted by moves in short-term interest rates in the near term. Therefore, our NFR associated with the interest rate sensitive assets, liabilities and off-balance sheet items may increase if short-term interest rates rise or decrease if short-term interest rates decline. However, changes would also be impacted by factors beyond interest rates, such as changes in balance sheet composition, spread compression or expansion and deviations from modelled deposit betas. In addition, re-pricing of our non-interest rate sensitive assets (for example, the rail operating leases) will impact NFR.

Market-implied forward rates over the future twelve months are used to estimate a base interest rate scenario for the net interest income projection in the base case. This base projection is compared with those calculated under varying interest rate scenarios to arrive at NII Sensitivity. Though there are many assumptions that affect the estimates for NII Sensitivity, those pertaining to deposit pricing, deposit mix and overall balance sheet composition are particularly impactful. Management continually evaluates the impact to its sensitivity analysis of these key assumptions.

EVE Sensitivity supplements net interest income simulation and sensitivity analysis as it estimates risk exposures beyond a twelve-month horizon. EVE Sensitivity modeling measures the extent to which the economic value of assets, liabilities and off-balance sheet instruments may change in response to a change in interest rates. EVE Sensitivity is calculated by subjecting the balance sheet to different rate shocks, measuring the net value of assets, liabilities and off-balance sheet instruments, and comparing those amounts with the EVE in base case calculated using a market-based forward interest rate curve. The methodology with which the operating lease assets are assessed in the EVE Sensitivity results in the table above reflects the existing contractual rental cash flows and the expected residual value at the end of the existing contract term.

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A wide variety of potential interest rate scenarios are simulated within our asset/liability management system. Interest sensitive assets, liabilities and off-balance sheet instruments are valued using discounted cash flow analysis for EVE Sensitivity. Rates are shocked via a set of scenarios that include both parallel and non-parallel interest rate movements. Scenarios are also run to capture our sensitivity to changes in the shape of the yield curve. Furthermore, we evaluate the sensitivity of these results to a number of key assumptions, such as spreads and prepayments.

NII Sensitivity and EVE Sensitivity limits have been set and are monitored for certain of the key scenarios. We manage the exposure to changes in NII Sensitivity and EVE Sensitivity in accordance with our risk appetite and within Board approved limits.

We use results of our various interest rate risk analyses to formulate asset and liability management (“ALM”) strategies, in coordination with the Asset Liability Committee (“ALCO”), to achieve the desired risk profile, while managing our objectives for capital adequacy and liquidity risk exposures. Specifically, we may manage our interest rate risk position through certain pricing strategies for loans and deposits, our investment strategy, issuing term debt with floating or fixed interest rates, and using derivatives such as interest rate swaps, which modify the interest rate characteristics of certain assets or liabilities.

These measurements provide an estimate of our interest rate sensitivity; however, they do not account for potential changes in credit quality, size, mix, and prepayment characteristics of our balance sheet, changes in PAA, or changes in the competition for business in the industries we serve. They also do not account for other business developments that could affect NFR, or for management actions that could affect NFR or that could be taken to change our risk profile. Accordingly, we can give no assurance that actual results would not differ materially from the estimated outcomes of our simulations. Further, the range of such simulations is not intended to represent our current view of the expected range of future interest rate movements.

FUNDING AND LIQUIDITY

As a result of our strategic transformation, we have strong and diversified sources of funding and liquidity. We are 84% deposit funded at March 31, 2020, have a strong liquidity profile, and maintain a comprehensive liquidity risk management framework, including monitoring processes and systems, designed to provide appropriate liquidity to meet expected and contingent funding needs under both normal and stressed environments at the Company and CIT Bank.

CIT actively manages its liquidity and monitors liquidity risk through a suite of tiered early warning indicators as well as management and Board limits. We continuously monitor, assess, and maintain an adequate level of liquidity to meet our cash and collateral obligations at a reasonable cost consistent with our liquidity risk management policy, and calculate liquidity risk metrics as part of our risk management practices.

The assessments of liquidity risk are measured under the assumption of normal operating conditions as well as under a stressed environment and use assumptions to reflect the changed market environment. Such environments cover a range of events, including systemic market-wide events as well as CIT-specific events. Liquidity stresses are applied in terms of duration and severity. Although not required by regulators, CIT continues to calculate and maintain a strong Liquidity Coverage Ratio above 100% informed by Tier IV banks based on the FRB Tailoring rule.

Liquidity stress test results, along with our risk metrics and other liquidity risk measurement practices, inform our business strategy, risk appetite, requirements for minimum balances of Liquid Assets and contingency funding plans.

We utilize a series of measurement tools to assess and monitor the level and adequacy of our liquidity position, liquidity conditions and trends. The primary tool is a liquidity forecast designed to identify movements in cash and collateral flows, both contractually and behaviorally. We use a stress testing framework to better understand the range of potential risks and the impacts of those risks on CIT. Included among our liquidity measurement tools are risk metrics that assist in identifying potential liquidity risk and CIT’s exposure to those risks as well as their impact on CIT’s liquidity.

Oversight is provided by the RMC, ERC, ALCO and the Risk Control Committee (“RCC”).

CIT closely monitors daily and intraday liquidity requirements to maintain appropriate amounts of liquidity on our balance sheet and access to contingent sources of liquidity to meet our obligations. Primary sources of available liquidity include Available Cash, High Quality Liquid Securities, and other contingent liquidity sources.

During the recent weeks of market disruptions, CIT enhanced its monitoring and internal communication around our liquidity risk. Consistent with our enhanced monitoring, we continue to maintain strong levels of Liquid Assets, above our internal limits.

We also have access to contingent sources of liquidity including the Revolving Credit Facility, FHLB borrowing capacity, other committed financing facilities, and repurchase lines, and we are operationally ready to utilize the FRB discount window and the FRB Paycheck Protection Program Liquidity Facility. At March 31, 2020 we had $9.5 billion of total Liquid Assets and $3.5 billion of contingent liquidity sources available, most of which is held at the Bank, commensurate with our assets. (See COVID-19 Pandemic Response - Funding and Liquidity discussion for details of total Liquid Assets and contingent liquidity sources.)

Cash

Cash totaled $3.7 billion at March 31, 2020 and $2.7 billion at December 31, 2019. The increase in cash in 2020 reflected the maturing securities purchased under agreement to resell, as noted below.

Investment Securities

Investment securities consisted primarily of US Treasury or Agency-issued fixed income securities and totaled $6.1 billion at March 31, 2020 and $6.3 billion at December 31, 2019, of which $5.9 billion and $6.0 billion were AFS. Securities of $3.2 billion were pledged as of March 31, 2020 to secure public funds, securities sold under agreements to repurchase, FHLB financing

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availability, and derivative contracts and for other purposes as required or permitted by law. During the quarter we monetized certain MBS securities.

We had $950 million of securities purchased under agreement to resell at December 31, 2019, which matured during the 2020 first quarter. See Note 6 — Investment Securities in Item 1 for additional information on types and maturities of investment securities.

Funding Sources

We fund our operations through deposits and borrowings. Deposits totaled $42.2 billion, 84% of total funding at March 31, 2020 and $35.1 billion, 84% of total funding at December 31, 2019. Borrowings totaled $8.1 billion at March 31, 2020 and $6.5 billion at December 31, 2019, respectively. The increase in deposits was driven by $7.0 billion from the MOB Acquisition. Borrowings consist of senior unsecured notes, subordinated unsecured notes and secured borrowings (FHLB advances and structured financings).

Unsecured borrowings decreased to 9% of total funding from 11% at December 31, 2019. Secured borrowings increased to 7% from 5% at December 31, 2019. See further discussions below.

We have minimal repayments of borrowings over the near-term. In calendar year 2020, we do not have unsecured debt repayments or FHLB advances due. Over the next twelve months, we have $500 million of unsecured borrowings due in March 2021, and $14 million of other structured financings. As of March 31, 2020, certificates of deposit with maturities over the coming twelve months were approximately $9 billion. See the contractual maturities table later in this section that includes borrowings and deposits. Also see Note 7 – Deposits and Note 9 – Borrowings in Item 1.

During the first quarter of 2020, we paid $3.8 million in preferred dividends and $35 million of common dividends. In the second quarter, we have declared preferred dividends of $12.2 million and common dividends of approximately $35 million.

See Net Finance Revenue section for a tabular presentation of our average funding mix for the period ended March 31, 2020.

Deposits

CIT Bank offers a full suite of deposit offerings to its commercial and consumer customers through a national online platform, a network of over 60 branches in Southern California, and another 25 bank branches acquired with the MOB Acquisition, primarily in the Southwest, Midwest and Southeast. With the addition of $7.0 billion of deposits from MOB on the acquisition date, we added the HOA channel to source deposits. MOB’s relationship-driven commercial banking business also provides an opportunity to further grow commercial deposits, as it accelerates our presence in the middle market. See “Mutual of Omaha Bank Acquisition” section. The period end balances are as follows:

Deposits by Channel (dollars in millions)

	March 31, 2020					December 31, 2019
	Total		Percent of Total			Total		Percent of Total
Online	$	18,971.2		45	%	$	19,014.0		54	%
Branch		11,975.2		28	%		11,230.6		32	%
Homeowners association		5,101.9		12	%		-		-	%
Commercial		3,216.9		8	%		2,228.6		6	%
Brokered / other channel		2,896.9		7	%		2,666.3		8	%
Total deposits	$	42,162.1		100	%	$	35,139.5		100	%

The following table details our period end deposit balances by type:

Deposits by Type (dollars in millions)

	March 31, 2020					December 31, 2019
	Total		Percent of Total			Total		Percent of Total
Savings and money market	$	24,089.3		57	%	$	21,059.8		60	%
Time deposits		12,430.1		29	%		11,157.7		32	%
Interest-bearing checking		2,852.9		7	%		1,328.9		4	%
Non-interest bearing deposits		2,789.8		7	%		1,593.1		4	%
Total deposits	$	42,162.1		100	%	$	35,139.5		100	%

Commensurate with the Federal Reserve interest rate reductions, we have been lowering rates on our deposits. See “Net Finance Revenue” for discussion on deposits interest expense and rates.

At the Company, the period end loans and leases to deposits ratio was 109% at March 31, 2020, relatively unchanged from December 31, 2019. At the Bank, the period end loans and leases to deposits ratio was 95% at March 31, 2020, up slightly from 94% at December 31, 2019.

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Unsecured Borrowings

Revolving Credit Facility

There were no borrowings outstanding under the Revolving Credit Facility. The Revolving Credit Facility had a total commitment amount of $300 million as of March 31, 2020, of which approximately $260 million was available to be drawn. The facility commitment was down from $400 million at December 31, 2019, reflecting the renewal of the facility in the first quarter of 2020 at a lower commitment level and with an extended maturity date of November 1, 2021.

Senior Unsecured Notes

At March 31, 2020, senior unsecured notes outstanding totaled $4.0 billion and the weighted average coupon rate was 4.62%, unchanged from December 31, 2019. In connection with the MOB Acquisition, CIT Bank established a $5 billion Global Bank Note Program in September 2019 to enable it to offer both unsecured senior and subordinated notes. CIT Bank subsequently issued $550 million of 2.969% Senior Unsecured Fixed-to-Floating Rate Notes due 2025.

Subordinated Unsecured Notes

Subordinated unsecured notes principal amount totaled $500 million as of March 31, 2020 and consisted of $100 million of 4.125% fixed-to-fixed subordinated notes due in 2029 and $400 million of 6.125% fixed rate subordinated notes due March 2028, which are included in Tier 2 capital.

Secured Borrowings

We may pledge assets for secured borrowing transactions, which include borrowings from the FHLB and/or FRB, or for other purposes as required or permitted by law. The debt issued in conjunction with these transactions is collateralized by certain discrete receivables, securities, loans, leases and/or underlying equipment. Certain related cash balances are restricted.

FHLB Advances

As a member of the FHLB of San Francisco, CIT Bank N.A. can access financing based on an evaluation of its creditworthiness, statement of financial position, size and eligibility of collateral. The interest rates charged by the FHLB for advances typically vary depending upon maturity, the cost of funds of the FHLB, and the collateral provided for the borrowing. Advances are secured by certain Bank assets and bear either a fixed or floating interest rate. The FHLB advances are collateralized by a variety of consumer and commercial loans, including SFR mortgage loans, multi-family mortgage loans, commercial real estate loans and securities.

FHLB Balances (dollars in millions)

									December 31,
	March 31, 2020								2019
	Lending Assets			High Quality Liquid Securities		Total			Total
Total borrowing capacity	$	5,879.0		$	2,879.5	$	8,758.5		$	6,350.5
Less:
Advances		(3,050.0	)		—		(3,050.0	)		(1,650.0	)
Available capacity	$	2,829.0		$	2,879.5	$	5,708.5		$	4,700.5

Pledged assets⁽¹⁾	$	7,308.0		$	3,006.3	$	10,314.3		$	6,987.6
Weighted Average Rate							1.03	%		2.04	%

⁽¹⁾

December 31, 2019 pledged assets included $50.4 million of High Quality Liquid Securities.

To supplement our cash position, we increased FHLB advances during the quarter. CIT Bank may borrow additional FHLB advances, as liquidity needs arise. The available capacity of $5,708.5 million includes $2,879.5 million to borrow against $3.0 billion of pledged High Quality Liquid Securities, which have not been borrowed against at March 31, 2020 and remain available for sale. FHLB advances and pledged assets are also discussed in Note 9 — Borrowings.

Other Secured and Structured Financings

Other secured and structured financings totaled $561.3 million at March 31, 2020, up from $361.1 million at December 31, 2019, driven by borrowings under our ABL facility. The total borrowing capacity of the ABL facility was $1.0 billion, based on the availability of eligible collateral, of which $417.8 million was unused at March 31, 2020. The facility expires in December 2021.

FRB

The Company has a borrowing facility with the FRB Discount Window that can be used for short-term, typically overnight borrowings. Effective March 16, 2020, the FRB announced changes to the FRB Discount Window, including the extension of the term of such borrowings up to 90 days. The borrowing capacity is determined by the FRB based on the collateral pledged. There were no outstanding borrowings with the FRB Discount Window as of March 31, 2020 and December 31, 2019. See Note 9 — Borrowings in Item 1 for total balances pledged, including amounts to the FRB. Beginning May 1, 2020, CIT Bank can borrow from the FRB Paycheck Protection Program Liquidity Facility, which is used to provide term financing to CIT Bank backed by PPP loans.

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CIT Obligations

The following table summarizes contractual maturities of deposits for deposits with stated maturities and borrowings outstanding, which excludes PAA discounts, original issue discounts and FSA discounts.

Contractual Maturities – Time Deposits and Borrowings for the Twelve Months Ended March 31 (dollars in millions)

	Total		2021		2022		2023		2024		Thereafter
Time deposits	$	12,430.8	$	9,011.2	$	1,889.5	$	394.5	$	456.3	$	679.3
Senior unsecured notes		3,998.4		500.0		—		1,147.0		1,250.0		1,101.4
Subordinated unsecured notes		500.0		—		—		—		—		500.0
FHLB advances		3,050.0		—		3,050.0		—		—		—
Other secured and structured financings		564.0		14.0		550.0		—		—		—
Time Deposits and borrowings	$	20,543.2	$	9,525.2	$	5,489.5	$	1,541.5	$	1,706.3	$	2,280.7

The following table presents further detail on maturity dates of senior unsecured notes by tranches.

Senior Unsecured Notes (dollars in millions)

Maturity Date	Rate (%)	Date of Issuance	Par Value
March 2021	4.125%	March 2018	$	500.0
August 2022	5.000%	August 2012		1,147.0
August 2023	5.000%	August 2013		750.0
February 2024	4.750%	August 2018		500.0
March 2025	5.250%	March 2018		500.0
September 2025	2.969%	September 2019		550.0
Weighted average rate and total	4.606%		$	3,947.0

Contractual Commitments

The following table summarizes off-balance sheet credit-related commitments and other purchase and funding commitments. We closely monitor our line usage, and revolver utilization increased in the middle of March as clients drew on their lines as a result of increased business uncertainty. These draws started to moderate toward the end of March and have been modest since the beginning of April.

Our increased focus in treasury and payment services helped us to retain a significant portion of these draws as commercial deposits.

Commitment Expiration for the Twelve Months Ended March 31 (dollars in millions)

	Total		2021		2022		2023		2024		2025+
Financing commitments	$	8,370.9	$	3,477.0	$	1,099.1	$	1,304.0	$	1,290.5	$	1,200.3
Rail and other purchase commitments		690.6		690.6		—		—		—		—
Letters of credit		241.7		59.8		49.3		25.6		55.9		51.1
Deferred purchase agreements		1,556.1		1,556.1		—		—		—		—
Total contractual commitments	$	10,859.3	$	5,783.5	$	1,148.4	$	1,329.6	$	1,346.4	$	1,251.4

At March 31, 2020, substantially all our undrawn financing commitments were senior facilities, with approximately 93% secured by commercial equipment or other assets, and the remainder comprised of cash flow or enterprise value facilities. Most of our undrawn and available financing commitments are in the Commercial Finance and Real Estate Finance divisions of Commercial Banking and include unused revolver availability of $2.6 billion, which is subject to borrower base revolver capacity and covenant compliance. Also included in financing commitments are delayed draws and term loans. Customer draws on such facilities are subject to certain pre-determined contract conditions. The top ten undrawn financing commitments totaled $606.7 million at March 31, 2020. Financing commitments related to consumer loans totaled approximately $464.6 million.

Total Commitments (dollars in millions)

	March 31, 2020		December 31, 2019
Financing Commitments
Financing assets	$	8,370.9	$	6,459.7
Letters of credit
Standby letters of credit		231.3		199.6
Other letters of credit		10.4		6.7
Deferred purchase agreements		1,556.1		2,060.6
Purchase and Funding Commitments
Rail and other purchase commitments	$	690.6	$	813.7

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Not all commitments in the above table may require CIT funding. The table above includes approximately $2.0 billion of undrawn financing commitments for instances where the customer is not in compliance with contractual obligations or does not have adequate collateral to borrow against the unused facility, and therefore CIT does not have the contractual obligation to lend. The table above includes $1.5 billion of DPA credit protection at March 31, 2020. The table also includes $64 million and $94 million available under DPA credit line agreements, net of the amount of DPA credit protection provided at March 31, 2020 and December 31, 2019, respectively. See Note 15 – Commitments in Item 1 for further detail on DPA and other noted commitments.

Debt Ratings

Debt ratings can influence the cost and availability of short- and long-term funding, the terms and conditions on which such funding may be available, the collateral requirements, if any, for borrowings and certain derivative instruments, the acceptability of our letters of credit, and the number of investors and counterparties willing to lend to the Company. A decrease, or potential decrease, in credit ratings could impact access to the capital markets and/or increase the cost of debt, and thereby adversely affect the Company’s liquidity and financial condition.

CIT and CIT Bank, N.A. debt ratings, as rated by Standard & Poor’s Ratings Services (“S&P”), Fitch Ratings, Inc. (“Fitch”), Moody’s Investors Service (“Moody’s”) and DBRS Inc. (“DBRS”) are presented in the following table:

Ratings

	S&P	Fitch	Moody’s	DBRS
Last Credit Update	5/4/20	4/29/20	4/9/20	4/29/20
CIT Group Inc.
Long Term Senior Unsecured Debt	BB+	BBB-	Ba1	BBB (low)
Subordinated Debt	BB	BB+	Ba1	BB (high)
Non-Cumulative Perpetual Stock	B+	B+	Ba3	BB (low)
Ratings Outlook / Trend	Negative	Negative (watch)	Stable	Negative
CIT Bank, N.A.
Issuer Rating	BBB-	BBB-	Ba1	BBB
Long Term Senior Bank Notes	BBB-	BBB-	Ba1	N/A
Deposit Rating (LT/ST)	N/A	BBB / F3	Baa1 / P-2	BBB / R-2 (high)
Outlook	Negative	Negative (watch)	Stable	Negative

N/A — Not Applicable

Rating agencies indicate that they base their ratings on many quantitative and qualitative factors, including capital adequacy, liquidity, asset quality, business mix, level and quality of earnings, and the current operating, legislative and regulatory environment, including implied government support. Potential changes in rating methodology as well as in the legislative and regulatory environment and the timing of those changes could impact our ratings, which could impact our liquidity and financial condition.

A debt rating is not a recommendation to buy, sell or hold securities, and the ratings are subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating.

CAPITAL

Capital Management

CIT’s capital management is discussed in our Annual Report on Form 10-K, Item 1. Business Overview - Regulation, subsections “Capital Requirements” and “Regulatory Expectations for Capital Planning.”

CIT maintains a comprehensive capital adequacy process. The Company establishes internal capital risk limits and warning thresholds, which utilize Risk-Based and Leverage-Based Capital calculations, internal and external early warning indicators, its capital planning process, and stress testing to evaluate the Company's capital adequacy for multiple types of risk in both normal and stressed environments. The capital management framework requires contingency plans be defined in the event capital adequacy risk limits are breached or a preponderance of warning thresholds are triggered.

See “COVID-19 Pandemic Response” section for discussion of the capital impacts from the adoption of CECL and the adverse impact from the COVID-19 pandemic thereon. In addition, the acquisition of MOB on January 1, 2020, impacted the comparability to prior periods.

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Return of Capital

We declared and paid the following dividends in 2020:

Declaration Date	Payment Date	Per Share Dividend
Common Stock
January 22, 2020	February 21, 2020	$	0.35
Series B Preferred Stock
January 22, 2020	March 16, 2020	$	0.48

On April 16, 2020, the Board of Directors of the Company declared a quarterly cash dividend in the amount of $0.35 per outstanding common share. The common stock dividend is payable on May 22, 2020 to common shareholders of record as of May 8, 2020. On April 16, 2020, the Board of Directors of the Company declared a semi-annual cash dividend in the amount of approximately $29.00 per outstanding Series A preferred stock. The dividend is payable on June 15, 2020 to Series A preferred shareholders of record as of May 29, 2020. On April 16, 2020, the Board of Directors of the Company declared a quarterly cash dividend in the amount of approximately $0.35 per outstanding Series B preferred stock. The dividend is payable on June 15, 2020 to Series B preferred shareholders of record as of May 29, 2020.

CIT stopped repurchasing shares in the third quarter of 2019 due to the then-pending MOB Acquisition and the Company’s intent is to remain out of the market for common share repurchases in order to increase the CET1 ratio to the internal target of 10.5%.

Capital Composition and Ratios

The Company is subject to various regulatory capital requirements. We compute capital ratios in accordance with Federal Reserve capital guidelines for assessing adequacy of capital. At March 31, 2020 and December 31, 2019, the capital ratios of the Company and CIT Bank exceeded all capital adequacy requirements.

In November 2017, the Federal Reserve Board, together with the OCC and FDIC adopted a final rule effective January 1, 2018 to extend the regulatory capital treatment under 2017 transition provisions for certain items, applicable to banking organizations that are not subject to advanced approaches capital rules (“Transition Final Rule”). These items include regulatory capital deductions, risk weights, and certain minority interest limitations. In July 2019, the federal bank regulators issued the final rule (“Simplification Final Rule”) to simplify the regulatory capital requirements for these items covered by the Transition Final Rule. The Simplification Final Rule was effective on April 1, 2020, but subsequently revised to January 1, 2020. The regulatory capital guidelines applicable to CIT and CIT Bank were the Basel III Rule and the Simplification Final Rule for the period ended March 31, 2020 and the Basel III Rule and the Transition Final Rule for the period ended December 31, 2019.

CIT elected to use the 5-year transition under the Revised CECL Transition Rule, which resulted in a benefit of $188.4 million in capital.

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Capital Components, Risk-Weighted Assets, and Capital Ratios (dollars in millions)

	March 31, 2020			December 31, 2019
CET1 Capital
Total common stockholders’ equity⁽¹⁾	$	5,335.8		$	5,814.0
Effect of CECL transition impact on retained earnings ⁽²⁾		188.4			—
Effect of certain items in AOCI excluded from CET1 Capital		(76.7	)		43.0
Adjusted total equity		5,447.5			5,857.0
Goodwill, net of associated deferred tax liabilities (DTLs)		(142.9	)		(361.7	)
Intangible assets, net of associated DTLs		(146.5	)		(50.9	)
CET1 Capital		5,158.1			5,444.4
Additional Tier 1 Capital
Preferred Stock		525.0			525.0
Other Additional Tier 1 Capital deductions⁽³⁾		(0.2	)		(0.1	)
Total Additional Tier 1 Capital		524.8			524.9
Total Tier 1 Capital		5,682.9			5,969.3
Tier 2 Capital
Qualifying Tier 2 Capital Instruments		494.5			494.4
Qualifying adjusted allowance for credit losses ("AACL")^{(2) (4)}		664.9			519.6
Total Tier 2 Capital		1,159.4			1,014.0
Total Capital	$	6,842.3		$	6,983.3
Risk-Weighted Assets	$	52,973.0		$	45,262.0
CIT Ratios
CET1 Capital Ratio		9.7	%		12.0	%
Tier 1 Capital Ratio		10.7	%		13.2	%
Total Capital Ratio		12.9	%		15.4	%
Tier 1 Leverage Ratio		9.8	%		11.9	%
CIT Bank, N.A. Capital Components and Ratios
CET1 Capital	$	4,677.7		$	4,879.6
Tier 1 Capital		4,677.7			4,879.6
Total Capital		5,545.7			5,644.3
Risk-Weighted Assets		45,160.2			37,150.5
CET1 Capital Ratio		10.4	%		13.1	%
Tier 1 Capital Ratio		10.4	%		13.1	%
Total Capital Ratio		12.3	%		15.2	%
Tier 1 Leverage Ratio		8.9	%		11.0	%

⁽¹⁾	See Condensed Consolidated Balance Sheets for the components of total common stockholders’ equity.

⁽²⁾	Reflects the CECL transition impact based on the Revised CECL Transition Rule.

⁽³⁾	Represents covered funds deductions required by the Volcker Rule.

⁽⁴⁾	AACL includes credit loss allowances related to loans, except for allowances for PCD assets. AACL also includes allowance for off-balance sheet credit exposures (i.e. unfunded lending commitments and DPAs) recorded in Other liabilities.

Common stockholders’ equity decreased from December 31, 2019, reflecting the net loss in the quarter primarily due to the provision for credit losses and the goodwill impairment, partially offset by the issuance of approximately $141 million in common shares on January 1, 2020 related to the MOB Acquisition.

See “COVID-19 Pandemic Response” section for discussion of the impact on capital due to the impacts from the MOB acquisition, the adoption of CECL and the adverse impact from the COVID-19 pandemic thereon.

The reconciliation of balance sheet assets to RWA is presented below:

Risk-Weighted Assets (dollars in millions)

	March 31, 2020			December 31, 2019
Balance sheet assets	$	58,936.7		$	50,832.8
Risk weighting adjustments to balance sheet assets		(12,475.5	)		(11,600.2	)
Off-Balance sheet items		6,511.8			6,029.4
Risk-weighted assets	$	52,973.0		$	45,262.0

The increase in balance sheet assets reflects the MOB Acquisition. The risk weighting adjustments to balance sheet assets as of March 31, 2020 increased from December 31, 2019 as a result of the increase in consumer loans risk-weighted at 50% due to the MOB Transaction and higher mark-to-market gains on derivative contracts, partially offset by the ACL increase due to the current macroeconomic environment.

The 2020 off-balance sheet items primarily reflect $3.4 billion of unused lines of credit (largely related to the Commercial and Real Estate Finance divisions), $1.6 billion related to DPAs (Commercial Finance division), $0.7 billion of derivative exposures, and $0.8 billion of other items. See Note 15 — Commitments in Item 1 for further detail on commitments.

See “COVID-19 Pandemic Response” section for discussion of the impact on RWA due to the impacts from the MOB acquisition and the adoption of CECL and the adverse impact from the COVID-19 pandemic thereon.

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Book Value, Tangible Book Value and per Share Amounts (dollars in millions, except per share amounts)

	March 31,			December 31,
	2020			2019
Total common stockholders' equity	$	5,335.8		$	5,814.0
Less goodwill		(146.8	)		(369.9	)
Intangible assets		(160.1	)		(66.0	)
Tangible book value⁽¹⁾	$	5,028.9		$	5,378.1
Book value per share	$	54.24		$	61.37
Tangible book value per share⁽¹⁾	$	51.12		$	56.77

⁽¹⁾	Tangible book value and tangible book value per share are non-GAAP measures. See “Non-GAAP Financial Measurements” for reconciliation of Non-GAAP to GAAP financial information

Book value ("BV") and tangible book value (“TBV”), and respective per share amounts, at March 31, 2020 decreased from December 31, 2019, reflecting the net loss during the quarter. During the quarter, we recognized a goodwill impairment of $345 million and recorded goodwill of $122 million and intangible assets of $103 million related to the MOB Acquisition.

CIT BANK, N.A.

The following tables present condensed financial information for CIT Bank. Trends and significant items are discussed in the previous sections of the MD&A. The changes in balances were primarily driven by the MOB Acquisition.

Condensed Balance Sheets (dollars in millions)

	March 31,			December 31,
	2020			2019
ASSETS:
Cash and deposits with banks	$	3,483.3		$	2,425.2
Securities purchased under agreement to resell		-			950.0
Investment securities		6,116.0			6,264.9
Assets held for sale		69.6			27.4
Loans		36,107.3			28,781.1
Allowance for credit losses		(1,097.7	)		(455.2	)
Operating lease equipment, net		4,846.5			4,686.8
Bank owned life insurance		1,100.9			1,043.2
Goodwill		121.6			323.1
Other assets		2,245.7			1,222.4
Total Assets	$	52,993.2		$	45,268.9
LIABILITIES AND EQUITY:
Deposits, including $835.0 and $683.4 due to affiliates at March 31, 2020 and December 31, 2019, respectively	$	42,997.1		$	35,822.9
FHLB advances		3,050.0			1,650.0
Borrowings, including $302.3 and $655.1 due to affiliates at March 31, 2020 and December 31, 2019, respectively		862.4			1,201.1
Other liabilities, including $52.5 and $73.1 payable to affiliates at March 31, 2020 and December 31, 2019, respectively		1,208.6			1,328.6
Total Liabilities		48,118.1			40,002.6
Total Equity		4,875.1			5,266.3
Total Liabilities and Equity	$	52,993.2		$	45,268.9

Capital Ratios – see Capital section

Loans and Leases, including HFS, by Segment (dollars in millions)

	March 31,		December 31,
	2020		2019
Commercial Banking
Commercial Finance	$	15,155.1	$	12,074.1
Business Capital		5,367.5		5,318.2
Rail		4,225.5		4,090.2
Real Estate Finance		7,742.7		5,398.4
Total		32,490.8		26,880.9
Consumer Banking
Consumer and Community Banking		6,436.4		4,531.4
Legacy Consumer Mortgages		2,096.2		2,083.0
Total		8,532.6		6,614.4
Total loans and leases	$	41,023.4	$	33,495.3

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Condensed Statements of Operations (dollars in millions)

	Quarters Ended
	March 31,			December 31,		March 31,
	2020			2019		2019
Interest and fees on loans	$	448.3		$	405.1	$	428.0
Other interest and dividends		45.3			52.1		63.6
Interest income		493.6			457.2		491.6
Interest on deposits		156.6			163.4		153.8
Interest on borrowings		13.8			9.9		23.0
Interest expense on deposits and payables with affiliated companies		4.4			3.2		7.0
Interest expense		174.8			176.5		183.8
Net interest revenue		318.8			280.7		307.8
Provision for credit losses		507.0			28.2		30.4
Net interest revenue, after credit provision		(188.2	)		252.5		277.4
Rental income on operating leases		124.5			125.2		122.7
Other non-interest income		100.7			62.3		70.0
Total net revenue, net of interest expense and credit provision		37.0			440.0		470.1
Operating expenses		294.0			221.5		243.2
Goodwill impairment		323.1			-		-
Depreciation on operating lease equipment		60.2			57.9		60.4
Maintenance and other operating lease expenses		30.4			19.7		25.8
Income before provision for income taxes		(670.6	)		140.9		140.7
Provision for income taxes		(117.4	)		31.4		36.6
Income from continuing operations		(553.2	)		109.5		104.1
Loss on discontinued operation		-			-		(0.7	)
Net (loss) income	$	(553.2	)	$	109.5	$	103.4
New business volume - funded	$	3,571.7		$	3,598.6	$	2,684.0

Net Finance Revenue (dollars in millions)

	Quarters Ended
	March 31,		December 31,		March 31,
	2020		2019		2019
Interest income	$	493.6	$	457.2	$	491.6
Rental income on operating leases		124.5		125.2		122.7
Finance revenue		618.1		582.4		614.3
Interest expense		174.8		176.5		183.8
Depreciation on operating lease equipment		60.2		57.9		60.4
Maintenance and other operating lease expenses		30.4		19.7		25.8
Net finance revenue	$	352.7	$	328.3	$	344.3
AEA	$	49,780.0	$	42,452.2	$	42,074.9

Net Finance Margin

	Quarters Ended
	March 31,			December 31,			March 31,
	2020			2019			2019
Interest income		3.97	%		4.31	%		4.67	%
Rental income on operating leases		1.00	%		1.18	%		1.17	%
Finance revenue		4.97	%		5.49	%		5.84	%
Interest expense		1.41	%		1.66	%		1.75	%
Depreciation on operating lease equipment		0.48	%		0.55	%		0.57	%
Maintenance and other operating lease expenses		0.25	%		0.19	%		0.25	%
Net finance margin		2.83	%		3.09	%		3.27	%

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to use judgment in making estimates and assumptions that affect reported amounts of assets and liabilities, reported amounts of income and expense and the disclosure of contingent assets and liabilities. The following estimates, which are based on relevant information available at the end of each period, include inherent risks and uncertainties related to judgments and assumptions made. We consider these estimates to be critical in applying our accounting policies, due to the existence of uncertainty at the time the estimate is made, the likelihood of changes in estimates from period to period and the potential impact on the financial statements.

Management believes that the judgments and assessments utilized in the following critical accounting estimates are reasonable. We do not believe that different assumptions are more likely than those utilized, although actual events may differ from such assumptions. Consequently, our estimates could prove inaccurate, and we may be exposed to charges to earnings that could be material.

The following methodologies and processes used in developing estimates relating to these items have been updated from those described in our 2019 Form 10-K.

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Adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326)

Background and Scope

On January 1, 2020 we adopted CECL, which replaces the previous incurred loss impairment model, that recognized credit losses when a probable threshold was met, with a requirement to recognize lifetime ECL immediately when a financial asset is originated or purchased. Refer to Note 1 – Business and Summary of Significant Accounting Policies for additional information about this new standard.

CECL applies to financial assets measured at amortized cost, net investments in leases, AFS debt securities and off-balance sheet credit exposures not accounted for as insurance. As a result, CECL is applicable to our financial instruments as follows:

✓

Cash

✓

Securities purchased under agreements to resell

✓

AFS debt securities

✓

Loans

✓

Investments in finance leases – lessor

✓

Certain other assets, including accrued interest receivable

✓

Allowance for off-balance sheet credit exposures related to financing commitments, letters of credit and DPAs

With respect to cash and interest-bearing cash, securities purchased under agreements to resell and most of our AFS debt securities, the impact from CECL was negligible given the nature of the assets and related collateral allowed for the assumption of zero loss. No credit loss is recognized on accrued interest receivable given the Company’s policy to reverse accrued and unpaid interest upon it becoming 90-days past due. The largest asset classes subject to forecasts under CECL are held for investment loans and finance leases as well as related unfunded commitments.

CECL is not prescriptive with respect to ACL calculations and estimating credit losses under this new standard is highly judgmental. Therefore, management continues to leverage a robust governance process to facilitate review, challenge and approval of the ACL.

Another change under CECL is that it replaces the legacy accounting related to PCI loans with the concept of PCD. An entity records a PCD asset at the purchase price plus the ACL expected at the time of acquisition to establish the initial amortized cost basis. This is referred to as “gross-up” accounting, as under this method, there is no credit loss expense affecting net income on acquisition. Changes in estimates of ECL after acquisition are recognized as credit loss expense (or reversal of credit loss expense) in subsequent periods as they arise. Assets classified as PCI on the January 1, 2020 adoption date automatically become PCD assets with the gross-up methodology applied, as a result there was no equity impact in connection with the transition / adoption. This change impacted our first quarter 2020 results in two ways: 1) in our legacy PCI portfolio where the PCD gross up / reclassification of non-accretable discount included in loan amortized cost resulted in a $120.5 million increase to ACL; and 2) the classification of certain loans from the MOB Acquisition as PCD, which resulted in the establishment of $20 million (net of acquisition date charge-offs of $38.6 million) in ACL through gross up. The January 1, 2020 ACL adjustment related to CIT’s initial adoption of CECL for legacy CIT non-PCD assets was recorded as an offset to retained earnings, while the adjustment to the ACL related to non-PCD loans acquired from MOB was established via a charge to the first quarter provision for credit losses. See ACL roll forward table in Credit Metrics.

CECL had been expected to result in greater volatility of earnings and capital levels over economic cycles given the requirement for companies to estimate credit losses over the full remaining expected life of their assets and sensitivity to sudden changes in forecasted economic variables and other assumptions in the loss models. In addition, eliminating the credit-related discount on the PCI portfolio and replacing it with a reserve means that changes in credit performance on the LCM portfolio will flow through loan loss provision thereby increasing volatility. The expectation of increased volatility was realized in the provision for the quarter ended March 31, 2020, largely due to the dramatic and rapid impact of the COVID-19 pandemic on economic forecasts.

Forecasting Approach – Loans, including Investment in Finance Leases

CIT uses multiple models to generate ECL forecasts while utilizing different segmentations for modeling and financial reporting. The model segmentation is generally driven by financial asset type, type of collateral or obligor characteristics (e.g., internal credit grade, industry). Reporting segmentation is driven by business segment and division. For modeling purposes, CIT’s commercial loan portfolio is segmented into four categories while the residential mortgage portfolio is segmented for LCM and jumbo mortgages. The primary segmentation characteristics for the commercial loan portfolio is described below.

•

Large ticket commercial

•

Commercial real estate

•

Small ticket commercial

•

Factoring receivables

We use a combination of internally-developed models and third-party models to develop loss estimates in our loan portfolios. Third-party models use external historical loan performance data while internal models are developed using a combination of internal and external historical loan performance data. Historical macroeconomic data is used together with historical loan performance data to identify correlations and select macro variables that would be expected to be appropriate predictors of loan losses in the future.

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Key inputs into the CECL forecasting process include:

•

Data elements / attributes of the current portfolio (e.g., credit grade, term)

•

Forecasts for macroeconomic variables

•

Other management assumptions (e.g., prepayments, credit conversion factors for unfunded commitments)

Our commercial loan portfolios use internal PD and LGD grading systems that consider the current financial condition of the borrower, past performance and industry / collateral specifics, among other factors. We use PD and LGD to categorize loans with common risk attributes and these ratings are among the inputs into our loss models utilized to develop CECL allowances. Our residential mortgage portfolios are similarly dependent on borrower credit worthiness and collateral values as measured by FICO scores and Loan-to-Value ratios. These risk attribute measurements are consistent with the metrics used to monitor and measure credit risk as disclosed in Note 3 – Loans.

We utilize macroeconomic forecasts issued by a third party as inputs to our ACL loss models. We use a baseline forecast over the contractual term of the asset for all our portfolios in our quantitative ACL calculations, and consider the forecast to be reasonable and supportable for the life of the loan. The variables listed below are most relevant for the CIT modeling suite.

•

Commercial real estate price index

•

Credit spreads

•

GDP growth rate

•

Home price index

•

Inflation

•

Manufacturing capacity utilization

•

Personal consumption

•

Unemployment rate

Management assumptions are used in various components of the CECL forecasting process including in the determination of exposure at default and qualitative adjustments. Exposure at default is determined by remaining term to maturity but is adjusted for prepayment assumptions on funded balances as well as credit conversion factor assumptions for unfunded commitments. Prepayment assumptions and credit conversion factors are based on current and historical experience. CIT’s process takes into consideration various internal and external risk factors, including forecast uncertainty with respect to scenario forecasts and sensitivity to changes in assumptions.

CIT’s CECL framework was developed to align with requirements under U.S. GAAP as well as regulatory guidance. CIT’s CECL approach uses one scenario as a baseline and then upside and downside scenarios are used to assess the sensitivity of losses in the portfolio to different economic forecasts. CIT has chosen to use alternative scenarios from a third party for its upside scenario and downside scenarios. Each quarter, CIT runs these alternative scenarios through the CECL models to generate lifetime loss estimates. CIT also adjusts certain assumptions by scenario, including loss given default and prepayment assumptions. The variances between the upside scenario and baseline as well as the downside and baseline are calculated and then a weighting adjustment factor is applied to the variances. Factors that are taken into consideration when determining the weighting adjustment factor include, but are not limited to, the following items.

•

Scenario probabilities

•

Balance of Risks: In assessing the variances between the upside and baseline and downside and baseline, CIT will have insight into whether risks are balanced or weighted to either the upside or downside.

•

Time Lag: CIT compares the scenarios at the end of the quarter to the scenario used earlier in the quarter to identify any significant changes.

•

Forecast Accuracy: Compare prior baseline scenario forecasts to actual economic statistics.

•

Economic Sentiment: Other notable sources with views on the economic environment (e.g., Federal Reserve) may also be considered.

2020 First Quarter ACL

CIT’s ACL on its loans increased from $483 million on December 31, 2019 to $1.1 billion on March 31, 2020 while the allowance for off-balance sheet credit exposures, predominantly for unfunded lending commitments and DPAs, increased from $37 million to $120 million over the same time period. The ACL increase of $628 million related to loans and the increase of $83 million for the allowance for off-balance sheet credit exposures has been driven by various factors, as described below.

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Allowance for Credit Losses and Allowance for Off-balance Sheet Credit Exposures (dollars in millions)

January 1: CECL Implementation and the MOB Acquisition resulted in an increase to the ACL of approximately $280 million; approximately $141 million of this increase was related to PCD loans and therefore did not impact CIT’s capital. The increase in the ACL consisted of:

•

CIT pre-MOB Acquisition: The transition from incurred loss to CECL on January 1, 2020 resulted in an ACL increase of $223.6 million for loans and approximately $8 million for off-balance sheet credit exposures. Approximately $120 million was related to the transition from PCI to PCD accounting. The CECL implementation resulted in a reduction to retained earnings totaling $82 million.

•

MOB Acquisition: The acquisition of MOB on January 1, 2020 included approximately $6.3 billion of loans and $57 million of net ACL for loans and approximately $8.5 million for the allowance for off-balance sheet credit exposures. The MOB Acquisition resulted in a one-time provision expense of $45 million.

March 31 (excluding COVID–19): Modest increases in the ACL from $763 million pre-COVID to $771 million at March 31, driven by individually evaluated loans.

March 31 (with COVID–19): CIT applied the March 20^th baseline scenario to reflect changes to macroeconomic forecasts as the pandemic accelerated globally, with downside adjustments to incorporate developments heading into quarter-end, which resulted in approximately $405 million of provision for credit losses.

•

Baseline scenario: CIT utilized a baseline scenario as of March 20, 2020 to reflect changes to macroeconomic forecasts as the pandemic accelerated globally. The scenario assumed return to economic growth in late 2020.

•

Added scenarios for downside adjustment: Throughout the month of March, macroeconomic forecasts were revised to incorporate the projected impacts of COVID-19. CIT analyzed various scenarios and used certain of these scenarios as inputs into its CECL models to quantify the sensitivity of the ACL to changes in the underlying macroeconomic forecast.

Volatile Scenario: CIT assessed the impact of a scenario as of March 27 which reflected a deeper V-shaped recession with significant stress in the second quarter of 2020, characterized by an 18% reduction in real GDP growth on an annualized basis, but then a rapid recovery in the third quarter of 2020.

Adverse Scenario: CIT also utilized a less volatile, but more prolonged U-shaped recession than the Baseline Scenario and Volatile Scenario that assumed an unemployment rate in excess of 7% from late 2020 through early 2022.

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First Quarter 2020 Scenarios

The following table presents the key assumptions utilized in the scenarios described above followed by discussion thereon:


	First Quarter Scenarios
	Updated Baseline (March 20)	Volatile Scenario (March 27)	Adverse Scenario
GDP
Second quarter⁽¹⁾	-4.9%	-18.3%	-4.6%
Third quarter⁽¹⁾	-0.3%	10.9%	-2.7%
Fourth quarter⁽¹⁾	1.30%	2.4%	-0.1%
Return to growth	fourth quarter 2020	third quarter 2020	first quarter 2021
2020: 1-year⁽²⁾	-1.3%	-2.5%	-2.3%
2020-2021: 2-year⁽³⁾	2.4%	1.4%	0.4%
Unemployment
Second quarter	5.1%	8.7%	5.6%
Third quarter	5.4%	6.3%	6.5%
Fourth quarter	5.9%	6.5%	7.0%
Peak: third quarter 2020 - fourth quarter 2021	6.1%	6.7%	7.4%

⁽¹⁾	Real GDP Growth, annualized % change.

⁽²⁾	Real GDP Level, fourth quarter 2020 – fourth quarter 2019 % change.

⁽³⁾	Real GDP Level, fourth quarter 2021 – fourth quarter 2019 % change.

The process incorporated direct inputs and assumptions in the modeling process while other judgmental factors were also taken into consideration when determining applicability of alternative scenarios. CIT’s ACL reflected the model results from the Baseline Scenario and an additional scenario adjustment that captured a portion of the variance between the Adverse Scenario and the Baseline Scenario. Model results from the Volatile scenario were evaluated and it was observed that results were more severe than the Baseline but generally not as severe as the Adverse scenario. The outcomes observed from these scenarios ranged from $1,071 million to $1,233 million, implying coverage ratios of 2.78% to 3.20%. CIT determined that there would be no adjustment for an upside scenario in the first quarter. The ACL was $1,111 million at March 31, 2020, resulting in a coverage ratio of 2.88% (excluding the allowance for off-balance sheet credit exposure). The table below summarizes direct inputs included in the CECL model results as well as considerations used to inform management judgment on the weighting of alternative scenarios.


Direct Inputs	Weighting Considerations
Use of alternative scenarios in quantitative models	Analysis of multiple scenario forecasts taken into consideration, including quarter-end scenario updates that included increases to quarterly volatility in GDP and unemployment
Increase in expected default rates / PD	Third party guidance for scenario weighting distributions
Increase in loss severity / LGD	Unprecedented government support for unemployed and small businesses may impact historical correlation between macro variables and credit defaults
Reduced prepayment rates	CECL results reviewed relative to prior stress tests

Adoption of Topic 326-30 – Debt Securities

We use two third-party models to develop loss estimates in our AFS debt securities portfolio – one for structured assets (e.g., MBS) and one for non-structured assets – (e.g., Corporate Bonds, Municipal Bonds, Treasury Securities). Both models use the discounted cash flow method (“DCF”) where the present value of expected cash flow is compared against amortized cost to derive the ECL.

The transition impact of adopting CECL was insignificant and had no equity impact, as these assets were reflected at fair value, with an adjustment to OCI under our legacy accounting. The negligible adjustment reflected the fact that the majority of the portfolio qualified for the zero-loss assumption. The total provision for the quarter related to the AFS debt securities portfolio was not significant.

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Goodwill

The consolidated goodwill balance as at March 31, 2020 was $146.8 million, or approximately 0.25% of total assets. CIT acquired MOB on January 1, 2020, which resulted in the recording of $121.6 million of goodwill. The determination of estimated fair values required management to make certain estimates about discount rates, future expected cash flows (that may reflect collateral values), market conditions and other future events that are highly subjective in nature.

Goodwill is assessed for impairment at least annually, or more often if events or circumstances have changed significantly from the annual test date that would indicate a potential reduction in the fair value of the reporting unit (“RU”) below its carrying value. Impairment exists when the carrying amount of goodwill exceeds its implied fair value.

The overall deterioration in the macroeconomic environment, challenges in the banking industry, including the low rate environment, and, in particular, the sustained decrease in CIT’s and its peer companies’ stock prices triggered the need for an interim goodwill impairment test in the first quarter of 2020. Based on the interim assessment, the Company recorded an impairment of $344.7 million during the quarter, including the goodwill associated with the Commercial Finance and Real Estate Finance RUs within the Commercial Banking segment of $301.5 million and the Consumer Banking RU of $43.2 million. This goodwill was primarily related to the OneWest Bank acquisition. With respect to the $121.6 million of goodwill associated with reporting units from the MOB Acquisition, there was no trigger event identified. In addition, the $25 million of goodwill associated with the Rail RU was assessed and was determined not to be impaired.

The determination of the impairment charge requires significant judgment and the consideration of past and current performance and overall macroeconomic and regulatory environments. There is risk that if the RU does not meet forecasted financial assumptions used in the analysis, such as asset volume and returns and deposit growth and rate projections, there could be incremental goodwill impairment. In addition to financial results, other inputs to the valuation, such as the discount rate and market assumptions, including stock prices of peer companies, could negatively affect the estimated fair value of the RUs in the future.

These risks are heightened given that the duration and severity of the COVID-19 pandemic and its future impact on the macro-economic environment is unknown. Refer to Item 1A. Risk Factors for further details on the risks to the Company associated with the COVID-19 pandemic. Adverse changes to the factors described above could result in additional future impairment of CIT’s goodwill and indefinite-lived intangible assets. The Company will continue to monitor the macroeconomic conditions throughout the year to identify potential impairment in the remaining goodwill or intangible assets.

GLOSSARY OF TERMS

We have added the following definitions to our Glossary of key terms that was included in Item 1. Business Overview in our 2019 Form 10-K.

Adjusted Allowance for Credit Losses (“AACL”) includes only the allowances that have been charged against earnings or retained earnings, which excludes allowances on PCD assets. The Revised CECL Transition Rule utilizes AACL in the calculation of the 25% scaling factor transition amount. The scaling factor is calculated by multiplying 25% to the difference between the AACL at CECL adoption and the AACL as of the end of the quarter during the first two years of the transition.

Allowance for Credit Losses (“ACL”) reflects the estimated credit losses over the full remaining expected life of the portfolio. See CECL below.

Available Cash consists of the unrestricted portions of balances in ‘Cash and due from banks’ and ‘Interest-bearing cash’, with additional restrictions to account for cash not accessible for liquidity, such as vault cash and deposits in transit.

Capital Conservation Buffer (“CCB”) is the excess 2.5% of each of the capital tiers that banks are required to hold in accordance with Basel III rules, above the minimum CET 1 Capital, Tier 1 capital and Total capital requirements, designed to absorb losses during periods of economic stress.

Current Expected Credit Losses (“CECL”) introduces a forward-looking “expected loss” model to estimate credit losses over the full remaining expected life of the portfolio, rather than the incurred loss model under previous U.S. GAAP standards. Estimates of ECL under the new model will be based on relevant information about past events, current conditions, and reasonable and supportable forecasts regarding the collectability of reported amounts. Generally, the new model requires that an ACL be estimated and recognized for financial assets measured at amortized cost within its scope.

High Quality Liquid Securities consist of readily-marketable, unpledged securities, as well as securities pledged but not drawn against at the FHLB and available for sale; generally, comprises Treasury and Agency securities held outright or via reverse repurchase agreements.

Liquid Assets includes Available Cash and High Quality Liquid Securities.

Pledged Assets are those required under the collateral maintenance requirement in connection with borrowing availability at the FHLB, which are comprised primarily of consumer and commercial real estate loans and also include certain High Quality Liquid Securities that are available for secured funding at the FHLB.

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Purchased Credit Deteriorated (“PCD”) financial assets are acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer’s assessment. Previously reported PCI loans under ASC 310-30 transitioned to PCD loans upon adoption of CECL.

SELECT DATA

Select Data (dollars in millions)

	Quarters Ended
	March 31,			December 31,			March 31,
	2020			2019			2019
Select Statement of Operations Data
Net interest revenue	$	287.9		$	251.6		$	280.9
Provision for credit losses		513.9			22.6			33.0
Total non-interest income		340.4			326.6			314.5
Total non-interest expenses		811.0			375.7			405.4
(Loss) income from continuing operations, net of tax		(624.3	)		130.6			119.2
Net (loss) income		(624.3	)		130.6			118.9
Net (loss) income available to common shareholders		(628.1	)		121.1			118.9
Per Common Share Data
Diluted (loss) income per common share - continuing operations	$	(6.40	)	$	1.27		$	1.18
Diluted (loss) income per common share		(6.40	)		1.27			1.18
Book value per common share		54.24			61.37			57.05
Tangible book value per common share		51.12			56.77			52.42
Dividends declared per common share		0.35			0.35			0.35
Dividend payout ratio		NM			27.5	%		29.8	%
Performance Ratios
Return (available to common shareholders; continuing operations) on average common stockholders' equity		NM			8.40	%		8.47	%
Return (available to common shareholders; continuing operations) on average tangible common stockholders' equity		NM			9.41	%		9.67	%
Net finance revenue as a percentage of average earning assets		2.73	%		3.01	%		3.20	%
Return (available to common shareholders; continuing operations) on AEA		NM			1.04	%		1.03	%
Average total equity to average total asset ratio		11.4	%		12.6	%		12.2	%
Balance Sheet Data
Loans including receivables pledged	$	38,530.4		$	30,998.9		$	31,247.0
Allowance for credit losses		(1,111.1	)		(482.6	)		(487.5	)
Operating lease equipment, net		7,488.1			7,319.7			6,989.5
Total cash and deposits		3,698.5			2,685.6			1,320.2
Investment securities		6,128.6			6,276.8			7,844.1
Total assets		58,936.7			50,832.8			50,781.5
Deposits		42,162.1			35,139.5			34,949.0
Borrowings		8,094.3			6,473.4			6,570.9
Total common stockholders’ equity		5,335.8			5,814.0			5,584.5
Credit Quality
Non-accrual loans as a percentage of loans		0.99	%		1.05	%		0.95	%
Net charge-offs as a percentage of average loans		0.57	%		0.40	%		0.43	%
Allowance for credit losses as a percentage of loans		2.88	%		1.56	%		1.56	%
Capital Ratios
CET1 capital ratio		9.7	%		12.0	%		12.0	%
Tier 1 capital ratio		10.7	%		13.2	%		12.7	%
Total capital ratio		12.9	%		15.4	%		14.8	%

NM – not meaningful

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NON-GAAP FINANCIAL MEASUREMENTS

The SEC adopted regulations that apply to any public disclosure or release of material information that includes a non-GAAP financial measure. A non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance or financial position that may either exclude or include amounts or is adjusted in some way to the effect of including or excluding amounts, as compared to the most directly comparable measure calculated and presented in accordance with GAAP financial statements. These measures are not in accordance with, or a substitute for, U.S. GAAP and may be different from or inconsistent with non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, we will also generally define it or present the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, along with a reconciliation of the differences between the U.S. GAAP financial measure and the non-GAAP financial measure. In instances when the non-GAAP balance is an aggregation of various line items from a financial statement, we will present those exact line item names and balances for the user to clearly see the components. We will also describe the measure and explain why we believe the measure to be useful.

The accompanying Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosure about Market Risk contain certain non-GAAP financial measures. We intend our non-GAAP financial measures to provide transparency about, or an alternate means of assessing our operating results and financial position to our investors, analysts and management.

These non-GAAP measures are not in accordance with, or a substitute for, GAAP and may be different from or inconsistent with non-GAAP financial measures used by other companies.

1.	Total Net Revenue, Net Finance Revenue, and Net Operating Lease Revenue

Total net revenue is a non-GAAP measure that represents the combination of NFR and other non-interest income and is an aggregation of all sources of revenue for the Company. The source of the data is various statement of income line items, arranged in a different order, and with different subtotals than included in the statement of income, and therefore is considered non-GAAP. Total net revenue is used by management to monitor business performance and is used by management to calculate a net efficiency ratio, as discussed below.

NFR is a non-GAAP measure that represents the level of revenue earned on our loans and leases and reflects interest income plus rental income on operating lease equipment less interest expense and expenses relating to operating lease equipment. NFR is another key performance measure used by management to monitor portfolio performance. NFR is also used to calculate a performance margin, NFM.

Due to the nature of our loans and leases, which include a higher proportion of operating lease equipment than most BHCs, certain financial measures commonly used by other BHCs are not as meaningful for our Company. As such, given our asset composition includes a high level of operating lease equipment, NFM as calculated below is used by management, compared to net interest margin (“NIM”) (a common metric used by other bank holding companies), which does not fully reflect the earnings of our portfolio because it includes the impact of debt costs of all our assets but excludes the net operating lease revenue.

Net operating lease revenue is a non-GAAP measure that represents the combination of rental income on operating leases less depreciation on operating lease equipment and maintenance and other operating lease expenses. The net operating lease revenues measurement is used by management to monitor portfolio performance and returns on its purchased equipment.

Total Net Revenue and Net Operating Lease Revenue (dollars in millions)

	Quarters Ended
	March 31,			December 31,			March 31,
	2020			2019			2019
Interest income	$	513.6		$	481.4		$	516.5
Rental income on operating lease equipment		209.8			215.3			217.7
Finance revenue (Non-GAAP)		723.4			696.7			734.2
Interest expense		225.7			229.8			235.6
Depreciation on operating lease equipment		78.3			76.4			79.4
Maintenance and other operating lease expenses		53.6			40.7			49.8
Net finance revenue (NFR) (Non-GAAP)		365.8			349.8			369.4
Other non-interest income		130.6			111.3			96.8
Total net revenues (Non-GAAP)	$	496.4		$	461.1		$	466.2

NFR (Non-GAAP)	$	365.8		$	349.8		$	369.4
Net finance margin (NFR as a % of AEA)(NFM)(Non-GAAP)		2.73	%		3.01	%		3.20	%

Net Operating Lease Revenue
Rental income on operating leases	$	209.8		$	215.3		$	217.7
Depreciation on operating lease equipment		78.3			76.4			79.4
Maintenance and other operating lease expenses		53.6			40.7			49.8
Net operating lease revenue (Non-GAAP)	$	77.9		$	98.2		$	88.5

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2.	Operating Expenses and Net Efficiency Ratio

Operating expenses excluding restructuring costs and intangible asset amortization is a non-GAAP measure used by management to compare period over period expenses. We exclude restructuring costs and intangible amortization from operating expenses as they are charges resulting from our strategic initiatives and not our operating activity. In addition, we exclude other noteworthy items to gauge the underlying level of operating expenses. Non-GAAP operating expenses are reconciled to GAAP in the “Non-Interest Expenses” section table.

Another key performance metric gauges our expense usage via our net efficiency calculation. Net efficiency ratio is a non-GAAP measurement used by management to measure the level of operating expenses (before restructuring costs and intangible amortization) to total net revenues. The base ratio is derived by dividing the operating expenses (before restructuring costs and intangible amortization) by total net revenue (see components in Item 1 above). A lower result reflects a more efficient use of our expenses to generate revenue.

We present a second net efficiency calculation that excludes other noteworthy items in the numerator and denominator due to their episodic nature and size. (Restructuring costs are considered noteworthy items.) Due to the exclusions of the mentioned items, both calculations are considered non-GAAP measures.

See “Non-Interest Expenses” for operating expenses.

Net Efficiency Ratio (dollars in millions)

	Quarters Ended
	March 31,			December 31,			March 31,
	2020			2019			2019
Total net revenues (Non-GAAP)	$	496.4		$	461.1		$	466.2
Total net revenues, excluding noteworthy items (Non-GAAP)	$	496.4		$	461.1		$	466.2
Net efficiency ratio (Non-GAAP)		65.6	%		54.8	%		58.0	%
Net efficiency ratio, excluding noteworthy items (Non-GAAP)		62.2	%		54.8	%		58.0	%

3.	Earning Assets, Average Earning Assets (“AEA”) and Core Loans and Leases

Earning asset balances (period end balances) displayed in the table below are directly derived from the respective line items in the balance sheet. These represent revenue generating assets, and the average (AEA) of which provides a basis for management performance calculations, such as NFM and operating expenses as a percentage of AEA. The source of the data is various balance sheet line items, however, when aggregated, the total is considered non-GAAP. The average balances are based on daily balances.

Average Earnings Assets and Earning Assets (dollars in millions)

	Quarters Ended
	March 31,			December 31,			March 31,
	2020			2019			2019
Average Earning Assets (Non-GAAP)	$	53,684.7		$	46,503.7		$	46,169.3

	March 31,			December 31,			March 31,
Period End Earning Assets	2020			2019			2019
Loans	$	38,530.4		$	30,998.9		$	31,247.0
Operating lease equipment, net		7,488.1			7,319.7			6,989.5
Assets held for sale		73.2			32.1			79.4
Credit balances of factoring clients		(1,023.7	)		(1,176.2	)		(1,651.3	)
Interest-bearing cash		3,477.8			1,695.5			1,190.1
Investment securities and securities purchased under agreement to resell		6,128.6			7,226.8			8,444.1
Total earning assets (Non-GAAP)	$	54,674.4		$	46,096.8		$	46,298.8

Certain portfolios within the segments were being managed but were being either run-off or sold. These include the LCM portfolio and NSP in Corporate. In order to gauge the underlying level of loans and leases, management will exclude these portfolios when comparing to prior periods. By excluding these from the total of loans, operating lease equipment and AHFS balances on the balance sheet, this metric is considered non-GAAP, and is presented only to assist the reader in understanding how management views the underlying change in these asset levels in aggregate. To gauge the growth in the underlying portfolios, we then excluded the acquired assets of MOB. The following table reflects the average balances for the respective periods.

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Core Average Loans and Leases (dollars in millions)

	Quarters Ended
	March 31,		December 31,		March 31,
	2020		2019		2019
Total average loans (incl HFS, net of credit balances)	$	36,493.6	$	30,015.0	$	29,377.7
Total average operating lease equipment (incl HFS)		7,416.1		7,225.6		6,982.7
Total average loans and leases (Non-GAAP)		43,909.7		37,240.6		36,360.4
Average non-core portfolio, LCM		2,155.8		2,158.8		2,739.5
Average non-core portfolios, NSP		-		0.6		19.0
Average core loans and leases		41,753.9		35,081.2		33,601.9
Average MOB		6,281.6		-		-
Average core loans and leases, excluding MOB (Non-GAAP)	$	35,472.3	$	35,081.2	$	33,601.9

4.	Tangible Book Value, ROTCE and Tangible Book Value per Share

TBV, also referred to as tangible common equity, return on tangible common equity (“ROTCE”), and TBV per share are considered key financial performance measures by management, and are used by other financial institutions. TBV, as calculated and used by management, represents CIT’s common stockholders’ equity, less goodwill and intangible assets. See the Capital section (Tangible Book Value and per Share Amounts table) for calculation of TBV per share. TBV per share is calculated by dividing TBV by the outstanding number of common shares.

ROTCE measures CIT’s profitability applicable to common stockholders as a percentage of average tangible common equity. This measure is useful for evaluating the performance of CIT as it calculates the return available to common stockholders without the impact of intangible assets and deferred tax assets. The calculation is also presented adjusted for semiannual preferred dividends, to provide the user a normalized view as if the dividend was paid evenly through the year. The average adjusted tangible common equity is derived using averages of balances presented, based on daily balances for the period.

TBV, ROTCE and TBV per share are measurements used by management and users of CIT’s financial data in assessing CIT’s use of equity. We believe the use of ratios that utilize tangible equity provides additional useful information because they present measures of those assets that can generate income.

CIT management believes TBV, ROTCE and TBV per share are important measures for comparative purposes with other institutions, but are not defined under U.S. GAAP, and therefore are considered non-GAAP financial measures.

Tangible Book Value (dollars in millions)

	Quarters Ended
	March 31,			December 31,			March 31,
	2020			2019			2019
Total common shareholders' equity	$	5,335.8		$	5,814.0		$	5,584.5
Less: goodwill		146.8			369.9			369.9
Less: Intangible assets		160.1			66.0			83.4
Tangible book value (Non-GAAP, reconciled on Balance Sheet table)		5,028.9			5,378.1			5,131.2
Less: Disallowed deferred tax asset		-			-			(45.3	)
Tangible common equity for ROTCE (Non-GAAP)	$	5,028.9		$	5,378.1		$	5,085.9
Average tangible common equity (Non-GAAP)	$	5,268.1		$	5,327.5		$	5,114.5

(Loss) income from continuing operations available to common shareholders	$	(628.1	)	$	121.1		$	119.2
Goodwill impairment, after tax		339.0			-			-
Intangible asset amortization, after tax		6.9			4.2			4.4
Non-GAAP (loss) income from continuing operations - for ROTCE calculation	$	(282.2	)	$	125.3		$	123.6
Return on average tangible common equity (Non-GAAP)	NM				9.41	%		9.67	%
Non-GAAP (loss) income from continuing operations (from the following non-GAAP noteworthy table)	$	(238.4	)	$	121.1		$	119.2
Intangible asset amortization, after tax		6.9			4.2			4.4
Non-GAAP (loss) income from continuing operations - for ROTCE calculation, excluding noteworthy items	$	(231.5	)	$	125.3		$	123.6
Preferred dividend normalization		(4.7	)		4.7			(4.7	)
Non-GAAP income from continuing operations - for ROTCE calculation, excluding noteworthy items and preferred dividend normalization	$	(236.2	)	$	130.0		$	118.9
Return on average tangible common equity, after noteworthy items (Non-GAAP)	NM				9.41	%		9.67	%
Return on average tangible common equity, after noteworthy items and preferred dividend normalization	NM				9.76	%		9.30	%

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5.	Net loss excluding noteworthy items

Net loss excluding noteworthy items is a non-GAAP measure as it excludes items from the respective line item in the GAAP statement of income. Due to the size of noteworthy items, the Company believes that adjusting for these items provides the user of CIT’s financial information a measure of the underlying performance of the Company. The non-GAAP noteworthy items are summarized in the following categories: significant due to the size of the transaction; transactions pertaining to items no longer considered core to CIT’s on-going operations (e.g. sales of non-strategic portfolios); and other items, such as restructuring costs.

Net loss, Excluding Noteworthy Items (dollars in millions, except per share data)

			Pre-tax					After-Tax			Per
	Description	Line Item	Balance		Tax⁽²⁾			Balance			Share
Quarter Ended March 31, 2020
Net loss available to common shareholders								$	(628.1	)	$	(6.40	)
Continuing Operations	MOB day 1 provision	Provision for credit losses	$	44.8	$	(8.1	)		36.7			0.37
	MOB merger and integration costs	Operating expenses		17.1		(3.1	)		14.0			0.14
	Goodwill impairment	Goodwill impairment		344.7		(5.7	)		339.0			3.46
Non-GAAP net loss available to common shareholders, excluding noteworthy items⁽¹⁾								$	(238.4	)	$	(2.43	)

⁽¹⁾	Items may not sum due to rounding.

⁽²⁾	Income tax rates vary depending on the specific item and the entity location in which it is recorded.

6.	Effective Tax Rate Reconciliation

The provision for income taxes before noteworthy items and tax discrete items and the respective effective tax rate are non-GAAP measures, which management uses for analytical purposes to understand the Company’s underlying tax rate. Noteworthy items are presented in item 5 above, and discussed in various sections of the MD&A. The tax discrete items are discussed in the Income Tax section.

Effective Tax Rate Reconciliation - Noteworthy Items (dollars in millions)

	Quarters Ended
	March 31,			December 31,			March 31,
	2020			2019			2019
(Benefit) provision for income taxes - GAAP	$	(72.3	)	$	49.3		$	37.8
Income tax on noteworthy items		16.9			-			-
(Benefit) provision for income taxes, before noteworthy items - Non-GAAP		(55.4	)		49.3			37.8
Income tax - remaining discrete items		3.0			(3.2	)		2.4
(Benefit) provision for income taxes, before noteworthy and discrete tax items - Non-GAAP	$	(52.4	)	$	46.1		$	40.2
(Loss) income from continuing operations before (benefit) provision for income taxes - GAAP	$	(696.6	)	$	179.9		$	157.0
Noteworthy items before tax		406.6			-			-
Adjusted (loss) income from continuing operations before (benefit) provision for income taxes and discrete items - Non-GAAP	$	(290.0	)	$	179.9		$	157.0
Effective tax rate		10.4	%		27.4	%		24.1	%
Effective tax rate, excluding noteworthy items - Non-GAAP		19.1	%		27.4	%		24.1	%
Effective tax rate, excluding noteworthy and tax discrete items - Non-GAAP		18.1	%		25.6	%		25.6	%

7.	Regulatory

Included within this Form 10-Q are risk-weighted assets, risk-based capital and leverage ratios as calculated under the Basel III Rule, the Simplification Final Rule and the Revised CECL Transition Rule for the period ended March 31, 2020, and the Transition Final Rule for the period ended December 31, 2019. Such measures are considered key regulatory capital measures used by banking regulators, investors and analysts to assess CIT’s (as a BHC) regulatory capital position and to compare CIT to other financial institutions. For information on our capital ratios and requirements, see the “Capital” and “COVID-19 Pandemic Response” sections.

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FORWARD-LOOKING STATEMENTS

Certain statements contained in this document are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, as amended. All statements contained herein that are not clearly historical in nature are forward-looking and the words “anticipate,” “believe,” “could,” “expect,” “estimate,” “forecast,” “intend,” “plan,” “potential,” “project,” “target” and similar expressions are generally intended to identify forward-looking statements. Any forward-looking statements contained herein, in press releases, written statements or other documents filed with the Securities and Exchange Commission or in communications and discussions with investors and analysts in the normal course of business through meetings, webcasts, phone calls and conference calls, concerning our operations, economic performance and financial condition are subject to known and unknown risks, uncertainties and contingencies. Forward-looking statements are included, for example, in the discussions about:

•

our liquidity risk and capital management, including our capital plan, leverage, capital ratios, and credit ratings, our liquidity plan, and our plans and the potential transactions designed to enhance our liquidity and capital, to repay secured and unsecured debt, to issue qualifying capital instruments, including Tier 1 qualifying preferred stock and Tier 2 qualifying subordinated debt, and for a return of capital,

•	recent accounting pronouncements and their estimated impact on our business or financial performance.

•	our plans to change our funding mix, to access new sources of funding, and to broaden our deposit taking capabilities, and expanding our treasury management services,

•	our pending or potential acquisition and disposition plans, and the integration and restructuring risks inherent in such acquisitions,

•	our credit risk management and credit quality,

•	our asset/liability risk management,

•	our funding, borrowing costs and NFR,

•	our operational risks, including risk of operational errors, failure of operational controls, cybersecurity risks, success of systems enhancements and expansion of risk management and control functions,

•	our mix of portfolio asset classes, including changes resulting from growth initiatives, new business initiatives, new products, acquisitions and divestitures, new business and customer retention,

•	our legal risks, including the enforceability of our agreements, the impact of legal proceedings, and the impact of changes in laws and regulations,

•	our growth rates, and

•	our commitments to extend credit or purchase equipment.

Forward-looking statements also include statements relating to our continuing response to the COVID-19 pandemic. These statements include, but are not limited to, statements about:

•	the implementation of our business continuity plan, Including the ability of our employees to work remotely and the effectiveness of our systems and other critical technology;

•	our ability to staff our branches and other operations that cannot be operated remotely;

•	our ability to maintain and operate our systems supporting our customers, including ongoing access to online banking resources;

•	the potential effectiveness of relief measures for customers affected by COVID-19;

•	the anticipated levels at which customers will draw on outstanding lines of credit;

•	the strength of our capital and liquidity positions, the availability of contingent liquidity sources, and our ability to accurately predict capital and liquidity needs;

•	the strength of our lending portfolios and the adequacy of our allowance for credit losses; and

•	future opportunities after the COVID-19 pandemic subsides.

All forward-looking statements involve risks and uncertainties, many of which are beyond our control, which may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements expressed or implied in these statements. Forward-looking statements are based upon management’s estimates of fair values and of future costs, using currently available information. Factors, in addition to those disclosed in “Risk Factors”, that could cause such differences include, but are not limited to:

•	risks inherent in deposit funding, including reducing reliance on brokered deposits, increasing retail non-maturity accounts, and expanding treasury management services,

•	risks inherent in capital markets, including liquidity, changes in market interest rates and quality spreads, and our access to secured and unsecured debt markets,

•	risks inherent in a return of capital, including risks related to obtaining regulatory approval, the nature and allocation among different methods of returning capital, and the amount and timing of any capital return,

•	risks of actual or perceived economic slowdown, downturn or recession, including slowdown in customer demand for credit or increases in non-accrual loans or default rates,

•	industry cycles and trends, including in oil and gas, power and energy, telecommunications, information technology, and commercial and residential real estate,

•	uncertainties associated with risk management, including evaluating credit, adequacy of reserves for credit losses, prepayment risk, asset/liability risk, interest rate and currency risks, and cybersecurity risks,

•	risks of implementing new processes, procedures, and systems,

•

risks associated with the value and recoverability of leased equipment and related lease residual values, including railcars, telecommunication towers, technology and office equipment, information technology equipment, including data centers, and large and small industrial, medical, and transportation equipment,

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•	risks of failing to achieve the projected revenue growth from new business initiatives or the projected expense reductions from efficiency improvements,

•	application of goodwill accounting or fair value accounting in volatile markets,

•

regulatory changes and developments, including changes in laws or regulations governing our business and operations, or affecting our assets, including our operating lease equipment or changes in the regulatory environment, whether due to events or factors specific to CIT, or other large multi-national or regional banks, or the industry in general,

•	risks associated with dispositions of businesses or asset portfolios, including how to replace the income associated with such businesses or asset portfolios and the risk of residual liabilities from such businesses or portfolios,

•	risks associated with acquisitions of asset portfolios or businesses, such as MOB, including integrating technology and operations, merging cultures, and reducing duplication in personnel, policies, internal controls, and systems, and

•

the duration, extent and severity of the COVID-19 pandemic, as well as the responses of federal, state and local governments to the pandemic, including the impact across our business, operations and employees as well as the effect on our customers and service providers and on the economy and markets more generally.

Any or all of our forward-looking statements here or in other publications may turn out to be wrong, and there are no guarantees regarding our performance. We do not assume any obligation to update any forward-looking statement for any reason.

Item 4. Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision of and with the participation of management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities and Exchange Act of 1934, (the “Exchange Act”) as of March 31, 2020. Based on such evaluation our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

Except as noted below, there were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Mutual of Omaha Bank acquisition – On January 1, 2020, the Company acquired Mutual of Omaha Bank as described elsewhere in this report. The Company is still in the process of integrating policies, processes, internal controls, people, technology and operations relating to this transaction into our overall internal controls over financial reporting. As integration activities occur, management will modify existing internal controls and/or implement additional internal controls when necessary to appropriately address underlying risks. In addition, during this integration period, management has extended its oversight and monitoring processes that support internal control over financial reporting, and to-date, while this acquisition is considered a significant change to the Company’s internal control over financial reporting, management has not identified any risks or concerns that require escalation to the principal executive officer and principal financial officer of the Company. The Company will continue to closely monitor and evaluate the impact and magnitude of any related changes to our internal control over financial reporting until all integration activities have been completed.

Implementation of the Current Expected Credit Losses (“CECL”) (ASC 326) accounting standard – On January 1, 2020, CIT adopted new guidance on measuring credit losses on financial instruments using the CECL accounting standard. The adoption of CECL has resulted in the implementation of additional models and systems and has also led to the modification of existing, and the implementation of additional, internal controls related to data validation, enhanced disclosure requirements and governance related activities into our overall internal controls over financial reporting to appropriately address underlying risks. Management has extended its oversight and monitoring processes that support internal control over financial reporting, and, to date, although the result of the accounting standard change is considered a significant change to the Company’s internal control over financial reporting, management has not identified any risks or concerns that require escalation to the principal executive officer and principal financial officer of the Company.

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Part Two — Other Information

Item 1. Legal Proceedings

See Note 16 — Contingencies, in the Notes to the unaudited interim Condensed Consolidated Financial Statements in Part I, Item 1 — Financial Statements, which is incorporated by reference into this item.

Item 1A. Risk Factors

Risk factors remain unchanged during the quarter, except for the additional factor noted below. For a discussion of risk factors, see Part I, Item 1A. Risk Factors, of CIT’s 2019 Form 10-K, and Forward-Looking Statements of this Form 10-Q.

Our business, financial condition, liquidity, capital and results of operations have been, and will likely continue to be, adversely affected by the COVID-19 pandemic.

The COVID-19 pandemic has created economic and financial disruptions that have adversely affected, and are likely to continue to adversely affect, our business, financial condition, liquidity, capital and results of operations. The extent to which the COVID-19 pandemic will negatively affect our business, financial condition, liquidity, capital and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic, the direct and indirect impact of the pandemic on our employees, clients, counterparties and service providers, as well as other market participants, and actions taken by governmental authorities and other third parties in response to the pandemic.

The COVID-19 pandemic has contributed to (i) sudden and significant declines, and significant increases in volatility, in financial markets; (ii) ratings downgrades, credit deterioration and defaults in many industries, including transportation, natural resources, retail, hospitality and commercial real estate; (iii) customers drawing on credit lines to increase liquidity; and (iv) heightened cybersecurity, information security and operational risks as a result of work-from-home arrangements. In addition, many of our customers, counterparties and third-party service providers have been, and may further be, affected by “stay-at-home” orders, market volatility and other factors that increase their risks of business disruption or that may otherwise affect their ability to repay loans, perform under the terms of any agreements with us or provide other essential services. As a result, our credit, operational and other risks are generally expected to increase until the pandemic subsides.

Although we have a business continuity plan that is designed to provide for our continuing operation in case of potentially disruptive events, such as a global pandemic, there can be no guarantee that our plan will effectively address some or all of the effects of the COVID-19 pandemic. Our business operations may be disrupted if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, failures in systems or technology or other restrictions in connection with the pandemic, or if we are unable to maintain service in our branches, lockboxes, or other operations that cannot be operated remotely.

We continue to monitor the sectors that are most susceptible to economic uncertainty as a result of the COVID-19 pandemic. The COVID-19 pandemic has significantly reduced demand for goods and service for many of our customers and other businesses in sectors that we service. In the retail sector, our exposure is in the factoring business, principally in lines of credit, and to a lesser extent in the commercial real estate business. In the hospitality and transportation sectors, we have loan exposures to the restaurant, lodging, gaming, maritime, aviation and rail industries. The significant declines in the price of, and demand for, oil and gas may have negative effects on not only our loan exposures in the exploration and production sector, but may also lead to a decreased demand for our railcars, and could have a significant adverse effect on the demand for ships that are collateral for our loans. Further, we have exposure to small businesses through both equipment loans and leases and through SBA loans, which could be adversely affected by the extensive closure of businesses in many states during the COVID-19 pandemic. We also have exposure to single family residential mortgages, which could be adversely affected by job losses due to the economic dislocation resulting from the COVID-19 pandemic. Further, we have implemented several forms of temporary relief to our retail and commercial customers, including payment deferrals, suspension of foreclosures and evictions, and fee waivers for ATM transactions, overdrafts, and early withdrawal of certificates of deposit, which may adversely affect our revenue and results of operations or result in higher rates of default and increased credit losses in future periods.

The potential negative effects of the COVID-19 pandemic on us and the industries to which we are exposed resulted in substantial decreases in our stock price during the first quarter. With the decline in market values across our peers and our expected decrease in financial results in the current and forecasted economic environment, we recognized a significant impairment to our goodwill in the first quarter. If the effects of the COVID-19 pandemic cause continued or extended decline in the economic environment and our financial results, we may be required to recognize further impairment of our goodwill.

The effects of the COVID-19 pandemic on economic and market conditions have increased demands on credit facilities that we provide to our customers, which could have an adverse impact on our liquidity. In addition, these adverse developments may negatively affect our capital and leverage ratios. We previously announced that we were suspending repurchases of our common stock in connection with our acquisition of Mutual of Omaha Bank until our target 10.5% CET1 capital ratio was reached, which we originally projected to occur by the end of 2020. The COVID-19 pandemic may affect our ability to reach the 10.5% target, and, even if that target is reached, may cause us to continue suspension of repurchases or further reduce capital distributions to preserve capital and liquidity to meet our customers’ needs. Long-term adverse effects could also prevent us from satisfying minimum regulatory capital ratios. Further, although we continue to monitor our capital and liquidity, including through stress testing, there can be no guarantee that we will be able to accurately predict our future capital and liquidity needs.

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In addition to the potential impact on industries that we serve, we are also potentially impacted by increased cybersecurity attacks. In times of economic stress, there are typically increased attempts at cybersecurity attacks to exploit potential weaknesses. In particular, we believe there currently are increased attempts at phishing attacks, in which attackers pose as known persons or authorities to entice employees to reveal their network credentials. Although we have significant resources dedicated to cybersecurity, there is no guarantee that we will not fall victim to phishing attacks or other cybersecurity attacks, which could lead to unauthorized access to confidential customer information or disruption of our technology and systems.

Further, like most organizations, we are susceptible to key man risk, meaning the risk that key members of our executive management team, such as our Chairwoman and CEO, our CFO, the heads of our two operating segments, our Chief Risk Officer, our Chief Credit Officer, or our Chief Technology and Operations Officer become ill or are incapacitated. Although we have management succession plans in place, there is no guarantee that those plans will be successfully implemented or will succeed.

Governmental authorities worldwide have taken unprecedented measures to stabilize the markets and support economic growth. The success of these measures is unknown and they may not be sufficient to address the negative effects of COVID-19 or avert severe and prolonged reductions in economic activity.

The length of the pandemic and the efficacy of the extraordinary measures being put in place to address it are unknown. Other negative effects of COVID-19 that may impact our business, financial condition, liquidity, capital and results of operations cannot be predicted at this time. It is likely, however, that our business, financial condition, liquidity, capital and results of operations will continue to be adversely affected until the pandemic subsides. Until the pandemic subsides, we may experience increased draws on lines of credit, reduced revenues in certain commercial business lines and increased credit losses in our lending portfolios. Even after the pandemic subsides, the U.S. economy as well as most other major economies may struggle to reopen their economies and may continue to experience a recession, and we anticipate our businesses would be materially and adversely affected by a prolonged recession in the U.S. and other major markets.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no repurchases of our common stock during the quarter ended March 31, 2020.

Item 4. Mine Safety Disclosure

Not applicable

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Item 6. Exhibits

(a)

Exhibits

2.1		Agreement and Plan of Merger, by and among CIT Group Inc., IMB HoldCo LLC, Carbon Merger Sub LLC and JCF III HoldCo I L.P., dated as of July 21, 2014 (incorporated by reference to Exhibit 2.1 to Form 8-K filed July 25, 2014).
2.2		Amendment No. 1, dated as of July 21, 2015, to the Agreement and Plan of Merger, by and among CIT Group Inc., IMB HoldCo I L.P., Carbon Merger Sub LLC and JCF III HoldCo I L.P., dated as of July 21, 2014 (incorporated by reference to Exhibit 2.1 to Form 8-K filed July 27, 2015).
2.3		Agreement and Plan of Merger among Mutual of Omaha Insurance Company, Omaha Financial Holdings, Inc. Mutual of Omaha Bank, CIT Group Inc. and CIT Bank National Association, dated as of August 12, 2019 (incorporated by reference to Exhibit 2.1 to Form 8-K filed August 16, 2019).
3.1		Fourth Restated Certificate of Incorporation of the Company, as filed with the Office of the Secretary of State of the State of Delaware on May 17, 2016 (incorporated by reference to Exhibit 3.1 to Form 8-K filed May 17, 2016).
3.2		Amended and Restated By-laws of the Company, as amended through April 15, 2020 (filed herein).
3.3		Certificate of Designation of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A of CIT Group Inc., dated June 6, 2017 (incorporated by reference to Exhibit 3.1 to Form 8-K filed June 7, 2017).
3.4		Certificate of Designation of 5.625% Non-Cumulative Perpetual Preferred Stock, Series B of CIT Group Inc. (incorporated by reference to Exhibit 3.3 to our Form 8-A filed November 12, 2019).
4.1		Indenture, dated as of January 20, 2006, between CIT Group Inc. and The Bank of New York Mellon (as successor to JPMorgan Chase Bank N.A.) for the issuance of senior debt securities (incorporated by reference to Exhibit 4.3 to Form S-3 filed January 20, 2006).
4.2		Indenture, dated as of March 15, 2012, among CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, security registrar and authenticating agent (incorporated by reference to Exhibit 4.1 of Form 8-K filed March 16, 2012).
4.3		Third Supplemental Indenture, dated as of August 3, 2012, among CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, security registrar and authenticating agent (including the Form of 4.25% Senior Unsecured Note due 2017 and the Form of 5.00% Senior Unsecured Note due 2022) (incorporated by reference to Exhibit 4.2 to Form 8-K filed August 3, 2012).
4.4		Fourth Supplemental Indenture, dated as of August 1, 2013, among CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, security registrar and authenticating agent (including the Form of 5.00% Senior Unsecured Note due 2023) (incorporated by reference to Exhibit 4.2 to Form 8-K filed August 1, 2013).
4.5		Seventh Supplemental Indenture, dated as of March 9, 2018, by and among CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, security registrar and authenticating agent (including the Form of 4.125% Senior Unsecured Notes due 2021 and Form of 5.250% Senior Unsecured Notes due 2025) (incorporated by reference to Exhibit 4.2 to Form 8-K filed March 12, 2018).
4.6		Subordinated Indenture, dated as of March 9, 2018, between CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, security registrar and authenticating agent (incorporated by reference to Exhibit 4.3 to Form 8-K filed March 12, 2018).
4.7		First Supplemental Indenture, dated as of March 9, 2018, between CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, security registrar and authenticating agent (including the Form of 6.125% Subordinated Notes due 2028) (incorporated by reference to Exhibit 4.4 to Form 8-K filed March 12, 2018).
4.8		Eighth Supplemental Indenture, dated as of August 17, 2018 by and among CIT Group Inc., Wilmington Trust National Association as trustee and Deutsche Bank Trust Company Americas, as paying agent, security registrar and authenticating agent (including the Form of 4.750% Senior Unsecured Notes due 2024) (incorporated by reference to Exhibit 4.2 of Form 8-K filed August 17, 2018).
4.9		Second Supplemental Indenture, dated as of November 13, 2019, between CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, security registrar and authenticating agent (including the Form of 4.125% Fixed-to-Fixed Rate Subordinated Notes due 2029) (incorporated by reference to Exhibit 4.2 on Form 8-K filed November 13, 2019).
4.10		Description of CIT Group Inc.’s Securities Registered under Section 12 of the Exchange Act Certain instruments defining the rights of holders of long-term debt securities of CIT and its subsidiaries are omitted pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K (incorporated by reference to Exhibit 4.10 to Form 10-K filed on February 20, 2020). CIT hereby undertakes to furnish to the SEC, upon request, copies of such instruments.
10.1*		CIT Group Inc. Omnibus Incentive Plan (incorporated by reference to exhibit 10.1 to Form 10-Q filed November 2, 2018).
10.2*		CIT Group Inc. Supplemental Retirement Plan (As Amended and Restated Effective as of January 1, 2008) (incorporated by reference to Exhibit 10.27 to Form 10-Q filed May 12, 2008).
10.3*		CIT Group Inc. Supplemental Savings Plan (As Amended and Restated Effective as of January 1, 2008) (incorporated by reference to Exhibit 10.28 to Form 10-Q filed May 12, 2008).
10.4*		New Executive Retirement Plan of CIT Group Inc. (As Amended and Restated as of January 1, 2008) (incorporated by reference to Exhibit 10.29 to Form 10-Q filed May 12, 2008).
10.5*		Form of CIT Group Inc. Long-term Incentive Plan Restricted Stock Unit Director Award Agreement (Annual Grant) (incorporated by reference to Exhibit 10.40 to Form 10-Q filed August 9, 2010).
10.6		Stockholders Agreement, by and among CIT Group Inc. and the parties listed on the signature pages thereto, dated as of July 21, 2014 (incorporated by reference to Exhibit 10.1 to Form 8-K filed July 25, 2014).
10.7*		Offer Letter, dated October 26, 2015, between CIT Group Inc. and Ellen R. Alemany, including Attached Exhibits. (incorporated by reference to Exhibit 10.39 to Form 10-Q filed November 13, 2015).
10.8		CIT Employee Severance Plan (As Amended and Restated Effective January 1, 2017) (incorporated by reference to Exhibit 10.40 to Form 10-Q filed November 9, 2016).
10.9		Form of CIT Group Inc. Omnibus Incentive Plan Restricted Stock Unit Director Award Agreement (Three Year Vesting) (incorporated by reference to Exhibit 10-48 to Form 10-K filed on March 16, 2017).

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10.10		Form of CIT Group Inc. Omnibus Incentive Plan Performance Share Unit Award Agreement (2017) (with ROTCE Performance Measure and TSR Modifier) (incorporated by reference to Exhibit 10.39 to Form 10-Q filed May 8, 2017).
10.11		Form of CIT Group Inc. Omnibus Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (2017) (incorporated by reference to Exhibit 10.40 to Form 10-Q filed May 8, 2017).
10.12		Form of CIT Group Inc. Omnibus Incentive Plan Performance Share Unit Award Agreement (2018) (incorporated by reference to Exhibit 10.23 to Form 10-Q filed May 4, 2018).
10.13		Form of CIT Group Inc. Omnibus Incentive Plan Restricted Stock Unit Award Agreement (with performance Based Vesting) (2018) (incorporated by reference to Exhibit 10.24 to Form 10-Q filed May 4, 2018).
10.14		Amendment No. 4 to Second Amended and Restated Revolving Credit and Guaranty Agreement, dated as of March 9, 2020, among CIT Group Inc., certain subsidiaries of CIT Group Inc., as Guarantors, the Lenders party thereto from time to time and Bank of America, N.A., as Administrative Agent and L/C Issuer (filed herein).
10.15		Form of CIT Group Inc. Omnibus Incentive Plan Performance Share Unit Award Agreement (2019) (incorporated by reference to Exhibit 10.19 to Form 10-Q filed May 3, 2019).
10.16		Form of CIT Group Inc. Omnibus Incentive Plan Restricted Stock Unit Award Agreement (with performance Based Vesting) (2019) (incorporated by reference to Exhibit 10.20 to Form 10-Q filed May 3, 2019).
10.17		Form of CIT Group Inc. Omnibus Incentive Plan Performance Share Unit Award Agreement (2020) (filed herein).
10.18		Form of CIT Group Inc. Omnibus Incentive Plan Restricted Stock Unit Award Agreement (with performance Based Vesting) (2020) (filed herein).

31.1		Certification of Ellen R. Alemany pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Commission, as promulgated pursuant to Section 13(a) of the Securities Exchange Act and Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of John Fawcett pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Commission, as promulgated pursuant to Section 13(a) of the Securities Exchange Act and Section 302 of the Sarbanes-Oxley Act of 2002.
32.1***		Certification of Ellen R. Alemany pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2***		Certification of John Fawcett pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1		The following materials from CIT Group Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Changes in Stockholders' Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements.
104		The cover page from CIT Group Inc.’s Form 10-Q for the quarterly period ended March 31, 2020, formatted inline XBRL (contained in exhibit 101.1).

*	Indicates a management contract or compensatory plan or arrangement.

**	Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission as part of an application for granting confidential treatment pursuant to the Securities Exchange Act of 1934, as amended.

***	This information is furnished and not filed for purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any filing under the Securities Act of 1933.

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Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


May 5, 2020	CIT GROUP INC.

	/s/ John Fawcett
	John Fawcett
	Executive Vice President and
	Chief Financial Officer

	/s/ Edward K. Sperling
	Edward K. Sperling
	Executive Vice President and Controller

103

Exhibit 3.2

CIT GROUP INC.

AMENDED AND RESTATED BY-LAWS
As Amended Through April 15, 2020

Article I
OFFICES

Section 1.01.Registered Office

. The registered office of CIT Group Inc. (the “Corporation”) in the State of Delaware shall be in the City of Wilmington, County of New Castle, State of Delaware.

Section 1.02.Other Offices

. The Corporation may also have one or more offices at such other places, either within or without the State of Delaware, as the board of directors of the Corporation (the “Board of Directors”) may from time to time determine or as the business of the Corporation may require.

Section 1.03.Location of Books and Records

. The books and records of the Corporation may be kept (subject to the provisions of the laws of the State of Delaware) at any place, either within or without the State of Delaware, as from time to time may be determined by the Board of Directors.

Article II
STOCKHOLDERS

Section 2.01.Place of Meetings

. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof.

Section 2.02.Annual Meetings

. The annual meeting of stockholders shall be held on such date and at such time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which meeting the stockholders shall elect a Board of Directors, and transact such other business as may properly be brought before the meeting. Written notice of the annual meeting of stockholders stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Any previously scheduled annual meeting of stockholders may be postponed by resolution of the Board of Directors upon public notice given on or prior to the date previously scheduled for such meeting.

Section 2.03.Special Meetings

. Unless otherwise prescribed by law or by the Certificate of Incorporation of the Corporation (including any certificates of designation with respect to any of the Corporation’s Preferred Stock (“Preferred Stock”), the “Certificate of

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Incorporation”), special meetings of stockholders of the Corporation may be called at any by (i) the Chairman of the Board of Directors or secretary of the Corporation at the request in writing of stockholders holding at least 25% of the voting power of the issued and outstanding common stock of the Corporation entitled to vote generally for the election of directors or (ii) by the Board of Directors in its discretion. Such a written request of stockholders shall state the purpose or purposes of the proposed meeting.

Except as otherwise required by law or by the Certificate of Incorporation, no business shall be transacted at any special meeting of stockholders other than the items of business stated in the notice of meeting.

Section 2.04.Notice of Meetings

. A notice of meeting, stating the place, day and hour of the meeting and, in the case of special meetings, the purpose or purposes for which such special meeting is called, shall be prepared and delivered by the Corporation not less than ten days nor more than sixty days before the date of the meeting, either personally, or by mail, or to the extent and in the manner permitted by applicable law.

Section 2.05.Quorum and Adjournment

. Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority of the voting power of the outstanding shares of the Corporation entitled to vote generally in the election of directors (the “Voting Stock”), represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, except that when specified business is to be voted on by a class or series voting as a class, the holders of a majority of the voting power of the shares of such class or series shall constitute a quorum for the transaction of such business. The Chairman of the Board or the holders of a majority of the voting power of the shares of Voting Stock so represented may adjourn the meeting from time to time, whether or not there is a quorum (or, in the case of specified business to be voted on by a class or series, the Chairman of the Board or the holders of a majority of the voting power of the shares of such class or series so represented may adjourn the meeting with respect to such specified business). No notice of the time and place of adjourned meetings need be given except as required by law. The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

Section 2.06.Notice of Stockholder Business and Nominations; Proxy Access

(a)Nature of Business at Meetings of Stockholders. Only such business (other than nominations for election to the Board of Directors, which must comply with the provisions of Section 2.06(b)) may be transacted at an Annual Meeting of Stockholders as is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the Annual Meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (c) otherwise properly brought before the Annual Meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.06(a) and on the record date for the determination of stockholders entitled to notice of and to vote at such Annual Meeting and (ii) who complies with the notice procedures set forth in this Section 2.06(a).

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In addition to any other applicable requirements, for business to be properly brought before an Annual Meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

To be timely, a stockholder’s notice to the Secretary must be delivered to or be mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred and twenty (120) days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that the Annual Meeting is called for a date that is not within twenty-five (25) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10^th) day following the day on which such notice of the date of the Annual Meeting was mailed or such public announcement of the date of the Annual Meeting was made, whichever first occurs. In no event shall the adjournment or postponement of an Annual Meeting, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

To be in proper written form, a stockholder’s notice to the Secretary must set forth the following information:

(a) as to each matter such stockholder proposes to bring before the Annual Meeting, a brief description of the business desired to be brought before the Annual Meeting and the reasons for conducting such business at the Annual Meeting, and

(b) as to the stockholder giving notice and the beneficial owner, if any, on whose behalf the proposal is being made, (i) the name and address of such person, (ii) (A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any affiliates or associates of such person, (B) the name of each nominee holder of shares of all stock of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of such shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation; (iii) a description of all agreements, arrangements, or understandings (whether written or oral) between or among such person, or any affiliates or associates of such person, and any other person or persons (including their names) in connection with the proposal of such business and any material interest of such person or any affiliates or associates of such person, in such business, including any anticipated benefit therefrom to such person, or any affiliates or associates of such person, (iv) a representation that the stockholder giving notice intends to appear in person or by proxy at the Annual Meeting to bring such business before the

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meeting; and (v) any other information relating to such person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies by such person with respect to the proposed business to be brought by such person before the Annual Meeting pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder.

A stockholder providing notice of business proposed to be brought before an Annual Meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.06(a) shall be true and correct as of the record date for determining the stockholders entitled to receive notice of the Annual Meeting and such update and supplement shall be delivered to or be mailed and received by the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for determining the stockholders entitled to receive notice of the Annual Meeting.

No business shall be conducted at the Annual Meeting of Stockholders except business brought before the Annual Meeting in accordance with the procedures set forth in this Section 2.06(a); provided, however, that, once business has been properly brought before the Annual Meeting in accordance with such procedures, nothing in this Section 2.06(a) shall be deemed to preclude discussion by any stockholder of any such business. If the chairman of an Annual Meeting determines that business was not properly brought before the Annual Meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

Nothing contained in this Section 2.06(a) shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act (or any successor provision of law).

(b)Nomination of Directors; Advance Notice of Stockholder Nominations. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Certificate of Incorporation with respect to the right of holders of Preferred Stock to nominate and elect a specified number of directors in certain circumstances. Nominations of persons for election to the Board of Directors may be made at any Annual Meeting of Stockholders (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.06(b) and on the record date for the determination of stockholders entitled to notice of and to vote at such Annual Meeting and (ii) who complies with the notice procedures set forth in this Section 2.06(b), or (c) by any stockholder of the Corporation or group of stockholders in accordance with Section 2.06(c). Nominations of persons for election to the Board of Directors may be made at any Special Meeting of Stockholders called for the purpose of electing directors, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.06(b) and on the record date for the determination of stockholders entitled to notice of and to vote at such Special Meeting and (ii) who complies with the notice procedures set forth in this Section 2.06(b). For the avoidance of doubt, stockholders are not permitted to

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nominate, in accordance with Section 2.06(c), persons for election to the Board of Directors at a Special Meeting of Stockholders.

In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

To be timely, a stockholder’s notice to the Secretary must be delivered to or be mailed and received at the principal executive offices of the Corporation (a) in the case of an Annual Meeting, not less than ninety (90) days nor more than one hundred and twenty (120) days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that the Annual Meeting is called for a date that is not within twenty-five (25) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10^th) day following the day on which such notice of the date of the Annual Meeting was mailed or such public announcement of the date of the Annual Meeting was made, whichever first occurs; and (b) in the case of a Special Meeting of Stockholders called for the purpose of electing directors, not later than the close of business on the tenth (10^th) day following the day on which notice of the date of the Special Meeting was mailed or public announcement of the date of the Special Meeting was made, whichever first occurs.

In no event shall the adjournment or postponement of an Annual Meeting or a Special Meeting called for the purpose of electing directors, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

To be in proper written form, a stockholder’s notice to the Secretary must set forth the following information:

(a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) (A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any affiliates or associates of such person, (B) the name of each nominee holder of shares of all stock of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of such shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation; and (iv) any other information relating to such person that would be required to be disclosed in a proxy statement or

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other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder; and

(b) as to the stockholder giving the notice, and the beneficial owner, if any, on whose behalf the nomination is being made, (i) the name and record address of such person; (ii) (A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any affiliates or associates of such person, (B) the name of each nominee holder of shares of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation; (iii) a description of all agreements, arrangements, or understandings (whether written or oral) between such person, or any affiliates or associates of such person, and any proposed nominee or any other person or persons (including their names) pursuant to which the nomination(s) are being made by such person, and any material interest of such person, or any affiliates or associates of such person, in such nomination, including any anticipated benefit therefrom to such person, or any affiliates or associates of such person; (iv) a representation that the stockholder giving notice intends to appear in person or by proxy at the Annual Meeting or Special Meeting to nominate the persons named in its notice; and (v) any other information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitation of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.

Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. Such notice must also include an executed questionnaire, representation and agreement pursuant to Section 2.06(e) (which form of questionnaire shall be provided by the secretary of the Corporation upon written request), which must be submitted within 10 days of the stockholder’s notice.

A stockholder providing notice of any nomination proposed to be made at an Annual Meeting or Special Meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.06(b) or Section 2.06(c) shall be true and correct as of the record date for determining the stockholders entitled to receive notice of the Annual Meeting or Special Meeting, and such update and supplement shall be delivered to or be mailed and received by the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for

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determining the stockholders entitled to receive notice of such Annual Meeting or Special Meeting.

No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 2.06(b) or Section 2.06(c). If the Chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

(c)Proxy Access for Director Nominations.

(i)Definitions. For purposes of Section 2.06, the following terms shall have the following meanings:

(A)“Authorized Group Member” shall mean, with respect to any nomination by a Nominator Group, the member of that Nominator Group that is authorized to act on behalf of all members of that Nominator Group with respect to matters relating to the nomination, including withdrawal of the nomination.

(B)“Compensation Arrangement” shall mean any direct or indirect compensatory, payment or other financial agreement, arrangement or understanding with any person or entity other than the Corporation, including, without limitation, any agreement, arrangement or understanding with respect to any direct or indirect compensation, reimbursement or indemnification in connection with candidacy, nomination, service or action as a nominee or as a director.

(C)“Eligible Stockholder” shall mean a person who has either (1) been a record holder of the shares of common stock of the Corporation used to satisfy the eligibility requirements in Section 2.06(c)(iv) continuously for the required three-year period or (2) provides to the Secretary of the Corporation, within the time period referred to in Section 2.06(c)(v), evidence of continuous Ownership of such shares for such three-year period from one or more securities intermediaries.

(D)“Maximum Number” shall mean that number of directors constituting the greater of (1) two or (2) 20% of the total number of directors of the Corporation on the last day on which a Nomination Notice may be submitted pursuant to this Section 2.06(c) (rounded down to the nearest whole number), which number shall be reduced as set forth in Section 2.06(c)(iii)(A).

(E)“Minimum Number” shall mean 3% of the number of outstanding shares of common stock of the Corporation as of the most recent date for which such amount is given in any filing by the Corporation with the Securities and Exchange Commission prior to the submission of the Nomination Notice.

(F)“Nominating Stockholder” shall mean any Eligible Stockholder or group of up to 20 stockholders (a “Nominator Group”) that, collectively as a group, satisfy the requirements to qualify as an Eligible Stockholder, that (1) has

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(individually and collectively, in the case of a Nominator Group) satisfied all applicable conditions and complied with all applicable procedures set forth in this Section 2.06(c) (including, without limitation, the timely submission of a Nomination Notice that meets the requirements set forth in this Section 2.06(c)), and (2) has nominated a Stockholder Nominee.

(G)“Nomination Notice” shall mean all information and documents that a Nominating Stockholder is required to submit to the Secretary of the Corporation pursuant to Section 2.06(c)(vi).

(H)“Own” shall mean possession, with respect to those outstanding shares of common stock of the Corporation entitled to vote generally for the election of all directors of the Corporation, of both: (1) the full voting and investment rights pertaining to the shares; and (2) the full economic interest in (including the opportunity for profit and risk of loss on) such shares; provided, that the number of shares calculated in accordance with clauses (1) and (2) shall not include any shares: (I) sold by such stockholder or any of its affiliates in any transaction that has not been settled or closed, including any short sale; (II) borrowed by such stockholder or any of its affiliates for any purposes or purchased by such stockholder or any of its affiliates pursuant to an agreement to resell; or (III) subject to any option, warrant, forward contract, swap, contract of sale, or other derivative or similar agreement entered into by such stockholder or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of outstanding shares of stock of the Corporation, in any such case which instrument or agreement has, or is intended to have, or if exercised by either party thereto would have, the purpose or effect of reducing in any manner, to any extent or at any time in the future, such stockholder’s or affiliates’ full right to vote or direct the voting of any such shares, and/or hedging, offsetting or altering to any degree any gain or loss arising from the full economic Ownership of such shares by such stockholder or affiliate, other than any such arrangements solely involving a national or multi-national multi-industry market index. A stockholder shall “Own” shares held in the name of a nominee or other intermediary so long as the stockholder retains the right to instruct how the shares are voted with respect to the election of directors and the right to direct the disposition thereof and possesses the full economic interest in the shares. A stockholder’s Ownership of shares shall be deemed to continue during any period in which the stockholder has loaned such shares or delegated any voting power over such shares by means of a proxy, power of attorney or other instrument or arrangement which in either case is revocable at any time by the stockholder; provided, however, in the event of a loan, the stockholder has the power to recall such loaned shares on five business days’ notice. The terms “Owned,” “Owning,” “Ownership” and other variations of the word “Own” shall have correlative meanings. Whether shares constitute shares Owned shall be decided by the Board of Directors in its reasonable determination, which determination shall be conclusive and binding on the Corporation and its stockholders.

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(I)“Stock Exchange Rules” shall mean the rules of any stock exchange on which the Corporation’s securities are traded.

(J)“Stockholder Nominee” shall mean any person nominated for election pursuant to this Section 2.06(c).

(K)“Voting Commitment” shall mean any agreement, arrangement or understanding with, and any commitment or assurance to, any person or entity as to how a person, if elected as a director of the Corporation, will act or vote on any issue or question.

(ii)Proxy Access at Annual Meetings. Subject to the provisions of this Section 2.06(c), if expressly requested in the relevant Nomination Notice, the Corporation shall include in its proxy statement for any Annual Meeting of Stockholders:

(A)the name of any Stockholder Nominee, which shall also be included on the Corporation’s form of proxy and ballot;

(B)disclosure about the Stockholder Nominee and the Nominating Stockholder required under the rules of the Securities and Exchange Commission or other applicable law to be included in the proxy statement;

(C)any statement included by the Nominating Stockholder in the Nomination Notice for inclusion in the proxy statement in support of the Stockholder Nominee’s election to the Board of Directors (subject, without limitation, to Section 2.06(c)(vii)(C)), if such statement does not exceed 500 words; and

(D)any other information that the Corporation or the Board of Directors determines, in its discretion, to include in the proxy statement relating to the nomination of the Stockholder Nominee, including, without limitation, any statement in opposition to the nomination, information relating to any Compensation Arrangement and/or Voting Commitment, and any of the information provided pursuant to this Section 2.06(c).

For the avoidance of doubt, the provisions of this Section 2.06(c) shall not apply to a Special Meeting of Stockholders, and the Corporation shall not be required to include a director nominee of a stockholder or group of stockholders in the Corporation’s proxy statement or form of proxy or ballot for any Special Meeting of Stockholders.

(iii)Maximum Number of Stockholder Nominees.

(A)The Corporation shall not be required to include in the proxy statement for an Annual Meeting of Stockholders more Stockholder Nominees than the Maximum Number. In the event that one or more vacancies for any reason occurs on the Board of Directors after the deadline set forth in Section 2.06(c)(v) but before the date of the Annual Meeting and the Board of Directors resolves to reduce the size of the Board of Directors in connection therewith, the

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Maximum Number shall be calculated based on the number of directors in office as so reduced. The Maximum Number for a particular Annual Meeting shall be reduced by:

(1)Stockholder Nominees whose nominations for election at such Annual Meeting are subsequently withdrawn;

(2)Stockholder Nominees who the Board of Directors itself decides to nominate for election at such Annual Meeting;

(3)the number of incumbent directors or director candidates (including, without limitation, candidates who are not Stockholder Nominees) that in either case will be included in the Corporation’s proxy statement for an Annual Meeting of Stockholders as an unopposed (by the Corporation) nominee pursuant to any agreement, arrangement or other understanding with any stockholder or group of stockholders; and

(4)the number of incumbent directors who had been Stockholder Nominees at any of the preceding two Annual Meetings of Stockholders and whose reelection at the upcoming Annual Meeting is being recommended by the Board of Directors.

(B)Any Nominating Stockholder submitting more than one Stockholder Nominee for inclusion in the Corporation’s proxy materials pursuant to this Section 2.06(c) shall rank such Stockholder Nominees based on the order that the Nominating Stockholder desires such Stockholder Nominees to be selected for inclusion in the Corporation’s proxy materials. In the event that the number of Stockholder Nominees submitted by Nominating Stockholders pursuant to this Section 2.06(c) exceeds the Maximum Number, the highest ranking Stockholder Nominee who meets the requirements of this Section 2.06(c) from each Nominating Stockholder will be selected for inclusion in the Corporation’s proxy materials until the Maximum Number is reached, going in order of the amount (largest to smallest) of shares of stock of the Corporation that each Nominating Stockholder disclosed as Owned in its respective Nomination Notice submitted to the Corporation. This selection process will continue with the next highest ranked nominees as many times as necessary, following the same order each time, until the Maximum Number is reached.

(iv)Eligible Stockholders.

(A)An Eligible Stockholder or Nominator Group may submit a nomination in accordance with this Section 2.06(c) only if the person or group (in the aggregate) has continuously Owned at least the Minimum Number (as adjusted for any stock splits, stock dividends, subdivisions, combinations, reclassifications, recapitalizations or similar events) of shares of the Corporation’s common stock throughout the three-year period preceding and including the date of submission of the Nomination Notice, and continues to Own at least the Minimum Number of shares through the date of the Annual Meeting. No shares may be attributed to more than one Eligible Stockholder. The following shall be

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treated as one Eligible Stockholder or one member of a Nominator Group if such Eligible Stockholder or member of a Nominator Group shall provide together with the Nomination Notice documentation that demonstrates compliance with the following criteria: (1) funds under common management and investment control; (2) funds under common management and funded primarily by the same employer; or (3) a “family of investment companies” or a “group of investment companies” (each as defined in or under the Investment Company Act of 1940, as amended).

For the avoidance of doubt, in the event of a nomination by a Nominator Group, any and all requirements and obligations for a given Eligible Stockholder (including, without limitation, each and every fund or company that comprises the Nominator Group) that are set forth in this Section 2.06(c), including the minimum holding period, shall apply to each member of such Nominator Group; provided, however, that the Minimum Number shall apply to the Ownership of the Nominator Group in the aggregate. Should any stockholder withdraw from a Nominator Group at any time prior to the Annual Meeting of Stockholders, the Nominator Group shall only be deemed to Own the shares held by the remaining members of that Nominator Group.

(B)No stockholder shall be permitted to be in more than one Nominator Group, and if any stockholder appears as a member of more than one Nominator Group, or as a member of a Nominator Group and as a Nominating Stockholder without any such group, such stockholder shall be deemed to be a member of only the Nominator Group that has the largest Ownership position as reflected in the Nomination Notice and is not permitted to act as a Nominating Stockholder separate from such Nominator Group.

(v)Timely Nomination Notice. To be timely, a Nomination Notice must be delivered to or be mailed and received at the principal executive offices of the Corporation not less than one hundred and twenty (120) days nor more than one hundred and fifty (150) days prior to the one-year anniversary of the date (as stated in the Corporation’s proxy materials relating to that Annual Meeting) that the Corporation first mailed its proxy statement for the Annual Meeting of the previous year, except where information or documents are required to be provided after the date the Nomination Notice is first submitted, as set forth in this Section 2.06(c); provided, however, that in the event that the Annual Meeting is called for a date that is not within twenty-five (25) days before or after the anniversary date of the immediately preceding Annual Meeting of Stockholders, the Nomination Notice to be timely must be so received not later than the close of business on the tenth (10^th) day following the day on which such notice of the date of the Annual Meeting was mailed or such public announcement of the date of the Annual Meeting was made, whichever first occurs. In no event shall the adjournment or postponement of an Annual Meeting, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a Nomination Notice.

(vi)Nomination Notice. The Nomination Notice shall consist of, collectively, the following information, documents and agreements which shall, for avoidance of

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doubt, be compiled, completed and submitted by the Nominating Stockholder or its representatives at its own cost:

(A)documentary evidence in the form of one or more written statements from the record holder of the shares (and from each intermediary through which the shares are or have been held during the requisite three-year holding period, provided that each such intermediary must be a participant in the Depository Trust Company or an affiliate of a participant in the Depository Trust Company) verifying and certifying that, as of a date within seven calendar days prior to the date of the Nomination Notice, the Nominating Stockholder Owns, and has continuously Owned for the preceding three years, the Minimum Number of shares, and the Nominating Stockholder’s agreement to provide, within five business days after the record date for the Annual Meeting, documentary evidence in the form of written statements from the record holder and intermediaries verifying and certifying the Nominating Stockholder’s continuous Ownership of the Minimum Number of shares through the record date;

(B)an undertaking to provide immediate notice if the Nominating Stockholder ceases to Own the Minimum Number of shares prior to the date of the Annual Meeting;

(C)a copy of the Schedule 14N (or any successor form) relating to the Stockholder Nominee, completed and filed with the Securities and Exchange Commission by the Nominating Stockholder as applicable, in accordance with Securities and Exchange Commission rules;

(D)the written consent of each Stockholder Nominee to being named in the Corporation’s proxy statement, form of proxy and ballot as a nominee and to serving as a director if elected;

(E)a written notice of the nomination of such Stockholder Nominee that includes the following additional information, agreements, representations and warranties by the Nominating Stockholder (including, for the avoidance of doubt, each member of a Nominator Group):

(1)the information and other deliverables that would be required to be set forth in a stockholder’s notice of nomination pursuant to Section 2.06(b), as if the Nominating Stockholder were the proposing stockholder under that section;

(2)to the extent not included in the response to paragraph (1) above, a detailed description of all material relationships, between or among the Nominating Stockholder, on the one hand, and each Stockholder Nominee, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 of Regulation S−K (or its successor Item) if the Nominating Stockholder were the “registrant” for purposes of such item and the Stockholder Nominee, were a director or executive officer of such registrant;

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(3)a detailed description of all communications by such Nominating Stockholder with any other stockholder or beneficial owner of any securities of the Corporation regarding such Stockholder Nominee;

(4)the details of any relationship that existed within the past three years and that would have been described pursuant to Item 6(e) of Schedule 14N (or any successor item) if it existed on the date of submission of the Schedule 14N;

(5)a representation and warranty that the Nominating Stockholder did not acquire, and is not holding, securities of the Corporation for the purpose or with the effect of influencing or changing control of the Corporation;

(6)a representation and warranty that the Nominating Stockholder has not nominated and will not nominate for election to the Board of Directors at the Annual Meeting any person other than such Nominating Stockholder’s Stockholder Nominee(s);

(7)a representation and warranty that the Nominating Stockholder has not engaged in and will not engage in a “solicitation” within the meaning of Rule 14a-1(l) under the Exchange Act with respect to the Annual Meeting, other than with respect to such Nominating Stockholder’s Stockholder Nominee(s) or any nominee of the Board of Directors;

(8)a representation and warranty that the Nominating Stockholder has not engaged in and will not engage in, other than with respect to such Nominating Stockholder’s Stockholder Nominee(s) or any nominee of the Board of Directors, (I) an exempt solicitation as described in Rule 14a-2(b) under the Exchange Act, or (II) any communication, as described in Rule 14a-1(l)(2)(iv) under the Exchange Act, stating how the Nominating Stockholder intends to vote at the Annual Meeting and the reasons therefor;

(9)a representation and warranty that the Nominating Stockholder will not use or distribute any proxy card other than the Corporation’s proxy card in soliciting stockholders in connection with the election of a Stockholder Nominee at the Annual Meeting;

(10)a representation and warranty that the Stockholder Nominee’s candidacy or, if elected, membership on the Board of Directors would not violate applicable state or federal law or Stock Exchange Rules;

(11)a representation and warranty that the Stockholder Nominee: (A) qualifies as independent under the Stock Exchange Rules and any publicly disclosed standards used by the Board of Directors in determining and disclosing the independence of the directors; and (B) is not and has not been subject to any event specified in Rule 506(d)(1) of

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Regulation D (or any successor rule) under the Securities Act of 1933 or Item 401(f) of Regulation S-K (or any successor rule) under the Exchange Act, without reference to whether the event is material to an evaluation of the ability or integrity of the Stockholder Nominee;

(12)a representation and warranty that the Nominating Stockholder satisfies the eligibility requirements set forth in Section 2.06(c)(iv);

(13)a representation and warranty that the Nominating Stockholder will continue to satisfy the eligibility requirements described in Section 2.06(c)(iv) through the date of the Annual Meeting;

(14)the details of any position of the Stockholder Nominee as an officer or director of any competitor (that is, any entity that provides products or services that compete with or are alternatives to the principal products produced or services provided by the Corporation or its affiliates) of the Corporation, within the three years preceding the submission of the Nomination Notice;

(15)the details of any position of the Stockholder Nominee as a director, trustee, officer or employee with management functions for any (I) depository institution, depository holding company that is not affiliated with the Corporation, each as defined in the Depository Institution Management Interlocks Act, as amended (the “Interlocks Act”) and the rules and regulations thereunder, or (II) entity that has been designated as a systemically important financial institution pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended (the “Dodd-Frank Act”) and the rules and regulations thereunder;

(16)if desired, a statement for inclusion in the proxy statement in support of the Stockholder Nominee’s election to the Board of Directors. Any such statement shall not exceed 500 words and shall fully comply with Section 14 of the Exchange Act and the rules and regulations thereunder; and

(17)in the case of a nomination by a Nominator Group, the designation by all group members of one Authorized Group Member;

(F)an executed agreement (which form of agreement shall be provided by the secretary of the Corporation upon written request), which must be submitted within ten (10) days of the Nominating Stockholder’s first submission of any information required by this Section 2.06(c)(vi), pursuant to which the Nominating Stockholder (including each member of a Nominator Group) agrees:

(1)to comply with all applicable laws, rules and regulations in connection with the nomination, solicitation and election;

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(2)to file any written solicitation or other communication with the Corporation’s stockholders relating to one or more of the Corporation’s directors or director nominees or any Stockholder Nominee with the Securities and Exchange Commission, regardless of whether any such filing is required under any rule or regulation or whether any exemption from filing is available for such materials under any rule or regulation;

(3)to assume all liability stemming from any action, suit or proceeding concerning any actual or alleged legal or regulatory violation arising out of any communication by the Nominating Stockholder or the Stockholder Nominee nominated by such Nominating Stockholder with the Corporation, its stockholders or any other person, including, without limitation, the Nomination Notice;

(4)to indemnify and hold harmless (jointly with all other members of a Nominator Group, if applicable) the Corporation and each of its directors, officers and employees individually against any liability, loss, damages, expenses or other costs (including attorneys’ fees) incurred in connection with any action, suit or proceeding (whether threatened, pending or completed), whether legal, judicial administrative or investigative, against the Corporation or any of its directors, officers or employees arising out of or relating to a failure or alleged failure of the Nominating Stockholder or Stockholder Nominee to comply with, or any breach or alleged breach of, its, or his or her, as applicable, obligations, agreements or representations under or pursuant to this Section 2.06(c), or otherwise arising out of any nomination, solicitation or other activity by any Eligible Stockholder or any member of a Nominator Group in connection with its efforts pursuant to this Section 2.06(c);

(5)to promptly (and in any event within 48 hours of discovering such misstatement or omission) notify the Corporation and any other recipient of any misstatement or omission if information included in the Nomination Notice, or any other communication by the Nominating Stockholder (including with respect to any member of a Nominator Group) with the Corporation, its stockholders or any other person in connection with the nomination or election ceases to be true and accurate in all material respects (or omits a material fact necessary to make the statements made not misleading), and promptly notify the Corporation and any other recipient of the information that is required to correct the misstatement or omission; and

(6)in the event that the Nominating Stockholder (including any member of a Nominator Group) has failed to continue to satisfy the eligibility requirements described in Section 2.06(c)(iv), to promptly notify the Corporation; and

(G)an executed questionnaire, representation and agreement pursuant to Section 2.06(e) (which form of questionnaire shall be provided by the secretary

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of the Corporation upon written request), which must be submitted within 10 days of the Nominating Stockholder’s first submission of any information required by this Section 2.06(c)(vi).

The information and documents required by this Section 2.06(c)(vi) shall be provided with respect to and executed by the Nominating Stockholder (and each member of a Nominator Group), and provided with respect to the persons specified in Instructions 1 and 2 to Items 6(c) and (d) of Schedule 14N (or any successor item) in the case of a Nominating Stockholder or any member of a Nominator Group. The Nomination Notice shall be deemed submitted on the date on which all the information and documents referred to in this Section 2.06(c)(vi) (other than such information and documents required to be provided after the date the Nomination Notice is first submitted) have been delivered to or, if sent by mail, received by the secretary of the Corporation.

(vii)Exclusion or Disqualification of Stockholder Nominees.

(A)If, after the deadline for submitting a Nomination Notice as set forth in Section 2.06(c)(v), a Nominating Stockholder becomes ineligible or withdraws its nomination or a Stockholder Nominee becomes ineligible or unwilling to serve on the Board of Directors, whether before or after the mailing of the definitive proxy statement, the Corporation:

(1)shall not be required to include in its proxy statement or on any ballot or form of proxy the Stockholder Nominee or any successor or replacement nominee proposed by the Nominating Stockholder or by any other Nominating Stockholder; and

(2)may otherwise communicate to its stockholders, including without limitation by amending or supplementing its proxy statement or ballot or form of proxy, that the Stockholder Nominee will not be included as a Stockholder Nominee in the proxy statement or on any ballot or form of proxy and will not be voted on at the Annual Meeting.

(B)Notwithstanding anything to the contrary contained in this Section 2.06(c), the Corporation may omit from its proxy materials any Stockholder Nominee, and any information concerning such Stockholder Nominee (including a Nominating Stockholder’s statement in support), and in such case such nomination shall be disregarded and no vote on such Stockholder Nominee will occur (notwithstanding that proxies in respect of such vote may have been received by the Corporation), and the Nominating Stockholder may not, after the last day on which a Nomination Notice would be timely, cure in any way any defect preventing the nomination of the Stockholder Nominee, if:

(1)the Corporation receives a notice (whether or not subsequently withdrawn) that a stockholder intends to nominate any candidate for election to the Board of Directors at the Annual Meeting pursuant to the advance notice requirements for stockholder nominees set forth in Section 2.06(b);

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(2)the Nominating Stockholder has engaged in a “solicitation” within the meaning of Rule 14a-1(l) under the Exchange Act with respect to the Annual Meeting, other than with respect to such Nominating Stockholder’s Stockholder Nominee(s) or any nominee of the Board of Directors;

(3)the Nominating Stockholder has engaged in, other than with respect to such Nominating Stockholder’s Stockholder Nominee(s) or any nominee of the Board of Directors, (I) an exempt solicitation as described in Rule 14a-2(b) under the Exchange Act, or (II) any communication, as described in Rule 14a-1(l)(2)(iv) under the Exchange Act, stating how the Nominating Stockholder intends to vote at the Annual Meeting and the reasons therefor;

(4)the Nominating Stockholder or the Authorized Group Member, as applicable, or any qualified representative thereof, does not appear at the Annual Meeting to present the nomination submitted in accordance with this Section 2.06(c);

(5)the Board of Directors, acting in good faith, determines that such Stockholder Nominee’s nomination or election to the Board of Directors would result in the Corporation violating or failing to be in compliance with these By-Laws or the Certificate of Incorporation, or any applicable law, rule or regulation to which the Corporation is subject, including the Stock Exchange Rules;

(6)the Stockholder Nominee was nominated for election to the Board of Directors pursuant to this Section 2.06(c) at one of the Corporation’s two preceding Annual Meetings of Stockholders and either withdrew from or became ineligible or unavailable for election at such Annual Meeting or received a vote of less than 25% of the shares of common stock entitled to vote for such Stockholder Nominee;

(7)the Stockholder Nominee has been, within the past three years, an officer or director of a competitor, as defined for purposes of Section 8 of the Clayton Antitrust Act of 1914, as amended;

(8)the Stockholder Nominee is a director, trustee, officer or employee with management functions for any (I) depository institution, depository holding company that is not affiliated with the Corporation, each as defined in the Interlocks Act and the rules and regulations thereunder, or (II) entity that has been designated as a systemically important financial institution pursuant to the Dodd-Frank Act and the rules and regulations thereunder;

(9)the Stockholder Nominee’s election as a member of the Board of Directors would cause or otherwise require the Corporation to seek, or assist in the seeking of, advance approval or to obtain, or assist in the obtaining of, an interlock waiver pursuant to the rules or regulations of

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the Board of Governors of the Federal Reserve System or the Office of the Comptroller of the Currency, United States Department of the Treasury;

(10)the Nominating Stockholder has failed to continue to satisfy the eligibility requirements described in Section 2.06(c)(iv), any of the representations and warranties made in the Nomination Notice ceases to be true and accurate in all material respects (or omits a material fact necessary to make the statement made not misleading), the Stockholder Nominee becomes unwilling or unable to serve on the Board of Directors or any violation or breach occurs of any of the obligations, agreements, representations or warranties of the Nominating Stockholder or the Stockholder Nominee under or pursuant to this Section 2.06(c).

(C)Notwithstanding anything to the contrary contained in this Section 2.06(c), the Corporation may omit from its proxy statement, or may supplement or correct, any information, including all or any portion of the statement in support of the Stockholder Nominee included in the Nomination Notice, if:

(1)such information is not true in all material respects or omits a material statement necessary to make the statements made not misleading;

(2)such information directly or indirectly impugns the character, integrity or personal reputation of, or directly or indirectly makes charges concerning improper, illegal or immoral conduct or associations, without factual foundation, with respect to, any individual, corporation, partnership, association or other entity, organization or governmental authority;

(3)the inclusion of such information in the proxy statement would otherwise violate the Securities and Exchange Commission proxy rules or any other applicable law, rule or regulation; or

(4)the inclusion of such information in the proxy statement would impose a material risk of liability upon the Corporation.

(D)The Corporation may solicit against, and include in the proxy statement its own statement relating to, any Stockholder Nominee.

(viii)Interpretation. The Board of Directors (and any other person or body authorized by the Board of Directors, including, without limitation, the chairman of the relevant Annual Meeting) shall have the power and authority to interpret this Section 2.06(c) and to make any and all determinations necessary or advisable to apply this Section 2.06(c) to any persons, facts or circumstances, including the power to determine (A) whether one or more stockholders or beneficial owners qualifies as an Eligible Stockholder or Nominator Group, as applicable, (B) whether a Nomination Notice complies with this Section 2.06(c), (C) whether a Stockholder Nominee satisfies the qualifications and requirements in this Section 2.06(c), and (D) whether any and all requirements of this Section 2.06(c) have been satisfied. Any such interpretation or

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determination adopted in good faith by the Board of Directors (or any other person or body authorized by the Board of Directors, including, without limitation, the chairman of the relevant Annual Meeting) shall be binding on all persons, including the Corporation and its stockholders (including any beneficial owners). The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedures, and the defective nomination shall be disregarded.

(d)General. For purposes of this Section 2.06, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(e)Submission of Questionnaire, Representation and Agreement. To be eligible to be a nominee for election or reelection, and to serve, as a director of the Corporation, a person must deliver (in accordance with the time periods prescribed for delivery of notice under Section 2.06(b) or Section 2.06(c), as applicable) to the Secretary at the Corporation’s principal place of business a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (i) is not and will not become a party to (a) any Voting Commitment that has not been disclosed to the Corporation or (b) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (ii) is not and will not become a party to any Compensation Arrangement (a) in connection with such person’s nomination or candidacy for director that has not been disclosed to the Corporation or (b) in connection with service or action as a director, (iii) will comply with all informational and similar requirements of applicable insurance and other laws and regulations, (iv) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, if elected as a director of the Corporation, will be in compliance with, and will in the future comply with, all applicable laws (including, without limitation, fiduciary duty requirements), policies and guidelines of the Corporation, including, without limitation, those relating to corporate governance, conflict of interest, confidentiality, stock ownership and securities trading, (v) if elected as a director of the Corporation, will act in the best interests of the Corporation and its stockholders and not in the interests of individual constituencies, and (vi) will promptly provide to the Corporation such other information as it may reasonably request.

Section 2.07.Chairman and Secretary of the Meeting

Meetings of the stockholders shall be presided over by the Chairman of the Board or the Chief Executive Officer, or if neither the Chairman nor the Chief Executive Officer is present, any officer designated by the Chairman of the Board or the Chief Executive Officer to act as chairman, or if the Chairman and Chief Executive Officer are not present and neither the Chairman nor the Chief Executive Officer has designated a chairman, by a chairman to be chosen at the meeting. The Secretary of the Corporation, or in his absence, any person appointed by the chairman of the meeting, shall act as secretary of the meeting and shall keep the minutes thereof. The order of business at all meetings of the stockholders and the procedure at the

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meeting, including such regulation of the manner of voting and the conduct of discussion, shall be as determined by the chairman of the meeting.

Section 2.08.Voting Rights

. At any meeting of stockholders, every stockholder entitled to vote may vote in person or by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no proxy shall be voted after three years from its date, unless such proxy provides for a longer period. Every proxy shall be executed in writing by the stockholder or by his or her authorized representative, or otherwise as provided under the Delaware General Corporation Law.

Section 2.09.Record Date

. For the purpose of determining the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or for the purpose of determining stockholders entitled to receive payment of any dividend or other distribution or the allotment of any rights, or for the purpose of any other action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of any such meeting, shall not be more than ten (10) days after the date on which the Board of Directors, by resolution, fixes a record date for any such consent in writing, and shall not be more than sixty (60) days prior to any other action.

Section 2.10.List of Stockholders

. For a period of at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting arranged in alphabetical order for each class of stock, and showing their addresses and their record holdings as of the record date shall be open for examination by any stockholder, for any purpose germane to the meeting, during ordinary business hours, at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list also shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. This list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

Section 2.11.Inspectors

. The Board of Directors may, and to the extent required by law shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting, decide upon the qualification of voters, certify the number of shares represented at the meeting, count the votes, decide the results and make a certified, written report thereof. The Board of Directors may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the chairman of the meeting may, and to the extent required by law shall, appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability.

Article III
DIRECTORS

Section 3.01.General Powers

. The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors. In addition to the powers and

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authorities by these By-Laws expressly conferred upon them, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Certificate of Incorporation or these By-Laws required to be exercised or done by the stockholders.

Section 3.02.Number, Term of Office and Election

. Subject to the rights of the holders of any Preferred Stock to elect directors under any specified circumstances, the entire Board of Directors shall consist of not less than three (3) nor more than fifteen (15) members, the exact number of which shall be fixed from time to time by resolution adopted by the affirmative vote of a majority of the entire Board of Directors. A nominee for director shall be elected to the Board of Directors if the votes cast “for” such nominee’s election exceed the votes cast “against” such nominee’s election; provided, however, that directors shall be elected by a plurality of the votes cast at any meeting of stockholders for which (i) the Secretary of the Corporation receives a notice that a stockholder has nominated a person for election to the Board of Directors in compliance with (A) the advance notice requirements for stockholder nominees for director set forth in Article II, Section 2.06(b) of these By-Laws or (B) the proxy access requirements for stockholder nominees for director set forth in Article II, Section 2.06(c) of these By-Laws, and (ii) such nomination has not been withdrawn by such stockholder on or before the tenth day before the Corporation first mails its notice of meeting for such meeting to the stockholders. If directors are to be elected by a plurality of the votes cast, stockholders shall not be permitted to vote against a nominee. Votes cast shall not include abstentions with respect to the election of directors.

Subject to his or her earlier death, resignation or removal as provided in Sections 3.04 or 3.05, each director shall hold office until the annual meeting of the stockholders next ensuing after his or her election and until his or her successor is elected and shall have qualified. Directors need not be stockholders.

Section 3.03.Quorum

. At all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business. The act of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as otherwise provided in the Delaware General Corporation Law, the Certificate of Incorporation, or these By-Laws. If a quorum shall not be present at any meeting of the Board of Directors, a majority of the directors present thereat may adjourn the meeting from time to time without further notice other than announcement at the meeting. If permitted by applicable law, the directors present at a duly authorized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum.

Section 3.04.Resignation

. Any director may resign at any time by giving written notice of his or her resignation to the Corporation. A resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt, and, unless otherwise specified therein, the acceptance of a resignation shall not be necessary to make it effective.

Section 3.05.Removal. Subject to any rights of holders of Preferred Stock, any director may be removed from office with or without cause by the holders of a simple majority of the voting power of the outstanding shares of Voting Stock, voting together as one class.

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Section 3.06.Vacancies

. Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, vacancies resulting from death, resignation, retirement, disqualification, removal from office or other cause, and newly created directorships resulting from any increase in the authorized number of directors, may be filled only by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors, or the sole remaining director, and directors so chosen shall hold office for a term expiring at the next annual meeting of stockholders and until their successors shall have been duly elected and qualified, subject to their prior death, resignation, retirement disqualification or removal from office. No decrease in the number of authorized directors constituting the Board of Directors shall shorten the term of any incumbent director.

Section 3.07.Meetings

(a)Meetings of the Board of Directors shall be held at such place within or without the State of Delaware as may from time to time be fixed by resolution of the Board or as may be specified in the call of any meeting. In the absence of any such designation, the meetings shall be held at the principal executive offices of the Corporation. Regular meetings of the Board of Directors shall be held six times each year on a bi-monthly basis and special meetings may be held at any time upon the call of the Chairman of the Board or the Chief Executive Officer or the President or, at the request in writing of a majority of the directors, by the Secretary.

(b)A meeting of the Board of Directors may be held without notice immediately after or before the annual meeting of stockholders at the same place at which such meeting was held or as soon as practicable after the annual meeting of stockholders on such date and at such time and place as the Board of Directors determines from time to time. For all other meetings of the Board of Directors, the Secretary or an Assistant Secretary shall give notice to each director of the time and place of the meeting by (a) mailing such notice by United States mail not later than the tenth (10^th) day preceding the day on which such meeting is to be held, (b) sending such notice via courier not later than the fourth (4^th) business day preceding the day on which such meeting is to be held or (c) sending such notice by facsimile or electronic mail transmission or other form of electronic communication or delivering such notice personally or by telephone, in each case, not later than during the second (2^nd) day immediately preceding the day on which such meeting is to be held. Notice of any meeting need not be given to any director who shall submit, either before or after the time stated therein, a signed waiver of notice or who shall attend the meeting, other than for the express purpose of objecting at the beginning thereof to the transaction of any business because the meeting is not lawfully called or convened. Notice of an adjourned meeting, including the place, date and time of the new meeting, shall be given to all directors not present at the time of the adjournment, and also to the other directors unless the place, date and time of the new meeting are announced at the meeting at the time at which the adjournment is taken.

(c)The Chairman of the Board shall preside at all meetings of the Board of Directors at which he shall be present. In his or her absence, the Lead Director shall preside at all meetings of the Board of Directors at which he or she shall be present and in the absence of the Lead Director, the Board of Directors shall choose a chairman of each meeting who shall preside thereat.

Section 3.08.Dividends

. To the extent permitted by law, the Board of Directors shall have full power and discretion, subject to the provisions of the Certificate of Incorporation and

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the terms of any other corporate document or instrument binding upon the Corporation, to determine what, if any, dividends or distributions shall be declared and paid or made.

Section 3.09.Committees

. (a) The Corporation shall have four standing committees: (i) the audit committee; (ii) the compensation committee; (iii) the nominating and governance committee; and (iv) the risk management committee. (b) Each committee shall be governed by a charter approved by the Board of Directors.

Section 3.10.Additional Committees

. The Board of Directors may in its discretion, by resolution passed by the affirmative vote of a majority of the entire Board of Directors, designate such other committees, which, to the extent permitted by law and conferred by the resolutions appointing them, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation. A majority of any such committee may determine its action and fix the time and place of its meetings, unless the Board of Directors shall otherwise provide. The Board of Directors shall have power at any time to dissolve any such committee formed by it.

Section 3.11.Committee Membership

. Subject to any other provisions herein or in any applicable charter (including the Audit Committee Charter and the Compensation and Governance Committee Charter), the Board of Directors shall determine the number and the identity of the directors who shall belong to each committee.

Section 3.12.Rules and Procedures

. (a) Each committee may fix its own rules and procedures and shall meet at such times and places as may be provided by such rules, by resolution of the committee or by call of the chairman of the committee. Notice of meetings of each committee, other than of regular meetings provided for by its rules or resolutions, shall be given to committee members. At all meetings of such committee, a majority of its members, but not less than two, shall constitute a quorum for the transaction of business. The act of the committee members present at any meeting at which there is a quorum shall be the act of such committee. Only the Board of Directors shall have the power to fill vacancies in any committee. All action taken at any meeting of a committee shall be recorded in minutes of the meeting and each committee shall deliver such minutes to the Secretary of the Corporation to be filed with the books and records of the Corporation. (b) The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member or members at any meeting of the committee. In addition, in the absence or disqualification of a member of a committee, if no alternate member has been designated by the Board of Directors, the member or members present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member. (c) Members of the Board of Directors or any committee thereof may participate in a meeting of the Board of Directors or committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at the meeting. (d) Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee.

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Section 3.13.Application of Article

. Whenever any provision of any other document relating to any committee of the Corporation named therein shall be in conflict with any provision of this Article III, the provisions of this Article III shall govern, except that if such other document shall have been approved by a vote of the Board of Directors, the provisions of such other document shall govern, and except that the provisions of the Audit Committee Charter and the provisions of the Compensation and Governance Committee Charter shall govern.

Section 3.14.Compensation

. Each director who is not an employee or officer of the Corporation or its subsidiaries, in consideration of his or her serving as such, shall be entitled to receive from the Corporation such compensation for such periods or such fees for attendance at meetings of the Board of Directors or of any committee, or both, as the Board of Directors or the Nominating and Governance Committee shall from time to time determine. The Board of Directors or the Nominating and Governance Committee may provide that the Corporation shall reimburse each director or member of a committee for any reasonable expenses incurred by him or her on account of his or her attendance at any such meeting. Nothing herein contained shall be construed to preclude any director from serving the Corporation or any of its subsidiaries or affiliates in any other capacity and receiving compensation therefor.

Section 3.15.Entire Board of Directors

. As used in these By-Laws, the term “entire Board of Directors” means the total number of directors which the Corporation would have if there were no vacancies in the Board of Directors.

Article IV
OFFICERS

Section 4.01.Number

. The officers of the Corporation shall include a Chairman of the Board, a Chief Executive Officer, a Secretary, a Chief Financial Officer, a Chief Compliance Officer, a Chief Risk Officer, a Treasurer, a Controller, a General Counsel and such other officers as may be appointed in accordance with the provisions of Section 4.03. Any number of offices may be held by the same person.

Section 4.02.Election, Term of Office and Qualifications

. Each officer specifically designated in Section 4.01 shall be chosen by the Board of Directors within sixty (60) days after each annual election of directors, and shall hold his or her office until a successor shall have been chosen and qualified or until his or her earlier death or until he or she shall resign or shall have been removed in the manner provided in Section 4.04. The Chairman of the Board and the Chief Executive Officer shall be directors. No other officer need be a director.

Section 4.03.Other Officers

. The Board of Directors from time to time may choose other officers or agents, including, but not limited to, one or more Vice Chairmen, a Chief Operating Officer, one or more Vice Presidents, one or more Assistant Vice Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and one or more Assistant Controllers, each of whom shall hold office for such period, have such authority and perform such duties as are provided in these By-Laws or as the Board of Directors from time to time may determine. The Chairman of the Board, the President or the Chief Executive Officer may appoint any such other officers or agents, other than a Chief Operating Officer, fix their term of office, and prescribe their respective authorities and duties.

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Section 4.04.Removal

. Any officer may be removed either with or without cause by the vote of a majority of the directors; provided that any officer who reports to either the Chief Executive Officer or President or to some other officer who in turn reports to the Chief Executive Officer or the President may also be removed by action of the Chief Executive Officer or the President or such other officer, as the case may be.

Section 4.05.Resignations

. Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, the President, the Chief Executive Officer or the Chief Operating Officer. Unless otherwise specified therein, such resignation shall take effect upon receipt thereof by the Board of Directors or by any such officer and the acceptance of a resignation shall not be necessary to make it effective.

Section 4.06.Vacancies

. A vacancy in any office because of death, resignation, removal, disqualification or any other cause may be filled for the unexpired portion of the term in the manner prescribed by these By-Laws for the regular election or appointment to such office.

Section 4.07.The Chairman of the Board

. The Chairman of the Board shall preside at meetings of the Board of Directors at which he or she is present, and shall give counsel and advice to the Board of Directors and the officers of the Corporation on all subjects touching the welfare of the Corporation and the conduct of its business. He or she shall perform such other duties as the Board of Directors may from time to time determine. The Chairman shall be a member of the Board of Directors. The Chairman shall have the power to sign all certificates, contracts, obligations and other instruments of the Corporation.

Section 4.08.Chief Executive Officer

. The Chief Executive Officer shall be the chief executive officer of the Corporation and, subject to the overall direction and control of the Board of Directors, shall have general charge and control of the business and affairs of the Corporation. In the event of the death, absence, unavailability or disability of the Chairman of the Board or the President, the Chief Executive Officer shall exercise all the powers and discharge all the duties of the Chairman. The Chief Executive Officer shall do and perform all such other duties and may exercise such other powers as from time to time may be assigned to him or her by these By-Laws or by the Board of Directors. The Chief Executive Officer shall have the power to sign all certificates, contracts, obligations and other instruments of the Corporation.

Section 4.09.The Chief Operating Officer

. In the event the Board of Directors shall choose a Chief Operating Officer, the Chief Operating Officer shall be the chief operating officer of the Corporation responsible for directing, administering and coordinating the business operations of the Corporation in accordance with policies, goals and objectives established by the Board of Directors. The Chief Operating Officer shall generally assist the Chief Executive Officer and perform such other duties as the Board of Directors or the Chief Executive Officer shall prescribe. The Chief Operating Officer shall have the power to sign all certificates, contracts, obligations and other instruments of the Corporation.

Section 4.10.The Vice Presidents and Assistant Vice Presidents

. The Vice Presidents and Assistant Vice Presidents shall perform such duties and may exercise such powers as from time to time may be assigned to him or her by these By-Laws or by the Board of Directors, the Chairman, a Vice Chairman of the Board, the President, the Chief Executive Officer or the Chief Operating Officer. The Board of Directors, the Chairman of the Board, the President, the Chief

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Executive Officer or the Chief Operating Officer may designate one or more Vice Presidents as Executive Vice Presidents or Senior Vice Presidents. In the event of the death, absence, unavailability or disability of the Chairman of the Board, the President, the Chief Executive Officer or the Chief Operating Officer, the Board of Directors may, in its discretion, designate one or more Vice Presidents who shall, for the time being, act as Chairman of the Board, President, Chief Executive Officer or Chief Operating Officer; and when so acting, such Vice Presidents shall have all of the powers and discharge all of the duties of the Chairman of the Board, the President, the Chief Executive Officer or the Chief Operating Officer. Each Vice President who has been designated an Executive Vice President or Senior Vice President shall, except where by law the signature of the President is required, possess the same power as the President to sign all certificates, contracts, obligations and other instruments of the Corporation.

Section 4.11.The Secretary and the Assistant Secretaries

. The Secretary shall:

(1)Attend meetings of the stockholders and the Board of Directors, keep the minutes of such meetings and cause the same to be recorded in books provided for that purpose;

(2)Prepare, or cause to be prepared, and submit to the Inspectors of election at each meeting of the stockholders a certified list, in alphabetical order, of the names of the stockholders entitled to vote at such meeting, together with the class and number of shares of stock held by each;

(3)Provide that all notices are duly given in accordance with the provisions of these By-Laws or as required by statute;

(4)Be custodian of the records and minutes of the Corporation, the Board of Directors and any committees thereof, and of the seal of the Corporation; see that the seal is affixed, if necessary, to all stock certificates prior to their issuance and to all documents the execution of which on behalf of the Corporation under its seal shall have been duly authorized and attest the seal when so affixed;

(5)Provide that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed; and

(6)In general, perform all duties and have all powers incident to the office of Secretary and perform such other duties and have such other powers as from time to time may be assigned to him or her by these By-Laws or by the Board of Directors.

At the request of the Secretary, or in his or her absence or disability, any Assistant Secretary shall perform any of the duties of the Secretary and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Secretary. Except where by law the signature of the Secretary is required, each of the Assistant Secretaries shall possess the same power as the Secretary to sign certificates, contracts, obligations and other instruments of the Corporation, and to affix the seal of the Corporation to such instruments and attest the same.

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Section 4.12.Chief Financial Officer

. The Chief Financial Officer shall, subject to the control of the Board of Directors, keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares. The books of account shall at all reasonable times be open to inspection by any director. The Chief Financial Officer shall be empowered, from time to time, to require from the officers or agents of the Corporation reports or statements giving such information as he or she may desire with respect to any and all financial transactions of the Corporation. The Chief Financial Officer shall deposit all moneys and other valuables in the name and the credit of the Corporation with such depositaries as may be designated by the Board of Directors. The Chief Financial Officer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, shall render to the President and directors, whenever they request it, an account of all of his or her transactions as Chief Financial Officer and of the financial condition of the Corporation and shall have other powers and perform such other duties as may be prescribed by the Board of Directors, the President or the Chief Executive Officer, or these By-Laws. The Chief Financial Officer shall have the power to sign all certificates, contracts, obligations and other instruments of the Corporation.

Section 4.13.The Treasurer and the Assistant Treasurers

(a)The Treasurer shall, subject to the control of the Board of Directors and except as such powers and duties are otherwise vested in the Chief Financial Officer (if such position shall be held by a different person), have the care and custody of the funds including the borrowing thereof, the securities, receipts and disbursements of the Corporation; cause all moneys and other valuable effects to be deposited in the name and to the credit of the Corporation, in such banks or trust companies or with such bankers of other depositaries as shall be selected by the Board of Directors or Audit Committee, or pursuant to authority conferred by the Board of Directors or Audit Committee; cause the funds of the Corporation to be disbursed by checks or drafts upon the authorized depositaries of the Corporation; cause to be taken and preserved paper vouchers for all moneys disbursed; render to the Chairman of the Board, the President, the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the Board of Directors or the Audit Committee, whenever requested, an account of his or her transactions as Treasurer; in general, perform all duties and have all powers incident to the office of Treasurer and perform such other duties and have such other powers as from time to time may be assigned to him or her by these By-Laws or by the Board of Directors. The Treasurer shall have the power to sign all certificates, contracts, obligations and other instruments of the Corporation.

(b)At the request of the Treasurer, or in his or her absence or disability, the Assistant Treasurer, or in case there shall be more than one Assistant Treasurer, the Assistant Treasurer designated by the Board of Directors, the Chairman of the Board, the President, the Chief Executive Officer, the Chief Financial Officer or the Chief Operating Officer, shall perform any of the duties of the Treasurer and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Treasurer. Except where by law the signature of the Treasurer is required, each of the Assistant Treasurers shall possess the same power as the Treasurer to sign all certificates, contracts, obligations and other instruments of the Corporation.

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Section 4.14.The Controller and the Assistant Controllers

(a)The Controller shall cause to be kept correct books of accounts of all the business transactions of the Corporation, shall see that adequate audits thereof are currently and regularly made, shall examine and certify the accounts of the Corporation, shall render to the Board of Directors, the Audit Committee, the Chairman of the Board, the President, the Chief Executive Officer, the Chief Financial Officer or the Chief Operating Officer, whenever requested, an account of the financial condition of the Corporation, and shall report to the Board of Directors, to the Audit Committee or to such officers as the Board of Directors may require. He or she shall perform such other duties and have such other powers as from time to time may be assigned to him or her by the Board of Directors.

(b)At the request of the Controller, or in his or her absence or disability, the Assistant Controller, or in case there shall be more than one Assistant Controller, the Assistant Controller designated by the Board of Directors or by the Chairman of the Board, the President, the Chief Executive Officer or the Chief Operating Officer, shall perform any of the duties of the Controller and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Controller.

Section 4.15.General Counsel

. The General Counsel shall be the chief legal officer of the Corporation and shall have responsibility for the general supervision of all matters of a legal nature concerning the Corporation. He or she shall perform all such duties commonly incident to his or her office or as properly required of him or her by the Chairman of the Board of Directors or the Chief Executive Officer. The General Counsel shall have the power to sign certificates, contracts, opinions and other documents of or on behalf of the Corporation.

Section 4.16.Voting Shares in Other Corporations

. Unless otherwise directed by the Board of Directors, shares in other corporations which are held by the Corporation shall be represented and voted only by the Chairman of the Board of Directors, the Chief Executive Officer, the President or a proxy or proxies appointed by any of them.

Section 4.17.Contracts

. Any officer having the power to sign certificates, contracts, obligations and other instruments of the Corporation may delegate such power to any other officer or employee of the Corporation, provided that the officer having delegated such power shall be accountable for the actions of such other officer or employee.

Article V
CERTIFICATES OF STOCK

Section 5.01.Form, Transfer

. The shares of the Corporation shall be represented by certificates or shall be uncertificated. Each registered holder of shares, upon request to the Corporation, shall be provided with a certificate of stock representing the number of shares owned by such holder. The certificates of stock of the Corporation shall be in the form or forms from time to time approved by the Board of Directors. Transfers of stock shall be made upon the books of the Corporation: (1) upon presentation of the certificates by the registered holder in person or by duly authorized attorney, or upon presentation of proper evidence of succession, assignment or authority to transfer the stock, and upon surrender of the appropriate certificate(s), or (2) in the case of uncertificated shares, upon receipt of proper transfer instructions from the registered owner of such uncertificated shares, or from a duly authorized attorney or from an

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individual presenting proper evidence of succession, assignment or authority to transfer the stock.

Section 5.02.Signatures

. The certificates of stock shall be signed in the name of the Corporation by the Chairman of the Board, the Chief Executive Officer, the President, any Vice Chairman or any Vice President and by the Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer (except that where any such certificate is countersigned either (a) by a transfer agent other than the Corporation or its employee or (b) by a registrar other than the Corporation or its employee, any other signature on any such certificate may be a facsimile) and shall be countersigned and registered in such a manner, if any, as the Board of Directors may by resolution prescribe. In case any officer, transfer agent or registrar who shall have signed, or whose facsimile signature or signatures shall have been used on any such certificate or certificates shall cease to be such officer, transfer agent or registrar of the Corporation or these By-Laws shall be amended to eliminate his or her office before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered as though the person or persons who signed such certificate or certificates, or whose facsimile signature or signatures shall have been used thereon, had not ceased to be such officer or officers of the Corporation or such office had not been eliminated, and such issuance and delivery shall constitute adoption thereof by the Corporation.

Section 5.03.Lost Certificates

. The Board of Directors or any officer of the Corporation to whom the Board of Directors has delegated authority may authorize any transfer agent of the Corporation to issue, and any registrar of the Corporation to register, at any time and from time to time unless otherwise directed, a new certificate or certificates of stock in the place of a certificate or certificates theretofore issued by the Corporation, alleged to have been lost or destroyed, upon receipt by the transfer agent of evidence of such loss or destruction, which may be the affidavit of the applicant; a bond indemnifying the Corporation and any transfer agent and registrar of the class of stock involved against claims that may be made against it or them on account of the lost or destroyed certificate or the issuance of a new certificate, of such kind and in such amount as the Board of Directors shall have authorized the transfer agent to accept generally or as the Board of Directors or an authorized officer shall approve in particular cases; and any other documents or instruments that the Board of Directors or an authorized officer may require from time to time to protect adequately the interest of the Corporation. A new certificate may be issued without requiring any bond when, in the judgment of the directors, it is proper to do so.

Section 5.04.Holder of Record

. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Delaware.

Article VI
CHECKS, NOTES, ETC.

All checks and drafts on the Corporation’s bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations, bonds and other orders or instruments for the payment of money, shall be signed by such officer or officers, employee or employees, or agent or agents, as shall be thereunto authorized from time to time by the Board of Directors. The

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Board of Directors may, in its discretion, also provide for the countersignature or registration of any or all such orders, instruments or obligations for the payment of money.

Article VII
FISCAL YEAR

The fiscal year of the Corporation shall be as specified by the Board of Directors.

Article VIII
CORPORATE SEAL

The corporate seal shall be in such form as shall from time to time be approved by the Board of Directors. If and when so authorized by the Board of Directors, a duplicate of the seal may be kept and used by the Secretary or Treasurer or by any Assistant Secretary or Assistant Treasurer. In lieu of the corporate seal, when so authorized by the Board of Directors, a facsimile of such corporate seal may be impressed or affixed or reproduced.

Article IX
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES

Section 9.01.General

. Subject to Section 9.03, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees, if such attorney’s fees are incurred in accordance with the policies and procedures established by the Company from time-to-time), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.

Section 9.02.Corporation Suit

. Subject to Section 9.03, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or

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matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

Section 9.03.Authorization

. Any indemnification under this Article IX (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the current or former director, officer, employee or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 9.01 or 9.02. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (a) by a majority vote of the directors who were not parties to such action, suit or proceeding, even though less than a quorum, (b) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, (c) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion or (d) by the stockholders. To the extent, however, that a current or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith, without the necessity of authorization in the specific case.

Section 9.04.Expenses

. Expenses (including attorneys’ fees) incurred by an officer or director of the Corporation or by a former director or officer of the Corporation in defending any civil, criminal, administrative or investigative action, suit or proceeding for which indemnification is available pursuant to this Article IX shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized in this Article IX. Such expenses (including attorneys’ fees) incurred by other employees and agents of the Corporation or by a person who is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise may be so paid upon such terms and conditions, if any, as the Board of Directors or the Chief Executive Officer and General Counsel deem appropriate.

Section 9.05.Non-Exclusive Rights

. The indemnification and advancement of expenses provided by or granted pursuant to this Article IX shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Certificate of Incorporation, these By-Laws, or any agreement, contract, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in Sections 9.01 and 9.02 shall be made to the fullest extent permitted by law. The provisions of this Article IX shall not be deemed to preclude the indemnification of any person who is not specified in Section 9.01 or 9.02 but whom the Corporation has the power or obligation to indemnify under the provisions of the Delaware General Corporation Law, or otherwise.

Section 9.06.Insurance

. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is

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or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power or the obligation to indemnify him or her against such liability under the provisions of this Article IX.

Section 9.07.Definitions

. For purposes of this Article IX, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provision of this Article IX with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Article IX, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he or she reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article IX. For purposes of this Article IX, a person shall be deemed to have acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe such person’s conduct was unlawful, if such person’s action is based on the records or books of account of the Corporation or another enterprise, or on information supplied to such person by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise; provided, that the foregoing shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in this Article IX.

Section 9.08.Continuing Nature

. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article IX shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors, administrators and personal representatives of such a person.

Section 9.09.Limitation

. Notwithstanding anything contained in this Article IX to the contrary, except for proceedings to enforce rights to indemnification, the Corporation shall not be obligated to indemnify any director, officer, employee or agent in connection with a

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proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors of the Corporation.

Section 9.10.Indemnification by a Court

. Notwithstanding any contrary determination in the specific case under Section 9.03, and notwithstanding the absence of any determination thereunder, any director or officer may apply to the Court of Chancery of the State of Delaware or any other court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Section 9.01 or 9.02. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director or officer is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 9.01 or Section 9.02, as the case may be. Neither a contrary determination in the specific case under Section 9.03 nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director or officer seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 9.10 shall be given to the Corporation promptly upon the filing of such application. If successful, in whole or in part, the director or officer seeking indemnification shall also be entitled to be paid the expense of prosecuting such application.

Article X
RELIANCE ON RECORDS AND REPORTS

Each director, officer or member of any committee designated by, or by authority of, the Board of Directors, shall in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation or any of its subsidiaries, or upon reports made to the Corporation or any of its subsidiaries by any officer or employee of the Corporation or of a subsidiary or by an independent certified public accountant or by an appraiser selected with reasonable care by the Board of Directors or by any such committee.

Article XI
AMENDMENTS

The Board of Directors shall have the express power, without a vote of stockholders, to adopt any By-Law, and to amend, alter or repeal these By-Laws, except to the extent that these By-Laws or the Certificate of Incorporation otherwise provide. The Board of Directors may exercise such power upon the affirmative vote of a majority of the entire Board of Directors; provided, however, that notwithstanding the foregoing, the Board of Directors may alter, amend or repeal By-Laws in conflict with Section 3.05 of these By-Laws or this Article XI of these By-Laws only by a resolution adopted by 66 2/3% vote of the entire Board of Directors. Stockholders may not adopt any By-Law, nor amend, alter or repeal these By-Laws of the Corporation, except upon the affirmative vote of the holders of at least 66 2/3% of the voting power of the outstanding shares of Voting Stock, voting together as a single class. These By-Laws may be altered, amended or repealed at any meeting of the Board of Directors, provided that notice of such proposed alteration, amendment or repeal is contained in the notice of such meeting of the Board of Directors.

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Article XII
FORUM FOR ADJUDICATION OF DISPUTES

Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director or officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation arising pursuant to any provision of the Delaware General Corporation Law or the Certificate of Incorporation or these By-Laws (in each case, as they may be amended from time to time), or (iv) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation governed by the internal affairs doctrine shall be a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware).

Article XIII

EMERGENCY BYLAWS

Section 13.01.Emergency Meetings of the Board of Directors. Notwithstanding any other provision in the Certificate of Incorporation or these By-Laws, this Article XIII shall apply during any emergency resulting from an attack on the United States or on a locality in which the Corporation conducts its business or customarily holds meetings of the Board of Directors or the stockholders of the Corporation, or during any nuclear or atomic disaster, or during the existence of any catastrophe, natural disaster, pandemic, or other similar emergency condition, which renders a significant number of the members of the Board of Directors incapacitated or inaccessible for an extended period of time and as a result of which a quorum of the Board of Directors or a standing committee thereof cannot be convened for action (an “Emergency”). The emergency bylaws in this Article XIII shall remain in effect during an Emergency, and upon termination of such Emergency, the provisions of this Article XIII shall cease to be operative.

Section 13.02.Notice and Quorum for Emergency Meetings. During any Emergency, unless otherwise provided by the Board of Directors, (i) a meeting of the Board of Directors or a standing committee thereof may be called by any director or officer by any means feasible under the circumstances; (ii) notice of any meeting of the Board of Directors or a standing committee thereof during such an Emergency may be given less than twenty-four (24) hours prior to the meeting to as many directors and by such means as may be feasible at the time, including by publication, television or radio; and (iii) the number of directors necessary to constitute a quorum shall be three (3) directors.

Section 13.03. Liability. No officer, director or employee of the Corporation acting in accordance with the emergency bylaws in this Article XIII shall be liable except for willful misconduct.

Section 13.04. Amendments to Emergency Bylaws. The emergency bylaws in this Article XIII may be amended pursuant to Article XI of these By-Laws, either before or during any Emergency, to make any further or different provision that may be practical and necessary for the circumstances of the Emergency.

17813-11

Exhibit 10.14

AMENDMENT NO. 4
TO THE
SECOND AMENDED AND RESTATED REVOLVING CREDIT AND GUARANTY AGREEMENT

THIS AMENDMENT NO. 4 TO THE SECOND AMENDED AND RESTATED REVOLVING CREDIT AND GUARANTY AGREEMENT (this “Amendment”) is dated as of March 9, 2020 and is entered into by and among CIT GROUP INC., a Delaware corporation (“Company”), as Borrower, CERTAIN SUBSIDIARIES OF COMPANY listed on the signature pages hereto, as Guarantors, BANK OF AMERICA, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”) and the Lenders listed on the signature pages hereto and is made with reference to that certain SECOND AMENDED AND RESTATED REVOLVING CREDIT AND GUARANTY AGREEMENT, dated as of February 17, 2016 (as amended by Amendment No. 1, dated as of February 27, 2017, Amendment No. 2, dated as of February 16, 2018 and Amendment No. 3, dated as of February 19, 2019, the “Credit Agreement”), by and among Company, certain subsidiaries of Company named therein as Guarantors, the Lenders party thereto from time to time and the Administrative Agent. Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Amended Credit Agreement (as defined herein).

RECITALS

WHEREAS, the Credit Parties have requested that the Lenders agree to amend certain provisions of the Credit Agreement and the other matters set forth herein, as provided for herein;

WHEREAS, subject to certain conditions, the Lenders party hereto are willing to agree to such amendments relating to the Credit Agreement and the other matters set forth herein; and

WHEREAS, BofA Securities, Inc., Barclays Bank PLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and Wells Fargo Bank, National Association are acting as joint lead arrangers and joint bookrunners in connection with this Amendment (collectively, the “Amendment No. 4 Joint Lead Arrangers”).

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

SECTION I. AMENDMENT TO CREDIT AGREEMENT

(a)Effective as of the Amendment No. 4 Effective Date (as defined herein), and subject to the terms and conditions set forth herein, the Credit Agreement is hereby amended in the form of Exhibit A hereto (as so amended, the “Amended Credit Agreement”).

(b)Effective as of the Amendment No. 4 Effective Date, and subject to the terms and conditions set forth herein, Schedule 2.1 (Commitments and L/C Issuer Sublimit) to the Credit Agreement is hereby amended in the form of Exhibit B hereto.

SECTION II. CONDITIONS TO EFFECTIVENESS

This Amendment shall become effective only upon the satisfaction or waiver in accordance with Section 10.5 of the Credit Agreement of the following conditions (the date of satisfaction or waiver of such conditions being referred to herein as the “Amendment No. 4 Effective Date”):

A. The Administrative Agent shall have received the following:

(i)duly executed counterpart signature pages to this Amendment from the Credit Parties, the Lenders, each L/C Issuer and the Administrative Agent;

(ii)an executed copy of the favorable written legal opinion, dated as of the Amendment No. 4 Effective Date, of Sullivan and Cromwell LLP, as counsel to the Credit Parties, in form and substance reasonably satisfactory to the Administrative Agent (and each Credit Party hereby instructs such counsel to deliver such opinion to the Administrative Agent);

(iii)a certificate as to the good standing of each Credit Party as of a recent date, from the Secretary of State or a similar Governmental Authority of the state of its incorporation, organization or formation; and

(iv)a certificate of an Authorized Officer of each Credit Party dated the Amendment No. 4 Effective Date and certifying (I) to the effect that (A) attached thereto is a true and complete copy of the certificate or articles of incorporation, organization or formation of such Credit Party certified as of a recent date by the Secretary of State (or similar official) of the state of its incorporation, organization or formation, or in the alternative, certifying that such certificate or articles of incorporation, organization or formation have not been amended since the Closing Date, and that the certificate or articles are in full force and effect, (B) attached thereto is a true and complete copy of the by-laws or operating agreements or equivalent documents of each Credit Party as in effect on the Amendment No. 4 Effective Date, or in the alternative, certifying that such by-laws or operating agreements or equivalent documents have not been amended since the Closing Date, and that such by-laws or operating agreements or equivalent documents are in full force and effect and (C) attached thereto is a true and complete copy of resolutions duly adopted by the board of directors, board of managers or member, as the case may be, of each Credit Party authorizing the execution, delivery and performance of the Credit Documents to which such Credit Party is a party, and that such resolutions have not been modified, rescinded or amended, and that such resolutions are in full force and effect, and (II) as to the incumbency and specimen signature of each officer executing any Credit Document on behalf of any Credit Party and signed by another officer as to the incumbency and specimen signature of the Authorized Officer executing the certificate pursuant to this clause (iv).

B. The Company shall have paid (i) all fees required to be paid on the Amendment No. 4 Effective Date pursuant to the Engagement Letter, dated as of February 24, 2020, between CIT Group Inc. and BofA Securities, Inc. and (ii) to the Amendment No. 4 Joint Lead Arrangers and Bank of America, N.A., in its capacity as Administrative Agent, to the extent invoiced at least one (1) Business Day prior to the Amendment No. 4 Effective Date, all reasonable out of pocket costs and expenses of the Administrative Agent and the Amendment No. 4 Joint Lead Arrangers in connection with the arrangement, preparation, negotiation and execution of this Amendment (including the reasonable fees and expenses of Cahill Gordon & Reindel LLP as counsel to the Administrative Agent and the Amendment No. 4 Joint Lead Arrangers) that are payable pursuant to Section 10.2 of the Credit Agreement and any outstanding costs and expenses referred to in Section 10.2 of the Credit Agreement (which may include amounts constituting reasonable estimates of fees and expenses of counsel and other

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advisors, provided that no such estimate shall thereafter preclude a final settling of account as to such fees and expenses);

C. The representations and warranties set forth in Section III hereof shall be true and correct and the Administrative Agent shall have received a certificate of an Authorized Officer to such effect.

D. Prior to or substantially concurrently with the Amendment No. 4 Effective Date, the Company shall have paid to the Administrative Agent for the account of each applicable Lender the Amendment No. 4 Upfront Fees required to be paid on the Amendment No. 4 Effective Date pursuant to Section 2.8(a)(ii) of the Amended Credit Agreement.

SECTION III. REPRESENTATIONS AND WARRANTIES

In order to induce Lenders and the Administrative Agent to enter into this Amendment, to amend the Credit Agreement and to agree to the other matters set forth herein, in each case as provided for herein, each Credit Party which is a party hereto represents and warrants to each Lender and the Administrative Agent that, both before and immediately after giving effect to this Amendment, the following statements are true and correct:

A. The representations and warranties contained in the Amended Credit Agreement and in the other Credit Documents are true and correct in all material respects (except such representations and warranties that by their terms are qualified by materiality or a Material Adverse Effect, which representations and warranties shall be true and correct in all respects), to the same extent as though made on and as of such time (or to the extent such representations and warranties specifically relate to an earlier date, on and as of such earlier date).

B. No Default or Event of Default shall have occurred and be continuing.

SECTION IV. ACKNOWLEDGMENT AND CONSENT

Each Guarantor hereby acknowledges that it has reviewed the terms and provisions of the Credit Agreement and this Amendment and consents to the amendments of the Credit Agreement effected pursuant to this Amendment. Each Guarantor hereby confirms that each Credit Document to which it is a party or otherwise bound will continue to guarantee to the fullest extent possible in accordance with the Credit Documents the payment and performance of all “Obligations” under each of the Credit Documents to which is a party (in each case as such terms are defined in the applicable Credit Document).

Each Guarantor acknowledges and agrees that any of the Credit Documents to which it is a party or otherwise bound shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Amendment.

Each Guarantor acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Amendment, such Guarantor is not required by the terms of the Credit Agreement or any other Credit Document to consent to the amendments to the Credit Agreement effected pursuant to this Amendment and (ii) nothing in the Credit Agreement, this Amendment or any other Credit Document shall be deemed to require the consent of such Guarantor to any future amendments to the Credit Agreement.

-3-

SECTION V. MISCELLANEOUS

A. Reference to and Effect on the Credit Agreement and the Other Credit Documents.

(i) On and after the Amendment No. 4 Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Credit Agreement, and each reference in the other Credit Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Amended Credit Agreement.

(ii) Except as specifically amended by this Amendment, the Credit Agreement and the other Credit Documents shall remain in full force and effect and are hereby ratified and confirmed.

(iii) The execution, delivery and performance of this Amendment shall not constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of any Agent or Lender under, the Credit Agreement or any of the other Credit Documents.

(iv) This Amendment shall constitute a “Credit Document” for all purposes of the Credit Agreement and the other Credit Documents.

B. Headings. Section and Subsection headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect.

C. Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

D. Counterparts. This Amendment may be executed in any number of counterparts (and by different parties hereto in separate counterparts), each of which when so executed and delivered shall constitute an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. Delivery of an executed counterpart by facsimile or other electronic transmission (e.g., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Amendment.

E. Binding Effect. The execution and delivery of this Amendment by any Lender shall be binding upon each of its successors and assigns (including assignees of its Loans in whole or in part prior to the effectiveness hereof).

F. Waiver of Jury Trial. Each of the parties hereto irrevocably waives trial by jury in any action or proceeding with respect to this Amendment or any other Credit Document.

[Remainder of this page intentionally left blank.]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.

Borrower:

CIT GROUP INC.

By:/s/ Sarah L.F. McAvoy
Name: Sarah L.F. McAvoy
Title:Executive Vice President and

Treasurer

Guarantors:

THE CIT GROUP/EQUIPMENT FINANCING, INC.

By:/s/ Sarah L.F. McAvoy
Name: Sarah L.F. McAvoy
Title:Executive Vice President and

Treasurer

C.I.T. LEASING CORPORATION

By:/s/ Sarah L.F. McAvoy
Name: Sarah L.F. McAvoy
Title:Executive Vice President and

Treasurer

THE CIT GROUP/BUSINESS CREDIT, INC.

By:/s/ Sarah L.F. McAvoy
Name: Sarah L.F. McAvoy
Title:Executive Vice President and

Treasurer

[Signature Page to Amendment No. 4 to CIT Second Amended and Restated Credit Agreement]

BANK OF AMERICA, N.A.,

as Administrative Agent

By: /s/ Aamir Saleem

Name: Aamir Saleem

Title: Vice President

BANK OF AMERICA, N.A.,

as Lender and L/C Issuer

By: /s/ Robin Noret

Name: Robin Noret

Title: Vice President

[Signature Page to Amendment No. 4 to CIT Second Amended and Restated Credit Agreement]

BARCLAYS BANK PLC,

as a Lender

By: /s/ Evan Moriarty

Name: Evan Moriarty

Title: Vice President

[Signature Page to Amendment No. 4 to CIT Second Amended and Restated Credit Agreement]

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,

as a Lender

By: /s/ Doreen Barr

Name: Doreen Barr

Title: Authorized Signatory

If a second signature line is required:

By: /s / Andrew Griffin

Name: Andrew Griffin

Title: Authorized Signatory

[Signature Page to Amendment No. 4 to CIT Second Amended and Restated Credit Agreement]

DEUTSCHE BANK AG NEW YORK BRANCH,

as a Lender

By: /s/ Ming K. Chu

Name: Ming K. Chu

Title: Director

If a second signature line is required:

By: /s / Marko Lukin

Name: Marko Lukin

Title: Vice President

[Signature Page to Amendment No. 4 to CIT Second Amended and Restated Credit Agreement]

JPMorgan Chase Bank, N.A.,

as a Lender

By: /s/ Evelyn Crisci

Name: Evelyn Crisci

Title: Executive Director

[Signature Page to Amendment No. 4 to CIT Second Amended and Restated Credit Agreement]

MORGAN STANLEY BANK, N.A.,

as a Lender

By: /s/ Alysha Salinger

Name: Alysha Salinger

Title: Authorized Signatory

[Signature Page to Amendment No. 4 to CIT Second Amended and Restated Credit Agreement]

WELLS FARGO BANK, NATIONAL ASSOCIATION

as a Lender

By: /s/ Linda Sampson

Name: Linda Sampson

Title: Vice President

[Signature Page to Amendment No. 4 to CIT Second Amended and Restated Credit Agreement]

CITIBANK, N.A.

as a Lender

By: /s/ Robert Goldstein

Name: Robert Goldstein

Title: Managing Director

[Signature Page to Amendment No. 4 to CIT Second Amended and Restated Credit Agreement]

Citizens Bank, National Association,

as a Lender

By: /s/ Zhen Ma

Name: Zhen Ma

Title: Senior Vice President

[Signature Page to Amendment No. 4 to CIT Second Amended and Restated Credit Agreement]

CONFIDENTIAL

Tranche 1 Facility CUSIP 17284TAU1
Tranche 2 Facility CUSIP 17284TAV9

Published Deal CUSIP 17284TAR8

EXHIBIT A

Amended Credit Agreement

SECOND AMENDED AND RESTATED
REVOLVING CREDIT
AND GUARANTY AGREEMENT

dated as of February 17, 2016

as amended as of March 9, 2020

among

CIT GROUP INC.,

CERTAIN SUBSIDIARIES OF CIT GROUP INC.,

THE LENDERS PARTY HERETO FROM TIME TO TIME,

BANK OF AMERICA, N.A.,
as Administrative Agent and L/C Issuer

——————————————————————————————

BOFA SECURITIES, INC.,

BARCLAYS BANK PLC,
CREDIT SUISSE SECURITIES (USA) LLC,

DEUTSCHE BANK SECURITIES INC.,

JPMORGAN CHASE BANK, N.A.,
MORGAN STANLEY SENIOR FUNDING, INC.

and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Joint Lead Arrangers and Joint Bookrunners

BARCLAYS BANK PLC,
CREDIT SUISSE SECURITIES (USA) LLC,

DEUTSCHE BANK SECURITIES INC.,

JPMORGAN CHASE BANK, N.A.,
MORGAN STANLEY SENIOR FUNDING, INC.

and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Syndication Agents

——————————————————————————————

$300,000,000 Revolving Credit Facility

——————————————————————————————

TABLE OF CONTENTS

Page

SECTION 1.

DEFINITIONS AND INTERPRETATION

1.1

Definitions.1

1.2

Accounting Terms.40

1.3

Interpretation, etc.41

1.4

Exchange Rates; Currency Equivalents.41

1.5

Additional Alternative Currencies.42

1.6

Change of Currency.42

1.7

Times of Day.43

1.8

Letter of Credit Amounts.43

1.9

Type of Loans and Borrowings.43

SECTION 2.

LOANS

2.1

Loans.43

2.2

Applicable Percentages; Availability of Funds.44

2.3

Use of Proceeds.45

2.4

Evidence of Debt; Register; Lenders’ Books and Records; Notes.45

2.5

Interest on Loans.46

2.6

Conversion/Continuation.47

2.7

Default Interest.47

2.8

Fees.48

2.9

Voluntary Prepayments and Commitment Reductions.49

2.10

Mandatory Prepayments; Commitment Termination.49

2.11

Application of Commitment Reductions and Payments.49

2.12

General Provisions Regarding Payments.50

2.13

Ratable Sharing.51

2.14

Making or Maintaining LIBOR Rate Loans.52

2.15

Increased Costs; Capital Adequacy; Reserves on LIBOR Rate Loans.55

2.16

Taxes; Withholding, etc.56

2.17

Obligation to Mitigate.60

2.18

Defaulting Lenders.61

2.19

Removal or Replacement of a Lender.62

2.20

Letters of Credit.63

SECTION 3.

CONDITIONS PRECEDENT

3.1

Conditions to Initial Extensions of Credit.71

3.2

Conditions to Each Credit Extension.72

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Page

SECTION 4.

REPRESENTATIONS AND WARRANTIES

4.1

Organization; Requisite Power and Authority; Qualification.73

4.2

Capital Stock and Ownership.73

4.3

Due Authorization.74

4.4

No Conflict.74

4.5

Governmental Consents.74

4.6

Binding Obligation.74

4.7

Historical Financial Statements.74

4.8

Adverse Proceedings, etc.75

4.9

Payment of Taxes.75

4.10

Properties.75

4.11

Environmental Matters.76

4.12

No Defaults.76

4.13

Governmental Regulation.76

4.14

Margin Stock.76

4.15

Employee Matters.76

4.16

Employee Benefit Plans.77

4.17

Solvency.78

4.18

Compliance with Statutes, etc.78

4.19

Disclosure.78

4.20

Terrorism Laws, FCPA and Sanctions.78

4.21

Insurance.79

4.22

Intellectual Property.79

4.23

Permits, etc.79

4.24

Affected Financial Institutions.79

4.25

Covered Entities.80

SECTION 5.

AFFIRMATIVE COVENANTS

5.1

Financial Statements and Other Reports.80

5.2

Existence.82

5.3

Payment of Taxes and Claims.83

5.4

Maintenance of Properties.83

5.5

Insurance.83

5.6

Books and Records; Inspections.83

5.7

Compliance with Laws.84

5.8

Environmental.84

5.9

Additional Guarantors.85

5.10

Designation of Restricted and Unrestricted Subsidiaries.85

5.11

Ratings.85

5.12

Use of Proceeds.86

5.13

Ownership of CIT Bank.86

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Page

SECTION 6.

NEGATIVE COVENANTS

6.1

Liens.86

6.2

Restricted Payments.88

6.3

Financial Covenants.89

6.4

Merger, Consolidation or Sale of All or Substantially All Assets.90

6.5

Negative Pledges.91

SECTION 7.

GUARANTY

7.1

Guaranty of the Obligations.91

7.2

Contribution by Guarantors.92

7.3

Payment by Guarantors.92

7.4

Liability of Guarantors Absolute.93

7.5

Waivers by Guarantors.94

7.6

Guarantors’ Rights of Subrogation, Contribution, etc.95

7.7

Subordination of Other Obligations.95

7.8

Continuing Guaranty.96

7.9

Authority of Guarantors or Borrower.96

7.10

Financial Condition of Borrower.96

7.11

Bankruptcy, etc.96

7.12

Discharge of Guaranty Upon Sale of Guarantor.97

7.13

Taxes.97

SECTION 8.

EVENTS OF DEFAULT

8.1

Events of Default.97

SECTION 9.

AGENTS

9.1

Appointment of Administrative Agent, Arrangers and Syndication Agents.100

9.2

Powers and Duties.100

9.3

General Immunity.101

9.4

Agents Entitled to Act as Lender.103

9.5

Lenders’ Representations, Warranties and Acknowledgment.103

9.6

Right to Indemnity.104

9.7

Successor Administrative Agent.104

9.8

Proofs of Claim.105

9.9

Non-Reliance on the Administrative Agent, the Arrangers and Other Lenders.106

9.10

Tax Indemnification.106

9.11

Pay-Off Letter106

9.12

Certain ERISA Matters.107

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Page

SECTION 10.

MISCELLANEOUS

10.1

Notices.109

10.2

Expenses.110

10.3

Indemnity.111

10.4

Set Off.112

10.5

Amendments and Waivers.112

10.6

Successors and Assigns; Participations.114

10.7

Survival of Representations, Warranties and Agreements.117

10.8

No Waiver; Remedies Cumulative.118

10.9

Marshalling; Payments Set Aside.118

10.10

Severability.118

10.11

Obligations Several; Independent Nature of Lenders’ Rights.118

10.12

Headings.118

10.13

APPLICABLE LAW.119

10.14

CONSENT TO JURISDICTION.119

10.15

WAIVER OF JURY TRIAL.119

10.16

Confidentiality.120

10.17

Usury Savings Clause.121

10.18

Guaranty.122

10.19

Patriot Act.122

10.20

Disclosure.122

10.21

Electronic Execution of Assignments.122

10.22

No Fiduciary Duty.123

10.23

Entire Agreement.123

10.24

Acknowledgement and Consent to Bail-In of Affected Financial Institutions.123

10.25

Acknowledgement Regarding Any Supported QFCs.124

APPENDICES:

ANotice Addresses

SCHEDULES:

1.1BAircraft Registration Jurisdictions
1.1CL/C Subsidiaries
1.1DRegulated Subsidiaries
2.1Commitments and L/C Issuer Sublimit

4.1Jurisdictions of Organization and Qualification
4.2Capital Stock and Ownership
5.10Unrestricted Subsidiaries

EXHIBITS:

A-1Funding Notice
A-2Conversion/Continuation Notice

A-3Notice of Prepayment
BRevolving Loan Note
CCompliance Certificate
DAssignment Agreement
ECertificates Regarding Non-Bank Status
F-1Closing Certificate

-iv-

F-2Solvency Certificate
GGuarantor Counterpart Agreement
HAdministrative Questionnaire
IIntercompany Subordination Agreement
JGuarantor Asset Coverage Ratio Certificate

SC1:4851060.3

CG&R DraftCurrent date: 02/21/2020 12:09 PM54043163v11

SECOND AMENDED AND RESTATED
REVOLVING CREDIT AND GUARANTY AGREEMENT

This SECOND AMENDED AND RESTATED REVOLVING CREDIT AND GUARANTY AGREEMENT, dated as of February 17, 2016, as amended as of March 9, 2020, is entered into by and among CIT GROUP INC., a Delaware corporation (“Borrower”), CERTAIN SUBSIDIARIES OF BORROWER, as Guarantors, the Lenders party hereto from time to time and BANK OF AMERICA, N.A., as Administrative Agent (in such capacity, or any successor thereto pursuant to the terms hereof, “Administrative Agent”) and L/C Issuer.

RECITALS:

WHEREAS, capitalized terms used in these Recitals shall have the respective meanings set forth for such terms in Section 1.1 hereof;

WHEREAS, Borrower, the Lenders party thereto, Bank of America, N.A., as administrative agent, and the other parties thereto are parties to that certain Amended and Restated Credit Agreement, dated as of January 27, 2014 (as amended prior to the Closing Date, the “Prior Credit Agreement”); and

WHEREAS, (a) Borrower has requested that (i) the Prior Credit Agreement be amended and restated as provided herein and (ii) from and after the Closing Date, the Lenders provide revolving credit facilities and the L/C Issuers issue letters of credit pursuant to the terms hereunder; and (b) the Lenders party hereto have indicated their willingness to so to extend such credit, and the L/C Issuers have indicated their willingness to issue Letters of Credit, in each case, on the terms and subject to the conditions set forth herein; and

WHEREAS, Guarantors have agreed to guarantee the obligations of Borrower hereunder, in each case, on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

SECTION 1.

DEFINITIONS AND INTERPRETATION

1.1	Definitions.

The following terms used herein, including in the preamble, recitals, exhibits and schedules hereto, shall have the following meanings:

“23A Transaction” means any transfer or transfers of assets of Borrower or any Restricted Subsidiary to any Banking Subsidiary pursuant to waivers of or exemptions from Section 23A of the Federal Reserve Act or any comparable statute, and the rules or regulations promulgated thereunder.

“Acceptable Collateralization” means, at the L/C Issuer’s election, (i) cash collateralization of all L/C Obligations arising under Letters of Credit issued by the L/C Issuer in an aggregate amount equal to percentages of such L/C Obligations reasonably acceptable to the L/C Issuer and pursuant to pledge documentation reasonably satisfactory to the L/C Issuer, (ii) issuance to the L/C

Issuer of back-to-back letters of credit from one or more financial institutions reasonably acceptable to the L/C Issuer with aggregate face amounts equal to percentages of such L/C Obligations reasonably acceptable to the L/C Issuer and in form reasonably satisfactory to the L/C Issuer or (iii) to the extent requested by Borrower, the “grandfathering” of all Letters of Credit issued by the L/C Issuer under a replacement revolving credit facility reasonably acceptable to the L/C Issuer.

“Acceptance Credit” means a commercial Letter of Credit in which the L/C Issuer engages with the beneficiary of such Letter of Credit to accept a time draft.

“Adjusted LIBOR Rate” means:

(a)for any Interest Rate Determination Date with respect to an Interest Period for a LIBOR Rate Loan, the rate per annum obtained by dividing (i) the rate per annum (rounded to the nearest one hundredth of one percent (1/100 of 1%)) equal to the rate determined by Administrative Agent to be the LIBOR Screen Rate or a comparable or successor rate, which comparable or successor rate is approved by the Administrative Agent, acting reasonably, determined at or about 11:00 a.m. (London, England time) on such Interest Rate Determination Date, by (ii) an amount equal to (x) one, minus (y) the Applicable Reserve Requirement; and

(b)for any interest calculation with respect to a Base Rate Loan, to the extent applicable thereto, on any date, the rate per annum equal to the LIBOR Screen Rate, determined at or about 11:00 a.m. (London, England time) on the applicable Interest Rate Determination Date in respect of such date, for U.S. Dollar deposits with an Interest Period of one month commencing that date;

provided that to the extent a comparable or successor rate is approved by the Administrative Agent in connection herewith, the approved rate shall be applied in a manner consistent with customary market practice; provided, further, that, to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent in accordance with customary practice; provided, further, that the Adjusted LIBOR Rate shall be deemed to be not less than 0.00%.

“Administrative Agent” as defined in the preamble hereto.

“Administrative Agent Affiliates” has the meaning set forth in Section 10.1(b)(iii).

“Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Appendix A, or such other address or account, as the Administrative Agent may from time to time notify to Borrower and the Lenders.

“Administrative Questionnaire” means an Administrative Questionnaire in substantially the form of Exhibit H or any other form approved by the Administrative Agent.

“Adverse Proceeding” means any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of Borrower, any Restricted Subsidiary or any U.S. Banking Subsidiary) at law or in equity, or before or by any Governmental Authority, domestic or foreign (including any Environmental Claims) or other regulatory body or any arbitrator, whether pending or, to the best knowledge of any Relevant Officer of Borrower, any Restricted Subsidiary or any U.S. Banking Subsidiary, threatened in writing, against or affecting Borrower, any Restricted Subsidiary or any U.S. Banking Subsidiary or any property of Borrower, any Restricted Subsidiary or any U.S. Banking Subsidiary.

“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.

“Affected Lender” as defined in Section 2.14(d).

“Affected Loans” as defined in Section 2.14(d).

“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by, or under direct or indirect common control with, such specified Person. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings. Notwithstanding anything to the contrary herein, in no event shall the Administrative Agent, any Arranger, Syndication Agent or (other than for purposes of the definition of “Eligible Assignee”) Lender, or any Person acquired or formed in connection with a workout, restructuring or foreclosure in the Ordinary Course of Business, be considered an “Affiliate” of any Credit Party.

“Agent” means, collectively, the Administrative Agent and the Syndication Agents.

“Aggregate Payments” as defined in Section 7.2.

“Agreement” means this Second Amended and Restated Revolving Credit and Guaranty Agreement and any annexes, exhibits, and schedules to any of the foregoing, in each case, as amended, amended and restated, supplemented or otherwise modified from time to time.

“Alternative Currency” means each of Euros, Sterling, Thai Baht, Hong Kong Dollars, Canadian Dollars, Mexican Pesos and Indian Rupees, and each other currency (other than Dollars) that is approved in accordance with Section 1.5.

“Alternative Currency Equivalent” means, at any time, with respect to any amount denominated in Dollars, the equivalent amount thereof in the applicable Alternative Currency as determined by the Administrative Agent or the L/C Issuer, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of such Alternative Currency with Dollars.

“Amendment No. 3” means Amendment No. 3 to this Agreement, dated as of February 19, 2019, by and among the Borrower, the Guarantors, the Administrative Agent and the Lenders.

“Amendment No. 3 Effective Date” has the meaning specified in Amendment No. 3, which date is February 19, 2019.

“Amendment No. 4” means Amendment No. 4 to this Agreement, dated as of March 9, 2020, by and among the Borrower, the Guarantors, the Administrative Agent and the Lenders.

“Amendment No. 4 Effective Date” has the meaning specified in Amendment No. 4, which date is March 9, 2020.

“Amendment No. 4 Upfront Fee” as defined in Section 2.8(a)(ii).

“Applicable Cash Collateralization Percentage” means (i) in the case of L/C Obligations denominated in Dollars, 100% (or 105% for purposes of the last paragraph of Section 8.1 and clause fifth of Section 2.12(f)), (ii) in the case of L/C Obligations denominated in Euro or Sterling, 115% (or 105% to the extent the Borrower provides (and Bank of America determines to accept) Cash Collateral for such L/C Obligations in the same currency in which the underlying Letter of Credit is denominated in a domestic account at Bank of America), and (iii) in the case of L/C Obligations denominated in Thai Baht, Hong Kong Dollars, Canadian Dollars, Mexican Pesos, Indian Rupees or any other currency, 120% (or 105% to the extent the Borrower provides (and Bank of America determines to accept) Cash Collateral for such L/C Obligations in the same currency in which the underlying Letter of Credit is denominated in a domestic account at Bank of America).

“Applicable Margin” means the applicable percentage per annum set forth below determined by reference to the applicable Pricing Level, which is Pricing Level III as of the Amendment No. 4 Effective Date. Any change in the Pricing Level shall be effective promptly after (i) public announcement of any change of Borrower’s Debt Rating or (ii) delivery of written notice of any change of Borrower’s Debt Rating by Borrower to the Administrative Agent. In the case where two of the ratings are in the equivalent rating category (rating category includes a +, -, 1, 2 or 3 signifier) (the “Equivalent Rating”) and the third rating is not, (i) if the third rating is no more than one rating category different from the Equivalent Ratings, the Pricing Level corresponding to the rating category of the Equivalent Ratings will apply; (ii) if the third rating is two or more rating categories higher than the Equivalent Ratings, the Pricing Level for the rating one rating category higher than the Equivalent Ratings will apply; and (iii) if the third rating is two or more rating categories lower than the Equivalent Ratings, the Pricing Level for the rating one rating category lower than the Equivalent Ratings will apply. In the case where all three ratings are in different rating categories, the Pricing Level for the middle rating will apply, except that (i) if the highest rating differs from the middle rating by at least two rating categories more than the lowest rating differs from the middle rating, then the Pricing Level for the rating one rating category higher than the middle rating will apply, and (ii) if the lowest rating differs from the middle rating by at least two categories more than the highest rating differs from the middle rating, then the Pricing Level for the rating one rating category lower than the middle rating will apply. If only two (but not three) Debt Ratings are in effect, the Applicable Margin shall be, (x) in the case of a split rating and the ratings differential is one rating category, the Pricing Level for the higher rating and (y) in the case of a split rating and the ratings differential is more than one rating category, the Pricing Level for the rating that is one rating category higher than the lower rating. If only one (but not two or three) Debt Rating is in effect, the Applicable Margin shall be determined by reference to the Pricing Level in which such rating falls. If no Debt Rating is in effect, then each of S&P, Moody’s and Fitch shall be deemed to have established a rating in Pricing Level V.


Pricing Level	Debt Rating (S&P/Moody’s/Fitch)	Applicable Margin for LIBOR Rate Loans	Applicable Margin for Base Rate Loans
I	≥ BBB / Baa2 / BBB	1.250%	0.250%
II	BBB- / Baa3 / BBB-	1.500%	0.500%
III	BB+ / Ba1 / BB+	1.750%	0.750%
IV	BB / Ba2 / BB	2.000%	1.000%
V	≤ BB- / Ba3 / BB-	2.250%	1.250%

“Applicable Percentage” means, (a) with respect to any Lender under any Tranche at any time, the percentage (carried out to the ninth decimal place) of the aggregate Commitments of such

Tranche represented by such Lender’s Commitment under such Tranche at such time, subject to adjustment as provided in Section 2.18, provided that if the Commitments under such Tranche have been terminated, then the Applicable Percentage of each Lender under such Tranche shall be based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments, and (b) with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Total Commitments represented by such Lender’s Commitments at such time, subject to adjustment as provided in Section 2.18, provided that if the Commitments have been terminated, then the Applicable Percentage of each Lender shall be based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments. The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.1 or in the Assignment Agreement pursuant to which such Lender becomes a party hereto, as applicable.

“Applicable Reserve Requirement” means, at any time, for any LIBOR Rate Loan, the maximum rate, expressed as a decimal, carried out to five decimal places, at which reserves (including any basic, marginal, special, supplemental, emergency or other reserves) are required to be maintained with respect thereto against “Eurocurrency Liabilities” (as such term is defined in Regulation D) under regulations issued from time to time by the Board of Governors of the Federal Reserve System or other applicable banking regulator. Without limiting the effect of the foregoing, the Applicable Reserve Requirement shall reflect any other reserves required to be maintained by such member banks with respect to (i) any category of liabilities which includes deposits by reference to which the applicable Adjusted LIBOR Rate or any other interest rate of a Loan is to be determined, or (ii) any category of extensions of credit or other assets which include LIBOR Rate Loans. A LIBOR Rate Loan shall be deemed to constitute Eurocurrency Liabilities and, as such, shall be deemed subject to reserve requirements without benefits of credit for proration, exceptions or offsets that may be available from time to time to the applicable Lender. The rate of interest on LIBOR Rate Loans shall be adjusted automatically on and as of the effective date of any change in the Applicable Reserve Requirement.

“Applicable Time” means, with respect to any payments in any Alternative Currency, the local time in the place of settlement for such Alternative Currency, as may be determined by the Administrative Agent or the L/C Issuer, as the case may be, to be necessary for timely settlement on the relevant date in accordance with normal banking procedures in the place of payment.

“Appraised Value” means, with respect to any aircraft, railcar or locomotive, the current market value of such aircraft, railcar or locomotive as determined in a “desktop” appraisal. For the avoidance of doubt, such appraisal shall not be based on forward-looking assumptions about the market environment.

“Approved Electronic Communications” means any notice, demand, communication, information, document or other material that any Credit Party provides to the Administrative Agent pursuant to any Credit Document or the transactions contemplated therein which is distributed to the Administrative Agent or to Lenders by means of electronic communications pursuant to Section 10.1(b).

“Arranger” means each of BofA Securities, Inc., Barclays Bank PLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and Wells Fargo Bank, National Association in its respective capacity as joint lead arranger and joint bookrunner.

“Assignment Agreement” means an Assignment and Assumption Agreement substantially in the form of Exhibit D, with such amendments or modifications as may be approved by Administrative Agent (including electronic documentation generated by use of an electronic platform).

“Assignment Effective Date” as defined in Section 10.6(b).

“Assignment Tax” as defined in the definition of Other Taxes.

“Attributable Indebtedness” in respect of a Sale and Leaseback Transaction, means, as of the date of determination thereof, without duplication, the present value (discounted at the rate per annum equal to the rate of interest implicit in the lease involved in such Sale and Leaseback Transaction, as determined in good faith by Borrower) of the obligation of the lessee thereunder for rental payments (excluding, however, any amounts required to be paid by such lessee, whether or not designated as rent or additional rent, cost or expense reimbursement or indemnity on account of maintenance and repairs, insurance, taxes, assessments, water rates or similar charges or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales or similar contingent amounts) during the remaining term of such lease (including any period for which such lease has been extended or may, at the option of the lessor, be extended). In the case of any lease which is terminable by the lessee upon the payment of a penalty, such rental payments shall also include the amount of such penalty, but no rental payments of any kind shall be considered as required to be paid under such lease subsequent to the first date upon which it may be terminated without penalty.

“Authorized Officer” means, as applied to any Person, any individual holding the position of chairman of the board (if an officer), chief executive officer, president, chief financial officer, chief accounting officer, controller, deputy controller, director-controller (or any comparable designation), treasurer, assistant treasurer or director-treasury (or any comparable designation), in each case, whose signatures and incumbency have been certified to Administrative Agent.

“Auto-Extension Letter of Credit” as defined in Section 2.20(b)(iii).

“Availability Period” means, with respect to any Series of Commitments, the period from and including the Closing Date to the earlier of (i) the applicable Final Maturity Date of such Series and (ii) the date of termination of the Commitments of such Series in accordance with the terms of this Agreement.

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.

“Bail-In Legislation” means, (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, rule, regulation or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).

“Bank Activities” means (i) 23A Transactions and (ii) any transfer or transfers of assets, Liens, Indebtedness, subordinations, participations, payments, assignments, reimbursements, purchases, granting of security interests, perfection thereof, and replacements thereof to secure obligations, servicing or other agreements, arrangements, transactions or actions by Borrower or any Restricted Subsidiary or any other Person in favor of any Banking Subsidiary required to be taken or which would be prudent or desirable to take in order to comply with all agreements, arrangements or transactions now and hereafter entered into between any of Borrower or any Restricted Subsidiary or any other Person and any Banking Subsidiary, or any Banking Subsidiary and/or its regulators, and all laws, federal, state, foreign and local

statutes, rules, guidelines, regulations, codes, executive orders and administrative or judicial precedents or authorities, including the interpretation thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all administrative orders, directed duties, requests, licenses and agreements with such Governmental Authorities, whether or not having the force of law, all arising from or relating to or connected with any Banking Subsidiary, together with all contractual indemnifications in connection with each of the above, and any and all actions undertaken in connection with any of the foregoing activities.

“Bank of America” means Bank of America, N.A. and its successors and assigns.

“Bank Regulatory Agency” means, with respect to CIT Bank, the “appropriate federal banking agency” with respect to such Person as defined in Section 3(q) of the Federal Deposit Insurance Act.

“Bankers’ Acceptance” means a time draft, drawn by the beneficiary under a commercial Letter of Credit and accepted by the L/C Issuer upon presentation of documents by the beneficiary of an Acceptance Credit pursuant to Section 2.20, in the standard form for bankers’ acceptances of the L/C Issuer.

“Banking Subsidiary” means, collectively, (i) CIT Bank and any other chartered or licensed banking institution that is authorized to take deposits and a Subsidiary of Borrower from time to time, and (ii) any Subsidiary of a Person described in clause (i).

“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.

“Base Rate” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Effective Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (c) the Adjusted LIBOR Rate plus 1.00%. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such prime rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

“Base Rate Loan” means a Loan bearing interest at a rate determined by reference to the Base Rate.

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding meaning.

“Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

“Beneficiary” means the Administrative Agent, Arranger, the L/C Issuer, Syndication Agent, Lender and any agents or sub-agents appointed by Administrative Agent pursuant to Section 9.3(h).

“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Internal Revenue Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Internal Revenue Code) the assets of any such “employee benefit plan” or “plan”.

“BHC Act Affiliate” as defined in Section 10.25(ii).

“Board of Directors” means:

(1)	with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;

(2)	with respect to a partnership, the board of directors of the general partner of the partnership;

(3)	with respect to a limited liability company, the board of directors, the managing member or members or any committee of managing members thereof designated to manage and direct the business of such limited liability company; and

(4)	with respect to any other Person, the board or committee of such Person serving a similar function.

“Borrower” as defined in the preamble hereto.

“Borrowing” means Loans of the same type and, in the case of LIBOR Rate Loans, having the same Interest Period made or continued by the Lenders pursuant to Sections 2.1(a) or 2.6(a), respectively.

“Business Day” means (i) any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close, and (ii) with respect to all notices, determinations, fundings and payments in connection with the Adjusted LIBOR Rate or any LIBOR Rate Loans, means any day which is a Business Day described in clause (i) and which is also a day for trading by and between banks in Dollar deposits in the London interbank market.

“Capital Lease” means, as applied to any Person, any lease of (or other arrangement conveying the right to use) any property (whether real, personal or mixed) by that Person as lessee (or the equivalent) that, in conformity with GAAP, is or is required to be accounted for as a capital lease on the balance sheet of that Person.

“Capital Lease Obligation” means, at the time any determination is to be made, the amount of the liability in respect of a Capital Lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with GAAP, and the final maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a premium or penalty.

“Capital Stock” means:

(1)	in the case of a corporation, corporate stock;

(2)	in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3)	in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and

(4)

any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

“Carrying Value” means the book value (net of any specific reserves) determined in accordance with GAAP as in effect on the Prior Credit Agreement Date, inclusive of fresh start accounting (“FSA”) adjustments recorded upon emergence of Borrower from bankruptcy and accretion and amortization of the FSA adjustments recorded since the date of such emergence; provided, that if there is a change in GAAP after the Prior Credit Agreement Date that would change the Carrying Value of aircraft, railcars or locomotives, Borrower may, in its sole discretion, elect within 30 days of the effectiveness of such change in GAAP (the “GAAP Change Date”) (which election may be made only once during the term of this Agreement) to define, from and after the GAAP Change Date, Carrying Value of aircraft, railcars and locomotives as their Appraised Value as determined by a Qualified Appraiser within the six months preceding the date on which Carrying Value is being determined.

“Cash” means money, currency or a credit balance in any demand or deposit account.

“Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the L/C Issuer and the Tranche 2 Lenders, as collateral for the L/C Obligations, cash or deposit account balances on terms and pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the L/C Issuer (which documents are hereby consented to by the Lenders), pursuant to which Borrower shall grant to the Administrative Agent, for the benefit of the L/C Issuer and the Tranche 2 Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Derivatives of such term have corresponding meanings. Cash Collateral shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America.

“Cash Equivalents” means, as at any date of determination, (i) marketable securities and repurchase agreements for marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States government, or (b) issued by any agency of the United States, the obligations of which are backed by the full faith and credit of the United States, in each case, maturing within one year after such date; (ii) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof, in each case, maturing within one year after such date and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iii) commercial paper maturing no more than one year from the date of issuance thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iv) time deposits or bankers’ acceptances maturing within one year after such date and issued or accepted by any Lender or by any commercial bank (including any branch of a commercial bank) that (a) in the case of a commercial bank organized under the laws of the United States of America, any state thereof or the District of Columbia is at least “adequately capitalized”

(as defined in the regulations of its primary Federal banking regulator), and has Tier 1 capital (as defined in such regulations) of not less than $100,000,000 or (b) in the case of any other commercial bank has a short-term commercial paper rating from S&P of at least A-1 or from Moody’s of at least P-1; and (v) shares of any money market mutual fund that has (a) net assets of not less than $500,000,000, and (b) ratings of at least AA or Aa from S&P or Moody’s, respectively.

“Certificate Regarding Non-Bank Status” means a certificate substantially in the form of Exhibit E-1, E-2, E-3 or E-4, as applicable.

“Change of Control” means the occurrence of any of the following:

(1)	any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the Beneficial Owner of more than 50% of the total outstanding Voting Capital Stock of Borrower (measured by voting power rather than the number of shares); or

(2)

Borrower consolidates with or merges with or into any Person or sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets to any such Person, or any such Person consolidates with or merges into or with Borrower, in any such event, pursuant to a transaction in which the outstanding Voting Capital Stock of Borrower is converted into or exchanged for cash, securities or other property, other than any such transaction where:

(A)the Voting Capital Stock of Borrower outstanding immediately prior to such transaction is changed into or exchanged for Voting Capital Stock (other than Disqualified Stock) of the surviving corporation constituting a majority of the outstanding shares of such Voting Capital Stock (measured by voting power rather than the number of shares) of such surviving corporation (immediately after giving effect to such issuance); and

(B)immediately after such transaction, no “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is the Beneficial Owner of more than 50% of the total outstanding Voting Capital Stock (measured by voting power rather than the number of shares) of the surviving corporation.

“CIT Bank” means CIT Bank, N.A., a national banking association organized under the laws of the United States of America (including, without limitation, any chartered or licensed banking institution that is authorized to take deposits which is merged with or into CIT Bank or which is the successor in interest to CIT Bank).

“Closing Certificate” means a Closing Certificate substantially in the form of Exhibit F-1.

“Closing Date” means February 17, 2016, the first date all the conditions precedent in Section 3.1 are satisfied or waived in accordance with Section 10.5.

“Commitment” means any Tranche 1 Commitment or any Tranche 2 Commitment.

“Commitment Fee” as defined in Section 2.8(a)(i).

“Commitment Rate Percentage” shall be, at any time, the rate per annum set forth in the table below opposite the Utilization Rate:



Utilization Rate	Commitment Rate Percentage
<33.3%	0.375%
≥ 33.3% but <66.7%	0.300%
≥ 66.7%	0.250%

“Compliance Certificate” means a Compliance Certificate substantially in the form of Exhibit C.

“Contractual Obligation” means, as applied to any Person, any provision of any Security issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.

“Contributing Guarantors” as defined in Section 7.2.

“Conversion/Continuation Date” means the effective date of a continuation or conversion, as the case may be, as set forth in the applicable Conversion/Continuation Notice.

“Conversion/Continuation Notice” means a Conversion/Continuation Notice substantially in the form of Exhibit A-2.

“Covered Entity” as defined in Section 10.25(ii).

“Covered Party” as defined in Section 10.25(i).

“Credit Date” means the date of a Credit Extension.

“Credit Document” means any of this Agreement, the Notes, if any, each Issuer Document and all other certificates, documents, instruments or agreements executed and delivered by a Credit Party for the benefit of the Administrative Agent or any Lender in connection herewith.

“Credit Extension” means each of the following: (a) a borrowing of Loans or (b) an L/C Credit Extension.

“Credit Party” means each Person (other than any Agent or any Lender or any representative thereof) from time to time party to a Credit Document.

“Debt Rating” means the long term senior unsecured, non-credit enhanced debt rating of Borrower by S&P, Moody’s and/or Fitch, as applicable.

“Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

“Default Rate” means any interest payable pursuant to Section 2.7.

“Default Right” as defined in Section 10.25(ii).

“Defaulting Lender” means, subject to Section 2.18(b), any Lender that, (a) has failed to (i) perform any of its funding obligations hereunder, including such Lender’s obligation to fund a Loan hereunder, unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied (a “Funding Default”), (ii) pay to the Administrative Agent, the L/C Issuer or any other Lender any amount required to be paid by it hereunder (including in respect of its participations in Letters of Credit), in each case, within two Business Days of the date required to be funded by it hereunder or when due, (b) has notified Borrower, the Administrative Agent or the L/C Issuer in writing that it does not intend to comply with its funding obligations hereunder or under agreements generally in which it commits to extend credit or has made a public statement to that effect, unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied, (c) has failed, within three Business Days after request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory agency acting in such capacity or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.18(b)) as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to Borrower, the L/C Issuer and each other Lender promptly following such determination.

“Deposit Account” means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit.

“Disqualified Person” means any Person that has a material line of business substantially similar to a material line of business of Borrower or any subsidiary on the Prior Credit Agreement Date and designated in writing as a “Disqualified Person” by Borrower in the letter dated January 27, 2014 and delivered to the Lenders.

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures (excluding any maturity as the result of an optional redemption or prepayment by the issuer thereof) or is mandatorily redeemable,

pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the Latest Maturity Date, unless such Capital Stock is redeemable solely for or payable solely in Qualified Equity Interests. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require Borrower to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock, if the terms of such Capital Stock provide that the issuer thereof may not repurchase or redeem any such Capital Stock pursuant to such provisions prior to the repayment in full of the Obligations.

“Dividing Person” has the meaning assigned to it in the definition of “Division.”

“Division” means the division of the assets, liabilities and/or obligations of a Person (the “Dividing Person”) among two or more Persons (whether pursuant to a “plan of division” or similar arrangement), which may or may not include the Dividing Person and pursuant to which the Dividing Person may or may not survive.

“Dollar Equivalent” means, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in any Alternative Currency, the equivalent amount thereof in Dollars, as determined by the Administrative Agent or the L/C Issuer, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of Dollars with such Alternative Currency.

“Dollars” and the sign “$” mean the lawful money of the United States.

“Domestic Restricted Subsidiary” means any Restricted Subsidiary that was formed under the laws of the United States or any state of the United States or the District of Columbia.

“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a Subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“Eligible Aircraft” means aircraft Owned directly by a Guarantor or through a Guarantor’s 100% direct beneficial ownership in a Qualified Owner Trust, subject to no Liens other than Permitted Aircraft Liens; provided that

(i)no more than 50% of the Carrying Value of all Eligible Aircraft shall consist of aircraft, other than narrowbody aircraft;

(ii)no more than 35% of the Carrying Value of all Eligible Aircraft shall consist of aircraft on lease to lessees in any one of the three regions of Emerging Markets;

(iii)no more than 50% of the Carrying Value of all Eligible Aircraft shall consist of aircraft registered in Australia;

(iv)no more than 25% of the Carrying Value of all Eligible Aircraft shall consist of aircraft registered in any other single jurisdiction, other than the United States, Australia or Canada;

(v)each such aircraft shall be subject to an operating lease that is in effect with such Guarantor, a Qualified Owner Trust or a Qualified Lease Subsidiary and was entered into in the ordinary course of business and, to such Guarantor’s knowledge, legally binding and in compliance in all material respects with all applicable Laws of the jurisdiction in which such operating lease was originated;

(vi)the obligor under such operating lease shall not be subject to any bankruptcy, insolvency, reorganization, liquidation or similar proceedings and no payments that are material in amount under such operating lease shall be overdue by more than 60 days;

(vii) all Eligible Aircraft shall be covered by insurance that is customarily carried and maintained under market practice applicable to such Eligible Aircraft;

(viii)no Eligible Aircraft shall be subject to any Event of Loss;

(ix)no more than 25% of the Carrying Value of all Eligible Aircraft shall consist of aircraft leased to a single lessee (including Affiliates of such lessee for this purpose);

(x)no less than 80% of the Carrying Value of all Eligible Aircraft shall consist of Preferred Aircraft Types;

(xi)no more than 10% of the Carrying Value of all Eligible Aircraft shall have an age that is more than 15 years from the date of manufacture;

(xii)each such aircraft shall be registered in a jurisdiction listed on Schedule 1.1B, and

(xiii)no such aircraft shall be leased to a lessee that is a Restricted Party; provided that if the lessee becomes a Restricted Party after the date the applicable aircraft and lease with such lessee were included in the determination of the Guarantor Asset Coverage Ratio, the leasing of such aircraft to such lessee shall not continue for the later of (x) more than 120 days after the applicable Credit Party becomes aware of such event and (y) the period the applicable Credit Party is mandatorily prevented by operation of law from repossessing such aircraft, but in no event longer than 180 days after the applicable Credit Party becomes aware of such event.

“Eligible Assignee” means any Person other than (i) a natural person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, one or more natural persons), (ii) a Disqualified Person or (iii) Borrower or any of its Affiliates; provided that if the consent of Borrower, the Administrative Agent or the L/C Issuer is required by Section 10.6(c) for an assignment to such Person, such consent shall have been obtained.

“Eligible Finance Receivable” means any Finance Receivable owned directly by a Guarantor; provided that

(i)such Finance Receivable shall be graded “Pass” or “Unclassified” (i.e., not “Special Mention,” “Substandard” or “Doubtful” or similar classification) by the Borrower in its regulatory credit classifications;

(ii)such Finance Receivable shall not consist of any loan to a Person that is a Restricted Party; provided that if the Person becomes a Restricted Party after the date the applicable Eligible Finance Receivable was included in the determination of the Guarantor Asset Coverage Ratio, such Eligible Finance Receivable shall be deemed to be excluded after the later of (x) more than 120 days after the applicable Credit Party becomes aware of such event and (y) the period the applicable Credit Party is mandatorily prevented by operation of law from exercising its rights as a creditor, but in no event longer than 180 days after the applicable Credit Party becomes aware of such event;

(iii)no payments that are material in amount under such Finance Receivable shall be overdue by more than 60 days or are outstanding past the stated final maturity;

(iv)such Finance Receivable shall not be subject to any Liens, other than Permitted Finance Receivable Liens; and

(v)if such Finance Receivable relates to an aircraft, railcar or locomotive, (x) unless clause (y) applies, such Guarantor shall own or have a first priority perfected security interest (subject only to Permitted Aircraft Liens or Permitted Railcar Liens) in the entire such aircraft (including airframe and engines), railcar or locomotive, or if such Finance Receivable relates to the financing of a fractional interest in an entire aircraft, such Guarantor shall have a first priority perfected security interest (subject only to Permitted Aircraft Liens) in the entire fractional interest so financed and (y) if such Finance Receivable is a syndicated financing of aircraft, the collateral agent for such financing shall have a first priority perfected security interest (subject only to Permitted Aircraft Liens) in the entire such aircraft (including airframe and engines), or if such financing relates to the financing of a fractional interest in an entire aircraft, the collateral agent for such financing shall have a first priority perfected security interest (subject only to Permitted Aircraft Liens) in the entire fractional interest so financed.

“Eligible Railcar” means a railcar or locomotive owned directly by a Guarantor, subject to no liens other than Permitted Railcar Liens; provided that

(i)each such railcar or locomotive shall be operated in the United States, Canada or Mexico;

(ii)no more than 10% of the Carrying Value of all Eligible Railcars shall consist of railcars or locomotives located in or subject to an operating lease with a lessee that is domiciled in Mexico;

(iii)no more than 20% of the Carrying Value of all Eligible Railcars shall consist of railcars or locomotives located in or subject to an operating lease with a lessee that is domiciled outside of the United States or Canada;

(iv)each such railcar or locomotive shall be covered by insurance that is customarily carried and maintained under market practice applicable to such Eligible Railcar;

(v)no more than 15% of the Carrying Value of all Eligible Railcars shall consist of railcars or locomotives subject to an operating lease with any single lessee;

(vi)no less than 85% of the Carrying Value of all Eligible Railcars shall consist of railcars or locomotives that are Preferred Railcar Types;

(vii)no such railcar or locomotive shall be subject to any Event of Loss;

(viii)each such railcar or locomotive shall be subject to an operating lease that is in effect with such Guarantor and was entered into in the ordinary course of business and, to such Guarantor’s knowledge, legally binding and in compliance in all material respects with all applicable Laws of the jurisdiction in which such operating lease was originated;

(ix)no such railcar or locomotive shall be under an operating lease with a lessee that is subject to a bankruptcy, insolvency, reorganization, liquidation or similar proceedings and no payments that are material in amount under such operating lease shall be overdue by more than 60 days; and

(x)no such railcar or locomotive shall be leased to a lessee that is a Restricted Party; provided that if the lessee becomes a Restricted Party after the date the applicable railcar or locomotive and lease with such lessee were included in the determination of the Guarantor Asset Coverage Ratio, the leasing of such railcar or locomotive to such lessee shall not continue for the later of (x) more than 120 days after the applicable Credit Party becomes aware of such event and (y) the period the applicable Credit Party is mandatorily prevented by operation of law from repossessing such railcar or locomotive, but in no event longer than 180 days after the applicable Credit Party becomes aware of such event.

“Emerging Markets” means (i) the following countries in Asia: China, India, Indonesia, South Korea, Malaysia, Philippines, Sri Lanka, Taiwan, Thailand and Vietnam; (ii) countries in the European Union whose sovereign credit rating is not BBB- or higher by S&P and Baa3 or higher by Moody’s, all countries in Africa, Bahrain, Brunei, Bulgaria, Croatia, Israel, Jordan, Kuwait, Qatar, Romania, Russia, Saudi Arabia, Turkey, Ukraine and the United Arab Emirates and (iii) Mexico and all countries in South America and Central America. Each of clause (i), (ii) and (iii) in this definition constitutes a region of Emerging Markets.

“Employee Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA which is or was sponsored, maintained or contributed to by, or required to be contributed to by, Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates.

“EMU Legislation” means the legislative measures of the European Council for the introduction of, changeover to or operation of a single or unified European currency.

“Environmental Claim” means any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise), by any Governmental Authority or any other Person, arising (i) pursuant to or in connection with any actual or alleged violation of any Environmental Law; (ii) in connection with any Hazardous Material or any actual or alleged Hazardous Materials Activity; or (iii) in connection with any actual or alleged environmental damage, injury, threat or harm to health, safety, natural resources or the environment.

“Environmental Laws” means any and all current or future foreign or domestic, federal or state (or any subdivision of either of them) statutes, ordinances, orders, rules, regulations, judgments, Governmental Authorizations, or any other requirements of Governmental Authorities relating to (i) protection of the environment or other environmental matters, including those relating to any Hazardous Materials Activity; (ii) the generation, use, storage, transportation or disposal of Hazardous Materials; or (iii) occupational safety, health and industrial hygiene, as it relates to any Hazardous Material, or the protection of human, plant or animal health or welfare, as they relates to any Hazardous Material.

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“Equivalent Rating” as defined in the definition of “Applicable Margin”.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor thereto, in each case, together with the rules and regulations thereunder.

“ERISA Affiliate” means, as applied to any Person, (i) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which that Person is a member; (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which that Person is a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member. Any former ERISA Affiliate of Borrower or any of its Subsidiaries shall continue to be considered an ERISA Affiliate of Borrower or any such Subsidiary within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of Borrower or such Subsidiary and with respect to liabilities arising after such period for which Borrower or such Subsidiary could be liable under the Internal Revenue Code or ERISA.

“ERISA Event” means (i) a “reportable event” within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for 30-day notice to the PBGC has been waived by regulation); (ii) the failure to meet the minimum funding standard of Section 412 or 430 of the Internal Revenue Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(c) of the Internal Revenue Code) or the failure to make by its due date a required contribution or installment under Section 430(j) of the

Internal Revenue Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (iii) notice of intent to terminate a Pension Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal by Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan with two or more non-related contributing sponsors or the termination of any such Pension Plan resulting in liability to Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which might reasonably constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (vi) the imposition of liability on Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal of Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any liability or Borrower’s reasonable expectation of liability therefor, or the receipt by Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or omission which could give rise to the imposition on Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the Internal Revenue Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a material claim (other than routine claims for benefits) against any Employee Benefit Plan or the assets thereof, or against Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates in connection with any Employee Benefit Plan; (x) receipt from the Internal Revenue Service of notice of the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code; or (xi) the imposition of a Lien or security interest pursuant to Section 430(k) of the Internal Revenue Code or pursuant to ERISA or a violation of Section 436 of the Internal Revenue Code with respect to any Pension Plan.

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

“Event of Default” means each of the conditions or events set forth in Section 8.1.

“Event of Loss” means, with respect to any property, (i) the actual or constructive total loss of such property or the use thereof resulting from destruction, damage beyond repair, or the rendition of such property permanently unfit for normal use from any casualty or similar occurrence whatsoever, (ii) the destruction or damage of a portion of such property, in each case, rendering such property unfit for normal use, from any casualty or similar occurrence whatsoever under circumstances in which such damage cannot reasonably be expected to be repaired, or such property cannot reasonably be expected to be restored to its condition immediately prior to such destruction or damage, within 90 days after the occurrence of such destruction or damage or (iii) the condemnation, confiscation or seizure of, or requisition of title to or use of, such property, except any such condemnation, confiscation, seizure or requisition that is reasonably expected to be lifted within 90 days (it being understood that any condemnation, confiscation, seizure or requisition that continues for 90 days despite such expectation shall be an Event of Loss).

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

“Excluded Taxes” of a Person means (a) any Tax imposed on or measured by net income, profits or gain by the jurisdiction in which a Person is organized or in which that Person’s applicable principal office (and/or, in the case of a Lender, its lending office) is located or in which that Person (and/or, in the case of a Lender, its lending office) is deemed to be doing business or has a present or former connection (other than a business or connection arising solely from having executed, delivered, enforced, become a party to, performed its obligations, received payments, received or perfected a security interest under, and/or engaged in any other transaction pursuant to, any Credit Document), (b) any Tax in the nature of the branch profits tax imposed by Section 884(a) of the Internal Revenue Code that is imposed by any jurisdiction described in clause (a) above, (c) any withholding tax that is attributable to a Lender’s failure to comply with Section 2.16(e), (d) any U.S. federal withholding tax imposed pursuant to Sections 1471 through 1474 of the Internal Revenue Code, as of the Closing Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof (this clause (d) shall be referred to as “FATCA”) and (e) in the case of a Non-U.S. Lender, any U.S. federal withholding tax imposed pursuant to any laws in effect at the time such Non-U.S. Lender becomes a party to this Agreement (or designates a new lending office), except to the extent that such Non-U.S. Lender (or its assignor, if any) was entitled, immediately prior to designation of a new lending office (or assignment), to receive additional amounts from a Credit Party with respect to such withholding tax pursuant to Section 2.16.

“Existing Letters of Credit” means the letters of credit and bankers’ acceptances issued under the Prior Credit Agreement that are outstanding on the Closing Date.

“Fair Share” as defined in Section 7.2.

“Fair Share Contribution Amount” as defined in Section 7.2.

“FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.

“FATCA” as defined in the definition of “Excluded Taxes”.

“FDIC” means the Federal Deposit Insurance Corporation.

“Federal Funds Effective Rate” means, for any day, the rate per annum (expressed, as a decimal, rounded upwards, if necessary, to the next higher one-hundredth of one percent (1/100 of 1%)) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided, that (i) if such day is not a Business Day, the Federal Funds Effective Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Effective Rate for such day shall be the average of the quotations on such day received by Administrative Agent from three federal funds brokers of recognized standing selected by it; provided, further, that the Federal Funds Effective Rate shall be deemed to be not less than 0.00%.

“Federal Reserve Act” means the Federal Reserve Act of 1913, as amended from time to time, and any successor statute.

“Final Maturity Date” means, with respect to each Series, November 1, 2021.

“Finance Receivable” means credit extended to customers through financing arrangements, including, but not limited to, term and revolver loans and financing leases, but excluding operating leases.

“Financial Officer” means, as applied to any Person, any individual holding the position of chief financial officer, treasurer, assistant treasurer, controller or deputy controller, in each case, whose signatures and incumbency have been certified to the Administrative Agent.

“Fiscal Quarter” means a fiscal quarter of any Fiscal Year.

“Fiscal Year” means the fiscal year of Borrower and the Restricted Subsidiaries ending on December 31 of each calendar year.

“Fitch” means Fitch Ratings Ltd.

“Foreign Subsidiary” means any Restricted Subsidiary that is not a Domestic Restricted Subsidiary.

“Fraudulent Conveyance” as defined in Section 7.1.

“Fronting Exposure” means, at any time there is a Defaulting Lender, such Defaulting Lender’s Applicable Percentage of the outstanding L/C Obligations under the applicable Tranche, other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

“FSA” as defined in the definition of “Carrying Value.”

“Funding Default” as defined in the definition of “Defaulting Lender.”

“Funding Guarantor” as defined in Section 7.2.

“Funding Notice” means a notice substantially in the form of Exhibit A-1 or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), completed and signed by a Relevant Officer of the Borrower.

“GAAP” as defined in Section 1.2.

“GAAP Change Date” as defined in the definition of “Carrying Value.”

“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity or Person exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“Governmental Authorization” means any permit, license, authorization, plan, directive, consent order or consent decree of or from any Governmental Authority.

“Guarantee” means, with respect to any Person, any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other

Person in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, that is (a) an obligation of such Person the primary purpose or intent of which is to provide assurance to an obligee that the Indebtedness of the obligor thereof will be paid or discharged, or any agreement relating thereto will be complied with, or the holders thereof will be protected (in whole or in part) against non-payment or non-discharge in respect thereof; or (b) a liability of such Person for Indebtedness of another through any agreement (contingent or otherwise) (i) to purchase, repurchase or otherwise acquire such Indebtedness or any security therefor, or to provide funds for the payment or discharge of such Indebtedness (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or (ii) to maintain the solvency or any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclauses (i) or (ii) of this clause (b), the primary purpose or intent thereof is as described in clause (a) above.

“Guaranteed Obligations” as defined in Section 7.1.

“Guarantor Asset Coverage Ratio” means, with respect to any date of determination, the ratio of (A) the sum of, without duplication, (i) the Carrying Value of (1) all Eligible Finance Receivables, (2) all Eligible Aircraft and (3) all Eligible Railcars (provided that, in the case of each of clauses (1), (2) and (3), Borrower may elect to exclude any asset or any portion thereof from such calculation), plus (ii) unrestricted Cash and Cash Equivalents owned directly by Guarantors and held in Deposit Accounts and Securities Accounts at the Administrative Agent or another Lender to (B) the sum of (i) the Total Commitments on such date plus (ii) the aggregate amount of all outstanding Indebtedness for borrowed money (including, without duplication, Guarantees of such Indebtedness) of the Guarantors (excluding Subordinated Intercompany Indebtedness) on such date plus, without duplication, commitments under other credit facilities of the Borrower or any Guarantor; provided that no more than 75% of the amount in clause (A) shall consist of the Carrying Value of Eligible Aircraft.

The Carrying Value of Eligible Finance Receivables, Eligible Aircraft and Eligible Railcars, as of any date of calculation, shall be the Carrying Value thereof as of the last day of the most recent month for which the Guarantor Asset Coverage Ratio Certificate has been or was required to be delivered on or prior to such date of calculation, as adjusted to:

(a)subtract the sum of the Carrying Value attributed in such calculation to (i) each asset that is disposed of to any Person other than a Guarantor, (ii) each asset (or any portion thereof) that Borrower determines to exclude from the calculation of Guarantor Asset Coverage Ratio and (iii) each asset that becomes subject to a Lien other than a Permitted Aircraft Lien, Permitted Finance Receivable Lien or Permitted Railcar Lien, as applicable, in each case of clauses (i), (ii) and (iii), to the extent occurring after the last day of the most recent month for which the Officer’s Certificate pursuant to Section 5.1(c) has been or was required to be delivered on or prior to the date of calculation; provided that no such subtraction pursuant to clause (i) or (iii) shall be required, unless assets with an aggregate Carrying Value (considering clauses (i) and (iii) together) of more than $50 million are so disposed of or encumbered after the end of the most recent month for which the Officer’s Certificate pursuant to Section 5.1(c) has been or was required to be delivered on or prior to such date of calculation; and

(b)add the sum of the Carrying Value of each Eligible Finance Receivable, Eligible Aircraft and Eligible Railcar that Borrower determines, after the last day of the most recent month for which the Officer’s Certificate pursuant to Section 5.1(c) has been or was required to be delivered on or prior to such date of calculation, to include in the calculation of the Guarantor Asset Coverage Ratio; provided that no such addition pursuant to this clause (b) shall be permitted with respect to any such calculation, unless assets with an aggregate Carrying Value of more than $50 million are so added for purposes of such calculation.

“Guarantor Asset Coverage Ratio Certificate” means an Officer’s Certificate of a Financial Officer substantially in the form attached hereto as Exhibit J, which shall include information in reasonable detail demonstrating the calculation of the covenant set forth in Section 6.3(b).

“Guarantor Counterpart Agreement” means a Guarantor Counterpart Agreement substantially in the form of Exhibit G delivered by a Credit Party pursuant to Section 5.9.

“Guarantor Ratio Assets” means, at any time, the assets of the Guarantors included in the calculation of the Guarantor Asset Coverage Ratio at such time.

“Guarantors” means:

(1)	as of the Amendment No. 4 Effective Date, each of the following Subsidiaries of Borrower:

The CIT Group/Equipment Financing, Inc., a Delaware corporation;

C.I.T. Leasing Corporation, a Delaware corporation;

The CIT Group/Business Credit, Inc., a New York corporation; and

(2)	any other Subsidiary of Borrower that executes a Guarantor Counterpart Agreement in accordance with the provisions of this Agreement,

and their respective successors and assigns, in each case, until such Person has been released from the Guaranty in accordance with the provisions of this Agreement.

“Guaranty” means the guaranty of each Guarantor set forth in Section 7.

“Hazardous Materials” means any chemical, material or substance, exposure to which is prohibited, limited or regulated by any Environmental Law or Governmental Authority or which poses a hazard to the health and safety of the owners, occupants or any Persons in the vicinity of any facility or to the indoor or outdoor environment.

“Hazardous Materials Activity” means any past or current activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, Release, threatened Release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or response action with respect to any of the foregoing.

“Highest Lawful Rate” means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are presently in effect or, to the extent allowed by law, under such applicable Laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable Laws now allow.

“Historical Financial Statements” means (i) the audited consolidated financial statements of Borrower and its Subsidiaries, consisting of a balance sheet and the related consolidated

statements of income, stockholders’ equity and cash flows, as of and for the Fiscal Year ended December 31, 2017, and (ii) unaudited consolidated financial statements of Borrower and its Subsidiaries, consisting of a balance sheet and the related consolidated statements of income, stockholders’ equity and cash flows, as of and for the nine months ended September 30, 2018.

“Honor Date” as defined in Section 2.20(c)(i).

“IFRS” as defined in the definition of “GAAP.”

“Immaterial Subsidiary” means, as of any date (unless such Subsidiary is otherwise classified as a Special Purpose Entity, Joint Venture or Regulated Subsidiary), any Subsidiary (A) that (i) (a) has assets with an aggregate Carrying Value less than $5.0 million, (b) has aggregate revenues less than $5.0 million for the most recently ended Fiscal Year for which financial statements were delivered pursuant to Section 5.1 immediately preceding the date on which the calculation is required to be made, and (c) is not integral to the business or operations of Borrower and its Subsidiaries, taken as a whole (other than Immaterial Subsidiaries), and (ii) has no Subsidiaries (other than Immaterial Subsidiaries), (B) the Capital Stock of which was acquired in connection with the workout of assets or exercise of remedies in the Ordinary Course of Business or as the proceeds of collateral securing a loan or other financing asset or in connection with servicing or managing assets in the Ordinary Course of Business, or (C) whose sole asset is one or more runoff portfolios or assets acquired in a workout.

“Increased Cost Lender” as defined in Section 2.19.

“Indebtedness,” as applied to any Person, means, without duplication, (i) all indebtedness for borrowed money; (ii) that portion of Capital Lease Obligations that is properly classified as a liability on a balance sheet in conformity with GAAP; (iii) all obligations of such Person evidenced by notes, bonds or similar instruments or upon which interest payments are customarily paid and all obligations in respect of drafts accepted representing extensions of credit whether or not representing obligations for borrowed money; (iv) any obligation owed for all or any part of the deferred purchase price of property or services (excluding obligations incurred in the Ordinary Course of Business having a term of less than six (6) months that are not overdue by more than sixty (60) days) which purchase price is (a) due more than six (6) months from the date of incurrence of the obligation in respect thereof or (b) evidenced by a note or similar written instrument; (v) all obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired by such person; (vi) all indebtedness of the type described elsewhere in this definition secured by any Lien on any property or asset owned or held by that Person regardless of whether such indebtedness secured thereby shall have been assumed by that Person or is non-recourse to the credit of that Person; (vii) the face amount of any letter of credit or letter of guaranty issued, bankers’ acceptances facilities, surety bond and similar credit transactions for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings or drafts; (viii) the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another of the type described in clauses (i) through (vii) or clauses (xi) through (xiii); (ix) any obligation of such Person the primary purpose or intent of which is to provide assurance to an obligee that the obligation of the type described in clauses (i) through (vii) or clauses (xi) through (xiii) of the obligor thereof will be paid or discharged, or any agreement relating thereto will be complied with, or the holders thereof will be protected (in whole or in part) against non-payment or non-discharge in respect thereof; (x) any liability of such Person for an obligation of the type described in clauses (i) through (vii) or clauses (xi) through (xiii) of another through any agreement (contingent or otherwise) (a) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or (b) to maintain the solvency or

any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclause (a) or (b) of this clause (x), the primary purpose or intent thereof is as described in clause (ix) above; (xi) all obligations of such Person in respect of any exchange traded or over the counter derivative transaction valued at the termination value thereof, including any Rate Management Transaction, whether entered into for hedging or speculative purposes; (xii) the maximum fixed redemption or repurchase price of all Disqualified Stock of such Person; and (xiii) all Attributable Indebtedness of such Person. Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or joint venturer, unless such Indebtedness is expressly or by operation of law non-recourse to such Person.

“Indemnified Liabilities” means, collectively, any and all liabilities, obligations, losses, damages (including natural resource damages), penalties, claims (including Environmental Claims), costs (including the costs of any required investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Hazardous Materials Activity), expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of outside counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any reasonable fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of (i) the execution or delivery of this Agreement, any other Credit Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby (including the Lenders’ agreement to make Credit Extensions or the use or intended use of the proceeds thereof, or any enforcement of any of the Credit Documents and any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit, if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit); (ii) the statements contained in the commitment letter or proposal letter delivered by any Lender to Borrower with respect to the transactions contemplated by this Agreement; or (iii) any Environmental Claim against or any Hazardous Materials Activity relating to or arising from, directly or indirectly, any past or present activity, operation, land ownership, or practice of Borrower or any of its Subsidiaries.

“Indemnified Taxes” means Taxes other than Excluded Taxes and Other Taxes.

“Indemnitee” as defined in Section 10.3(a).

“Indemnitee Related Person” of an Indemnitee means (1) any controlling Person or controlled Affiliate of such Indemnitee, (2) the respective directors, officers and employees of such Indemnitee or any of its controlling Persons or controlled Affiliates and (3) the respective agents of such Indemnitee or any of its controlling Persons or controlled Affiliates, in the case of this clause (3), acting on behalf of or upon the direction of such Indemnitee, controlling Person or such controlled Affiliate.

“Information Platform” as defined in Section 5.1(k).

“Institutional Term Loan” means any term loan borrowed by Borrower or any Subsidiary that is syndicated in the institutional term loan market.

“Interest Payment Date” means with respect to (i) any outstanding Base Rate Loan, (a) the last day of each Fiscal Quarter, commencing on the first such date to occur after the Closing Date; and (b) the applicable Final Maturity Date with respect to such Loan; and (ii) any outstanding LIBOR Rate Loan, the last day of each Interest Period applicable to such Loan; provided that, in the case of any Interest Period of longer than three (3) months, Interest Payment Date shall also include each date that is three (3) months, or an integral multiple thereof, after the commencement of such Interest Period.

“Interest Period” means, in connection with a LIBOR Rate Loan, an interest period of one, two, three or six months or, if each applicable Lender agrees, an interest period of twelve months, as selected by Borrower in the applicable Funding Notice or Conversion/Continuation Notice, (i) initially, commencing on the Credit Date or Conversion/Continuation Date thereof, as the case may be; and (ii) thereafter, commencing on the day on which the immediately preceding Interest Period expires; provided that

(a)if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day, unless no further Business Day occurs in such month, in which case such Interest Period shall expire on the immediately preceding Business Day;

(b)any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c) of this proviso, end on the last Business Day of a calendar month; and

(c)no Interest Period shall extend beyond the applicable Final Maturity Date with respect to such Loan.

“Interest Rate Determination Date” means, with respect to any Interest Period, the date that is two Business Days prior to the first day of such Interest Period.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter, and any successor statute.

“Investment” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of (i) loans (including Guarantees or other obligations but excluding extensions of trade credit), accounts receivable or deposits made in the Ordinary Course of Business), (ii) advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the Ordinary Course of Business), (iii) purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, or (iv) any item that is or would be classified as an investment on a balance sheet prepared in accordance with GAAP. Except as otherwise provided in this Agreement, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value.

“ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).

“Issuer Documents” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the L/C Issuer and the Borrower (or any Subsidiary) in favor of the L/C Issuer (including any authorization for air release of

cargo or release of shipment without surrender of marine bills of lading) and relating to such Letter of Credit.

“Joint Venture” means a joint venture, partnership or other similar arrangement, in each case, with a Person or Persons who are not Subsidiaries of Borrower, whether in corporate, partnership or other legal form; provided that in no event shall any corporate Restricted Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party.

“Junior Debt” means (i) any Indebtedness of Borrower or any Guarantor which is by its terms subordinated in right of payment to the Loans and (ii) any unsecured Indebtedness of Borrower that is not guaranteed by the Guarantors.

“Latest Maturity Date” means the latest Final Maturity Date for any Series.

“Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case, whether or not having the force of law.

“L/C Advance” means, with respect to each Tranche 2 Lender, such Tranche 2 Lender’s funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage. All L/C Advances shall be denominated in Dollars.

“L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made.

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

“L/C Issuer” means, as the context may require, (a) Bank of America, in its capacity as issuer of Letters of Credit hereunder, (b) any other Lender reasonably acceptable to the Borrower and the Administrative Agent that has agreed in writing to be an L/C Issuer and (c) any successor L/C Issuer appointed pursuant to Section 9.7(b) or 10.06(i), in each case, with respect to Letters of Credit issued by it; provided that with respect to any Letter of Credit denominated in an Alternative Currency, only Bank of America may be the L/C Issuer. In the event that there is more than one L/C Issuer at any time, references herein and in the other Credit Documents to the L/C Issuer shall be deemed to refer to the L/C Issuer in respect of the applicable Letter of Credit or to all L/C Issuers, as the context requires.

“L/C Issuer Sublimit” means, with respect to any L/C Issuer, the amount specified under the column headed “L/C Issuer Sublimit” on Schedule 2.1.

“L/C Obligations” means, as at any date of determination, (i) the aggregate amount available to be drawn under all outstanding Letters of Credit (including the maximum aggregate amount which is, or at any time thereafter may become, payable by the L/C Issuer under all then outstanding Bankers’ Acceptances and Letters of Indemnity) plus (ii) the aggregate of all Unreimbursed Amounts, including, without duplication, all L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.8. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the

operation of Rule 3.14 of the ISP or article 29 of the UCP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

“L/C Participation Fee” as defined in Section 2.8(a)(iii).

“L/C Sublimit” means, at any time, the Tranche 2 Total Commitments at such time.

“L/C Subsidiary” means (i) any Subsidiary listed on Schedule 1.1C or (ii) any Subsidiary designated as an L/C Subsidiary by Borrower by written notice to the Administrative Agent and the L/C Issuer at least five (5) Business Days in advance of the effectiveness thereof; provided that such Subsidiary has delivered the documents specified in Section 3.1(b) and (i) to the Administrative Agent and L/C Issuer prior to such Subsidiary being designated an “L/C Subsidiary.”

“Lender” means each Lender party hereto and any other Person that becomes a party hereto pursuant to an Assignment Agreement, other than any such Person that ceases to be a party hereto pursuant to an Assignment Agreement.

“Letter of Credit” means any letter of credit or Letter of Indemnity issued hereunder. A Letter of Credit may be a commercial letter of credit (payable against sight or time drafts, including any Bankers’ Acceptances arising from acceptance of time drafts) or a standby Letter of Credit. Letters of Credit may be issued in Dollars or in an Alternative Currency, subject to the proviso in the definition of “L/C Issuer.”

“Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer (which, in the case of any Letter of Credit issued for the account of any customer of Borrower or any Subsidiary, at the L/C Issuer’s election, shall be executed by both (i) Borrower or the applicable L/C Subsidiary and (ii) such customer) and, as applicable, shall include such general acceptance agreements, applications, certificates and other documents, as L/C Issuer may require in connection with the creation of Bankers’ Acceptances.

“Letter of Credit Expiration Date” means the day that is five days prior to the Latest Maturity Date (or, if such day is not a Business Day, the next preceding Business Day).

“Letter of Indemnity” means any air release, steamship guarantee or similar document providing indemnity to a carrier for air release of cargo or release of shipment without surrender of bills of lading for such cargo or shipment.

“LIBOR” means the London Interbank Offered Rate.

“LIBOR Rate Loan” means a Loan bearing interest at a rate determined by reference to the Adjusted LIBOR Rate.

“LIBOR Screen Rate” means LIBOR as displayed on the applicable screen page the Administrative Agent designates in its reasonable discretion to determine LIBOR (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time).

“LIBOR Successor Rate” as defined in Section 2.14(c).

“LIBOR Successor Rate Conforming Changes” means, with respect to any proposed LIBOR Successor Rate, any conforming changes to the definition of Base Rate, Interest Period, timing

and frequency of determining rates and making payments of interest and other administrative matters as may be appropriate, in the reasonable discretion of the Administrative Agent in consultation with the Borrower, to reflect the adoption of such LIBOR Successor Rate and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent reasonably determines that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of such LIBOR Successor Rate exists, in such other manner of administration as the Administrative Agent determines, in consultation with the Borrower, is reasonably necessary in connection with the administration of this Agreement).

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable Law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

“Loan” means any Tranche 1 Loan or any Tranche 2 Loan.

“Margin Stock” as defined in Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“Material Adverse Effect” means a material adverse effect on (i) the business operations, properties, assets, or condition (financial or otherwise) of Borrower, the Restricted Subsidiaries and the Banking Subsidiaries, taken as a whole; (ii) the ability of the Credit Parties, as a whole, to fully and timely perform the Obligations; (iii) the legality, validity, binding effect, or enforceability against the Credit Parties of the Credit Documents, in each case, taken as a whole; or (iv) the rights, remedies and benefits available to, or conferred upon, the Administrative Agent or any Lender under the Credit Documents, taken as a whole.

“Moody’s” means Moody’s Investors Service, Inc.

“Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, (i) to which Borrower, any of its Subsidiaries, or any of their respective ERISA Affiliates is making or accruing an obligation to make contributions or (ii) in respect of which Borrower, any of its Subsidiaries, or any of their respective ERISA Affiliates could have liability under Section 4201 of ERISA, in the event of a complete or partial withdrawal of any Person from such plan.

“NAIC” means The National Association of Insurance Commissioners, and any successor thereto.

“Non-Consenting Lender” as defined in Section 2.19.

“Non-Extension Notice Date” as defined in Section 2.20(b)(iii).

“Non-Public Information” means information which has not been disseminated in a manner making it available to investors generally, within the meaning of Regulation FD.

“Non-U.S. Lender” as defined in Section 2.16(e).

“Note” means a Revolving Loan Note substantially in the form of Exhibit B.

“Notice” means a Funding Notice or a Conversion/Continuation Notice.

“Notice of Prepayment” means a notice of prepayment with respect to a Loan, which shall be substantially in the form of Exhibit A-3 or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Relevant Officer.

“Obligations” means all liabilities and obligations of every nature of each Credit Party from time to time owed to the Administrative Agent (including any former administrative agent), the Arrangers, the Syndication Agents, the Lenders, or any of them, under any Credit Document, whether for principal, interest and fees (including interest and fees which, but for the filing of a petition in bankruptcy with respect to such Credit Party, would have accrued on any Obligation, whether or not a claim is allowed against such Credit Party for such interest in the related bankruptcy proceeding), expenses, indemnification or otherwise and whether primary, secondary, direct, indirect, contingent, fixed or otherwise (including obligations of performance).

“Obligee Guarantor” as defined in Section 7.7.

“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.

“Officer’s Certificate” means a certificate executed by an Authorized Officer of Borrower in his or her official (and not individual) capacity.

“Ordinary Course of Business” means each of the following occurring in the ordinary course of business: (i) all activities conducted by Borrower and its Subsidiaries in the ordinary course of their businesses, regardless of frequency, including, without limitation, the following activities: providing, arranging or syndicating financing (whether debt or equity), holding Portfolio Assets and their other assets and properties, asset management and servicing, factoring, trade accounts receivable purchasing, trade accounts receivable management services, leasing (both capital and operating leasing, and sales and exchanges pursuant to such leasing, and real estate leasing and subleasing to or from third parties with respect to operating locations), purchases, sales, transfers or other dispositions of Portfolio Assets, investment advisory services, insurance products, vendor financing, management, Portfolio Asset management, purchases and sales or other dispositions of assets and Capital Stock (including Investments in Joint Ventures) acquired in workouts of Portfolio Assets or factoring facilities, in each case, in this clause (i), to third parties or to Subsidiaries in the ordinary course of business, (ii) any financings (including any Investments and other transactions in connection therewith) of the foregoing activities through securitizations, secured financings, bank loans, conduit facilities, trusts, special purpose vehicles or other means, (iii) any related workout, exercise of remedies or restructuring activities, including, without limitation, formation of a special purpose vehicle to acquire, hold or dispose of assets and Capital Stock obtained in connection with such restructuring or other activities, (iv) managing and operating assets and businesses acquired through the exercise of remedies, (v) business associated with investments, banking or investment banking (including commercial and retail deposit taking and Bank Activities) or finance companies and (vi) any reasonable extension or evolution of the foregoing activities.

“Organizational Documents” means (i) with respect to any corporation, its certificate or articles of incorporation or organization, as amended, and its by-laws, as amended, (ii) with respect to any limited partnership, its certificate of limited partnership, as amended, and its partnership agreement, as amended, (iii) with respect to any general partnership, its partnership agreement, as amended, and (iv) with respect to any limited liability company, its articles of organization, as amended, and its operating

agreement or limited liability company agreement, as amended. In the event any term or condition of this Agreement or any other Credit Document requires any Organizational Document to be certified by a secretary of state or similar governmental official, the reference to any such “Organizational Document” shall only be to a document of a type customarily certified by such governmental official.

“Other Permitted Liens” means (a) (x) Liens for Taxes (i) for amounts not yet overdue, or (ii) for amounts that are overdue if obligations with respect to such Taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted so long as such reserves or other appropriate provisions, if any, as shall be required by GAAP, shall have been made for any such contested amounts; and (y) Liens with respect to other claims described in Section 5.3; provided that the requirements of Section 5.3 applicable thereto are complied with; (b) statutory Liens of landlords, banks (and rights of set off), of carriers, warehousemen, mechanics, suppliers, repairmen, workmen and materialmen, ordinary course Liens on aircraft for airport, navigation, and other en-route charges, permitted Liens under leases and other Liens imposed by law (other than any such Lien imposed pursuant to Section 430(k) or 436(f) of the Internal Revenue Code or by ERISA), (i) for amounts not yet overdue, or (ii) for amounts that are overdue and that (in the case of any such amounts overdue for a period in excess of five (5) days) are being contested in good faith by appropriate proceedings, so long as such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts; (c) Liens incurred in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations (exclusive of obligations for the payment of Indebtedness for borrowed money), or deposits made to secure liability to insurance carriers; (d) easements, rights of way, restrictions, encumbrances, encroachments, and other minor defects or irregularities in title or ownership rights, in each case, which do not and will not interfere with the value or use of the property to which such Lien is attached or with the ordinary conduct of business, in either case, in a manner that is material to Borrower and its Restricted Subsidiaries, taken as a whole; (e) Liens solely on any cash earnest money deposits made by Borrower or any of its Restricted Subsidiaries in connection with any letter of intent or purchase agreement the consummation of which would be permitted hereunder; (f) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (g) any zoning or similar law or right reserved to or vested in any governmental office or agency to control or regulate the use of any real property; and (h) licenses or sublicenses of patents, trademarks and other intellectual property rights granted by Borrower or any of its Restricted Subsidiaries in connection with Ordinary Course of Business.

“Other Taxes” means any and all present or future stamp, registration, recording, filing, transfer, documentary, excise or property Taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to or in connection with, any Credit Document, excluding any such Tax imposed as a result of an assignment by a Lender (“Assignment Tax”), if the Lender has a present or former connection with the jurisdiction imposing such Assignment Tax (other than a connection arising solely from having executed, delivered, enforced, become a party to, performed its obligations, received payments, received or perfected a security interest under, and/or engaged in any other transaction pursuant to, any Credit Document).

“Outstanding Amount” means (a) with respect to Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Loans, as the case may be, occurring on such date; and (b) with respect to any L/C Obligations on any date, the Dollar Equivalent amount of the aggregate outstanding amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any

other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by Borrower of Unreimbursed Amounts.

“Overnight Rate” means, for any day, (a) with respect to any amount denominated in Dollars, the greater of (i) the Federal Funds Effective Rate and (ii) an overnight rate determined by the Administrative Agent or the L/C Issuer, as the case may be, in accordance with banking industry rules on interbank compensation, and (b) with respect to any amount denominated in an Alternative Currency, the rate of interest per annum at which overnight deposits in the applicable Alternative Currency, in an amount approximately equal to the amount with respect to which such rate is being determined, would be offered for such day by a branch or Affiliate of Bank of America in the applicable offshore interbank market for such currency to major banks in such interbank market.

“Own” means, with respect to any aircraft, to hold legal and sole ownership of such aircraft directly or to hold 100% of the beneficial ownership of such aircraft through a trust, conditional sale or similar arrangement holding title to such aircraft. The terms “Ownership” and “Owned by” have a correlative meaning.

“Owner Trust” means any trust holding title to any aircraft, 100% of the beneficial ownership of which trust is held by Borrower or any Guarantor.

“Owner Trustee” means the owner trustee (not in its individual capacity but solely as trustee) of an Owner Trust, the property of which is beneficially owned by a Guarantor.

“Participant” as defined in Section 10.6(g)(ii).

“Participant Register” as defined in Section 10.6(g)(iv).

“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001), including the Beneficial Ownership Regulation.

“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

“Pension Plan” means an Employee Benefit Plan that is a “defined benefit plan” (as defined in Section 414(j) of the Internal Revenue Code and Section 3(35) of ERISA) other than a Multiemployer Plan.

“Permitted Aircraft Liens” means (i) Liens described under clause (a)(x) in the definition of “Other Permitted Liens,” (ii) any Lien of landlords, carriers, warehousemen, hanger keepers, mechanics, suppliers, repairmen, workmen, materialmen and the like (including liens for airport, navigation, and other en-route charges) arising in the ordinary course of business by operation of Law (or under customary terms of repair or modification agreements or any engine or parts-pooling arrangements) or similar Lien, in each case, (x) which are either not overdue or are being contested in good faith by appropriate proceedings, and (y) securing obligations that are not incurred in connection with the obtaining of any Indebtedness for borrowed money, and (iii) the lease pursuant to which the applicable aircraft is leased or any sublease of such aircraft or any liens incurred by lessees or sublessees in connection with such arrangements or in their interest in such lease or sublease.

“Permitted Finance Receivable Liens” means (i) Liens described under clause (a)(x) in the definition of “Other Permitted Liens,” and (ii) Liens that are rights of set off or other limitations or encumbrances relating to transactions with a syndicate member or participant or agent or letter of credit

bank or issuer in a loan or equity transaction in the ordinary course of business securing obligations that are not incurred in connection with the obtaining of any Indebtedness for borrowed money.

“Permitted Liens” means each of the Liens permitted pursuant to Section 6.1 and Other Permitted Liens.

“Permitted Railcar Liens” means (i) Liens described under clause (a)(x) in the definition of “Other Permitted Liens,” (ii) any Lien of landlords, carriers, warehousemen, mechanics, suppliers, repairmen, workmen, materialmen and the like arising in the ordinary course of business by operation of law (or under customary terms of repair or modification agreements or parts-pooling arrangements) or similar Lien, in each case, (x) which are either not overdue or are being contested in good faith by appropriate proceedings, and (y) securing obligations that are not incurred in connection with the obtaining of any Indebtedness for borrowed money, and (iii) the lease pursuant to which the applicable railcar is leased or any sublease of such railcar or any liens incurred by lessees or sublessees in connection with such arrangements or in their interest in such lease or sublease.

“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.

“Portfolio Assets” means any assets or rights acquired, funded, held, managed, financed, syndicated or otherwise generated or disposed of in the Ordinary Course of Business, including, without limitation, loans, leases, inventory, equipment, intellectual property rights, securities and investment property (equity or otherwise), mortgages and instruments (negotiable or otherwise), receivables, trade payables or trade account receivables, and any other financial assets and the proceeds and products of the foregoing.

“Preferred Aircraft Types” means aircraft of each of the following types: (a) Airbus A319, (b) Airbus 319neo, (c) Airbus A320, (d) Airbus A320neo, (e) Airbus A321-200, (f) Airbus A321neo, (g) Airbus A330, (h) Airbus A350, (i) Boeing 737-600, (j) Boeing 737-700, (k) Boeing 737-800, (l) Boeing 737-900ER, (m) Boeing 737 MAX, (n) Boeing 777-200ER, (o) Boeing 777-200LR, (p) Boeing 777-300ER, (q) Boeing 787 and (r) Embraer E-190.

“Preferred Railcar Types” means any railcar or locomotive, other than the following types: (i) locomotives, other than freight locomotives, (ii) centerbeam cars, (iii) 70-ton box cars and (iv) steel coal cars.

“Prime Rate” means, with respect to any day, the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate.” The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. The Administrative Agent or any other Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

“Principal Office” means, for each of the Administrative Agent and any Lender, such Person’s “Principal Office” (and account as appropriate) as set forth on Appendix A, or such other office or account or office of a third party or sub-agent, as appropriate, as such Person may from time to time designate in writing to Borrower and each Lender, which office may include any Affiliate of such Lender or any domestic or foreign branch of such Lender or such Affiliate. Unless the context otherwise requires each reference to a Lender shall include its applicable Principal Office.

“Prior Credit Agreement” has the meaning set forth in the preamble hereto.

“Prior Credit Agreement Date” means January 27, 2014.

“Prohibited Country” means a country or territory that is the subject of sanctions administered or enforced by any Sanctions Authority.

“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

“Public Lender” as defined in Section 5.1(k).

“Publicly Traded Debt Securities” means any issue of debt securities of Borrower or any of its Restricted Subsidiaries originally issued in a public offering registered with the SEC or in an offering pursuant to Rule 144A under the Securities Act and of which issue at least $50.0 million aggregate principal amount is outstanding.

“QFC” as defined in Section 10.25(ii).

“QFC Credit Support” as defined in Section 10.25.

“Qualified Appraiser” means (i) in the case of aircraft, any of AVITAS, Inc., Aircraft Information Services, Inc. or Aviation Specialist Group, (ii) in the case of railcars or locomotives, Rail Solutions, Inc. and (iii) any other appraisal firm selected and retained by Borrower and reasonably acceptable to the Administrative Agent.

“Qualified Equity Interests” means Capital Stock of Borrower that is not Disqualified Stock.

“Qualified Lease Subsidiary” means a Subsidiary that (a) does not engage in any activities other than entering into (i) leases (each, a “headlease”) with respect to aircraft with a Guarantor, a Qualified Owner Trust or another Qualified Lease Subsidiary and (ii) subleases with respect to such aircraft with the ultimate customer or another Qualified Lease Subsidiary, (b) is obligated to pay, and pays, not less than 98% of the rental payments under the sublease as rental payment under the headlease and (c) has no liabilities other than those incidental to the foregoing.

“Qualified Owner Trust” means an Owner Trust that (a) is wholly owned, beneficially and of record, directly by a Guarantor, (b) does not engage in any activities other than (i) holding title to aircraft for the benefit of one or more Guarantors and (ii) entering into leases with respect to such aircraft for the benefit of one or more Guarantors, and (c) has no liabilities other than those incidental to the foregoing.

“Rate Management Transactions” means any transaction (including an agreement with respect thereto) now existing or hereafter entered into by Borrower or any Restricted Subsidiary which is a rate swap, basis swap, total return swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures, or the purchase of credit default swaps.

“Real Estate Asset” means, at any time of determination, any interest (fee, leasehold or otherwise) then owned by any Credit Party in any real property.

“Register” as defined in Section 2.4(b).

“Regulated Subsidiary” means any Person identified on Schedule 1.1D and each other Person identified from time to time by any Credit Party in writing to the Administrative Agent in accordance with Section 10.1 so long as, in each case, such Person is an entity directly regulated by a Governmental Authority, including any Banking Subsidiary and its Subsidiaries, or whose assets or business consist primarily of assets (e.g., licenses) or businesses regulated directly by a Governmental Authority.

“Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“Regulation FD” means Regulation FD, as promulgated by the SEC under the Securities Act and the Exchange Act.

“Regulation S-X” means Regulation S-X, as promulgated by the SEC under the Securities Act.

“Regulation T” means Regulation T of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“Related Fund” means, with respect to any Lender that is an investment fund, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees and advisors of such Person and of such Person’s Affiliates.

“Release” means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater.

“Relevant Officer” means, as applied to any Person, any individual holding the position of chairman of the board (if an officer), chief executive officer, president, chief financial officer, chief accounting officer, controller, treasurer or assistant treasurer and, solely for purposes of notices given pursuant to Section 2, any such officer or employee of the applicable Credit Party so designated by any of the foregoing officers in a written notice to the Administrative Agent.

“Replacement Lender” as defined in Section 2.19.

“Requisite Lenders” means, as of any date of determination, Lenders holding more than 50% of the sum of the (a) Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations being deemed, without duplication, “held” by such Lender for purposes of this definition) and (b) the aggregate unused Commitments; provided that the

unused Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Requisite Lenders.

“Requisite Tranche Lenders” means (a) with respect to the Tranche 1 Facility, the Requisite Tranche 1 Lenders and (b) with respect to the Tranche 2 Facility, the Requisite Tranche 2 Lenders.

“Requisite Tranche 1 Lenders” means one or more Lenders having or holding Tranche 1 Exposure representing more than fifty percent (50%) of the Tranche 1 Exposure of all Lenders, provided that the Tranche 1 Exposure held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Requisite Tranche 1 Lenders.

“Requisite Tranche 2 Lenders” means one or more Lenders having or holding Tranche 2 Exposure representing more than fifty percent (50%) of the Tranche 2 Exposure of all Lenders, provided that the Tranche 2 Exposure held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Requisite Tranche 2 Lenders.

“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.

“Restricted Party” means any Person that is (1) listed on, or owned (meaning 50% or greater ownership interest) or otherwise (directly or indirectly) controlled by a Person listed on, or acting on behalf of a Person listed on, any Sanctions List, (2) located in, or organized under the laws of, or domiciled in, or owned (meaning 50% or greater ownership interest) or otherwise (directly or indirectly) controlled by, or acting on behalf of, a Person located in or organized under the laws of or domiciled in a Prohibited Country or (3) otherwise a Target of Sanctions.

“Restricted Payment” as defined in Section 6.2(a).

“Restricted Subsidiary” of a Person means any Subsidiary of such Person that is not an Unrestricted Subsidiary. Unless otherwise specified, a Restricted Subsidiary refers to a Restricted Subsidiary of Borrower.

“Revaluation Date” means, with respect to any Letter of Credit, each of the following: (i) each date of issuance or renewal of a Letter of Credit denominated in an Alternative Currency, (ii) each date of an amendment of any such Letter of Credit having the effect of increasing the amount thereof (solely with respect to the increased amount), (iii) each date of any payment by the L/C Issuer under any Letter of Credit denominated in an Alternative Currency, (iv) the first Business Day of each month and (v) such additional dates as the Administrative Agent or the L/C Issuer shall reasonably determine (including, without limitation, on any date when the L/C Issuer issues a Letter of Indemnity, an airway bill release, steamship guarantee or a banker’s acceptance in respect of a Letter of Credit) or the Requisite Tranche 2 Lenders shall reasonably require.

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw Hill Corporation.

“Sale and Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired whereby Borrower or a Restricted Subsidiary transfers such property to a Person and Borrower or a Restricted Subsidiary leases it from such Person.

“Same Day Funds” means (a) with respect to disbursements and payments in Dollars, immediately available funds, and (b) with respect to disbursements and payments in an Alternative Currency, same day or other funds, as may be reasonably determined by the Administrative Agent or the L/C Issuer, as the case may be, to be customary in the place of disbursement or payment for the settlement of international banking transactions in the relevant Alternative Currency.

“Sanctions” means the economic sanctions laws, regulations, embargoes or restrictive measures administered, enacted, or enforced by: (i) the United States government, including the Executive Order, the USA PATRIOT Act of 2001, the U.S. International Emergency Economic Powers Act (50 U.S.C. §§ 1701 et seq.), the U.S. Trading with the Enemy Act (50 U.S.C. App. §§ 1 et seq.), the U.S. United Nations Participation Act, the U.S. Syria Accountability and Lebanese Sovereignty Act, the U.S. Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 or the Iran Sanctions Act, Section 1245 of the National Defense Authorization Act of 2012, The Iran Freedom and Counter-Proliferation Act of 2012, the Iran Threat Reduction and Syria Human Rights Act of 2012, the Countering America’s Adversaries Through Sanctions Act (22 U.S.C. 9401 et seq.), all as amended, executive orders implementing these laws, or any of the foreign assets control regulations (including 31 C.F.R., Subtitle B, Chapter V, as amended); (ii) the United Nations; (iii) the European Union; (iv) the United Kingdom; or (v) the respective governmental institutions and agencies of any of the foregoing, including, without limitation, OFAC, the United States Department of State, her Majesty’s Treasury (“HMT”), the United Nations Security Council, Ireland, or other relevant sanctions authority (together, the “Sanctions Authorities”).

“Sanctions Authority” as defined in the definition of Sanctions.

“Sanctions List” means the Annex to the Executive Order, the Specially Designated Nationals and Blocked Persons List maintained by OFAC, the Consolidated List of Financial Sanctions Targets and the Investment Ban List maintained by HMT, or any similar list maintained by, or public announcement of Sanctions designation made by, any of the Sanctions Authorities.

“Scheduled Unavailability Date” as defined in Section 2.14(c).

“SEC” means the U.S. Securities and Exchange Commission.

“Securities” means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.

“Securities Account” means a “securities account” as defined in Section 8-501 of the UCC, with a bank or like organization.

“Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor statute.

“Series” means (i) with respect to any Commitment, its character as a Tranche 1 Commitment, Tranche 2 Commitment or any other group of Commitments designated as a “Series” pursuant to this Agreement, and (ii) with respect to any Loan, its character as a Tranche 1 Loan, Tranche 2 Loan or any other group of Loans designated as a “Series” pursuant to this Agreement; provided that, notwithstanding anything to the contrary, the borrowing and, except as set forth in Section 2.11(b),

repayment of Loans shall be made on a pro rata basis across all Series of Loans of the same Tranche, and any reduction of Commitments shall be made on a pro rata basis across all Series of Commitments of the same Tranche.

“Significant Subsidiary” means any Restricted Subsidiary or any U.S. Banking Subsidiary that is a chartered or licensed banking institution that is authorized to take deposits that, in either case, would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Closing Date.

“Solvency Certificate” means a Solvency Certificate of the chief financial officer of Borrower substantially in the form of Exhibit F-2.

“Solvent” means that, as of the date of determination, (a) the sum of Borrower’s debts and liabilities (including contingent liabilities) does not exceed the present fair saleable value of Borrower’s present assets; (b) Borrower’s capital is not unreasonably small in relation to its business, as contemplated on the Closing Date or with respect to any transaction contemplated to be undertaken after the Closing Date; and (c) Borrower does not intend to incur, or believe that it will incur, debts beyond its ability to pay such debts as they become due (whether at maturity or otherwise). For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5).

“Special Purpose Entity” means a Person (i) formed by Borrower or a Subsidiary of Borrower for a limited purpose or having a limited business purpose in connection with the Ordinary Course of Business or (ii) the Capital Stock of which was acquired in connection with the workout of assets or exercise of remedies in the Ordinary Course of Business or as the proceeds of collateral securing a loan or other Portfolio Asset or in connection with servicing or managing assets in the Ordinary Course of Business, which is designated as a Special Purpose Entity by Borrower or a Guarantor.

“Spot Rate” for a currency means the rate determined by the Administrative Agent or the L/C Issuer, as applicable, to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date as of which the foreign exchange computation is made; provided that the Administrative Agent or L/C Issuer may obtain such spot rate from another financial institution designated by the Administrative Agent or the L/C Issuer, if the Person acting in such capacity does not have, as of the date of determination, a spot buying rate for any such currency; and provided, further, that the L/C Issuer may use such spot rate quoted on the date as of which the foreign exchange computation is made in the case of any Letter of Credit denominated in an Alternative Currency.

“Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the issue date of such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

“Subordinated Intercompany Indebtedness” means Indebtedness of any Guarantor to Borrower or any Subsidiary; provided that all such Indebtedness of any Guarantor shall be expressly subordinated to the Obligations substantially on the terms attached hereto as Exhibit I.

“Subsidiary” means, with respect to any specified Person:

(1)

any corporation, limited liability company, association or other business entity of which more than fifty percent (50%) of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting, agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, limited liability company, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

(2)	any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).

Unless otherwise specified, a Subsidiary refers to a Subsidiary of Borrower.

“Supported QFC” as defined in Section 10.25.

“Syndication Agent” means each of Barclays Bank PLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and Wells Fargo Bank, National Association in its respective capacity as syndication agent.

“Target of Sanctions” means a Person with whom a U.S. Person or other national of a Sanctions Authority would be prohibited or restricted by law from engaging in trade, business, or other activities.

“Tax” means any present or future tax, levy, impost, duty, assessment, charge, claim, fee, deduction or withholding of any nature imposed, levied, collected, withheld or assessed by any Governmental Authority, including any interest, penalties or additional amounts thereon.

“Tax Related Person” means any Person (including a beneficial owner of an interest in a pass-through entity) who is required to include in income amounts realized (whether or not distributed) by the Administrative Agent, a Lender or Participant or any Tax Related Person of any of the foregoing.

“Terminated Lender” as defined in Section 2.19.

“Terrorism Laws” means any of the following: (a) Executive Order 13224 issued by the President of the United States (the “Executive Order”), (b) the Terrorism Sanctions Regulations (Title 31 Part 595 of the U.S. Code of Federal Regulations), (c) the Terrorism List Governments Sanctions Regulations (Title 31 Part 596 of the U.S. Code of Federal Regulations), (d) the Foreign Terrorist Organizations Sanctions Regulations (Title 31 Part 597 of the U.S. Code of Federal Regulations), (e) the Patriot Act (as it may be subsequently codified), (f) The Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act”, 31 U.S.C. §§ 5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959), (g) all other present and future legal requirements of any Governmental Authority addressing, relating to, or attempting to eliminate, terrorist acts and acts of war and (h) any regulations promulgated pursuant thereto or pursuant to any legal requirements of any Governmental Authority governing terrorist acts or acts of war.

“Threshold Amount” means $250,000,000.

“Tier 1 Capital Ratio” means the ratio of tier 1 capital to standardized total risk-weighted assets (in each case, calculated in accordance with the capital adequacy rules of the applicable Bank Regulatory Agency).

“Total Commitments” means, at any time, the aggregate amount of the Lenders’ Commitments at such time.

“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all L/C Obligations.

“Tranche” means the Tranche 1 Facility or the Tranche 2 Facility.

“Tranche 1 Commitment” means, with respect to each Tranche 1 Lender, its obligations to make Tranche 1 Loans to Borrower pursuant to Section 2.1(a) in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.1 under the caption “Tranche 1 Commitment” or opposite such caption in the Assignment Agreement pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

“Tranche 1 Exposure” means, with respect to any Lender, as of any date of determination, the sum of (i) any unfunded Tranche 1 Commitment of such Lender in effect as of such date, if any, and (ii) the principal amount of the Tranche 1 Loans of such Lender outstanding as of such date.

“Tranche 1 Facility” means the “Tranche 1” revolving facility established pursuant to Section 2.1 of this Agreement and the Tranche 1 Loans and Tranche 1 Commitments thereunder.

“Tranche 1 Lender” means each Lender that has a Tranche 1 Commitment or that holds a Tranche 1 Loan.

“Tranche 1 Loan” means any Tranche 1 Loan made pursuant to the Tranche 1 Commitments.

“Tranche 1 Outstandings” means the aggregate Outstanding Amount of all Tranche 1 Loans.

“Tranche 1 Total Commitments” means, at any time, the aggregate amount of the Lenders’ Tranche 1 Commitments at such time. The Tranche 1 Total Commitments as of the Amendment No. 4 Effective Date are $200,000,000.

“Tranche 2 Commitment” means, with respect to each Tranche 2 Lender, its obligations to (A) make Tranche 2 Loans to Borrower pursuant to Section 2.1(a) and (B) purchase participations in L/C Obligations, in an aggregate principal amount at any one time outstanding not to exceed, the amount set forth opposite such Lender’s name on Schedule 2.1 under the caption “Tranche 2 Commitment” or opposite such caption in the Assignment Agreement pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

“Tranche 2 Exposure” means, with respect to any Tranche 2 Lender, as of any date of determination, the sum, without duplication, of (i) any unfunded Tranche 2 Commitment of such Lender in effect as of such date, if any, (ii) the principal amount of the Tranche 2 Loans of such Lender

outstanding as of such date and (iii) such Tranche 2 Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations.

“Tranche 2 Facility” means the “Tranche 2” revolving facility established pursuant to Sections 2.1 and the Letter of Credit facility established pursuant to Section 2.20 of this Agreement and the Tranche 2 Loans and Tranche 2 Commitments thereunder.

“Tranche 2 Lender” means each Lender that has a Tranche 2 Commitment or that holds a Tranche 2 Loan.

“Tranche 2 Loan” means any Tranche 2 Loan made pursuant to the Tranche 2 Commitments.

“Tranche 2 Outstandings” means the aggregate Outstanding Amount of all Tranche 2 Loans.

“Tranche 2 Total Commitments” means, at any time, the aggregate amount of the Lenders’ Tranche 2 Commitments at such time. The Tranche 2 Total Commitments as of the Amendment No. 4 Effective Date are $100,000,000.

“UCP” means, with respect to any Letter of Credit, the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce.

“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person subject to IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.

“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

“United States” means the United States of America.

“Unreimbursed Amount” as defined in Section 2.20(c)(i).

“Unrestricted Subsidiary” means (i) any Subsidiary listed on Schedule 5.10 and (ii) any Subsidiary that is formed after the Prior Credit Agreement Date as an Unrestricted Subsidiary or designated as an Unrestricted Subsidiary after the Prior Credit Agreement Date, in each case, in compliance with Section 5.10.

“U.S. Banking Subsidiary” means a Banking Subsidiary (including CIT Bank) organized under the laws of the United States, any state thereof or any other jurisdiction thereunder.

“U.S. Lender” as defined in Section 2.16(e).

“U.S. Special Resolution Regimes” as defined in Section 10.25.

“Utilization Rate” means the percentage equal to (i) the Total Outstandings over (ii) the Total Commitments.

“Voting Capital Stock” of any specified Person as of any date means the outstanding Capital Stock of such Person that has at the time ordinary voting power to elect the Board of Directors of such Person.

“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

1.2	Accounting Terms.

All calculations under the Credit Documents shall be made in accordance with the accounting principles and policies used to prepare the Historical Financial Statements, except (i) as otherwise expressly provided herein or therein and (ii) that Indebtedness of Borrower and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 on financial liabilities shall be disregarded. Without limiting the foregoing, leases shall continue to be classified and accounted for on a basis consistent with that reflected in the Historical Financial Statements provided prior to the Amendment No. 3 Effective Date for all purposes of this Agreement, notwithstanding any change in GAAP relating thereto, unless the parties hereto shall enter into a mutually acceptable amendment addressing such changes; provided that, notwithstanding the foregoing, in no event will any lease that would have been categorized as an operating lease as determined in accordance with GAAP prior to giving effect to the Accounting Standards Codification Topic 842, Leases, or any other changes in GAAP subsequent to the Amendment No. 3 Effective Date, be considered a Capital Lease for purposes of this Agreement. For the avoidance of doubt, all lease liabilities and right of use assets in each case related to operating leases shall be excluded from all calculations made under this Agreement.

Financial statements and other information required to be delivered by Borrower to Lenders pursuant to Sections 5.1(a) and 5.1(b) shall be prepared in accordance with generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity, as may be approved by a significant segment of the accounting profession of the United States, in each case, which are in effect at the applicable time in the United States (“GAAP”). At any time after the Closing Date, Borrower may elect to apply International Financial Reporting Standards (“IFRS”) accounting principles in lieu of GAAP and, upon any such election, references herein to GAAP shall thereafter be construed to mean IFRS (except as otherwise provided in this Agreement). Borrower shall give notice of any such election made in accordance with this definition to the Administrative Agent.

Accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP or in the application thereof.

1.3	Interpretation, etc.

Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. References herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided. The use herein of the word “include” or “including,” when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. Unless otherwise indicated, any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document, as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein). Any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation, as amended, modified, replaced or supplemented from time to time. Capitalized terms in this Agreement referring to any Person shall refer to such Person together with its successors and permitted assigns.

1.4	Exchange Rates; Currency Equivalents.

(a)The Administrative Agent or the L/C Issuer, as applicable, shall determine the Spot Rates as of each Revaluation Date to be used for calculating Dollar Equivalent amounts of Credit Extensions and Outstanding Amounts denominated in Alternative Currencies. Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot Rates employed in converting any amounts between the applicable currencies, until the next Revaluation Date to occur. Except for purposes of financial statements delivered by Credit Parties hereunder or calculating financial covenants hereunder or except as otherwise provided herein, the applicable amount of any currency (other than Dollars) for purposes of the Credit Documents shall be such Dollar Equivalent amount, as so determined by the Administrative Agent or the L/C Issuer, as applicable.

(b)Wherever in this Agreement in connection with the issuance, amendment or extension of a Letter of Credit, an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such Letter of Credit is denominated in an Alternative Currency, such amount shall be the relevant Alternative Currency Equivalent of such Dollar amount (rounded to the nearest unit of such Alternative Currency, with 0.5 of a unit being rounded upward), as determined by the L/C Issuer.

1.5	Additional Alternative Currencies.

(a)Borrower may from time to time request that Letters of Credit be issued in a currency other than those specifically listed in the definition of “Alternative Currency”; provided that such requested currency is a lawful currency (other than Dollars) that is readily available and freely transferable and convertible into Dollars. Such request shall be subject to the approval of the Administrative Agent and the L/C Issuer (such approval not to be unreasonably withheld or delayed).

(b)Any such request shall be made to the Administrative Agent not later than 11:00 a.m., ten Business Days prior to the date of the desired Credit Extension (or such other time or date, as may be agreed by the Administrative Agent and the L/C Issuer, in their sole discretion). The Administrative Agent shall promptly notify the L/C Issuer of any such request. The L/C Issuer shall notify the Administrative Agent, not later than 11:00 a.m., five Business Days after receipt of such

request, whether it consents to the issuance of Letters of Credit in such requested currency (such consent not to be unreasonably withheld, conditioned or delayed).

(c)Any failure by the L/C Issuer to respond to such request within the time period specified in the preceding sentence shall be deemed to be a refusal by the L/C Issuer to permit Letters of Credit to be issued in such requested currency. If the Administrative Agent and the L/C Issuer consent to the issuance of Letters of Credit in such requested currency, the Administrative Agent shall so notify Borrower and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Letter of Credit issuances. If the Administrative Agent shall fail to obtain consent to any request for an additional currency under this Section 1.5, the Administrative Agent shall promptly so notify Borrower.

1.6	Change of Currency.

(a)Each obligation of Borrower to make a payment denominated in the national currency unit of any member state of the European Union that adopts the Euro as its lawful currency after the Closing Date shall be redenominated into Euro at the time of such adoption (in accordance with the EMU Legislation). If, in relation to the currency of any such member state, the basis of accrual of interest expressed in this Agreement in respect of that currency shall be inconsistent with any convention or practice in the London interbank market for the basis of accrual of interest in respect of the Euro, such expressed basis shall be replaced by such convention or practice with effect from the date on which such member state adopts the Euro as its lawful currency.

(b)Each provision of this Agreement shall be subject to such reasonable changes of construction, as the Administrative Agent may from time to time specify to be appropriate to reflect the adoption of the Euro by any member state of the European Union and any relevant market conventions or practices relating to the Euro.

(c)Each provision of this Agreement also shall be subject to such reasonable changes of construction, as the Administrative Agent may from time to time specify to be appropriate to reflect a change in currency of any other country and any relevant market conventions or practices relating to the change in currency.

1.7	Times of Day.

Unless otherwise specified, all references herein to times of day shall be references to New York City time.

1.8	Letter of Credit Amounts.

Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the Dollar Equivalent of the stated amount of such Letter of Credit in effect at such time; provided, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the Dollar Equivalent of the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

1.9	Type of Loans and Borrowings.

For purposes of this Agreement, Loans or Borrowings may be classified and referred to by its type (e.g., a “LIBOR Rate Loan” or “Base Rate Loans”).

SECTION 2.

LOANS

2.1

Loans.

(a)Loan Commitments.

Subject to the terms and conditions hereof, each Lender under each Tranche severally agrees to make Loans under such Tranche to Borrower from time to time, on any Business Day during the applicable Availability Period; provided, however, that after giving effect to any Borrowing of Loans under any Tranche, (i) the Outstanding Amount of all Loans and L/C Obligations, if any, under such Tranche shall not exceed the aggregate Commitments under such Tranche, and (ii) the aggregate Outstanding Amount of the Loans of any Lender under such Tranche plus such Lender’s Applicable Percentage of the Outstanding Amount of any L/C Obligations under such Tranche, if any, shall not exceed such Lender’s Commitment under such Tranche. For the avoidance of doubt, Loans shall be made ratably across all Commitments of each Tranche. Within the limits of each Lender’s Commitment under each Tranche, and subject to the other terms and conditions hereof, Borrower may borrow under this Section 2.1(a), prepay under Section 2.9 or 2.10, and reborrow under this Section 2.1(a). Loans may be Base Rate Loans or LIBOR Rate Loans, as further provided herein.

(b)Borrowing Mechanics.

(i)Borrower shall give notice to the Administrative Agent, which may be given by (A) telephone or (B) delivering a fully executed Funding Notice; provided that any telephonic notice must be confirmed promptly by delivery to the Administrative Agent of a Funding Notice. Each such Funding Notice must be received by the Administrative Agent no later than 10:00 a.m. (or, solely in the case where the Credit Date is the Closing Date, 3:00 p.m.) at least three Business Days in advance of the proposed Credit Date in the case of a Loan that is a LIBOR Rate Loan, and no later than 9:00 a.m. on the proposed Credit Date in the case of a Loan that is a Base Rate Loan; provided, however, that if Borrower wishes to request LIBOR Rate Loans having an Interest Period other than one, two, three or six months in duration, as provided in the definition of “Interest Period,” the applicable notice must be received by the Administrative Agent not later than 10:00 a.m. four Business Days prior to the requested date of such Borrowing, conversion or continuation, whereupon the Administrative Agent shall give prompt notice to the Lenders of the applicable Tranche of such request and determine whether the requested Interest Period is acceptable to all of them. Not later than 10:00 a.m., three Business Days before the requested date of such Borrowing, conversion or continuation of the Loans of any Tranche, the Administrative Agent shall notify Borrower (which notice may be by telephone to be followed by confirmation in writing) whether or not the requested Interest Period has been consented to by all the Lenders of such Tranche. Each Borrowing of Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Borrower shall be bound to make a borrowing in accordance with a Funding Notice for a Loan that is a LIBOR Rate Loan, unless such Funding Notice is revoked by Borrower prior to the occurrence of the applicable Credit Extension; provided that any such revocation shall be subject to the terms of Section 2.14(e). Promptly upon receipt by Administrative Agent of any Funding Notice, Administrative Agent shall notify each Lender of the proposed borrowing. Administrative Agent and Lenders may act without liability upon the basis of written, or telecopied notice believed by

Administrative Agent in good faith to be from Borrower (or from any Authorized Officer thereof designated in writing purportedly from Borrower to Administrative Agent), it being understood that no Lender nor Administrative Agent shall be obligated in any manner with respect to the funding of any Loan in the absence of the receipt by Administrative Agent of a completed and executed Funding Notice. Administrative Agent and each Lender shall be entitled to rely conclusively on any Authorized Officer’s authority to request a Loan on behalf of Borrower, until Administrative Agent and such Lenders receive written notice to the contrary. Administrative Agent and Lenders shall have no duty to verify the authenticity of the signature appearing on any written Funding Notice.

(ii)Each Lender of the applicable Tranche shall make its Loan available to Administrative Agent not later than 12:00 noon on the applicable Credit Date, by wire transfer of Same Day Funds in Dollars, at the Principal Office designated by the Administrative Agent. Upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of the Loans available to Borrower by no later than 3:00 p.m. on the applicable Credit Date by causing an amount of Same Day Funds in Dollars equal to the proceeds of all such Loans received by Administrative Agent by 12:00 noon on such day from Lenders to be credited to the account of Borrower at the Principal Office designated by the Administrative Agent or to such other account, as may be designated in writing to Administrative Agent by Borrower.

2.2	Applicable Percentages; Availability of Funds.

(a)Applicable Percentages. Any Loan requested on a Credit Date shall be made by the applicable Lenders simultaneously and proportionately to their respective Applicable Percentages, it being understood that no Lender shall be responsible for any default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of a default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder.

(b)Availability of Funds. Unless Administrative Agent shall have been notified by any Lender prior to the applicable Credit Date (or, in the case of a Base Rate Loan, at least 2 hours before the time that Lenders are required to make their Loans available pursuant to Section 2.1(b)(ii) on the applicable Credit Date) that such Lender does not intend to make available to Administrative Agent the amount of such Lender’s Loan requested on such Credit Date, Administrative Agent may assume that such Lender has made such amount available to Administrative Agent on such Credit Date and Administrative Agent may, in its sole discretion, but shall not be obligated to, make available to Borrower a corresponding amount on such Credit Date. If such corresponding amount is not in fact made available to Administrative Agent by such Lender, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender, together with interest thereon, for each day from such Credit Date, until the date such amount is paid to Administrative Agent, at the customary rate set by Administrative Agent for the correction of errors among banks for three (3) Business Days and thereafter at the Base Rate. If such Lender does not pay such corresponding amount forthwith upon Administrative Agent’s demand therefor, Administrative Agent shall promptly notify Borrower and Borrower shall within one Business Day pay such corresponding amount to Administrative Agent, together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the rate payable hereunder for Base Rate Loans. Nothing in this Section 2.2(b) shall be deemed to relieve any Lender from its obligation to fulfill its Commitments hereunder or to prejudice any rights that Borrower may have against any Lender as a result of any default by such Lender hereunder.

2.3	Use of Proceeds.

Borrowings and Letters of Credit will be used for general corporate purposes of Borrower and its Subsidiaries. No portion of the proceeds of any Credit Extension shall be used in any manner that causes or might cause such Credit Extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation thereof or to violate the Exchange Act.

2.4	Evidence of Debt; Register; Lenders’ Books and Records; Notes.

(a)Lenders’ Evidence of Debt. Each Lender shall maintain on its internal records an account or accounts evidencing the Obligations of Borrower to such Lender, including the amounts of the Loans made by it and each repayment and prepayment in respect thereof. Any such recordation shall be conclusive and binding on Borrower absent manifest error; provided that the failure to make any such recordation, or any error in such recordation, shall not affect any Lender’s Commitments or Borrower’s Obligations in respect of any applicable Loans; and provided, further, in the event of any inconsistency between the Register and any Lender’s records, the recordations in the Register shall govern.

(b)Register. Administrative Agent (or its agent or sub-agent) shall maintain at its Principal Office a register for the recordation of the names and addresses of Lenders and the Commitments and Loans of each Lender from time to time (the “Register”), including the principal amount of the Loans and Commitments. The Register shall be available for inspection by Borrower, the L/C Issuer and any Lender at any reasonable time and from time to time upon reasonable prior notice. Administrative Agent shall record, or shall cause to be recorded, in the Register, the Commitments and the Loans in accordance with the provisions of Section 10.6, and each repayment or prepayment in respect of the principal amount of the Loans, and any such recordation shall be conclusive and binding on Borrower and each Lender, absent manifest error; provided that failure to make any such recordation, or any error in such recordation, shall not affect any Lender’s Commitments or Borrower’s Obligations in respect of any Loan. Borrower hereby designates the entity serving as Administrative Agent to serve as Borrower’s agent solely for purposes of maintaining the Register as provided in this Section 2.4, and Borrower hereby agrees that, to the extent such entity serves in such capacity, the entity serving as Administrative Agent and its officers, directors, employees, agents and affiliates shall constitute “Indemnitees.”

(c)Notes. If so requested by any Lender by written notice to Borrower (with a copy to Administrative Agent), Borrower promptly shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 10.6) on the Closing Date (or, if such notice is delivered after the Closing Date, promptly after Borrower’s receipt of such notice) a Note or Notes to evidence such Lender’s Commitment.

2.5	Interest on Loans.

(a)Except as otherwise set forth herein, each Loan shall bear interest on the unpaid principal amount thereof from the date made through repayment thereof (whether by acceleration or otherwise) as follows:

(i)	if a Base Rate Loan, at the Base Rate plus the Applicable Margin; or

(ii)	if a LIBOR Rate Loan, at the Adjusted LIBOR Rate plus the Applicable Margin.

(b)The basis for determining the rate of interest with respect to any Loan, and the Interest Period with respect to any LIBOR Rate Loan, shall be selected by Borrower and notified to Administrative Agent and Lenders pursuant to the applicable Funding Notice or Conversion/Continuation Notice, as the case may be. If, on any day, a Loan is outstanding with respect to which a Funding Notice or Conversion/Continuation Notice has not been delivered to Administrative Agent in accordance with the terms hereof specifying the applicable basis for determining the rate of interest, then for that day such Loan shall be a Base Rate Loan.

(c)In connection with LIBOR Rate Loans, there shall be no more than ten (10) Interest Periods outstanding at any time. In the event Borrower fails to specify between a Base Rate Loan or a LIBOR Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice, such Loan (if outstanding as a LIBOR Rate Loan) will be automatically converted into a Base Rate Loan on the last day of the then current Interest Period for such Loan (or if outstanding as a Base Rate Loan will remain as, or (if not then outstanding) will be made as, a Base Rate Loan). In the event Borrower fails to specify an Interest Period for any LIBOR Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice, Borrower shall be deemed to have selected an Interest Period of one month. As soon as practicable after 10:00 a.m. on each Interest Rate Determination Date, Administrative Agent shall determine (which determination shall, absent manifest error, be final, conclusive and binding upon all parties) the interest rate that shall apply to the LIBOR Rate Loans for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to Borrower and each Lender.

(d)Interest payable pursuant to Section 2.5(a) shall be computed on the basis of a 360 day year with respect to LIBOR Rate Loans and a 365/366 day year with respect to Base Rate Loans, in each case, for the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the date of the making of such Loan or the first day of an Interest Period applicable to such Loan or, the last Interest Payment Date with respect to such Loan or, with respect to a Base Rate Loan being converted from a LIBOR Rate Loan, the date of conversion of such LIBOR Rate Loan to such Base Rate Loan, as the case may be, shall be included, and the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted to a LIBOR Rate Loan, the date of conversion of such Base Rate Loan to such LIBOR Rate Loan, as the case may be, shall be excluded; provided, if a Loan is repaid on the same day on which it is made, one day’s interest shall be paid on that Loan.

(e)Except as otherwise set forth herein, interest on each Loan shall accrue on a daily basis and be payable in arrears (i) on each Interest Payment Date; and (ii) upon any reduction or termination of Commitments, on the principal amount of Loans repaid in connection with such reduction or termination. Any interest on a Loan which is not paid when due shall, to the extent permitted by applicable Law, bear interest at the same rate as is applicable to that Loan, and such interest on interest shall be payable in arrears at the same times as interest on that Loan and shall, if not paid when due, compound daily.

2.6	Conversion/Continuation.

(a)Subject to Section 2.14, Borrower shall have the option:

(i)

to convert at any time all or any part of any Loan equal to $500,000 and integral multiples of $100,000 in excess of that amount from one type of Loan to another type of Loan; provided, a LIBOR Rate Loan may only be converted on the expiration of the Interest Period applicable to such LIBOR Rate Loan, unless Borrower shall pay all amounts due under Section 2.14 in connection with any such conversion; or

(ii)	upon the expiration of any Interest Period applicable to any LIBOR Rate Loan, to continue all or any portion of such Loan equal to $500,000 and integral multiples of $100,000 in excess of that amount as a LIBOR Rate Loan;

provided, however, in the case of clauses (i) and (ii), that during the existence of an Event of Default, no Loan may be converted to or continued as a LIBOR Rate Loan without the consent of the Requisite Lenders.

(b)Borrower shall deliver a Conversion/Continuation Notice to Administrative Agent no later than 10:00 a.m. at least one Business Day in advance of the proposed conversion date (in the case of a conversion to a Base Rate Loan) and at least three (3) Business Days in advance of the proposed conversion/continuation date (in the case of a conversion to, or a continuation of, a LIBOR Rate Loan). Except as otherwise provided herein, a Conversion/Continuation Notice for conversion to, or continuation of, any LIBOR Rate Loans shall be irrevocable on and after the related Interest Rate Determination Date, and Borrower shall be bound to effect a conversion or continuation in accordance therewith.

2.7	Default Interest.

Any payment not made when due hereunder shall thereafter bear interest (including post-petition interest in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws, whether or not allowed in such a proceeding) payable on demand or, if no demand is made, at the time specified below, at a rate that is two percent (2.0%) per annum in excess of the interest rate otherwise payable hereunder with respect to the applicable Loans (or, in the case of any such fees and other amounts, at a rate which is two percent (2.0%) per annum in excess of the interest rate otherwise payable hereunder for Base Rate Loans); provided, in the case of LIBOR Rate Loans, upon the expiration of the Interest Period in effect at the time any such increase in interest rate is effective, such LIBOR Rate Loans shall thereupon become Base Rate Loans and shall thereafter bear interest payable upon demand at a rate which is two percent (2.0%) per annum in excess of the interest rate otherwise payable hereunder for Base Rate Loans. To the extent no demand therefor has been previously made, such interest shall be payable in arrears at the same times as interest on each Loan and shall, if not paid when due, compound daily. Payment or acceptance of the increased rates of interest provided for in this Section 2.7 is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Administrative Agent or any Lender.

2.8

Fees.

(a)Borrower agrees to pay for the account of the applicable Lenders the following fees:

(i)

an aggregate commitment fee (“Commitment Fee”) equal to (x) the Commitment Rate Percentage times (y) (I) with respect to Tranche 1 Lenders, the actual daily amount by which the Tranche 1 Total Commitments exceeds the Tranche 1 Outstandings and (II) with respect to Tranche 2 Lenders, the actual daily amount by which the Tranche 2 Total Commitments exceeds the Tranche 2 Outstandings, to be allocated among the Lenders of the applicable Tranche according to their Applicable Percentages on each such day;

(ii)	an upfront fee (the “Amendment No. 4 Upfront Fee”) to each Lender on the Amendment No. 4 Effective Date, in an amount equal to (x) the percentage set forth in the Summary of Terms and Conditions posted to the Lenders on February 24, 2020 under “Consent

Fee” times (y) the sum of the amounts set forth opposite the name of such Lender on Schedule 2.1 under the headings “Tranche 1 Commitments” and “Tranche 2 Commitments”; and

(iii)

an aggregate fee (“L/C Participation Fee”) equal to (x) the aggregate Dollar Equivalent of the L/C Obligations on each day times (y) the Applicable Margin for LIBOR Rate Loans, to be allocated among the Tranche 2 Lenders according to their Applicable Percentages; provided, however, any L/C Participation Fees otherwise payable for the account of a Defaulting Lender with respect to any Letter of Credit as to which such Defaulting Lender has not provided Cash Collateral satisfactory to the L/C Issuer pursuant to Section 2.20 shall be payable, to the maximum extent permitted by applicable Law, to the other Tranche 2 Lenders in accordance with the upward adjustments in their respective Applicable Percentages allocable to such Letter of Credit pursuant to Section 2.18, with the balance of such fee, if any, payable to the L/C Issuer for its own account.

(b)Borrower agrees to pay to the L/C Issuer (i) a fronting fee equal to (x) 0.25% per annum times (y) the actual daily amount of the aggregate Dollar Equivalent of all L/C Obligations described in clause (i) of the definition thereof; and (ii) customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit and bankers’ acceptances, as from time to time in effect, as notified in writing from the L/C Issuer to the Borrower (such fees in effect as of the Closing Date, as provided to Borrower prior to or on the Closing Date). Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

(c)All fees referred to in Sections 2.8(a)(i) and (iii) and Section 2.8(b)(i) shall be calculated on the basis of a 360 day year and the actual number of days elapsed in the applicable period and shall be payable quarterly in arrears on the last day of each Fiscal Quarter during the applicable period, commencing on the first such date to occur after the Closing Date, and on the date of termination of the Commitments. The Amendment No. 4 Upfront Fee shall be paid on the Amendment No. 4 Effective Date.

(d)In addition to any of the foregoing fees, Borrower agrees to pay to the Administrative Agent all fees separately agreed in the amounts and at the times so agreed.

2.9	Voluntary Prepayments and Commitment Reductions.

(a)Any time and from time to time, Borrower may prepay any Loans of any Tranche on any Business Day, in whole or in part, in an aggregate minimum amount of $500,000; provided that Notice of Prepayment shall be given to the Administrative Agent not later than 12:00 noon, on the Business Day prior to the date of prepayment in the case of Base Rate Loans and on the third Business Day prior to the date of prepayment in the case of LIBOR Rate Loans. Upon the giving of any Notice of Prepayment, the principal amount of the Loans of the Tranche specified in the Notice of Prepayment (together with any amounts due pursuant to Section 2.14(e) in the case of LIBOR Rate Loans) shall become due and payable on the prepayment date specified therein. For the avoidance of doubt, each prepayment of Loans of any Tranche shall be applied ratably among all Series of Loans of such Tranche.

(b)Any time and from time to time, Borrower may terminate or permanently reduce, in whole or in part, the aggregate Commitments under any Tranche; provided that (i) notice of such termination or reduction shall be received by the Administrative Agent not later than 11:00 a.m. five Business Days prior to the date of such termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof and (iii) the Borrower shall not terminate or reduce the Commitments under any Tranche if, after giving effect thereto

and to any concurrent prepayments hereunder, the Outstanding Amount of all Loans and L/C Obligations under such Tranche would exceed the aggregate Commitments under such Tranche.

2.10	Mandatory Prepayments; Commitment Termination.

(a)If for any reason the Tranche 1 Outstandings at any time exceed the Tranche 1 Total Commitments, Borrower shall, within three Business Days, prepay the Tranche 1 Loans in an aggregate amount sufficient to reduce the Tranche 1 Outstandings as of such date of payment to an amount not to exceed the Tranche 1 Total Commitments.

(b)If for any reason the Tranche 2 Outstandings at any time exceed the Tranche 2 Total Commitments, Borrower shall, within three Business Days, prepay the Tranche 2 Loans and/or Cash Collateralize L/C Obligations in an aggregate amount sufficient to reduce the Tranche 2 Outstandings as of such date of payment to an amount not to exceed the Tranche 2 Total Commitments; provided that for this purpose only, L/C Obligations that are Cash Collateralized in an amount equal to the Applicable Cash Collateralization Percentage of the amount of L/C Obligations shall be disregarded from the calculation of Tranche 2 Outstandings.

(c)Each Series of Commitments shall terminate on the applicable Final Maturity Date. All Loans of such Series shall be due and payable on such Final Maturity Date.

2.11	Application of Commitment Reductions and Payments.

(a)Each reduction of Commitments of any Tranche shall reduce the Commitment of each Lender of such Tranche ratably according to such Lender’s Applicable Percentage of such Tranche.

(b)Each payment by any Credit Party in respect of the principal, interest or fees of any Tranche shall be paid to the Lenders of such Tranche ratably according to such Lender’s Applicable Percentage of such Tranche.

(c)Any prepayment of Loans of any Tranche shall be applied first to Base Rate Loans of such Tranche to the full extent thereof before application to LIBOR Rate Loans of such Tranche, in each case, in a manner which minimizes the amount of any payments required to be made by Borrower pursuant to Section 2.14(e).

2.12	General Provisions Regarding Payments.

(a)All payments by Borrower of principal, interest, fees and other Obligations shall be made in Dollars in Same Day Funds, without recoupment, setoff, counterclaim or other defense free of any restriction or condition, and delivered to Administrative Agent not later than 12:00 noon on the date due at the Principal Office designated by the Administrative Agent for the account of Lenders; funds received by Administrative Agent after that time on such due date shall be deemed to have been paid by Borrower on the next Business Day.

(b)Administrative Agent (or its agent or sub-agent appointed by it) shall promptly distribute to each applicable Lender at such address, as such Lender shall indicate in writing, such Lender’s Applicable Percentage of all payments and prepayments of principal and interest due hereunder, together with all other amounts due thereto, including all fees payable with respect thereto, to the extent received by Administrative Agent.

(c)Notwithstanding the foregoing provisions hereof, if any Conversion/Continuation Notice is withdrawn as to any Affected Lender or if any Affected Lender of any Tranche makes Base Rate Loans in lieu of its Applicable Percentage of any LIBOR Rate Loans of such Tranche, Administrative Agent shall give effect thereto in apportioning payments received thereafter.

(d)Subject to the proviso set forth in the definition of “Interest Period,” whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder or of fees hereunder.

(e)Administrative Agent shall deem any payment by or on behalf of Borrower hereunder that is not made in Same Day Funds prior to 12:00 noon to be a non-conforming payment. Any such payment shall not be deemed to have been received by Administrative Agent until the later of (i) the time such funds become available funds, and (ii) the next Business Day. Interest shall continue to accrue on any principal as to which a non-conforming payment is made, until such funds become available funds (but in no event less than the period from the date of such payment to the next succeeding applicable Business Day) at the Default Rate determined pursuant to Section 2.7 from the date such amount was due and payable until the date such amount is paid in full.

(f)If an Event of Default shall have occurred and be continuing, all payments or proceeds received by the Administrative Agent hereunder in respect of any of the Obligations shall be applied:

first, to pay any costs, expenses, indemnities, fees or premiums (including fees, charges and disbursements of counsel to the Administrative Agent, Arrangers and Syndication Agents) then due to Administrative Agent, Arrangers and Syndication Agents under the Credit Documents, until paid in full, including, without limitation, amounts payable under Sections 2.14, 2.15 and 2.16 and expenses under Section 10.2;

second, ratably to pay any expenses or indemnities then due to any of the Lenders and the L/C Issuer under the Credit Documents, ratably among the Lenders and the L/C Issuer, until paid in full;

third, ratably to pay interest and fees due in respect of the Loans, L/C Obligations, L/C Borrowings and Letters of Credit, ratably among the Lenders and the L/C Issuer, until paid in full;

fourth, ratably to pay the principal amount of all Loans and L/C Borrowings then outstanding, ratably among the Lenders and the L/C Issuer in proportion to the respective amounts, until paid in full;

fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash Collateralize at the Applicable Cash Collateralization Percentage that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit issued by the L/C Issuer;

sixth, to pay ratably any other Obligations then due and payable; and

seventh, the balance, if any, to the Person lawfully entitled thereto (including the applicable Credit Party or its successors or assigns) or as a court of competent jurisdiction may direct.

2.13	Ratable Sharing.

If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of (a) Obligations due and payable to such Lender hereunder and under the other Credit Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Lender at such time to (ii) the aggregate amount of the Obligations due and payable to all Lenders hereunder and under the other Credit Documents at such time) of payments on account of the Obligations due and payable to all Lenders hereunder and under the other Credit Documents at such time obtained by all the Lenders at such time or (b) Obligations owing (but not due and payable) to such Lender hereunder and under the other Credit Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing (but not due and payable) to such Lender at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Lenders hereunder and under the other Credit Parties at such time) of payment on account of the Obligations owing (but not due and payable) to all Lenders hereunder and under the other Credit Documents at such time obtained by all of the Lenders at such time, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and subparticipations in L/C Obligations of the other Lenders, or make such other adjustments, as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of Obligations then due and payable to the Lenders or owing (but not due and payable) to the Lenders, as the case may be, provided that:

(i)

if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, without interest; and

(ii)

the provisions of this Section shall not be construed to apply to (x) any payment made by or on behalf of the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (y) the application of Cash Collateral in accordance with the express terms of this Agreement (including the application of Cash Collateral to the satisfaction of the specific L/C Obligations and other applicable obligations for which the Cash Collateral was so provided), or (z) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or subparticipations in L/C Obligations to any assignee or participant, other than an assignment to Borrower or any Subsidiary thereof (as to which the provisions of this Section shall apply).

Borrower, on behalf of each Credit Party, consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Credit Party rights of setoff and counterclaim with respect to such participation, as fully as if such Lender were a direct creditor of such Credit Party in the amount of such participation.

2.14	Making or Maintaining LIBOR Rate Loans.

(a)Inability to Determine Applicable Interest Rate. If in connection with any request for a LIBOR Rate Loan or a conversion to or continuation thereof, the Administrative Agent determines that (i) Dollar deposits are not being offered to banks in the London interbank Eurodollar market for the applicable amount and Interest Period of such LIBOR Rate Loan, or (ii) (A) adequate and reasonable means do not exist for determining the LIBOR for any requested Interest Period with respect to a proposed LIBOR Rate Loan or in connection with an existing or proposed Base Rate Loan and

(B) the circumstances described in Section 2.14(c)(i) do not apply (in each case, “Impacted Loans”), the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain LIBOR Rate Loans shall be suspended (to the extent of the affected LIBOR Rate Loans or Interest Periods), and (y) in the event of a determination described in the preceding sentence with respect to the LIBOR component of the Base Rate, the utilization of the LIBOR component in determining the Base Rate shall be suspended, in each case until the Administrative Agent revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of LIBOR Rate Loans (to the extent of the affected LIBOR Rate Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein.

(b)Alternative Rate. Notwithstanding the foregoing, if the Administrative Agent has made the determination described in Section 2.14(a), the Administrative Agent, in consultation with the Borrower, may establish an alternative interest rate for the Impacted Loans, in which case, such alternative rate of interest shall apply with respect to the Impacted Loans until (i) the Administrative Agent revokes the notice delivered with respect to the Impacted Loans under the first sentence of Section 2.14(a), (ii) the Administrative Agent or the Requisite Lenders notify the Administrative Agent and the Borrower that such alternative interest rate does not adequately and fairly reflect the cost to such Lenders of funding the Impacted Loans, or (iii) any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for such Lender or its applicable lending office to make, maintain or fund Loans whose interest is determined by reference to such alternative rate of interest or to determine or charge interest rates based upon such rate or any Governmental Authority has imposed material restrictions on the authority of such Lender to do any of the foregoing and provides the Administrative Agent and the Borrower written notice thereof.

(c)LIBOR Successor Rate. Notwithstanding anything to the contrary in this Agreement or any other Credit Document, if the Administrative Agent reasonably determines (which determination shall be conclusive absent manifest error), or Borrower or the Requisite Lenders notify the Administrative Agent (with, in the case of the Requisite Lenders, a copy to Borrower) that the Borrower or the Requisite Lenders (as applicable) have determined, that (i) adequate and reasonable means do not exist for ascertaining LIBOR for any requested Interest Period, including because the LIBOR Screen Rate is not available or published on a current basis and such circumstances are unlikely to be temporary, or (ii) the administrator of the LIBOR Screen Rate or a Governmental Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date after which LIBOR or the LIBOR Screen Rate shall no longer be made available or used for determining the interest rate of loans (such specific date, the “Scheduled Unavailability Date”), or (iii) syndicated loans currently being executed, or that include language similar to that contained in this Section 2.14 are being executed or amended (as applicable), to incorporate or adopt a new benchmark interest rate to replace LIBOR, then reasonably promptly after such determination by the Administrative Agent or receipt by the Administrative Agent of such notice, as applicable, the Administrative Agent and the Borrower may amend this Agreement to replace LIBOR with an alternate benchmark rate (including any mathematical or other adjustments to the benchmark (if any) incorporated therein), giving due consideration to any evolving or then existing convention for similar U.S. dollar denominated syndicated credit facilities for such alternative benchmarks (any such proposed rate, a “LIBOR Successor Rate”), together with any proposed LIBOR Successor Rate Conforming Changes. Notwithstanding anything to the contrary in Section 10.5, such amendment shall become effective without any further action or consent of any other party to this Agreement at 5:00 p.m. on the fifth Business Day after the Administrative Agent shall have posted such proposed amendment to all Lenders and Borrower unless, prior to such time, Lenders comprising the Requisite Lenders have delivered to the Administrative Agent written notice that such Lenders do not accept such amendment. Such LIBOR Successor Rate shall be applied in a manner consistent with market practice; provided that to the extent such market practice is not administratively

feasible for the Administrative Agent, as determined by the Administrative Agent in consultation with the Borrower, such LIBOR Successor Rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent.

If no LIBOR Successor Rate has been determined and the circumstances under clause (i) above exist or the Scheduled Unavailability Date has occurred (as applicable), the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain LIBOR Rate Loans shall be suspended, (to the extent of the affected LIBOR Rate Loans or Interest Periods), and (y) the LIBOR component shall no longer be utilized in determining the Base Rate. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of LIBOR Rate Loans (to the extent of the affected LIBOR Rate Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans (subject to the foregoing clause (y)) in the amount specified therein.

Notwithstanding anything else herein, any definition of LIBOR Successor Rate shall provide that in no event shall such LIBOR Successor Rate be less than zero for purposes of this Agreement.

(d)Illegality or Impracticability of LIBOR Rate Loans. In the event that, on any date, any Lender shall have determined (which determination shall be final and conclusive and binding upon all parties hereto, but shall be made only after consultation with Borrower and Administrative Agent) that the performance of any of its obligations hereunder or making, maintaining, continuation of or funding or charging interest with respect to any Credit Extension (i) has become unlawful as a result of compliance by such Lender in good faith with any law, treaty, governmental rule, regulation, guideline or order (or would conflict with any such treaty, governmental rule, regulation, guideline or order not having the force of law, even though the failure to comply therewith would not be unlawful), or (ii) has become impracticable, as a result of contingencies occurring after the Closing Date which materially and adversely affect the London interbank market or the position of such Lender in that market, then, and in any such event, such Lender shall be an “Affected Lender” and it shall on that day give notice (by telecopy or by telephone confirmed in writing) to Borrower and Administrative Agent of such determination (which notice Administrative Agent shall promptly transmit to each other Lender). If the Administrative Agent receives a notice from (x) any Lender pursuant to clause (i) of the preceding sentence or (y) a notice from Lenders constituting the Requisite Lenders pursuant to clause (ii) of the preceding sentence, then (1) the obligation of the Lenders (or, in the case of any notice pursuant to clause (i) of the preceding sentence, such Lender) to issue, make, maintain, fund or charge interest with respect to any such Credit Extension as, or to convert Loans to, LIBOR Rate Loans shall be suspended, until such notice shall be withdrawn by the Affected Lender, (2) to the extent such determination by the Affected Lender relates to a LIBOR Rate Loan then being requested by Borrower pursuant to a Funding Notice or a Conversion/Continuation Notice, the Lenders (or, in the case of any notice pursuant to clause (i) of the preceding sentence, such Lender) shall make such Loan as (or continue such Loan as or convert such Loan to, as the case may be) a Base Rate Loan, (3) the Lenders’ (or, in the case of any notice pursuant to clause (i) of the preceding sentence, such Lender’s) obligation to maintain its outstanding LIBOR Rate Loans (the “Affected Loans”) shall be terminated at the earlier to occur of the expiration of the Interest Period then in effect with respect to the Affected Loans or when required by law, and (4) the Affected Loans shall automatically convert into Base Rate Loans on the date of such termination. Borrower shall pay accrued interest on the amount so converted and all amounts due under Section 2.14(e) in accordance with the terms thereof due to such conversion. Notwithstanding the foregoing, to the extent a determination by an Affected Lender, as described above, relates to a LIBOR Rate Loan then being requested by Borrower pursuant to a Funding Notice or a Conversion/Continuation Notice, Borrower shall have the option, subject to the provisions of Section 2.14(e), to rescind such Funding Notice or

Conversion/Continuation Notice as to all Lenders by giving notice (by telecopy) to Administrative Agent of such rescission on the date on which the Affected Lender gives notice of its determination, as described above (which notice of rescission Administrative Agent shall promptly transmit to each other Lender). Except as provided in the immediately preceding sentence, nothing in this Section 2.14(d) shall affect the obligation of any Lender, other than an Affected Lender, to make or maintain Loans as, or to convert Loans to, LIBOR Rate Loans in accordance with the terms hereof.

(e)Compensation for Breakage or Non-Commencement of Interest Periods. Borrower shall compensate each Lender, upon written request by such Lender (which request shall set forth the basis for requesting such amounts), for all reasonable losses, expenses and liabilities (including any interest paid or calculated to be due and payable by such Lender to lenders of funds borrowed by it to make or carry its LIBOR Rate Loans and any loss, expense or liability sustained by such Lender in connection with the liquidation or reemployment of such funds, but excluding loss of anticipated profits) which such Lender may sustain: (i) if, for any reason (other than a default by such Lender or pursuant to Section 2.14(a)), a borrowing of any LIBOR Rate Loan does not occur on a date specified therefor in a Funding Notice, or a conversion to or continuation of any LIBOR Rate Loan does not occur on a date specified therefor in a Conversion/Continuation Notice; (ii) if any prepayment or other principal payment of, or any conversion of, any of its LIBOR Rate Loans occurs on any day, other than the last day of an Interest Period applicable to that Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or (iii) if any prepayment of any of its LIBOR Rate Loans is not made on any date specified in a notice of prepayment given by Borrower.

(f)Booking of LIBOR Rate Loans. Any Lender may make, carry or transfer LIBOR Rate Loans at, to, or for the account of, any of its branch offices or the office of an Affiliate of such Lender.

(g)Assumptions Concerning Funding of LIBOR Rate Loans. Calculation of all amounts payable to a Lender under this Section 2.14 and under Section 2.15 shall be made, as though such Lender had actually funded each of its relevant LIBOR Rate Loans through the purchase of a LIBOR deposit bearing interest at the rate obtained pursuant to the definition of Adjusted LIBOR Rate in an amount equal to the amount of such LIBOR Rate Loan and having a maturity comparable to the relevant Interest Period and through the transfer of such LIBOR deposit from an offshore office of such Lender to a domestic office of such Lender in the United States of America; provided, however, each Lender may fund each of its LIBOR Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this Section 2.14 and under Section 2.15.

2.15	Increased Costs; Capital Adequacy; Reserves on LIBOR Rate Loans.

(a)Compensation For Increased Costs. Subject to the provisions of Section 2.16 (which shall be controlling with respect to the matters covered thereby), in the event that any Lender shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case, that becomes effective after the Closing Date, or compliance by such Lender with any guideline, request or directive issued or made after the Closing Date by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law) (i) subjects such Lender (or its applicable lending office) to any additional Tax (other than any Excluded Taxes of such Lender, or any Indemnified Taxes or Other Taxes indemnifiable under Section 2.16) with respect to this Agreement or any of the other Credit Documents or any of its obligations hereunder or thereunder or any

payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in, or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or other requirements with respect to LIBOR Rate Loans that are reflected in the definition of Adjusted LIBOR Rate); or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder or the London interbank market; and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, Borrower shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise, as such Lender in its reasonable judgment shall determine), as may be necessary to compensate such Lender on an after tax basis for any such increased cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to Borrower (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this Section 2.15(a), which statement shall be conclusive and binding upon all parties hereto absent manifest error.

(b)Capital or Liquidity Adequacy Adjustment. In the event that any Lender shall have determined that the adoption, effectiveness, phase in or applicability after the Closing Date of any law, rule or regulation (or any provision thereof) regarding capital adequacy or liquidity requirement, or any change therein or in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, in each case, after the Closing Date, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive regarding capital adequacy or liquidity requirement (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency issued, becoming effective, phased-in or made after the Closing Date, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender’s Loans, or participations therein or other obligations hereunder with respect to the Loans to a level below that which such Lender or such controlling corporation could have achieved, but for such adoption, effectiveness, phase in, applicability, change or compliance (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy or liquidity requirement), then, from time to time, within five Business Days after receipt by Borrower from such Lender of the statement referred to in the next sentence, Borrower shall pay to such Lender such additional amount or amounts, as will compensate such Lender or such controlling corporation, on an after tax basis, for such reduction. Such Lender shall deliver to Borrower (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to Lender under this Section 2.15(b), which statement shall be conclusive and binding upon all parties hereto absent manifest error.

(c)Dodd-Frank; Basel III. Notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith (“Dodd-Frank”) and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case, pursuant to Basel III, shall, in each case, be deemed to be a “change in Law,” regardless of the date enacted, adopted or issued. With respect to amounts due pursuant to Sections 2.15(a) and (b) as a result of changes in Law relating to Dodd-Frank or Basel III, the claim for additional amounts shall be generally consistent with such Lender’s treatment of customers of such Lender that such

Lender considers, in its reasonable discretion, to be similarly situated as Borrower and having generally similar provisions in their agreements with such Lender, provided that such Lender shall not be required to disclose any confidential or proprietary information.

(d)L/C Issuer. For purposes of this Section 2.15, the term “Lender” shall include the L/C Issuer.

2.16	Taxes; Withholding, etc.

(a)Payments to Be Free and Clear. All sums payable by any Credit Party hereunder and under the other Credit Documents shall (except to the extent required by Law) be paid free and clear of, and without any deduction or withholding on account of, any Taxes.

(b)Withholding of Taxes. If any Credit Party or any other Person is required by Law to make any deduction or withholding on account of any Indemnified Tax or Other Taxes from any sum paid or payable under any of the Credit Documents: (i) Borrower shall notify Administrative Agent of any such requirement or any change in any such requirement as soon as Borrower becomes aware of it; (ii) the Credit Parties or other Person shall make such deduction or withholding and pay any such Indemnified Tax or Other Taxes to the relevant Governmental Authority before the date on which penalties attach thereto; (iii) the sum payable by such Credit Party in respect of which the relevant deduction or withholding is required shall be increased, to the extent necessary to ensure that after any such deduction or withholding (including deduction or withholding attributable to amounts payable under this Section 2.16), Administrative Agent, the L/C Issuer or such Lender, as the case may be, and each of their Tax Related Persons receives on the due date a net sum equal to what it would have received had no such deduction or withholding been required; and (iv) within thirty (30) days after making any such deduction or withholding, Borrower shall deliver to Administrative Agent evidence reasonably satisfactory to the other affected parties of such deduction or withholding and of the remittance thereof to the relevant taxing or other authority.

(c)Other Taxes. In addition, the Credit Parties shall pay all Other Taxes to the relevant Governmental Authorities in accordance with applicable Law. The Credit Parties shall deliver to Administrative Agent official receipts or other evidence of such payment reasonably satisfactory to Administrative Agent in respect of any Other Taxes payable hereunder promptly after payment of such Other Taxes.

(d)Indemnification. The Credit Parties shall, jointly and severally, indemnify the Administrative Agent and each Lender, within twenty (20) days after written demand therefor, for the full amount of any Indemnified Taxes and Other Taxes paid or incurred by the Administrative Agent or such Lender or their respective Tax Related Persons, as the case may be, relating to, arising out of, or in connection with, any Credit Document or any payment or transaction contemplated hereby or thereby, whether or not such taxes were correctly or legally imposed or asserted by the relevant Governmental Authority and all reasonable costs and expenses incurred in enforcing the provisions of this Section 2.16; provided, however, that the Credit Parties shall not be required to indemnify the Administrative Agent, Lenders and their respective Tax Related Persons (i) in duplication of Taxes covered by Section 2.16(b), (ii) for any penalty imposed as a result of any gross negligence or unlawful misconduct of the Administrative Agent, Lender or Tax Related Person, as the case maybe or (iii) for Taxes on consolidated net income, other than in the case of (A) any matters addressed in Section 2.16(c) and any indemnification therefor and (B) any payments of expenses and costs made pursuant to this Section 2.16(d), in which instances such indemnification shall be made on an after-Tax basis, such that after all required deductions and payments of all Indemnified Taxes or Other Taxes (including Taxes on consolidated net income applicable to amounts covered by this Section 2.16(d)(iii)(A) or (B)), the

Administrative Agent, the Lenders and each of their respective Tax Related Persons receives and retains an amount equal to the sum it would have received and retained, had it not paid or incurred or been subject to such Indemnified Taxes and Other Taxes or expenses and costs. A certificate as to the amount of such Taxes (along with a copy of the applicable documents from the Internal Revenue Service or other Governmental Authority asserting such claim to Indemnified Taxes, if any; provided that copies of any such document may be redacted to the extent such document contains unrelated information) delivered to Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. If a Credit Party reasonably believes that such Indemnified Taxes or Other Taxes were not correctly or legally asserted, the Administrative Agent, such Lender or their respective Tax Related Persons, as the case may be, will use reasonable efforts to cooperate with Borrower (at Borrower’s expense) to obtain a refund of such Indemnified Taxes, the benefit of which refund shall be returned to Borrower to the extent provided in Section 2.16(f), provided that, in the sole good faith determination of the Administrative Agent or Lender or their respective Tax Related Persons, pursuing such refund would not be materially prejudicial to the Administrative Agent, Lender or their respective Tax Related Persons.

(e)Evidence of Exemption from U.S. Withholding Tax. Any Lender that is entitled to an exemption from or reduction of withholding Tax or backup withholding Tax under the Law of the jurisdiction in which Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to Borrower (and the Administrative Agent at any time or times reasonably requested by Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable Law, as may reasonably be requested by Borrower or the Administrative Agent to permit such payments to be made without such withholding Tax or at a reduced rate. Each such Lender shall, whenever a lapse in time or change in circumstances renders such documentation obsolete, expired or inaccurate in any material respect, deliver promptly to Borrower and the Administrative Agent updated or other appropriate documentation (including any new documentation reasonably requested by the applicable withholding agent) or promptly notify Borrower and the Administrative Agent of its inability to do so.

Without limiting the foregoing, each Lender that is not a United States Person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for U.S. federal income tax purposes (a “Non-U.S. Lender”) shall deliver to Administrative Agent (for the Administrative Agent itself and for transmission to Borrower), on or prior to the Closing Date (in the case of each Lender listed on the signature pages hereof) or on or prior to the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), and at such other times, as may be reasonably requested in writing by Borrower or Administrative Agent (each, in the reasonable exercise of its discretion), (i) two copies of Internal Revenue Service Form W-8BENE (or W-8BEN, as applicable) or Internal Revenue Service Form W-8ECI (or any successor forms), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by the Administrative Agent or Borrower to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Credit Documents or is subject to deduction or withholding at a reduced rate, pursuant to an applicable income tax treaty or because the item of income is effectively connected with the conduct of a U.S. trade or business, (ii) if such Lender is not a “bank” or other Person described in Section 881(c)(3) of the Internal Revenue Code, including a 10% shareholder of Borrower (within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) or a “controlled foreign corporation” related to Borrower (within the meaning of Section 881(c)(3)(C) of the Internal Revenue Code) and cannot deliver Internal Revenue Service Form W-8ECI pursuant to clause (i) above, two copies of a Certificate Regarding Non-Bank Status, together with two copies of Internal Revenue Service Form W-8BENE (or W-8BEN, as applicable) (or any successor form), properly completed and duly executed by such Lender, and such other documentation required under the

Internal Revenue Code and reasonably requested by the Administrative Agent or Borrower to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of interest payable under any of the Credit Documents pursuant to the portfolio interest exemption or (iii) two copies of any other documentation, properly completed and duly executed by such Lender, to establish such Lender’s entitlement to an exemption from or reduction in withholding of U.S. federal income tax. Each Lender that is a United States person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for United States federal income tax purposes (a “U.S. Lender”) and is not an exempt recipient within the meaning of Treasury Regulation Section 1.6049-4(c) shall deliver to the Administrative Agent (for the Administrative Agent itself and for transmission to Borrower) on or prior to the Closing Date (or, if later, on or prior to the date on which such Lender becomes a party to this Agreement) two copies of the Internal Revenue Service Form W-9 (or any successor form), properly completed and duly executed by such Lender, confirming that such U.S. Lender is entitled to an exemption from United States backup withholding tax. Each Lender required to deliver any forms, certificates or other evidence with respect to United States federal income tax withholding matters pursuant to this Section 2.16(e) hereby agrees, from time to time after the initial delivery by such Lender of such forms, certificates or other evidence, whenever a lapse in time or change in circumstances renders such forms, certificates or other evidence expired, obsolete or inaccurate in any material respect, that such Lender shall promptly deliver to Administrative Agent (for the Administrative Agent itself and for transmission to Borrower) two new copies of Internal Revenue Service Form W-8BENE (or W-8BEN, as applicable), Internal Revenue Service Form W-8ECI, a Certificate Regarding Non-Bank Status and Internal Revenue Service Form W-8BENE (or W-8BEN, as applicable), Internal Revenue Service Form W-9 or other applicable documentation (or any successor forms to any of the foregoing), as the case may be, properly completed and duly executed by such Lender, and two new copies of other documentation, required under the Internal Revenue Code and reasonably requested by Administrative Agent or Borrower, properly completed and duly executed by such Lender, to confirm or establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to payments to such Lender under the Credit Documents or is subject to deduction or withholding at a reduced rate, or notify Administrative Agent and Borrower of its inability to deliver any such forms, certificates or other evidence.

Each Non-U.S. Lender, to the extent it does not act or ceases to act for its own account with respect to any portion of any sums paid or payable to such Non-U.S. Lender under any of the Credit Documents (for example, in the case of a typical participation by such Non-U.S. Lender, or where Non-U.S. Lender is a partnership for U.S. federal income tax purposes), shall deliver to the Administrative Agent (for the Administrative Agent itself and for transmission to Borrower) on or prior to the Closing Date or on or prior to the date when such Non-U.S. Lender ceases to act for its own account with respect to any portion of any such sums paid or payable, and at such other times, as may be necessary in the determination of the Administrative Agent or Borrower (in either case, in the reasonable exercise of its discretion), (A) two copies of the forms or statements required to be provided by such Non-U.S. Lender, as set forth in the preceding paragraph, properly completed and duly executed by such Lender, to establish the portion of any such sums paid or payable with respect to which such Non-U.S. Lender acts for its own account that is not subject to U.S. federal income tax, and (B) two copies of Internal Revenue Service Form W-8IMY (or any successor forms), properly completed and duly executed by such Lender, together with any information such Non-U.S. Lender is required to transmit with such form, and any other certificate or statement of exemption required under the Internal Revenue Code, properly completed and duly executed by such Lender, to establish that such Non-U.S. Lender is not acting for its own account with respect to a portion of any such sums payable to such Non-U.S. Lender, and two copies of an applicable Certificate Regarding Non-Bank Status, properly completed and duly executed by the applicable participant or partner, provided, that if the Lender is a partnership and one or more of its partners are claiming the exemption for portfolio interest under Section 881(c) of the Internal Revenue Code, such Lender may provide a Certificate Regarding Non-Bank Status on behalf of such partners.

Any Non-U.S. Lender providing the Internal Revenue Service Form W-8IMY is hereby required to update such form (or notify the Administrative Agent and Borrower of its inability to do so) at the same times that a Non-U.S. Lender is required to update applicable forms, certificates and documentations pursuant to the preceding paragraph.

If a payment made to a Lender under any Credit Document would be subject to U.S. federal withholding Tax imposed by FATCA (as defined in clause (d) of “Excluded Taxes”) if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine whether such Lender has complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

From and after the Closing Date, solely for purposes of FATCA, the Borrower and the Administrative Agent shall treat, and the Lenders hereby authorize the Borrower and the Administrative Agent to treat, the Credit Agreement and all Loans made thereunder (including any Loans already outstanding) as not qualifying as “grandfathered obligations” within the meaning of Treasury Regulation section 1.1471-2(b)(2)(i).

Nothing in this Section 2.16 shall be construed to require a Lender, the Administrative Agent or their respective Tax Related Persons to provide any forms or documentation that it is not legally entitled to provide.

(f)Treatment of Certain Refunds. If the Administrative Agent, a Lender or its respective Tax Related Persons has received a refund of any Taxes as to which it has been indemnified by Borrower or with respect to which Borrower has paid additional amounts pursuant to this Section 2.16, it shall pay to Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by Borrower under this Section 2.16 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent, such Lender or its respective Tax Related Persons (including any Taxes imposed with respect to such refund), as is determined by the Administrative Agent, Lender or its respective Tax Related Persons in reasonable discretion, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund or credit); provided that Borrower, upon the written request of the Administrative Agent, such Lender or its respective Tax Related Persons, agrees to repay the amount paid over to Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent, such Lender or its respective Tax Related Persons, in the event the Administrative Agent, such Lender or its respective Tax Related Persons is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require the Administrative Agent, any Lender or its respective Tax Related Persons to make available its tax returns (or any other information relating to its taxes which it deems confidential) to Borrower or any other Person. Notwithstanding anything to the contrary in this paragraph (f), in no event will the Administrative Agent or any Lender be required to pay any amount to the Borrower pursuant to this paragraph (f) the payment of which would place the Administrative Agent or such Lender in a less favorable net after-Tax position than the Administrative Agent or such Lender would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid.

(g)L/C Issuer. For purposes of this Section 2.16, the term “Lender” shall include the L/C Issuer.

2.17	Obligation to Mitigate.

Each Lender agrees that, as promptly as practicable after the officer of such Lender responsible for administering its Loans becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender to become an Affected Lender or that would entitle such Lender to receive payments under Section 2.14, 2.15 or 2.16, it will, to the extent not inconsistent with the internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts to (a) make, issue, fund or maintain its Credit Extensions, including any Affected Loans, through another office of such Lender, or (b) take such other measures as such Lender may deem reasonable, if, as a result thereof, the circumstances which would cause such Lender to be an Affected Lender would cease to exist or the additional amounts which would otherwise be required to be paid to such Lender pursuant to Section 2.14, 2.15 or 2.16 would be materially reduced and if, as determined by such Lender in good faith, the making, issuing, funding or maintaining of such Commitments or Loans through such other office or in accordance with such other measures, as the case may be, would not otherwise adversely affect such Commitments or Loans or the interests of such Lender; provided that such Lender will not be obligated to utilize such other office pursuant to this Section 2.17 unless Borrower agrees to pay all reasonable costs and expenses incurred by such Lender as a result of utilizing such other office as described above. A certificate as to the amount of any such expenses payable by Borrower pursuant to this Section 2.17 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender to Borrower (with a copy to Administrative Agent) shall be conclusive absent manifest error.

2.18	Defaulting Lenders.

(a)Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:

(i)	Waivers and Amendments. That Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 10.5 and the definition of “Requisite Lenders”.

(ii)

Reallocation of Payments. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 8 or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 10.4, shall be applied at such time or times, as may be determined by the Administrative Agent as follows: first, to the payment of any amounts (including fees and expenses) owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment of any amounts (including fees and expenses) owing by such Defaulting Lender to the L/C Issuer hereunder; third, to Cash Collateralize the L/C Issuer’s Fronting Exposure with respect to such Defaulting Lender; fourth, as Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof, as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the L/C Issuer’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement; sixth, to the payment of any amounts owing to the Lenders or the L/C Issuer or, so

long as no Default or Event of Default exists, Borrower as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the L/C Issuer or Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and seventh, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or L/C Borrowings in respect of which such Defaulting Lender has not fully funded its appropriate share and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 3.2 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Obligations owed to, all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Obligations owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in L/C Obligations are held by the Lenders pro rata in accordance with the Commitments hereunder without giving effect to Section 2.18(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.18(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii)

Certain Fees. That Defaulting Lender (x) shall not be entitled to receive any Commitment Fee pursuant to Section 2.8(a)(i) for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender) and (y) shall be limited in its right to receive L/C Participation Fees as provided in Section 2.8(a)(iii).

(iv)

Reallocation of Applicable Percentages to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in L/C Obligations in respect of the Tranche 2 Facility shall be reallocated among the non-Defaulting Lenders in accordance with their respective Applicable Percentages under the Tranche 2 Facility (calculated without regard to such Defaulting Lender’s Commitment), but only to the extent that (x) at the date that the applicable Tranche 2 Lender becomes a Defaulting Lender, no Default or Event of Default exists, and (y) such reallocation does not cause the aggregate principal amount of the Tranche 2 Loans and the participation in L/C Obligations of any non-Defaulting Lender to exceed such non-Defaulting Lender’s Tranche 2 Commitment. Subject to Section 10.24, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a non-Defaulting Lender as a result of such non-Defaulting Lender’s increased exposure following such reallocation.

(b)Defaulting Lender Cure. If Borrower, the Administrative Agent and the L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon, as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions, as the Administrative Agent may determine to be necessary to cause the Commitments and funded and unfunded participations in Letters of Credit to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages under the applicable Tranches (without giving effect to Section 2.18(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of Borrower, while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

(c)Cash Collateral. At any time that there shall exist a Defaulting Lender, immediately upon the request of the Administrative Agent or the L/C Issuer, to the extent the L/C Issuer is at such time holding L/C Obligations, Borrower shall, at its election, either (1) prepay Loans in an amount sufficient to permit the Fronting Exposure with respect to such Defaulting Lender to be reallocated in full to the other Lenders in accordance with Section 2.18(a)(iv) above or (2) Cash Collateralize all such Fronting Exposure (after giving effect to Section 2.18(a)(iv) and any Cash Collateral provided by the Defaulting Lender).

2.19	Removal or Replacement of a Lender.

Anything contained herein to the contrary notwithstanding, in the event that: (a) (i) any Lender (an “Increased Cost Lender”) shall give notice to Borrower that such Lender is an Affected Lender or that such Lender is entitled to receive payments under Section 2.14, 2.15 or 2.16, (ii) the circumstances which have caused such Lender to be an Affected Lender or which entitle such Lender to receive such payments shall remain in effect, and (iii) such Lender shall fail to withdraw such notice within five Business Days after Borrower’s request for such withdrawal; or (b) any Lender shall be a Defaulting Lender; or (c) in connection with any proposed amendment, modification, termination, waiver or consent with respect to any of the provisions hereof, as contemplated by Section 10.5(b), the consent of Requisite Lenders shall have been obtained, but the consent of one or more of such other Lenders (each, a “Non-Consenting Lender”) whose consent is required shall not have been obtained (and, if such proposed amendment, modification, termination, waiver or consent would have a disproportionate effect on any Tranche, the consent of the Requisite Tranche Lenders with respect to such Tranche shall have been obtained); then, with respect to each such Increased Cost Lender, Defaulting Lender or Non-Consenting Lender (the “Terminated Lender”), Borrower may, by giving written notice to Administrative Agent and any Terminated Lender of its election to do so, elect to cause such Terminated Lender (and such Terminated Lender hereby irrevocably agrees) to assign its outstanding Loans and Commitments in full to one or more Eligible Assignees (each, a “Replacement Lender”) in accordance with the provisions of Section 10.6 and the Terminated Lender shall pay any fees payable thereunder in connection with such assignment; provided that in connection with any such replacement, if any such Terminated Lender does not execute and deliver to the Administrative Agent a duly executed Assignment Agreement reflecting such replacement, then such Terminated Lender shall be deemed to have executed and delivered such Assignment Agreement without any action on the part of such Terminated Lender; provided, further, that (1) on the date of such assignment, the Replacement Lender shall pay to Terminated Lender an amount equal to the principal of all outstanding Loans of the Terminated Lender; (2) on the date of such assignment, Borrower shall pay any amounts payable to such Terminated Lender pursuant to Section 2.14(e), 2.15 or 2.16 through such date; and (3) in the event such Terminated Lender is a Non-Consenting Lender, each Replacement Lender shall consent, at the time of such assignment, to each matter in respect of which such Terminated Lender was a Non-Consenting Lender. In accordance with the Assignment Agreement, interest and fees pursuant to Section 2.8 that accrued prior to the effective date of the assignment shall be for the account of the Terminated Lender, and such amounts that accrue on and after the effective date of the assignment shall be for the account of the Replacement Lender. Upon the prepayment of all amounts owing to any Terminated Lender and the termination of such Terminated Lender’s Commitments such Terminated Lender shall no longer constitute a “Lender” for purposes hereof; provided that any rights of such Terminated Lender to indemnification hereunder shall survive as to such Terminated Lender. Each Replacement Lender shall cure any existing Funding Default of the applicable Defaulting Lender.

2.20	Letters of Credit.

(a)The Letter of Credit Commitment.

(i)Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the Tranche 2 Lenders set forth in this Section 2.20, (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit denominated in Dollars or in one or more Alternative Currencies for the account of (x) Borrower or any Subsidiary or (y) in the case of commercial Letters of Credit only, any customer of Borrower or any Subsidiary, and to amend or extend Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drawings under the Letters of Credit; and (B) the Tranche 2 Lenders severally agree to participate in Letters of Credit issued for the account of Borrower or any Subsidiary and any drawings thereunder; provided that after giving effect to any Credit Extension with respect to any Letter of Credit, (I) the Tranche 2 Outstandings shall not exceed the aggregate amount of Tranche 2 Commitments that would be in effect at any time prior to the expiration of all Letters of Credit outstanding at such time (solely after giving effect to the scheduled maturity of any Commitment occurring prior to the expiration of all such Letters of Credit), and (II) the aggregate Dollar Equivalent of all L/C Obligations shall not exceed the L/C Sublimit. Each request by Borrower or an L/C Subsidiary for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by Borrower that the Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. Borrower represents that it or its applicable Subsidiary has complied with all applicable requirements of Law (including “know your customer” requirements) with respect to all customers of Borrower or any Subsidiary for whose account a Letter of Credit is issued hereunder.

(ii)The L/C Issuer shall not issue any Letter of Credit, if:

(A)subject to Section 2.20(b)(iii), the expiry date of such requested Letter of Credit (other than a Letter of Indemnity) would occur more than twelve months after the date of issuance or last extension;

(B)the expiry date of such requested Letter of Credit (other than a Letter of Indemnity) would occur after the Letter of Credit Expiration Date;

(C)any Bankers’ Acceptance created or to be created thereunder would not be an eligible bankers’ acceptance under Section 13 of the Federal Reserve Act (12 U.S.C. § 372); or

(D)such Letter of Credit is a “direct-pay” Letter of Credit.

(iii)The L/C Issuer shall not be under any obligation to issue any Letter of Credit if:

(A)any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit or bankers’ acceptances generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any

restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense (for which the L/C Issuer is not otherwise compensated hereunder) which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;

(B)the maturity date of any Bankers’ Acceptance would occur (1) earlier than 30 or later than 120 days from the date of issuance or (2) later than 60 days before the Letter of Credit Expiration Date, unless the Requisite Tranche 2 Lenders have approved such maturity date;

(C)the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer applicable to letters of credit or bankers’ acceptances generally;

(D)except as otherwise agreed by the Administrative Agent and the L/C Issuer, such Letter of Credit is in an initial stated amount less than $10,000;

(E)except as otherwise agreed by the Administrative Agent and the L/C Issuer, such Letter of Credit is to be denominated in a currency other than Dollars or an Alternative Currency;

(F)except as described in Section 2.20(b)(iii), such Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder;

(G)any Tranche 2 Lender is at that time a Defaulting Lender, unless the L/C Issuer has entered into arrangements for Cash Collateralization with Borrower or such Tranche 2 Lender to eliminate the L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section 2.18) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Obligations as to which the L/C Issuer has actual or potential Fronting Exposure;

(H)the L/C Issuer does not as of the issuance date of such requested Letter of Credit issue Letters of Credit in the requested currency (if not Dollars);

(I)except as otherwise agreed by the L/C Issuer (acting reasonably, in consultation with the Borrower), in the case of any Letter of Indemnity, the expiry date of such requested Letter of Indemnity would occur (x) more than twelve months after the date of issuance or last extension or (y) after the Letter of Credit Expiration Date; or

(J)the aggregate Dollar Equivalent of all L/C Obligations issued and outstanding by such L/C Issuer would exceed its L/C Issuer Sublimit.

(iv)The L/C Issuer shall not amend any Letter of Credit, if the L/C Issuer would not be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof.

(v)The L/C Issuer shall not be under any obligation to amend any Letter of Credit, if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

(vi)The L/C Issuer shall act on behalf of the Tranche 2 Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (A) provided to the Administrative Agent in Section 9.3 (other than Section 9.3(h)) with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and in connection with Issuer Documents pertaining to such Letters of Credit, as fully as if the term “Administrative Agent” as used in Section 9.3 (other than Section 9.3(h)) included the L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuer; provided, however, that nothing in this Section 2.20(a)(vi) shall limit the liability of the L/C Issuer to the Borrower under Section 2.20(f) of this Agreement.

(b)Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit.

(i)Each Letter of Credit shall be issued or amended, as the case may be, upon the request of Borrower or an L/C Subsidiary delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by an Authorized Officer of Borrower, as the case may be. Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least two Business Days (or such later date and time, as the Administrative Agent and the L/C Issuer may agree in a particular instance, in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount and currency thereof; (C) the expiry date thereof; (D) if applicable, the name and address of the customer of Borrower or the applicable L/C Subsidiary for whose account the Letter of Credit is to be issued; (E) the name and address of the beneficiary thereof; (F) the documents to be presented by such beneficiary in case of any drawing thereunder; (G) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (H) the purpose and nature of the requested Letter of Credit; and (I) such other matters, as the L/C Issuer may reasonably require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify, in form and detail reasonably satisfactory to the L/C Issuer: (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters, as the L/C Issuer may reasonably require. Additionally, the Borrower or the applicable L/C Subsidiary shall furnish to the L/C Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer or the Administrative Agent may reasonably require. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of Letter of Credit Application or other agreement submitted by the Borrower or applicable L/C Subsidiary to, or entered into by the Borrower with, the L/C Issuer relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

(ii)Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof. Unless the L/C Issuer has received written notice from any Tranche 2 Lender, the Administrative Agent or any Credit Party, at least one Business Day prior to the

requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Section 2.20(a)(i) or 3.2 shall not then be satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of Borrower (or the applicable Subsidiary) or enter into the applicable amendment, as the case may be, in each case, in accordance with the L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Tranche 2 Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Tranche 2 Lender’s Applicable Percentage times the amount of such Letter of Credit under the applicable Tranche.

(iii)If Borrower or the applicable L/C Subsidiary so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving 30 days’ (or such other number of days, as the L/C Issuer may agree) prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, Borrower or the applicable L/C Subsidiary shall not be required to make a specific request to the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Tranche 2 Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has determined that it would not be permitted at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of Section 2.20(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Requisite Tranche 2 Lenders have elected not to permit such extension or (2) from the Administrative Agent, any Tranche 2 Lender or Borrower that one or more of the applicable conditions specified in Section 2.20(a)(i) or 3.2 is not then satisfied, and, in each such case, directing the L/C Issuer not to permit such extension.

(iv)Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to Borrower or the applicable L/C Subsidiary and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.

(c)Drawings and Reimbursements; Funding of Participations.

(i)Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall notify Borrower and the Administrative Agent thereof. In the case of a Letter of Credit denominated in an Alternative Currency, Borrower shall reimburse the L/C Issuer in such Alternative Currency, unless (A) the L/C Issuer (at its option) shall have specified in such notice that it will require reimbursement in Dollars, or (B) in the absence of any such requirement for reimbursement in Dollars, Borrower shall have notified the L/C Issuer promptly following receipt of the notice of drawing that Borrower will reimburse the L/C Issuer in Dollars. In the case of any such reimbursement in Dollars of a drawing under a Letter of Credit denominated in an Alternative Currency, the L/C Issuer shall notify Borrower of the Dollar Equivalent of the amount of the drawing promptly following the determination thereof. Not later than 11:00 a.m. on the second Business Day following the date of any payment (or, in the case of any commercial Letter of Credit, not later than the date of payment, subject to timely notice by the L/C Issuer) by the L/C Issuer under a Letter of Credit

to be reimbursed in Dollars, or the Applicable Time on the date of any payment by the L/C Issuer under a Letter of Credit to be reimbursed in an Alternative Currency (each such date, an “Honor Date”), Borrower shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing and in the applicable currency. If Borrower fails to so reimburse the L/C Issuer by such time, the Administrative Agent shall promptly notify each Tranche 2 Lender of the Honor Date, the amount of the unreimbursed drawing (expressed in Dollars in the amount of the Dollar Equivalent thereof, in the case of a Letter of Credit denominated in an Alternative Currency) (the “Unreimbursed Amount”), and the amount of such Tranche 2 Lender’s Applicable Percentage thereof under the applicable Tranches. In such event, Borrower shall be deemed to have requested a Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.1 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Commitments and the conditions set forth in Section 3.2 (other than the delivery of a Funding Notice). Any notice given by the L/C Issuer or the Administrative Agent pursuant to this Section 2.20(c)(i) may be given by telephone, if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

(ii)Each Tranche 2 Lender shall, upon any notice pursuant to Section 2.20(c)(i), make funds available to the Administrative Agent for the account of the L/C Issuer, in Dollars, at the Administrative Agent’s Office for Dollar-denominated payments in an amount equal to its Applicable Percentage of the Unreimbursed Amount under the applicable Tranches not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.20(c)(iii), each Tranche 2 Lender that so makes funds available shall be deemed to have made a Base Rate Loan to Borrower in such amount. The Administrative Agent shall remit the funds so received to the L/C Issuer in Dollars.

(iii)With respect to any Unreimbursed Amount that is not fully refinanced by a Borrowing of Base Rate Loans because the conditions set forth in Section 3.2 cannot be satisfied or for any other reason, Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest from and including to , but excluding, the second Business Day after the Honor Date at the Adjusted LIBOR Rate, and for each day thereafter, at the Default Rate (or, in the case of any L/C Borrowing relating to a commercial Letter of Credit, from and including the Honor Date at the Default Rate). In such event, each Tranche 2 Lender’s payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.20(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Tranche 2 Lender in satisfaction of its participation obligation under this Section 2.20.

(iv)Until each Tranche 2 Lender funds its L/C Advance pursuant to this Section 2.20(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Tranche 2 Lender’s Applicable Percentage of such amount shall be solely for the account of the L/C Issuer.

(v)Each Tranche 2 Lender’s obligation to make L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.20(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Tranche 2 Lender may have against the L/C Issuer, Borrower, any Subsidiary or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default; or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing. No such making of an L/C Advance shall relieve or otherwise impair the obligation of

Borrower to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.

(vi)If any Tranche 2 Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required to be paid by such Tranche 2 Lender pursuant to the foregoing provisions of this Section 2.20(c) by the time specified in Section 2.20(c)(ii), the L/C Issuer shall be entitled to recover from such Tranche 2 Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to L/C Issuer at a rate per annum equal to the applicable Overnight Rate from time to time in effect, plus any administrative, processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing. If such Tranche 2 Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Tranche 2 Lender’s L/C Advance in respect of the relevant L/C Borrowing. A certificate of the L/C Issuer submitted to any Tranche 2 Lender (through the Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.

(d)Repayment of Participations.

(i)At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Tranche 2 Lender such Tranche 2 Lender’s L/C Advance in respect of such payment in accordance with Section 2.20(c), if the Administrative Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from Borrower or otherwise), the Administrative Agent will distribute to such Tranche 2 Lender its Applicable Percentage thereof in Dollars and in the same funds as those received by the Administrative Agent.

(ii)If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.20(c)(i) is required to be returned under any of the circumstances described in Section 10.9 (including pursuant to any settlement entered into by the L/C Issuer, in its discretion), each Tranche 2 Lender shall pay to the Administrative Agent for the account of the L/C Issuer its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Tranche 2 Lender, at a rate per annum equal to the applicable Overnight Rate from time to time in effect. The obligations of the Tranche 2 Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

(e)Obligations Absolute. The obligation of Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid in accordance with the terms of this Agreement under all circumstances, including the following:

(i)	any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Credit Document;

(ii)

the existence of any claim, counterclaim, setoff, defense or other right that Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

(iii)

any draft, demand, certificate, endorsement or other document presented under, or in connection with, such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

(iv)

any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law;

(v)	any adverse change in the relevant exchange rates or in the availability of the relevant Alternative Currency to Borrower or any Subsidiary or in the relevant currency markets generally; or

(vi)	any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, Borrower or any Subsidiary.

Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with Borrower’s instructions or other irregularity, Borrower will promptly notify the L/C Issuer. Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents, unless such notice is given as aforesaid.

(f)Role of the L/C Issuer. Borrower and each Tranche 2 Lender agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight or time draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request, or with the approval, of the Lenders or the Requisite Tranche 2 Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided that this assumption is not intended to, and shall not, preclude Borrower’s pursuing such rights and remedies, as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable or responsible for any of the matters described in clauses (i) through (vi) of Section 2.20(e); provided that anything in such clauses to the contrary notwithstanding, Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be liable to Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by Borrower which Borrower proves were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight or time draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or

information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument endorsing, transferring or assigning, or purporting to endorse, transfer or assign, a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

(g)Applicability of ISP and UCP. Unless otherwise expressly agreed by the L/C Issuer and Borrower when a Letter of Credit is issued, (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the UCP shall apply to each commercial Letter of Credit.

(h)Conflict with Issuer Documents. In the event of any conflict between the terms hereof and the terms of any Issuer Documents, the terms hereof shall control.

(i)Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary (including an L/C Subsidiary) or a customer of Borrower or any Subsidiary, Borrower shall be jointly and severally obligated to reimburse the L/C Issuer hereunder for any and all drawings under such Letter of Credit; provided, if such Subsidiary is a Foreign Subsidiary, only Borrower shall be obligated to reimburse the L/C Issuer hereunder. Borrower hereby acknowledges that the issuance of Letters of Credit for the account of such Subsidiaries, or a customer of Borrower or any Subsidiary, inures to the benefit of Borrower, and that its business derives substantial benefits from the businesses of such Subsidiaries.

(j)Existing Letters of Credit. All Existing Letters of Credit shall be deemed on the Closing Date to be issued hereunder and shall constitute Letters of Credit subject to the terms hereof.

(k)Bankers’ Acceptances. This Agreement contemplates the issuance of commercial Letters of Credit that are Acceptance Credits and the creation of Bankers’ Acceptances in connection therewith. For purposes hereof, and as additional clarification, as the context requires, (i) references to drawings under Letters of Credit shall include the creation of, and payments under, Bankers’ Acceptances, (ii) references to notices of drawing under Letters of Credit shall include presentations of Bankers’ Acceptances for payment, (iii) references to undrawn amounts under Letters of Credit shall include amounts payable under (or that may become payable under) Bankers’ Acceptances, (iv) references to the issuance of a Letter of Credit shall include the creation of a Bankers’ Acceptance under a commercial Letter of Credit and (v) references to expiry dates of Letters of Credit shall include maturity dates of Bankers’ Acceptances.

SECTION 3.

CONDITIONS PRECEDENT

3.1	Conditions to Initial Extensions of Credit.

The effectiveness of this Agreement and the obligation of the L/C Issuer and each Lender to make any Loan or an L/C Credit Extension hereunder is subject to the satisfaction, or waiver in accordance with Section 10.5, of the following conditions on or before the Closing Date:

(a)Credit Documents. The Administrative Agent shall have received a copy of each of the following Credit Documents originally executed and delivered by each applicable Credit Party for each Lender: (i) this Agreement and (ii) a Note executed by Borrower in favor of each Lender requesting a Note, provided such request shall have been delivered to Borrower at least two Business Days prior to the Closing Date.

(b)Organizational Documents; Incumbency. The Administrative Agent shall have received (i) a certificate of an Authorized Officer of each Credit Party dated the Closing Date and certifying (I) to the effect that (A) attached thereto is a true and complete copy of the certificate or articles of incorporation, organization or formation of such Credit Party certified as of a recent date by the Secretary of State (or similar official) of the state of its incorporation, organization or formation, or in the alternative (other than in the case of the Borrower), certifying that such certificate or articles of incorporation, organization or formation have not been amended since the Prior Credit Agreement Date, and that the certificate or articles are in full force and effect, (B) attached thereto is a true and complete copy of the by-laws or operating agreements or equivalent documents of each Credit Party as in effect on the Closing Date, or in the alternative (other than in the case of the Borrower), certifying that such by-laws or operating agreements or equivalent documents have not been amended since the Prior Credit Agreement Date, and that such by-laws or operating agreements or equivalent documents are in full force and effect and (C) attached thereto is a true and complete copy of resolutions duly adopted by the board of directors, board of managers or member, as the case may be, of each Credit Party authorizing the execution, delivery and performance of the Credit Documents to which such Credit Party is a party, and that such resolutions have not been modified, rescinded or amended, and that such resolutions are in full force and effect, and (II) as to the incumbency and specimen signature of each officer executing any Credit Document on behalf of any Credit Party and signed by another officer as to the incumbency and specimen signature of the Authorized Officer executing the certificate pursuant to this clause (b)(i); and (ii) a good standing certificate from the applicable Governmental Authority of each Credit Party’s jurisdiction of incorporation, organization or formation, each dated a recent date prior to the Closing Date.

(c)Opinion of Counsel. The Lenders, Arrangers, Syndication Agents, the Administrative Agent and their respective counsel shall have received executed copies of the favorable written opinion of Sullivan & Cromwell LLP, counsel for Credit Parties, dated as of the Closing Date and in form and substance reasonably satisfactory to the Administrative Agent (and each Credit Party hereby instructs Sullivan & Cromwell LLP to deliver such opinion to the Administrative Agent, Arrangers, Syndication Agents and Lenders).

(d)Certificates. The Administrative Agent shall have received a properly executed Closing Certificate and Solvency Certificate, each dated as of the Closing Date.

(e)Prior Credit Agreement. All commitments under the Prior Credit Agreement shall have been terminated, and all loans and accrued and unpaid interest, fees and any other amounts outstanding under the Prior Credit Agreement shall have been paid in full; provided that accrued and unpaid interest, fees and other amounts outstanding under the Prior Credit Agreement (other than principal amount of loans) may be paid within ten (10) Business Days following the receipt by Borrower of an invoice from the Administrative Agent regarding any such accrued and unpaid interest, fees or other amounts outstanding (it being understood that such amounts shall be due and payable on such tenth Business Day if not paid prior to such date).

(f)Arranger Fees and Expenses. The Borrower shall have paid (i) all fees required to be paid on the Closing Date pursuant to this Agreement or the Engagement Letter, dated as of January 19, 2016, between CIT Group Inc., and Merrill Lynch, Pierce, Fenner & Smith Incorporated and (ii) to the Arrangers and Bank of America, N.A., in its capacity as Administrative Agent, to the extent invoiced at least one (1) Business Day prior to the Closing Date, all reasonable out of pocket costs and expenses of the Administrative Agent and the Arrangers in connection with the arrangement, preparation, negotiation and execution of this Agreement (including the reasonable fees and expenses of Cahill Gordon & Reindel LLP as counsel to the Administrative Agent and the Arrangers) and any outstanding costs and expenses referred to in Section 10.2 (which may include amounts constituting reasonable estimates of fees and

expenses of counsel and other advisors, provided that no such estimate shall thereafter preclude a final settling of account as to such fees and expenses).

(g)No Material Adverse Effect. Since December 31, 2014, no event, circumstance or change has occurred that has caused or could reasonably be expected to have, either in any case or in the aggregate, a Material Adverse Effect, except as otherwise disclosed in Borrower’s Annual Report on Form 10-K for the Fiscal Year ended December 31, 2014 or any subsequent filings by Borrower with the SEC under the Exchange Act.

(h)Patriot Act Information, etc. Each Lender shall have received, on or prior to the Closing Date, all documentation and other information reasonably requested by such Lender that is required by bank regulatory authorities under applicable “know your customer,” anti-money laundering and foreign asset control rules and regulations and any other compliance or regulatory considerations applicable to such Lender (including the Patriot Act), including the information described in Section 10.19.

(i)Representations and Warranties. The representations and warranties contained herein and in the other Credit Documents shall be true and correct in all material respects (except such representations and warranties that by their terms are qualified by materiality or a Material Adverse Effect, which representations and warranties shall be true and correct in all respects) on and as of the Closing Date, to the same extent as though made on and as of the Closing Date (or to the extent such representations and warranties specifically relate to an earlier date, on and as of such earlier date).

(j)No Default. No Default or Event of Default shall have occurred and be continuing.

3.2	Conditions to Each Credit Extension.

The obligation of each Lender to make any Credit Extension (other than the conversion or continuation of a Loan) on any Credit Date, including the Closing Date (except as otherwise specified), is subject to the satisfaction, or waiver in accordance with Section 10.5, of the following conditions precedent:

(i)	the Administrative Agent shall have received a fully executed and delivered Funding Notice, if applicable;

(ii)	the L/C Issuer shall have received fully executed and delivered Letter of Credit Application(s) (with copies to the Administrative Agent), if applicable;

(iii)

as of such Credit Date, the representations and warranties contained herein and in the other Credit Documents shall be true and correct in all material respects (except such representations and warranties that by their terms are qualified by materiality or a Material Adverse Effect, which representations and warranties shall be true and correct in all respects) on and as of that Credit Date, to the same extent as though made on and as of that date (or to the extent such representations and warranties specifically relate to an earlier date, on and as of such earlier date); and

(iv)	as of such Credit Date, no event shall have occurred and be continuing or would result from the consummation of the applicable Credit Extension or the use of proceeds thereof that would constitute an Event of Default or a Default.

The Administrative Agent shall be entitled, but not obligated, to request and receive, prior to the making of any Credit Extension, additional information reasonably satisfactory to the Administrative Agent confirming the satisfaction of any of the foregoing if, in the good faith judgment of the Administrative Agent, such request is warranted under the circumstances.

SECTION 4.

REPRESENTATIONS AND WARRANTIES

In order to induce Lenders to enter into this Agreement and to make each Credit Extension to be made thereby, each Credit Party represents and warrants to the Administrative Agent, Arrangers, Syndication Agents and each Lender, on the Closing Date and on the date of any Credit Extension (other than the conversion or continuation of a Loan), that the following statements are true and correct:

4.1	Organization; Requisite Power and Authority; Qualification.

Each Credit Party (a) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization (which is identified, as of the Closing Date, in Schedule 4.1), (b) has all requisite power and authority to own and operate its properties and to carry on its business as now conducted and as proposed to be conducted, except, in each case, where the failure to have such power or authority has not had, and could not be reasonably expected to have, a Material Adverse Effect, (c) has all requisite power and authority to enter into the Credit Documents to which it is a party and to carry out the transactions contemplated thereby and, in the case of Borrower (or any Subsidiary for whose account a Letter of Credit is issued), to receive the Credit Extensions hereunder, and (d) is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, except in jurisdictions where the failure to be so qualified or in good standing has not had, and could not be reasonably expected to have, a Material Adverse Effect.

4.2	Capital Stock and Ownership.

The Capital Stock of each of Borrower, each U.S. Banking Subsidiary and the Restricted Subsidiaries (other than an Owner Trust) has been duly authorized and validly issued and is fully paid and non-assessable.

4.3	Due Authorization.

The execution, delivery and performance of the Credit Documents have been duly authorized by all necessary action on the part of each Credit Party that is a party thereto (except that any Owner Trustee has not yet received instructions from the beneficiary of the Owner Trust).

4.4	No Conflict.

The execution, delivery and performance by each of the Credit Parties of the Credit Documents to which they are parties and the consummation of the transactions contemplated by such Credit Documents do not and will not: (a) violate (i) any provision of any Law applicable to Borrower or any of its Restricted Subsidiaries, (ii) any of the Organizational Documents of Borrower or any of its Restricted Subsidiaries, or (iii) any order, judgment or decree of any court or other agency of government binding on Borrower or any of its Restricted Subsidiaries, in the case of clauses (i) and (iii), except as could not reasonably be expected to have a Material Adverse Effect; (b) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of

Borrower or any of its Restricted Subsidiaries, except as could not reasonably be expected to have a Material Adverse Effect; (c) result in or require the creation or imposition of any Lien upon any of the properties or assets of Borrower or any of its Restricted Subsidiaries, except as could not reasonably be expected to have a Material Adverse Effect; (d) except to the extent it could not reasonably be expected to have a Material Adverse Effect, result in any default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to its operations or any of its properties; (e) require any approval of stockholders, members or partners; or (f) except to the extent it could not reasonably be expected to have a Material Adverse Effect, require any approval or consent of any Person under any Contractual Obligation of Borrower or any of its Restricted Subsidiaries, except for such approvals or consents which have been obtained on or before the Closing Date.

4.5	Governmental Consents.

Except as could not reasonably be expected to have a Material Adverse Effect, the execution, delivery and performance by each of the Credit Parties of the Credit Documents to which they are parties and the consummation of the transactions contemplated by such Credit Documents do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority.

4.6	Binding Obligation.

Each Credit Document has been duly executed and delivered by each Credit Party that is a party thereto and is the legally valid and binding obligation of such Credit Party, enforceable against such Credit Party in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability (whether enforcement is sought in equity or at law).

4.7	Historical Financial Statements.

The Historical Financial Statements were prepared in conformity with GAAP and fairly present, in all material respects, the financial position, on a consolidated basis, of the Persons described in such financial statements as at the respective dates thereof and the results of operations and cash flows, on a consolidated basis, of the entities described therein for each of the periods then ended, subject, in the case of any such unaudited financial statements, to changes resulting from audit and normal year-end adjustments. As of the Amendment No. 4 Effective Date, neither Borrower nor any of its Subsidiaries has any contingent liability or liability for taxes, long term lease or unusual forward or long term commitment that is not reflected in the Historical Financial Statements or the notes thereto and which, in any such case, is material in relation to the business, operations, properties, assets, condition (financial or otherwise) or prospects of Borrower, its Restricted Subsidiaries and the Banking Subsidiaries, taken as a whole.

4.8	Adverse Proceedings, etc.

There are no Adverse Proceedings, individually or in the aggregate, that (a) relate to any Credit Document or the transactions contemplated hereby or thereby or (b) could reasonably be expected to have a Material Adverse Effect. Neither Borrower nor any of its Subsidiaries (a) is in violation of any applicable Laws (including Environmental Laws) that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, or (b) is subject to, or in default with respect to, any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or

foreign, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

4.9	Payment of Taxes.

Except as otherwise permitted under Section 5.3, all Tax returns and reports of Borrower and its Restricted Subsidiaries required to be filed by any of them have been timely filed taking into account extensions, and all Taxes (whether or not shown on such Tax returns) which are due and payable and all assessments, fees and other governmental charges upon Borrower and its Restricted Subsidiaries and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable (including in the capacity as a withholding agent) and adequate reserve for all Taxes not yet due and payable has been made, except to the extent that the failure to file, pay or establish could not, individually or in the aggregate, reasonably be expected to cause a Material Adverse Effect. Borrower knows of no material proposed tax assessment or other material claim or proceeding against Borrower or any of its Restricted Subsidiaries which is not being actively contested by Borrower or such Restricted Subsidiary in good faith and by appropriate proceedings; provided that such reserves or other appropriate provisions, if any, as shall be required in conformity with GAAP shall have been made or provided therefor.

4.10	Properties.

Each of Borrower and its Restricted Subsidiaries has (i) in the case of fee interests in real property, good, sufficient and legal title to, (ii) in the case of other owned real or personal property, good, sufficient and legal title or ownership of, and (iii) in the case of leasehold interests in real or personal property, valid leasehold interests and rights in, in each case, all of its properties and assets, including, without limitation, those reflected in its Historical Financial Statements referred to in Section 4.7 and in the most recent financial statements delivered pursuant to Section 5.1, in each case, except for (x) assets disposed of since the date of such financial statements in the Ordinary Course of Business or as otherwise permitted under the Credit Documents, (y) encumbrances and defects in title which would constitute Permitted Liens and (z) other defects in title that would not result in a Material Adverse Effect. All such properties and assets are in working order and condition, ordinary wear and tear excepted, and except for Permitted Liens, all such properties and assets are free and clear of Liens.

4.11	Environmental Matters.

Neither Borrower nor any of its Subsidiaries nor any of their respective facilities or operations are subject to any outstanding written order, consent decree or settlement agreement with any Person relating to any Environmental Law, any Environmental Claim, or any Hazardous Materials Activity that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. There are and, to each of Borrower’s and its Restricted Subsidiaries’ knowledge, have been, no conditions, occurrences, or Hazardous Materials Activities which could reasonably be expected to form the basis of an Environmental Claim against Borrower or any of its Restricted Subsidiaries that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Compliance with all current or pending future requirements pursuant to or under Environmental Laws by Borrower or any of its Subsidiaries could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. No event or condition has occurred or is occurring with respect to Borrower or any of its Restricted Subsidiaries relating to any Environmental Law, any Release of Hazardous Materials, or any Hazardous Materials Activity which, individually or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect.

4.12	No Defaults.

Neither Borrower nor any of its Restricted Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any of its Contractual Obligations, and no condition exists which, with the giving of notice or the lapse of time or both, could constitute such a default, except where the consequences, direct or indirect, of such default or defaults, if any, could not reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.

4.13	Governmental Regulation.

No Credit Party is subject to regulation under the Federal Power Act or the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness contemplated hereunder (or any refinancings hereof) or which may otherwise render all or any portion of the Obligations unenforceable. Neither Borrower nor any of its Restricted Subsidiaries is a “registered investment company” or a company “controlled” by a “registered investment company” or a “principal underwriter” of a “registered investment company”, as such terms are defined in the Investment Company Act of 1940.

4.14	Margin Stock.

No part of the proceeds of the Loans made to such Credit Party will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such Margin Stock or for any purpose that violates, or is inconsistent with, the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System.

4.15	Employee Matters.

(a)Borrower, its Restricted Subsidiaries, and their respective employees, agents and representatives have not committed any material unfair labor practice, as defined in the National Labor Relations Act that could reasonably be expected to have a Material Adverse Effect. There is (a) no unfair labor practice complaint pending against Borrower or any of its Restricted Subsidiaries, or to the best knowledge of any Relevant Officer of Borrower, threatened in writing against any of them before the National Labor Relations Board or any other Governmental Authority and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement or similar agreement that is so pending against Borrower or any of its Restricted Subsidiaries or, to the best knowledge of any Relevant Officer of Borrower, threatened in writing against any of them, (b) no labor dispute, strike, lockout, or work stoppage in existence or, to the best knowledge of any Relevant Officer of Borrower, threatened in writing against or involving Borrower or any of its Restricted Subsidiaries that could reasonably be expected to have a Material Adverse Effect, (c) no labor union, labor organization, trade union, works council, or group of employees of Borrower or any of its Restricted Subsidiaries has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or threatened to be brought or filed against Borrower or any of its Restricted Subsidiaries with the National Labor Relations Board or any other Governmental Authority, and (d) to the best knowledge of any Relevant Officer of Borrower, no union representation question existing with respect to any of the employees of Borrower or any of its Restricted Subsidiaries and, to the best knowledge of any Relevant Officer of Borrower, no labor union organizing activity with respect to any employees of Borrower or any of its Restricted Subsidiaries that is taking place, except (with respect to any matter specified in clause (a), (b), (c), or (d) above, either individually or in the aggregate) such as is not reasonably likely to have a Material Adverse Effect.

(b)As of the Amendment No. 4 Effective Date, Borrower is not and will not be using “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans in connection with the Loans, the Letters of Credit or the Commitments.

4.16	Employee Benefit Plans.

(a)

Except as could not reasonably be expected to result in a Material Adverse Effect, each Employee Benefit Plan is in material compliance with all applicable provisions and requirements of ERISA and the Internal Revenue Code and the regulations and published interpretations thereunder, except for any required amendments for which the remedial amendment period, as defined in Section 401(b) or other applicable provision of the Internal Revenue Code, has not yet expired and except where a failure to so comply would not reasonably be expected to have a Material Adverse Effect.

(b)

As of the Closing Date, except (in each of the following cases) as would not reasonably be expected to result in a Material Adverse Effect, no Pension Plan has been terminated, nor is any Pension Plan in an “at-risk” status pursuant to Section 303 of ERISA, nor has any funding waiver from the Internal Revenue Service been received or requested with respect to any Pension Plan, nor has there been any event requiring any disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension Plan.

(c)

Except where the failure of any of the following representations to be correct in all material respects would not reasonably be expected to have a Material Adverse Effect, Borrower, any of its Restricted Subsidiaries or ERISA Affiliate has not: (A) engaged in a nonexempt prohibited transaction described in Section 406 of the ERISA or Section 4975 of the Internal Revenue Code, (B) incurred any liability to the PBGC which remains outstanding, other than the payment of premiums, and there are no premium payments which are due and unpaid, (C) failed to make a required contribution or payment to a Multiemployer Plan, or (D) failed to make a required installment or other required payment under Section 412 or 430 of the Internal Revenue Code.

(d)	Except as could not reasonably be expected to result in a Material Adverse Effect, no ERISA Event has occurred or is reasonably expected to occur with respect to Borrower, any of its Restricted Subsidiaries or any of their respective ERISA Affiliates.

(e)

Except (i) to the extent required under Section 4980B of the Internal Revenue Code or similar state laws, or otherwise funded entirely by the participants thereof, or accrued for on the financial statements of Borrower or its Restricted Subsidiaries or (ii) as could not reasonably be expected to result in a Material Adverse Effect, no Employee Benefit Plan provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of Borrower, any of its Restricted Subsidiaries or any of their respective ERISA Affiliates.

4.17

Solvency.

Borrower and its consolidated Subsidiaries, taken as a whole, are and, upon the incurrence of any Credit Extension by the Credit Parties on any date on which this representation and warranty is made, will be, Solvent.

4.18	Compliance with Statutes, etc.

Each of Borrower and its Subsidiaries is in compliance with its organizational documents and all applicable Laws of, and all applicable restrictions imposed by, all Governmental Authorities, in

respect of the conduct of its business and the ownership of its property (including compliance with all applicable Environmental Laws with respect to any Real Estate Asset or governing its business and the requirements of any permits issued under such Environmental Laws with respect to any such Real Estate Asset or the operations of Borrower or any of its Restricted Subsidiaries), except such non-compliance that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

4.19	Disclosure.

No representation or warranty of any Credit Party contained in any Credit Document, none of Borrower’s Annual Report on Form 10-K for the Fiscal Year ended December 31, 2016 or any subsequent filings by Borrower with the SEC, and none of the reports, financial statements or other documents, certificates or written statements furnished to Lenders by or on behalf of Borrower or any of its Restricted Subsidiaries for use in connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state a material fact (known to any Relevant Officer of Borrower, in the case of any document not furnished by Borrower or any of its Restricted Subsidiaries) necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which the same were made; provided that, with respect to projected financial information, the Credit Parties represent only that such information was prepared in good faith based upon assumptions that Borrower believed to be reasonable at the time prepared. As of the Amendment No. 4 Effective Date, the information included in the Beneficial Ownership Certification, if applicable, is true and correct in all respects.

4.20	Terrorism Laws, FCPA and Sanctions.

(a)

Borrower and its Subsidiaries are in compliance in all material respects with the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010, other applicable anti-corruption legislation, and the Terrorism Laws. No part of the proceeds of any Credit Extension will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010, and other applicable anti-corruption legislation.

(b)

None of Borrower, any of its Subsidiaries or any director or officer of the foregoing, or, to the knowledge of any Relevant Officer of Borrower, any employee, independent contractor, consultant, third-party vendor, advisor, Affiliate or representative of Borrower or any of its Subsidiaries, is an individual or entity currently the subject of any Sanctions, nor is Borrower or any Subsidiary located, organized or resident in a Prohibited Country.

(c)

Credit Parties will not, directly or indirectly, use the proceeds of any Credit Extension, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other individual or entity, to fund any activities of or business with any individual or entity, or in any Prohibited Country, that, at the time of such funding, is to the knowledge of a Relevant Officer of the Borrower the subject of Sanctions, or in any other manner that will result in a violation of Sanctions applicable to any party hereto.

(d)

Borrower has implemented and maintains in effect policies and procedures designed to provide reasonable assurance of compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees, independent contractors, consultants, third-party vendors and advisors with Terrorism Laws, Sanctions, the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010, and other applicable anti-corruption legislation.

4.21	Insurance.

The properties of Borrower and each of its Restricted Subsidiaries are adequately insured with financially sound and reputable insurers and in such amounts, with such deductibles and covering such risks and otherwise on terms and conditions, as have been customarily carried or maintained by Borrower and such insurance complies with the requirements of Section 5.5.

4.22	Intellectual Property.

Each Credit Party and its Restricted Subsidiaries owns, or is licensed to use, all trademarks, trade names, copyrights, patents and other intellectual property material to the operation of its business, as currently conducted, and the use thereof by the Credit Parties and their respective Restricted Subsidiaries does not infringe, misappropriate, dilute, misuse or otherwise violate the rights of any other Person, except, in each of the above cases, as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

4.23	Permits, etc.

Each Credit Party has, and is in compliance with, all permits, licenses, authorizations, approvals, entitlements and accreditations required for such Person lawfully to own, lease, manage or operate, or to acquire, each business currently owned, leased, managed or operated, or to be acquired, by such Person, other than such that, if not obtained, could not reasonably be expected to have a Material Adverse Effect. No condition exists or event has occurred which, in itself or with the giving of notice or lapse of time or both, would result in the suspension, revocation, impairment, forfeiture or non-renewal of any such permit, license, authorization, approval, entitlement or accreditation, and there is no claim that any thereof is not in full force and effect, except, in each of the foregoing cases, to the extent any such condition, event or claim could not be reasonably be expected to have a Material Adverse Effect.

4.24	Affected Financial Institutions.

No Credit Party is an Affected Financial Institution.

4.25	Covered Entities.

No Credit Party is a Covered Entity.

SECTION 5.

AFFIRMATIVE COVENANTS

Each Credit Party that is a party to this Agreement covenants and agrees that so long as any Commitment is in effect and until payment in full of all Obligations (other than contingent obligations not yet due) and the expiration or termination or Acceptable Collateralization of all Letters of Credit, each such Credit Party shall perform, and shall cause each of its Restricted Subsidiaries to perform, all covenants in this Section 5.

5.1	Financial Statements and Other Reports.

Unless otherwise provided below, Borrower will deliver to Administrative Agent and Lenders (which, in the case of the financial statements referred to in clauses (a) and (b) below, shall not be required to be delivered to the extent filed by Borrower with the SEC):

(a)Quarterly Financial Statements. As soon as available, and in any event within forty-five (45) days (or such later date as Borrower files its quarterly reports pursuant to Rule 12b-25 under the Exchange Act or any other similar rule promulgated by the SEC) after the end of each of the first three Fiscal Quarters of each Fiscal Year (commencing with the Fiscal Quarter ending March 31, 2016), the consolidated balance sheets of Borrower and its Subsidiaries as at the end of such Fiscal Quarter and the related consolidated statements of income, stockholders’ equity and cash flows of Borrower and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth, in each case, in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year, all in reasonable detail.

(b)Annual Financial Statements. As soon as available, and in any event within ninety (90) days (or such later date as Borrower files its annual reports pursuant to Rule 12b-25 under the Exchange Act or any other similar rule promulgated by the SEC) after the end of each Fiscal Year (commencing with the Fiscal Year ended December 31, 2015), (i) the consolidated balance sheets of Borrower and its Subsidiaries as at the end of such Fiscal Year and the related consolidated statements of income, stockholders’ equity and cash flows of Borrower and its Subsidiaries for such Fiscal Year, setting forth, in each case, in comparative form the corresponding figures for the previous Fiscal Year, in reasonable detail and (ii) with respect to such financial statements referred to in clause (i) a report thereon of PricewaterhouseCoopers LLP or other independent certified public accountants of recognized national standing selected by Borrower, reported on without a “going concern” or similar qualification, exception or explanatory statement, or qualification arising out of the scope of the audit, and reasonably satisfactory to Administrative Agent and shall state that such consolidated financial statements fairly present, in all material respects, the consolidated financial position of Borrower and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP, applied on a basis consistent with prior years (except as otherwise disclosed in such financial statements) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards.

(c)Compliance Certificate; Guarantor Asset Coverage Ratio Certificate. Together with each required delivery of financial statements pursuant to Sections 5.1(a) and 5.1(b), a duly executed and completed Compliance Certificate, which shall include information in reasonable detail demonstrating the calculation of the covenants set forth in Section 6.3(a) (including, in the case of filed financial statements, a reference or hyperlink to the filed financial statements to which the Compliance Certificate relates). Within 45 days after the end of each month (commencing with the month ended December 31, 2015), Borrower shall deliver to Administrative Agent a duly executed and completed Guarantor Asset Coverage Ratio Certificate using the Carrying Values as of the end of such month; provided that the Guarantor Asset Coverage Ratio Certificate for the month ended December 31, 2015 delivered under the Prior Credit Agreement shall be deemed to have been delivered hereunder.

(d)Notice of Default. Prompt written notice (but, in any event, within five (5) Business Days of a Relevant Officer of Borrower becoming aware thereof) (i) of any condition or event that constitutes an Event of Default or that notice has been given to Borrower with respect thereto; or (ii) of the occurrence of any event or change that has caused, either in any case or in the aggregate, a Material Adverse Effect, which notice shall be accompanied by an Officer’s Certificate specifying the nature and period of existence of such Event of Default, event or change, and what action Borrower has taken, is taking and proposes to take with respect thereto.

(e)Notice of Litigation. Prompt written notice (but, in any event, within five (5) Business Days of a Relevant Officer of Borrower becoming aware thereof) of (i) any Adverse Proceeding not previously disclosed in writing by Borrower to Lenders, (ii) any development in any Adverse Proceeding or (iii) any investigation of any Credit Party by any Governmental Authority (unless

prohibited by law, rule, regulation or judicial or administrative order or directive by any Governmental Authority and other than any routine inquiry or any inquiry, action or investigation or supervisory activity by the Federal Reserve Board) that, in the case of any of clause (i), (ii) or (iii) if adversely determined, could be reasonably expected to have a Material Adverse Effect, or seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby, or alleges any criminal misconduct by any Credit Party that could be reasonably expected to have a Material Adverse Effect.

(f)ERISA. In the event of the occurrence of any ERISA Event that could reasonably be expected to have a Material Adverse Effect, a prompt written notice (but, in any event, within five (5) Business Days of a Relevant Officer of Borrower becoming aware thereof) specifying the nature thereof, what action Borrower, any of its Restricted Subsidiaries or any of their respective ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when known to any Relevant Officer of Borrower, any action taken or threatened in writing by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto.

(g)Other Debt Notices. Promptly after the distribution thereof (but, in any event, within five (5) Business Days thereafter, unless such has been publicly filed with the SEC or posted to Borrower’s website (and notification of any such posting has been provided to the Administrative Agent) or has otherwise been previously provided to the Administrative Agent hereunder or under any other Credit Document), copies of all reports and other materials distributed to the lenders under any other syndicated revolving credit facility of Borrower or any Institutional Term Loan or the holders of any Publicly Traded Debt Securities (or any trustee, agent or other representative therefor) in excess of the Threshold Amount pursuant to the terms of the documentation governing such Indebtedness, and notice in writing following any event of default under any other syndicated revolving credit facility of Borrower or any Institutional Term Loan or any Publicly Traded Debt Securities in excess of the Threshold Amount.

(h)Information Regarding Guarantor Assets. Following the GAAP Change Date, Borrower shall cause to be delivered to Administrative Agent a copy of each appraisal setting forth Appraised Value of Eligible Aircraft and Eligible Railcars included in the Guarantor Asset Coverage Ratio, promptly following Borrower’s receipt thereof from a Qualified Appraiser. In addition, if any Guarantor disposes of any of its assets in the amount in excess of $350,000,000, in any single transaction or series of related transactions, Borrower shall notify Administrative Agent in writing as soon as reasonably practicable but in any event within ten (10) Business Days of the disposition.

(i)Violations of Terrorism Laws. Promptly, unless prohibited by law, rule, regulation or judicial or administrative order, (i) if any Relevant Officer of any Credit Party obtains knowledge that any Credit Party or any Affiliate of Borrower which owns, directly or indirectly, any Securities of any Credit Party is the subject of any of the Terrorism Laws, such Credit Party will notify Administrative Agent and (ii) upon the request of any Lender, such Credit Party will provide any information in such Credit Party’s possession, such Lender believes is reasonably necessary to be delivered to comply with the Patriot Act.

(j)Other Information. (A) Upon the reasonable request of the Administrative Agent, and upon reasonable prior notice (unless such has been publicly filed with any securities exchange or with the SEC or any governmental or private regulatory authority or has been posted to Borrower’s website (and notification of any such posting has been provided to the Administrative Agent) or has otherwise been previously provided to the Administrative Agent hereunder or under any other Credit Document), copies of (i) all financial statements, reports, notices and proxy statements sent or made available generally by Borrower to its security holders acting in such capacity or by any Restricted Subsidiary of Borrower to its security holders other than Borrower or another Restricted Subsidiary of

Borrower, (ii) all regular and periodic reports and all registration statements and prospectuses, if any, filed by Borrower or any of its Restricted Subsidiaries with any securities exchange or with the SEC or any governmental or private regulatory authority, (iii) all press releases and other statements made available generally by Borrower or any of its Restricted Subsidiaries to the public concerning material developments in the business of Borrower or any of its Restricted Subsidiaries and (B) such other information and data with respect to Borrower or any of its Subsidiaries, as from time to time may be reasonably requested by Administrative Agent.

(k)Certification of Public Information. Borrower and each Lender acknowledge that certain of the Lenders may be “public-side” Lenders (Lenders that do not wish to receive material non-public information with respect to Borrower, its Restricted Subsidiaries or their securities) (the “Public Lenders”) and, if documents or notices required to be delivered pursuant to this Section 5.1 or otherwise are being distributed through IntraLinks/IntraAgency, SyndTrak, ClearPar or a substantially similar electronic transmission system or another relevant website (the “Information Platform”), any document or notice that Borrower has indicated contains Non-Public Information shall not be posted on that portion of the Information Platform designated for such Public Lenders. Borrower agrees to clearly designate all information provided to the Administrative Agent by or on behalf of Borrower which is suitable to make available to Public Lenders which, at a minimum, shall mean the word “PUBLIC” shall appear prominently on the first page thereof. If Borrower has not indicated whether a document or notice delivered pursuant to this Section 5.1 contains Non-Public Information, the Administrative Agent reserves the right to post such document or notice solely on that portion of the Information Platform designated for Lenders who wish to receive material non-public information with respect to Borrower, its Subsidiaries and their securities.

5.2	Existence.

Except as otherwise permitted under this Agreement, Borrower will, and will cause each Restricted Subsidiary and each U.S. Banking Subsidiary to, at all times preserve and keep in full force and effect its existence and all rights and governmental authorizations, qualifications, franchises, licenses and permits material to its business and to conduct its business in each jurisdiction in which its business is conducted, in each case, except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect; provided that none of Borrower, any Restricted Subsidiary or any U.S. Banking Subsidiary shall be required to preserve any such existence (other than Borrower or CIT Bank), right or governmental authorizations, qualifications, franchise, licenses and permits, if such Person shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Person, and that the loss thereof is not disadvantageous in any material respect to such Person or to Lenders.

5.3	Payment of Taxes and Claims.

Each Credit Party will, and will cause each of its Restricted Subsidiaries to, or in case of leased assets will contract with the applicable lessee to, pay all Taxes imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises before any penalty or fine accrues thereon, and all claims (including claims for labor, services, materials and supplies) for sums that have become due and payable and/or that by law have or may become a Lien upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto, in each case, except to the extent that the failure to pay any such item (either individually or together with all other such unpaid items) could not reasonably be expected to have a Material Adverse Effect; provided that no such Tax or claim need be paid if it is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as (a) adequate reserve or other appropriate provision, as shall

be required in conformity with GAAP shall have been made therefor and (b) in the case of leased assets, such contest proceedings are being conducted in accordance with terms set forth in the applicable lease.

5.4	Maintenance of Properties.

Each Credit Party will, and will cause each of its Restricted Subsidiaries to, or in the case of leased assets will contract with the applicable lessee to, if the failure to do any of the following could reasonably be expected to constitute a Material Adverse Effect: (a) maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted, all material assets used or useful in the business of Borrower and its Restricted Subsidiaries and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof and (b) comply at all times with the provisions of all material leases to which it is a party as lessee under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder.

5.5	Insurance.

Borrower will maintain or cause to be maintained, with financially sound and reputable insurers, such casualty insurance, such public liability insurance, third party property damage insurance with respect to liabilities, losses or damage in respect of the assets, properties and businesses of Borrower and its Restricted Subsidiaries, as has heretofore been customarily carried or maintained by Borrower in respect of the assets, properties and businesses of Borrower and its Restricted Subsidiaries, in each case, in such amounts (giving effect to self-insurance and provided that adequate reserves therefor are maintained in accordance with GAAP), with such deductibles, covering such risks and otherwise on such terms and conditions, as shall be customary for Borrower in respect of the assets, properties and businesses of Borrower and its Restricted Subsidiaries.

5.6	Books and Records; Inspections.

Each Credit Party will, and will cause each of its Restricted Subsidiaries to, (a) keep adequate books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities and (b) permit Administrative Agent, any Lender and any of their respective representatives (including employees, consultants, accountants, lawyers and appraisers) to visit and inspect any of the properties of any Credit Party and any of its Restricted Subsidiaries, to inspect, copy and take extracts from its and their financial and accounting records, and to discuss its and their affairs, finances and accounts with its and their officers and independent accountants, all upon reasonable notice and at such reasonable times during normal business hours, as often as may reasonably be requested; provided that (i) visits by any Lender shall be coordinated through Administrative Agent at Borrower’s request and (ii) so long as no Event of Default has occurred and is continuing, visits by any Lender or its representatives shall be limited to once per Fiscal Year and shall be at such Lender’s expense. By this provision the Credit Parties authorize such accountants to discuss with Administrative Agent and each Lender and such representatives the affairs, finances and accounts of Borrower and its Restricted Subsidiaries. The Credit Parties acknowledge that Administrative Agent, after exercising its rights of inspection, may prepare and distribute to the Lenders certain reports pertaining to the Credit Parties’ assets for internal use by Administrative Agent and the Lenders; provided that, in each case, the foregoing shall be subject to any confidentiality restrictions to which any Credit Party or its Subsidiaries are subject in the conduct of Ordinary Course of Business.

5.7	Compliance with Laws.

(a)Each Credit Party will comply, and shall cause each of its Subsidiaries to comply with the requirements of all applicable Laws, rules, regulations and orders of any Governmental Authority

(including all Environmental Laws), except where noncompliance could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Each Credit Party shall take all reasonable and necessary actions to ensure that no portion of the Loans will be used, disbursed or distributed for any purpose, or to any Person, directly or indirectly, in violation of any of the Terrorism Laws and shall take all reasonable and necessary action to comply in all material respects with all Terrorism Laws with respect thereto.

(b)Borrower will maintain, and cause each U.S. Banking Subsidiary that is a chartered or licensed banking institution that is authorized to take deposits to maintain, at all times such amount of capital (including a total capital ratio, Tier 1 Capital Ratio, Tier 1 leverage ratio and any other ratio relating to capital), as may be prescribed by the applicable bank regulatory authority, as the case may be, from time to time, by statute, rule or regulation, as is necessary for Borrower and each such U.S. Banking Subsidiary to be considered “well capitalized” (or similar term) by applicable statute, rule or regulation.

5.8	Environmental.

Each Credit Party shall (a) promptly take, and shall cause each of its Restricted Subsidiaries promptly to take, any and all actions necessary to (i) cure any violation of applicable Environmental Laws by such Credit Party or its Restricted Subsidiaries that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and (ii) make an appropriate response to any Environmental Claim against such Credit Party or any of its Restricted Subsidiaries and discharge any obligations it may have to any Person thereunder where failure to do so could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and (b) if a Default caused by reason of a breach of any representation, warranty or covenant related to environmental matters (including those contained in Sections 4.10, 4.13, 5.7 or 5.8) shall have occurred and be continuing for more than 20 days without the Credit Parties commencing activities reasonably likely to cure such Default in accordance with Environmental Laws, at the written request of the Administrative Agent or the Requisite Lenders through the Administrative Agent, provide to the Lenders within 90 days after such request, at the expense of Borrower, an environmental assessment report regarding the matters which are the subject of such Default, including, where appropriate, soil and/or groundwater sampling, prepared by an environmental consulting firm and, in the form and substance, reasonably acceptable to the Administrative Agent and indicating the presence or absence of Hazardous Materials and the estimated cost of any compliance or corrective action or response action with respect to any of the foregoing.

5.9	Additional Guarantors.

If the Borrower desires any Restricted Subsidiary that is not already a Guarantor to become a guarantor or obligor under this Agreement, then Borrower shall cause that Restricted Subsidiary to become a Guarantor hereunder by (1) executing and delivering to the Administrative Agent a Guarantor Counterpart Agreement, (2) delivering to the Administrative Agent an opinion of counsel (which may be in-house counsel) regarding authorization, execution and enforceability, reasonably satisfactory to the Administrative Agent and (3) take all such actions and execute and deliver, or cause to be executed and delivered, all such documents, instruments, agreements, and certificates, as are similar to those described in Section 3.1(b).

5.10	Designation of Restricted and Unrestricted Subsidiaries.

(a)Borrower may (i) designate any Restricted Subsidiary (including any Subsidiary that is acquired after the Prior Credit Agreement Date) to be an Unrestricted Subsidiary if, at the time of designation, such Restricted Subsidiary is a Special Purpose Entity (whether bankruptcy remote or not),

Regulated Subsidiary, Joint Venture, Immaterial Subsidiary or Owner Trust (other than a Qualified Owner Trust) or (ii) form a Subsidiary that is a Special Purpose Entity (whether bankruptcy remote or not), Regulated Subsidiary, Joint Venture, Immaterial Subsidiary or Owner Trust (other than a Qualified Owner Trust) as an Unrestricted Subsidiary, in each case, if after giving effect thereto no Event of Default has occurred and is continuing or would occur as a result thereof. Notwithstanding anything to the contrary, no Subsidiary that is a “Restricted Subsidiary” or an obligor or guarantor under documents governing any Publicly Traded Debt Securities shall be permitted to be designated an Unrestricted Subsidiary, unless such “Restricted Subsidiary,” obligor or guarantor is also being concurrently designated to be an “Unrestricted Subsidiary” under the documents governing such Publicly Traded Debt Securities. For the avoidance of doubt, no Guarantor shall be an Unrestricted Subsidiary.

(b)In the case of clause (a)(i) above, upon such designation, Borrower shall deliver to Administrative Agent an Officer’s Certificate certifying that the designation of a Restricted Subsidiary as an Unrestricted Subsidiary complies with the preceding conditions. In the case of clause (a)(ii) above, reasonably promptly upon request of the Administrative Agent, Borrower shall deliver to Administrative Agent an Officer’s Certificate setting forth all Unrestricted Subsidiaries formed since the time of the last such request from the Administrative Agent or, if no such prior request was made, since the Prior Credit Agreement Date, and certifying that all such formations complied with the preceding conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the requirements of being an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement.

(c)Borrower may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation will only be permitted, if no Event of Default would be in existence as a result of such designation.

5.11

Ratings.

Borrower will use commercially reasonable efforts to have the revolving credit facilities hereunder rated by at least any two of Moody’s, S&P and Fitch at all times that the Obligations are outstanding.

5.12	Use of Proceeds.

Loans and Letters of Credit will be used for general corporate purposes of Borrower and its Subsidiaries. No part of the proceeds of any Credit Extension will be used, whether directly or indirectly, for any purpose that violates any law, including Regulations T, U and X of the Board of Governors of the Federal Reserve System.

5.13	Ownership of CIT Bank.

CIT Bank shall remain a direct or indirect wholly-owned Subsidiary of the Borrower.

SECTION 6.

NEGATIVE COVENANTS

Each Credit Party that is a party to this Agreement covenants and agrees that, so long as any Commitment is in effect and until payment in full of all Obligations (other than contingent obligations not yet due) and the expiration or termination or Acceptable Collateralization of all Letters of Credit, such Credit Party shall perform, and shall cause each of its Restricted Subsidiaries (to the extent applicable) to perform, all covenants in this Section 6.

6.1

Liens.

Borrower shall not pledge or otherwise subject to any Lien any of its property or assets to secure Indebtedness for money borrowed, incurred, issued, assumed or guaranteed by Borrower without thereby expressly securing the due and punctual payment of the Obligations equally and ratably with any and all other Indebtedness for borrowed money secured by such Lien, so long as any such other Indebtedness shall be so secured; provided, however, that this restriction shall not prohibit or otherwise restrict:

(1)	Liens existing on the Prior Credit Agreement Date;

(2)	[Reserved];

(3)	Borrower from creating, incurring or suffering to exist upon any of its property or assets any Lien in favor of any Subsidiary of Borrower;

(4)

Borrower (i) from creating, incurring or suffering to exist a purchase money Lien upon any such property, assets, capital stock or Indebtedness acquired by Borrower prior to, at the time of, or within one year after (A) in the case of physical property or assets, the later of the acquisition, completion of construction (including any improvements on existing property) or commencement of commercial operation of such property or (B) in the case of shares of Capital Stock, Indebtedness or other property or assets, the acquisition of such shares of Capital Stock, Indebtedness, property or assets, (ii) from acquiring property or assets subject to Liens existing thereon at the date of acquisition thereof, whether or not the Indebtedness secured by any such Lien is assumed or guaranteed by Borrower, or (iii) from creating, incurring or suffering to exist Liens upon any property of any Person, which Liens exist at the time any such Person is merged with or into or consolidated with Borrower (or becomes a Subsidiary of Borrower) or which Liens exist at the time of a sale or transfer of the properties of any such Person as an entirety or substantially as an entirety to Borrower;

(5)

Borrower from creating, incurring or suffering to exist upon any of its property or assets Liens in favor of the United States or any state thereof or the District of Columbia, or any agency, department or other instrumentality thereof, to secure progress, advance or other payments pursuant to any contract or provision of any statute (including maintaining self-insurance or participating in any fund in connection with worker’s compensation, disability benefits, unemployment insurance, old age pensions or other types of social benefits, or joining in any other provisions or benefits available to companies participating in any such arrangements);

(6)

Borrower from creating, incurring or suffering to exist upon any of its property or assets Liens securing its obligations under letters of credit issued, Rate Management Transactions entered into not for speculative purposes, bids, tenders, sales contracts, purchase agreements, repurchase agreements, reverse repurchase agreements, bankers’ acceptances, leases, surety and performance bonds, and other similar obligations, in each case, incurred in the ordinary course of business;

(7)	Borrower from creating, incurring or suffering to exist Liens upon any real property acquired or constructed by Borrower primarily for use in the conduct of its business;

(8)	Borrower from entering into any arrangement with any Person providing for the leasing by Borrower of any property or assets, which property or assets have been or will be sold or transferred by Borrower to such Person with the intention that such property or assets will be

leased back to Borrower, if the obligations in respect of such lease would not be included as liabilities on a consolidated balance sheet of Borrower;

(9)

Borrower from creating, incurring or suffering to exist upon any of its property or assets Liens to secure non-recourse debt in connection with Borrower engaging in any leveraged or single-investor or other lease transactions, whether (in the case of Liens on or relating to leases or groups of leases or the particular properties subject thereto) such Liens are on the particular properties subject to any leases involved in any of such transactions and/or the rental or other payments or rights under such leases or, in the case of any group of related or unrelated leases, on the properties subject to the leases comprising such group and/or on the rental or other payments or rights under such leases, or on any direct or indirect interest therein, and whether (in any case) (A) such Liens are created prior to, at the time of, or at any time after the entering into of such lease transactions and/or (B) such leases are in existence prior to, or are entered into by Borrower at the time of or at any time after, the purchase or other acquisition by Borrower of the properties subject to such leases;

(10)

Borrower from creating, incurring or suffering to exist (A) other consensual Liens in the ordinary course of business of Borrower that secure Indebtedness that, in accordance with GAAP, would not be included in total liabilities, as shown on Borrower’s consolidated balance sheet, to the extent such Liens are created by reason of dispositions not characterized as “true sales” under FASB ASC 810 or 860 (or any successor to any of the foregoing), or (B) Liens created by Borrower in connection with any transaction intended by Borrower to be a sale of property or assets of Borrower, provided that such Liens are upon any or all of the property or assets intended to be sold, the income from such property or assets and/or the proceeds of such property or assets;

(11)	Borrower from creating, incurring or suffering to exist Liens on property or assets financed through tax-exempt municipal obligations, provided that such Liens are only on the property or assets so financed;

(12)

any extension, renewal, refinancing or replacement (or successive extensions, renewals, refinancings or replacements), in whole or in part, of any of the foregoing; provided, however, that any such extension, renewal, refinancing or replacement shall be limited to all or a part of the property or assets (or substitutions therefor) which secured the Lien so extended, renewed, refinanced or replaced (plus improvements on such property); and

(13)

Borrower from creating, incurring or suffering to exist any other Liens not otherwise permitted by any of the foregoing clauses (1) through (12) above; provided that the maximum amount of Indebtedness secured by Liens in reliance on this clause (13) shall not exceed, at the time of and after giving effect to the incurrence of any Indebtedness secured by a Lien in reliance on this clause (13), an amount equal to the greater of (i) $760,000,000, and (ii) 10% of the excess of Borrower’s consolidated total assets over Borrower’s consolidated liabilities, as shown on Borrower’s balance sheet for the most recent fiscal quarter for which financial statements are publicly available in accordance with GAAP at the date of measurement.

For the purposes of this Section 6.1, any contract by which title is retained as security (whether by lease, purchase, title retention agreement or otherwise) for the payment of a purchase price shall be deemed to be a purchase money Lien.

Nothing contained in this Section 6.1 shall prevent or be deemed to prohibit the creation, assumption or guaranty by Borrower of any Indebtedness not secured by a Lien or the issuance by the

Borrower of any debentures, notes or other evidences of Indebtedness not secured by a Lien, whether in the ordinary course of business or otherwise.

The entry by Borrower into any contract, document, agreement or instrument (which shall include bank credit facilities and loan agreements), in the ordinary course of business or otherwise, which contract, document, agreement or instrument may provide for or contain a right of set-off or other similar right between Borrower and such other party to the contract, document, agreement or instrument shall not result in, or be deemed to constitute, the creation or incurrence of a “Lien” as such term is used in this Agreement.

6.2	Restricted Payments.

(a)	Borrower will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(1)declare or pay any dividend or make any other payment or distribution on account of Borrower’s or any Guarantor’s Equity Interests (including any payment in connection with any merger or consolidation involving Borrower or any Guarantor) or to the direct or indirect holders of Borrower’s or any Guarantor’s Equity Interests in their capacity as such (other than (i) dividends or distributions payable in Qualified Equity Interests of Borrower and (ii) dividends or distributions payable by any Guarantor to Borrower or any other Guarantor); or

(2)purchase, redeem or otherwise acquire or retire for value (including in connection with any merger or consolidation involving Borrower) any Equity Interests of Borrower; or

(3)make any payment on or with respect to, or purchase, redeem, defease, or otherwise acquire or retire for value, any Junior Debt, except (x) a payment of interest or principal at the Stated Maturity thereof or (y) a payment, purchase, redemption, defeasance or other acquisition or retirement for value of any Junior Debt in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of payment, purchase, redemption, defeasance, acquisition or retirement

(all such payments and other actions set forth in these clauses (1) through (3) above being collectively referred to as “Restricted Payments”), unless, at the time of and after giving effect to such Restricted Payment, no Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment.

(b)

Section 6.2(a) will not prohibit the payment of any dividend or the consummation of any irrevocable redemption within 60 days after the date of declaration of the dividend or giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend or redemption payment would have been permitted under this Agreement.

6.3	Financial Covenants.

(a)The Credit Parties shall not permit the Tier 1 Capital Ratio of the Borrower, as of the last day of any Fiscal Quarter of the Borrower, to be less than 8.5%.

(b)The Credit Parties shall not permit the Guarantor Asset Coverage Ratio to be less than the applicable ratio indicated in the ratings based grid, as set forth below, determined by reference to the Debt Rating to be effective promptly after (i) public announcement of any change

of Borrower’s Debt Rating or (ii) delivery of written notice of any change of Borrower’s Debt Rating by Borrower to the Administrative Agent.


Covenant Level	Debt Rating (S&P / Moody’s / Fitch)	Minimum Guarantor Asset Coverage Ratio
I	≥ BBB- / Baa3 / BBB-	1.000 to 1.000
II	BB+ / Ba1 / BB+	1.250 to 1.000
III	BB / Ba2 / BB	1.375 to 1.000
IV	≤ BB- / Ba3 / BB-	1.500 to 1.000

In the case where two of the ratings are Equivalent Ratings and the third rating is not, (i) if the third rating is no more than one rating category (which includes a +, -, 1, 2 or 3 signifier) different from the Equivalent Ratings, the Covenant Level corresponding to the rating category of the Equivalent Ratings will apply; (ii) if the third rating is two or more rating categories higher than the Equivalent Ratings, the Covenant Level for the rating one rating category higher than the Equivalent Ratings will apply; and (iii) if the third rating is two or more rating categories lower than the Equivalent Ratings, the Covenant Level for the rating one rating category lower than the Equivalent Ratings will apply.

In the case where all three ratings are in different rating categories, the Covenant Level for the middle rating will apply, except that (i) if the highest rating differs from the middle rating by at least two rating categories more than the lowest rating differs from the middle rating, then the Covenant Level for the rating one rating category higher than the middle rating will apply, and (ii) if the lowest rating differs from the middle rating by at least two rating categories more than the highest rating differs from the middle rating, then the Covenant Level for the rating one rating category lower than the middle rating will apply.

Notwithstanding the foregoing, Covenant Level I shall apply only if at least two ratings are in Covenant Level I.

6.4	Merger, Consolidation or Sale of All or Substantially All Assets.

(a)Borrower will not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not Borrower is the surviving corporation); or (2) sell, assign, transfer, convey, lease or otherwise dispose of all or substantially all of the properties or assets (including, in each case, pursuant to a Division) of Borrower and its Subsidiaries, taken as a whole, in one or more related transactions, to another Person unless:

(1)either: (a) Borrower is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than Borrower) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation or limited liability company organized or existing under the laws of the United States, any state of the United States or the District of Columbia;

(2)the Person formed by or surviving any such consolidation or merger (if other than Borrower) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made expressly assumes all of Borrower’s Obligations under this Agreement and the other Credit Documents pursuant to agreements reasonably satisfactory to the Administrative Agent; and

(3)immediately after, and upon giving effect to, such transaction, no Default or Event of Default exists.

(b)Section 6.4(a)(3) will not apply to:

(1)a merger of Borrower with an Affiliate solely for the purpose of reorganizing Borrower in another jurisdiction; or

(2)any consolidation or merger, or any sale, assignment, transfer, conveyance, lease or other disposition of assets between or among Borrower and its Restricted Subsidiaries.

(c)Upon any consolidation or amalgamation by Borrower with, or merger of Borrower into, any other Person or any conveyance, transfer or lease of the properties and assets of Borrower as or substantially as an entirety to any Person in accordance with Section 6.4(a) or 6.4(b), the successor Person formed by such consolidation or amalgamation or into which Borrower is merged, or to which such conveyance, transfer or lease is made, shall succeed to, and be substituted for, and may exercise every right and power of, Borrower under this Agreement with the same effect, as if such successor Person had been named as Borrower herein; and thereafter, except in the case of a lease, the predecessor Person shall be released from all Obligations and covenants under this Agreement and the other Credit Documents.

(d)A Guarantor may not sell or otherwise dispose of all or substantially all of its assets (including pursuant to a Division) to another Person (other than to Borrower or another Guarantor), or consolidate with or merge with or into another Person (other than with or into Borrower or another Guarantor or unless Borrower or such Guarantor is the surviving Person in such consolidation or merger), in either case, unless:

(1)	immediately prior to, and after giving effect to, such transaction, no Event of Default has occurred and is continuing;

(2)

the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger (if other than the Guarantor, Borrower or another Guarantor) assumes all Obligations of that Guarantor under this Agreement and the other Credit Documents pursuant to agreements reasonably satisfactory to the Administrative Agent; and

(3)if the surviving Person is not Borrower or a Guarantor, at the time of the transaction such Guarantor or the surviving Person will have delivered, or caused to be delivered, to the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent, a certificate of an Authorized Officer of such Guarantor or such surviving Person and an opinion of counsel, each to the effect that such consolidation, merger, transfer, sale, assignment, conveyance, lease or other transaction and the agreements in respect thereof comply with this Agreement and that all conditions precedent herein provided for relating to such transaction have been complied with; provided that this paragraph shall not apply to any Guarantor that has been unconditionally released and discharged from the Guaranty in accordance with this Agreement.

6.5	Negative Pledges.

In the event that Borrower or any Restricted Subsidiary shall incur, amend, extend or refinance any Indebtedness (any such Indebtedness being, “Additional Indebtedness”), such Additional Indebtedness or any documentation governing such Additional Indebtedness shall not restrict Liens on any Guarantor Ratio Assets to secure the Obligations (and any refinancing thereof); provided that such Additional Indebtedness or such documentation may require that, if the Obligations (or any refinancing thereof) become secured by a Lien on any Guarantor Ratio Assets, such Additional Indebtedness shall be secured by a Lien on such Guarantor Ratio Assets subordinated to the Lien securing the Obligations (or any refinancing thereof) pursuant to an intercreditor agreement containing customary junior lien provisions and otherwise in form and substance reasonably satisfactory to the Administrative Agent.

SECTION 7.

GUARANTY

7.1	Guaranty of the Obligations.

Subject to the provisions of Section 7.2, Guarantors jointly and severally hereby irrevocably and unconditionally guaranty to Administrative Agent for the ratable benefit of the Beneficiaries the due and punctual payment in full of all Obligations, when the same shall become due, whether at Stated Maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due, but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)) (collectively, the “Guaranteed Obligations”). Notwithstanding any provision to the contrary of this Agreement or of any other Credit Document, it is intended that the Guaranties and liens and security interests (if any) granted by Guarantors not constitute a “Fraudulent Conveyance.” For purposes hereof, “Fraudulent Conveyance” means a fraudulent conveyance under section 548 of the Bankruptcy Code or a fraudulent conveyance or fraudulent transfer under the provisions of any applicable fraudulent conveyance or fraudulent transfer law or similar law of any state, nation or other governmental unit, as in effect from time to time. The parties hereto agree that, if the Guaranties or any such liens or security interests would, but for the application of this Section 7.1, constitute a Fraudulent Conveyance, the Guaranties and each such lien and security interest shall be valid and enforceable only to the maximum extent that would not cause the Guaranties or such lien or security interest to constitute a Fraudulent Conveyance.

7.2	Contribution by Guarantors.

All Guarantors desire to allocate among themselves (collectively, the “Contributing Guarantors”), in a fair and equitable manner, their obligations arising under this Guaranty. Accordingly, in the event any payment or distribution is made on any date by a Guarantor (a “Funding Guarantor”) under this Guaranty such that its Aggregate Payments exceed its Fair Share as of such date, such Funding Guarantor shall be entitled to a contribution from each of the other Contributing Guarantors in an amount sufficient to cause each Contributing Guarantor’s Aggregate Payments to equal its Fair Share as of such date. “Fair Share” means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the Fair Share Contribution Amount with respect to such Contributing Guarantor, to (ii) the aggregate of the Fair Share Contribution Amounts with respect to all Contributing Guarantors multiplied by, (b) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under this Guaranty in respect of the obligations guaranteed. “Fair Share Contribution Amount” means, with respect to a Contributing Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Contributing Guarantor under this Guaranty that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or

conveyance under Section 548 of the Bankruptcy Code or any comparable applicable provisions of state law; provided that, solely for purposes of calculating the Fair Share Contribution Amount with respect to any Contributing Guarantor for purposes of this Section 7.2, any assets or liabilities of such Contributing Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to, or obligations of, contribution hereunder shall not be considered as assets or liabilities of such Contributing Guarantor. “Aggregate Payments” means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (1) the aggregate amount of all payments and distributions made on or before such date by such Contributing Guarantor in respect of this Guaranty (including in respect of this Section 7.2), minus (2) the aggregate amount of all payments received on or before such date by such Contributing Guarantor from the other Contributing Guarantors as contributions under this Section 7.2. The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor. The allocation among Contributing Guarantors of their obligations, as set forth in this Section 7.2, shall not be construed in any way to limit the liability of any Contributing Guarantor hereunder. Each Guarantor is a third party beneficiary to the contribution agreement set forth in this Section 7.2.

7.3	Payment by Guarantors.

Subject to Section 7.2, Guarantors hereby, jointly and severally, agree, in furtherance of the foregoing and not in limitation of any other right which any Beneficiary may have at law or in equity against any Guarantor by virtue hereof, that upon the failure of Borrower to pay any of the Guaranteed Obligations when and as the same shall become due, whether at Stated Maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due, but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), Guarantors will, upon demand, pay, or cause to be paid, in Cash, to Administrative Agent, for the ratable benefit of Beneficiaries, an amount equal to the sum of the unpaid principal amount of all Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including interest which, but for Borrower becoming the subject of a case under the Bankruptcy Code, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against Borrower for such interest in the related bankruptcy case) and all other Guaranteed Obligations then owed to Beneficiaries as aforesaid.

7.4	Liability of Guarantors Absolute.

Each Guarantor agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety, other than payment in full of the Guaranteed Obligations. In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees as follows:

(a)this Guaranty is a guaranty of payment when due and not of collectibility. This Guaranty is a primary obligation of each Guarantor and not merely a contract of surety;

(b)Administrative Agent may enforce this Guaranty upon the occurrence and during the continuance of an Event of Default, notwithstanding the existence of any dispute between Borrower and any Beneficiary with respect to the existence of such Event of Default;

(c)the obligations of each Guarantor hereunder are independent of the obligations of Borrower and the obligations of any other guarantor (including any other Guarantor) of the obligations of Borrower, and a separate action or actions may be brought and prosecuted against such Guarantor, whether or not any action is brought against Borrower or any of such other guarantors, and whether or not Borrower is joined in any such action or actions;

(d)payment by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge any Guarantor’s liability for any portion of the Guaranteed Obligations which has not been paid; and without limiting the generality of the foregoing, if Administrative Agent is awarded a judgment in any suit brought to enforce any Guarantor’s covenant to pay a portion of the Guaranteed Obligations, such judgment shall not be deemed to release such Guarantor from its covenant to pay the portion of the Guaranteed Obligations that is not the subject of such suit, and such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect, modify or abridge any other Guarantor’s liability hereunder in respect of the Guaranteed Obligations;

(e)any Beneficiary, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability hereof or giving rise to any reduction, limitation, impairment, discharge or termination of any Guarantor’s liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guaranteed Obligations; (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guaranteed Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guaranteed Obligations and take and hold security for the payment hereof or the Guaranteed Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation of any Person (including any other Guarantor) with respect to the Guaranteed Obligations; (v) enforce and apply any security, now or hereafter held by or for the benefit of such Beneficiary in respect hereof or the Guaranteed Obligations, and direct the order or manner of sale thereof, or exercise any other right or remedy that such Beneficiary may have against any such security, in each case, as such Beneficiary, in its discretion, may determine consistent herewith or any other applicable Credit Document, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor against Borrower or any security for the Guaranteed Obligations; and (vi) exercise any other rights available to it under the Credit Documents; and

(f)this Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than payment in full of the Guaranteed Obligations), including the occurrence of any of the following, whether or not any Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce, or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Credit Documents, at law, in equity or otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranty of, or security for, the payment of the Guaranteed Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) hereof, any of the other Credit Documents, any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guaranteed Obligations, in each case, whether or not in accordance with the terms hereof or such Credit Document, such agreement relating to such other guaranty or security; (iii) the Guaranteed Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other

than payments received pursuant to the other Credit Documents or from the proceeds of any security for the Guaranteed Obligations, except to the extent such security also serves as collateral for indebtedness, other than the Guaranteed Obligations) to the payment of indebtedness, other than the Guaranteed Obligations, even though any Beneficiary might have elected to apply such payment to any part or all of the Guaranteed Obligations; (v) any Beneficiary’s consent to the change, reorganization or termination of the corporate structure or existence of Borrower or any of its Restricted Subsidiaries and to any corresponding restructuring of the Guaranteed Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guaranteed Obligations; (vii) any defenses, set offs or counterclaims which Borrower may allege or assert against any Beneficiary in respect of the Guaranteed Obligations, including failure of consideration, breach of warranty, statute of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Guarantor, as an obligor in respect of the Guaranteed Obligations.

7.5	Waivers by Guarantors.

Each Guarantor hereby waives, for the benefit of Beneficiaries: (a) any right to require any Beneficiary, as a condition of payment or performance by such Guarantor, to (i) proceed against Borrower, any other guarantor (including any other Guarantor) of the Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security held from Borrower, any such other guarantor or any other Person, (iii) proceed against or have resort to any balance of any Deposit Account or credit on the books of any Beneficiary in favor of Borrower or any other Person, or (iv) pursue any other remedy in the power of any Beneficiary whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of Borrower or any other Guarantor, including any defense based on, or arising out of, the lack of validity or the unenforceability of the Guaranteed Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of Borrower or any other Guarantor from any cause, other than payment in full of the Guaranteed Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Beneficiary’s errors or omissions in the administration of the Guaranteed Obligations, except behavior which amounts to bad faith, gross negligence or willful misconduct; (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal or equitable discharge of such Guarantor’s obligations hereunder, (ii) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder or the enforcement hereof, (iii) any rights to set offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any Beneficiary protect, secure, perfect or insure any security interest or lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of default hereunder, or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto, notices of any extension of credit to Borrower and notices of any of the matters referred to in Section 7.4 and any right to consent to any thereof; and (g) any defenses or benefits that may be derived from, or afforded by, law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms hereof.

7.6	Guarantors’ Rights of Subrogation, Contribution, etc.

Until the Guaranteed Obligations shall have been indefeasibly paid in full and the Commitments shall have terminated, each Guarantor hereby waives any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against Borrower or any other Guarantor or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations

hereunder, in each case, whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise, and including without limitation (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has, or may hereafter have against Borrower with respect to the Guaranteed Obligations, (b) any right to enforce, or to participate in, any claim, right or remedy that any Beneficiary now has or may hereafter have, against Borrower, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Beneficiary. In addition, until the Guaranteed Obligations shall have been indefeasibly paid in full and the Commitments shall have terminated, each Guarantor shall withhold exercise of any right of contribution such Guarantor may have against any other guarantor (including any other Guarantor) of the Guaranteed Obligations, including any such right of contribution, as contemplated by Section 7.2. Each Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution, as set forth herein, is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor may have against Borrower or against any collateral or security, and any rights of contribution such Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights any Beneficiary may have against Borrower, to all right, title and interest any Beneficiary may have in any such collateral or security, and to any right any Beneficiary may have against such other guarantor. If any amount shall be paid to any Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Guaranteed Obligations shall not have been finally and indefeasibly paid in full, such amount shall be held in trust for Administrative Agent, on behalf of Beneficiaries, and shall forthwith be paid over to Administrative Agent, for the benefit of Beneficiaries, to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof.

7.7	Subordination of Other Obligations.

Any Indebtedness of Borrower or any Guarantor now or hereafter held by any Guarantor (the “Obligee Guarantor”) is hereby subordinated in right of payment to the Guaranteed Obligations, and any such indebtedness collected or received by the Obligee Guarantor after an Event of Default has occurred and is continuing shall be held in trust for Administrative Agent, on behalf of Beneficiaries, and shall forthwith be paid over to Administrative Agent, for the benefit of Beneficiaries, to be credited and applied against the Guaranteed Obligations, but without affecting, impairing or limiting in any manner the liability of the Obligee Guarantor under any other provision hereof.

7.8	Continuing Guaranty.

This Guaranty is a continuing guaranty and shall remain in effect until all of the Guaranteed Obligations shall have been indefeasibly paid in full and the Commitments shall have terminated. Each Guarantor hereby irrevocably waives any right to revoke this Guaranty as to future transactions giving rise to any Guaranteed Obligations.

7.9	Authority of Guarantors or Borrower.

It is not necessary for any Beneficiary to inquire into the capacity or powers of any Guarantor or Borrower or the officers, directors or any agents acting or purporting to act on behalf of any of them.

7.10	Financial Condition of Borrower.

Any Credit Extension may be made to Borrower or continued from time to time, without notice to, or authorization from, any Guarantor, regardless of the financial or other condition of Borrower

at the time of any such grant or continuation. No Beneficiary shall have any obligation to disclose or discuss with any Guarantor its assessment, or any Guarantor’s assessment, of the financial condition of Borrower. Each Guarantor has adequate means to obtain information from Borrower on a continuing basis concerning the financial condition of Borrower and its ability to perform its obligations under the Credit Documents, and each Guarantor assumes the responsibility for being and keeping informed of the financial condition of Borrower and of all circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations. Each Guarantor hereby waives and relinquishes any duty on the part of any Beneficiary to disclose any matter, fact or thing relating to the business, operations or conditions of Borrower, now known, or hereafter known, by any Beneficiary.

7.11	Bankruptcy, etc.

(a)So long as any Guaranteed Obligations remain outstanding, no Guarantor shall, without the prior written consent of Administrative Agent acting pursuant to the instructions of Requisite Lenders, commence or join with any other Person in commencing any bankruptcy, reorganization or insolvency case or proceeding against Borrower or any other Guarantor. The obligations of Guarantors hereunder shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any case or proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of Borrower or any other Guarantor or by any defense which Borrower or any other Guarantor may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding.

(b)Each Guarantor acknowledges and agrees that any interest on any portion of the Guaranteed Obligations which accrues after the commencement of any case or proceeding referred to in clause (a) above (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by operation of law by reason of the commencement of such case or proceeding, such interest as would have accrued on such portion of the Guaranteed Obligations, if such case or proceeding had not been commenced) shall be included in the Guaranteed Obligations because it is the intention of Guarantors and Beneficiaries that the Guaranteed Obligations which are guaranteed by Guarantors pursuant hereto should be determined without regard to any rule of law or order which may relieve Borrower of any portion of such Guaranteed Obligations. Guarantors will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay Administrative Agent, or allow the claim of Administrative Agent in respect of, any such interest accruing after the date on which such case or proceeding is commenced.

(c)In the event that all or any portion of the Guaranteed Obligations are paid by Borrower, the obligations of Guarantors hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered, directly or indirectly, from any Beneficiary as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed Obligations for all purposes hereunder.

7.12	Discharge of Guaranty Upon Sale of Guarantor.

If all of the Capital Stock or all or substantially all of the assets of any Guarantor or any of its successors in interest hereunder shall be sold or otherwise disposed of (including by merger or consolidation) in accordance with the terms and conditions hereof, the Guaranty of such Guarantor or such successor in interest, as the case may be, hereunder shall automatically be discharged and released without any further action by any Beneficiary or any other Person, effective as of the time of such asset sale or other disposition.

7.13

Taxes.

The provisions of Section 2.16 shall apply, mutatis mutandis, to the Guarantors and payments thereby.

SECTION 8.

EVENTS OF DEFAULT

8.1	Events of Default.

If any one or more of the following conditions or events shall occur:

(a)Failure to Make Payments When Due. Failure by Borrower to (i) pay when due the principal of, and premium, if any, on, any Loan or any L/C Obligation, whether at Stated Maturity, by acceleration or otherwise; (ii) pay when due any installment of principal of any Loan, by mandatory prepayment or otherwise; (iii) pay within three (3) Business Days of the date due any interest on any Loan or any L/C Obligation or any fee or any other amount due hereunder; or (iv) deposit, within three (3) Business Days of the date required, any funds as Cash Collateral in respect of L/C Obligations, when required by this Agreement; or

(b)Default in Other Agreements. (i) Failure of Borrower or any Restricted Subsidiary to pay when due any principal of, or interest on, or any other amount payable in respect of, one or more items of Indebtedness (other than Indebtedness referred to in Section 8.1(a)) in each case, beyond the grace period, if any, provided therefor; or (ii) breach or default by Borrower or any Restricted Subsidiary with respect to any other material term of (1) one or more items of Indebtedness, or (2) any loan agreement, mortgage, indenture or other agreement relating to such item(s) of Indebtedness, in each case, beyond the grace period, if any, provided therefor, if the effect of such breach or default is to cause that Indebtedness to become or be declared due and payable prior to its Stated Maturity or the Stated Maturity of any underlying obligation, or prior to the stated term of such derivative transaction, as the case may be; and, in the case of clauses (i) and (ii), the aggregate principal amount or termination value, as applicable, of such Indebtedness owed by such Credit Party or such Restricted Subsidiary is greater than the Threshold Amount; or

(c)Breach of Certain Covenants. Failure of any Credit Party to perform or comply with any term or condition contained in (i) Section 6.3(a) or (b) and such failure continues for five (5) Business Days or (ii) Section 5.1, Section 5.2 (with respect to the legal existence of Borrower), Section 5.12, Section 5.13 or Section 6 (other than Section 6.3(a) or (b)); or

(d)Breach of Representations, etc. (i) Any representation, warranty, certification or other statement made by any Credit Party in this Agreement shall be false in any material respect as of the date made; or (ii) any representation, warranty, certification or other statement made or deemed made by any Credit Party in any Credit Document (other than this Agreement) or in any statement or certificate at any time given by any Credit Party in writing pursuant hereto or thereto or in connection herewith or therewith shall be false as of the date made or deemed made, to the extent (other than in the case of any representation, warranty, certification or other statement is already qualified as to “materiality” or similar standard), as could reasonably be expected to have a Material Adverse Effect; or

(e)Other Defaults Under Credit Documents. Any Credit Party shall default in the performance of, or compliance with, any term contained herein or any of the other Credit Documents, other than any such term referred to in any other Section of this Section 8.1, and such default shall not

have been remedied or waived within thirty (30) days after the earlier of (i) any Relevant Officer of such Credit Party becoming aware of such default, or (ii) receipt by any Relevant Officer of Borrower of notice from Administrative Agent or any Lender of such default; or

(f)Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court of competent jurisdiction shall enter a decree or order for relief in respect of Borrower or any Significant Subsidiary in an involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency, reorganization, liquidation or similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced against Borrower or any Significant Subsidiary under the Bankruptcy Code or under any other applicable bankruptcy, insolvency, reorganization, liquidation or similar law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, conservator, custodian or other officer having similar powers over Borrower or any Significant Subsidiary, or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee, conservator or other custodian of Borrower or any Significant Subsidiary for all or a substantial part of its property, and any such event described in this clause (ii) shall continue for sixty (60) days without having been dismissed, bonded or discharged; or

(g)Voluntary Bankruptcy; Appointment of Receiver, etc. (i) Borrower or any Significant Subsidiary shall seek to have an order for relief entered with respect to it or shall commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency, reorganization, liquidation or similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee, conservator or other custodian for all or a substantial part of its property; or Borrower or any Significant Subsidiary shall make any assignment for the benefit of creditors; (ii) Borrower or any Significant Subsidiary shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts generally, as such debts become due; or (iii) there shall have occurred the voluntary appointment of a receiver, trustee, conservator or other custodian of Borrower or any Significant Subsidiary; or

(h)Claims, Judgments and Attachments. Any money judgment, writ or warrant of attachment or similar process involving, in the aggregate, at any time, an amount in excess of the Threshold Amount (in either case, to the extent not fully covered by insurance (less any deductible) as to which a solvent and unaffiliated third party insurance company has acknowledged coverage) shall be entered or filed against Borrower or any Significant Subsidiary or any of their respective assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of thirty (30) days (or, in any event, later than the date that enforcement proceedings shall have been commenced by any creditor upon such judgment order or five (5) days prior to the date of any proposed sale thereunder); or

(i)Dissolution. Any order, judgment or decree shall be entered against Borrower or any Significant Subsidiary decreeing the dissolution or split up of such Person and such order shall remain undischarged or unstayed for a period in excess of thirty (30) days; or

(j)Employee Benefit Plans. There shall occur one or more ERISA Events which, individually or in the aggregate, results in, or might reasonably be expected to result in, liability of Borrower, any of its Restricted Subsidiaries or any of their respective ERISA Affiliates in excess of the Threshold Amount during the term hereof; or

(k)Change of Control. A Change of Control shall occur; or

(l)Guaranties and other Credit Documents. At any time after the execution and delivery thereof, (i) any Credit Party shall repudiate its obligations under any Credit Document, other than, in the case of a Guarantor, following its release from the Guaranty, (ii) the Guaranty for any reason, other than the satisfaction in full of all Obligations, shall cease to be in full force and effect in any material respect with respect to any Guarantor (other than in accordance with its terms) or shall be declared to be null and void, or (iii) any Credit Document (other than the Guaranty) ceases to be in full force and effect (other than by reason of the satisfaction in full of the Obligations in accordance with the terms hereof) or shall be declared null and void; or

(m)CIT Bank. CIT Bank (a) ceases to accept deposits on the order of a bank regulatory authority, (b) ceases to be an insured bank under the Federal Deposit Insurance Act, (c) is required to submit a capital restoration plan to the Office of the Comptroller of the Currency that would reasonably be expected to result in a Material Adverse Effect on the Borrower’s ability to meet its Obligations, or (d) fails to comply with any formal order of a bank regulatory authority which failure would reasonably be expected to have a Material Adverse Effect;

THEN, (1) upon the occurrence of any Event of Default described in Section 8.1(f) or 8.1(g) with respect to Borrower, automatically, and (2) upon the occurrence of any other Event of Default, upon notice to Borrower by the Administrative Agent (given at the direction of the Requisite Lenders) with respect to any or all of the following, (A) the Commitments shall immediately terminate; (B) each of the following shall immediately become due and payable, in each case, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by each Credit Party: (I) the fees, expenses, indemnities and other amounts (including fees, charges and disbursements of counsel) then due to the Administrative Agent and the other Beneficiaries, including without limitation, amounts payable under Sections 2.12, 2.14, 2.15, 2.16 and 10.2, (II) the unpaid principal amount of, and accrued interest on, the Loans, and (III) all other Obligations; (C) Borrower shall Cash Collateralize the L/C Obligations (in an amount equal to the Applicable Cash Collateralization Percentage thereof); and (D) upon the written direction of the Requisite Lenders, all LIBOR Rate Loans then outstanding shall be immediately converted into Base Rate Loans (it being understood that Borrower shall be liable for any amounts payable under Section 2.14(e) in connection with such conversion).

SECTION 9.

AGENTS

9.1	Appointment of Administrative Agent, Arrangers and Syndication Agents.

BofA Securities, Inc., Barclays Bank PLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and Wells Fargo Bank, National Association are hereby appointed the Arrangers hereunder, and each Lender and the L/C Issuer hereby authorize BofA Securities, Inc., Barclays Bank PLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and Wells Fargo Bank, National Association to act as the Arrangers in accordance with the terms hereof and the other Credit Documents. Bank of America is hereby appointed the Administrative Agent hereunder and under the other Credit Documents and each Lender and the L/C Issuer hereby authorize Bank of America to act as the Administrative Agent in accordance with the terms hereof and the other Credit Documents. Barclays Bank PLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and Wells Fargo Bank, National Association are hereby appointed the Syndication Agents hereunder, and each Lender hereby authorizes Barclays Bank PLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and Wells Fargo Bank, National

Association to act as the Syndication Agents in accordance with the terms hereof and the other Credit Documents. The Administrative Agent hereby agrees to act in its capacity as such upon the express conditions contained herein and the other Credit Documents, as applicable. The provisions of this Section 9 (other than as expressly provided herein) are solely for the benefit of the Administrative Agent, the L/C Issuer and the Lenders and no Credit Party shall have any rights as a third party beneficiary of any of the provisions of this Section 9 (other than as expressly provided herein). Notwithstanding any other provision of this Agreement or any provision of any other Credit Document, the Arrangers and the Syndication Agents are named as such for recognition purposes only, and in their respective capacities as such shall have no duties, responsibilities or liabilities with respect to this Agreement or any other Credit Document; it being understood and agreed that the Arrangers and the Syndication Agents shall be entitled to all exculpatory provisions and indemnification and reimbursement rights in favor of the Administrative Agent provided herein and in the other Credit Documents and all of the other benefits of this Section 9 (notwithstanding, for the avoidance of doubt, whether or not the Arrangers or the Syndication Agents are specifically referenced in connection with the enumeration of such rights or benefits). Without limitation of the foregoing, no Arranger or Syndication Agent shall, by reason of this Agreement or any other Credit Document, have any fiduciary relationship in respect of any Lender, Credit Party or any other Person.

9.2	Powers and Duties.

Each Lender and the L/C Issuer irrevocably authorize the Administrative Agent to take such action on such Lender’s or the L/C Issuer’s behalf and to exercise such powers, rights and remedies hereunder and under the other Credit Documents, as are specifically delegated or granted to the Administrative Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. The Administrative Agent shall have only those duties and responsibilities that are expressly specified herein and the other Credit Documents. The Administrative Agent may exercise such powers, rights and remedies, and perform such duties, by or through its agents or employees. The Administrative Agent shall not have, by reason hereof or any of the other Credit Documents, a fiduciary relationship or other implied duties in respect of any Lender; and nothing herein or in any of the other Credit Documents, expressed or implied, is intended to, or shall be so construed as to, impose upon the Administrative Agent any obligations in respect hereof or any of the other Credit Documents, except as expressly set forth herein or therein. Without limiting the generality of the foregoing sentence, the use of the term “agent” in this Agreement and in the other Credit Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under the agency doctrine of any applicable Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

9.3	General Immunity.

(a)No Responsibility for Certain Matters. The Administrative Agent shall not be responsible to any Lender or the L/C Issuer for the execution, effectiveness, genuineness, validity, enforceability, collectibility or sufficiency hereof or of any other Credit Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by the Administrative Agent to Lenders or by or on behalf of any Credit Party to any Syndication Agent, any Lender or the L/C Issuer in connection with the Credit Documents and the transactions contemplated thereby or for the financial condition or business affairs of any Credit Party or any other Person liable for the payment of any Obligations, and the Administrative Agent shall not be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Credit Documents or as to the use of the proceeds of the Loans or as to the existence or possible existence of any Event of Default or Default or as

to the satisfaction of any condition set forth in Section 3 or elsewhere herein (other than to confirm receipt of items expressly required to be delivered to the Administrative Agent) or to inspect the properties, books or records of Borrower or any of its Subsidiaries or to make any disclosures with respect to the foregoing. No requirement in any Credit Document for a Credit Party to provide evidence, opinion, information, documentation or other material requested or required by the Administrative Agent shall be construed to mean that the Administrative Agent has any responsibility to request or require such evidence, opinion, information, documentation or other material. Anything contained herein to the contrary notwithstanding, Administrative Agent shall not have any liability arising from confirmations of the amount of outstanding Loans or the Letters of Credit.

(b)Exculpatory Provisions. None of the Administrative Agent, the Arrangers or the Syndication Agents or their officers, partners, directors, employees or agents shall be liable to the Lenders (i) for any action taken or omitted by the Administrative Agent, the Arranger or Syndication Agent (A) under or in connection with any of the Credit Documents except to the extent caused by such Administrative Agent’s, Arranger’s or Syndication Agent’s gross negligence or willful misconduct, as determined by a final, non-appealable judgment of a court of competent jurisdiction or (B) with the consent, or at the request, of the Requisite Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement) or (ii) for any failure of any Credit Party to perform its obligations under this Agreement or any other Credit Document. None of the Administrative Agent, the Arrangers or the Syndication Agents shall have any duty or responsibility to disclose, or be liable for the failure to disclose, to any Lenders or any L/C Issuer, any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the Credit Parties or any of their Affiliates, that is communicated to, obtained or in possession of, the Administrative Agent, or any Arranger or Syndication Agent or any of their Related Parties in any capacity, except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent. The Administrative Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection herewith or with any of the other Credit Documents or from the exercise of any power, discretion or authority vested in it hereunder or thereunder, unless and until the Administrative Agent shall have received instructions in respect thereof from Requisite Lenders (or such other Lenders, as may be required to give such instructions under Section 10.5) and, upon receipt of such instructions from Requisite Lenders (or such other Lenders, as the case may be), the Administrative Agent shall be entitled to act or (where so instructed) refrain from acting, or to exercise such power, discretion or authority, in accordance with such instructions and shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Credit Document or applicable Law. Without prejudice to the generality of the foregoing, (i) the Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and shall be entitled to rely, and shall be protected in relying, on opinions and judgments of attorneys (who may be attorneys for Borrower and its Subsidiaries), accountants, experts and other professional advisors selected by it; and (ii) no Lender shall have any right of action whatsoever against the Administrative Agent as a result of the Administrative Agent acting or (where so instructed) refraining from acting hereunder or under any of the other Credit Documents in accordance with the instructions of Requisite Lenders (or such other Lenders, as may be required to give such instructions under Section 10.5).

(c)Notice of Default. The Administrative Agent shall not be deemed to have knowledge of any Default or Event of Default, until written notice describing such Default or Event of Default is given to any Agent by a Credit Party, the L/C Issuer or a Lender. In the event that the Administrative Agent shall receive such a notice, the Administrative Agent shall give notice thereof to the Lenders; provided that failure to give such notice shall not result in any liability on the part of the Administrative Agent.

(d)None of the Lenders or the L/C Issuer shall assert, and each Lender and the L/C Issuer hereby waive, any claim against the Administrative Agent, including any predecessor agent, its sub-agents and their respective Affiliates in respect of any action taken, or omitted to be taken, by any of them, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Credit Document or any agreement or instrument contemplated hereby or thereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof.

(e)No provision of this Agreement, any other Credit Document or any agreement or instrument contemplated hereby or thereby, or the transactions contemplated hereby or thereby shall require the Administrative Agent to: (i) expend or risk its own funds or provide indemnities in the performance of any of its duties hereunder or the exercise of any of its rights or power, or (ii) otherwise incur any financial liability in the performance of its duties hereunder or the exercise of any of its rights or power, except for such expense, indemnity or liability, if any, arising out of the Administrative Agent’s gross negligence or willful misconduct in the performance of its duties hereunder or under any other Credit Document, as determined by a judgment of a court of competent jurisdiction.

(f)The Administrative Agent, including any predecessor agent, its sub-agents and their respective Affiliates, shall not be responsible for any action taken, or omitted to be taken, by the Administrative Agent with respect to (i) perfecting, maintaining, monitoring, preserving or protecting the security interest or lien granted under this Agreement, any other Credit Document or any agreement or instrument contemplated hereby or thereby or (ii) the filing, re-filing, recording, re-recording or continuing of any document, financing statement, mortgage, assignment, notice, instrument of further assurance or other instrument in any public office at any time or times. The actions described in items (i) and (ii) shall be the sole responsibility of the Credit Parties.

(g)The Administrative Agent shall not be required to qualify in any jurisdiction in which it is not presently qualified to perform its obligations as Administrative Agent.

(h)The Administrative Agent may perform any and all of its duties and exercise its rights and powers under this Agreement or under any other Credit Document by or through any one or more sub-agents appointed by it. Each of the Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates. The exculpatory, indemnification and other provisions of this Section 9 shall apply to any of the Affiliates of the Administrative Agent and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as the Administrative Agent. All of the rights, benefits, and privileges (including the exculpatory and indemnification provisions) of this Section 9 shall apply to any such sub-agent and to the Affiliates of any such sub-agent, and shall apply to their respective activities as sub-agent, as if such sub-agent and Affiliates were named herein. Notwithstanding anything herein to the contrary, with respect to each sub-agent appointed by the Administrative Agent, (i) such sub-agent shall be a third party beneficiary under this Agreement with respect to all such rights, benefits and privileges (including exculpatory rights and rights to indemnification) and shall have all of the rights and benefits of a third party beneficiary, including an independent right of action to enforce such rights, benefits and privileges (including exculpatory rights and rights to indemnification) directly, without the consent or joinder of any other Person, against any or all of Credit Parties and the Lenders, (ii) such rights, benefits and privileges (including exculpatory rights and rights to indemnification) shall not be modified or amended without the consent of such sub-agent, and (iii) such sub-agent shall only have obligations to the Administrative Agent and not to any Credit Party, Lender or any other Person and no Credit Party, Lender or any other Person shall have any rights, directly or indirectly, as a third party beneficiary or otherwise, against such sub-agent.

9.4	Agents Entitled to Act as Lender.

The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, the Administrative Agent, in its individual capacity as a Lender hereunder. With respect to its Loans and participations in the Letters of Credit, the Administrative Agent shall have the same rights and powers hereunder, in its capacity as a Lender, as any other Lender and may exercise the same, as if it were not performing the duties and functions delegated to it hereunder, and the term “Lender” shall, unless the context clearly otherwise indicates, include the Administrative Agent, in its individual capacity. The Administrative Agent and its Affiliates may accept deposits from, lend money to, own securities of, and generally engage in any kind of banking, trust, financial advisory or other business with Borrower or any of its Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from Borrower for services in connection herewith and otherwise without having to account for the same to Lenders. The Lenders acknowledge that, pursuant to such activities, the Administrative Agent or its Affiliates may receive information regarding any Credit Party or any Affiliate of any Credit Party (including information that may be subject to confidentiality obligations in favor of such Credit Party or such Affiliate) and acknowledge that the Administrative Agent and its Affiliates shall be under no obligation to provide such information to them. In addition, pursuant to such activities, the Administrative Agent or their Affiliates may have economic interests that could conflict with the Lenders.

9.5	Lenders’ Representations, Warranties and Acknowledgment.

(a)Each of the Lenders and the L/C Issuer represents and warrants that it has made its own independent investigation of the financial condition and affairs of Borrower and its Subsidiaries in connection with Credit Extensions hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of Borrower and its Subsidiaries. The Administrative Agent shall not have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and the Administrative Agent shall not have any responsibility with respect to the accuracy of or the completeness of any information provided to Lenders. Each Lender agrees that it will not claim that any Lender has rendered advisory services of any nature or respect or owes a fiduciary or similar duty to any Lender in connection with this Agreement or the transactions contemplated hereby.

(b)Each Lender, by delivering its signature page to this Agreement or an Assignment Agreement or by the funding of any Credit Extension, shall be deemed to have acknowledged receipt of, and consented to and approved, each Credit Document and each other document required to be approved by the Administrative Agent or Lenders, as applicable, on the Closing Date or as of the date of such Credit Extension.

(c)Each Lender represents and warrants that, as of the Closing Date, or such later date on which such Lender delivers a signature page to an Assignment Agreement, Borrower has provided such Lender with adequate access to financial and other information concerning Borrower and its Subsidiaries and such Lender has been able to obtain from Borrower any additional information necessary to make an informed decision regarding the creditworthiness of Borrower and its Subsidiaries.

9.6	Right to Indemnity.

Each Lender, in proportion to its Applicable Percentage, severally, agrees to indemnify the Administrative Agent and the L/C Issuer, to the extent that the Administrative Agent or the L/C Issuer shall not have been reimbursed by any Credit Party (and without limiting its obligation to do so), for and

against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against, the Administrative Agent or the L/C Issuer in exercising its powers, rights and remedies or performing its duties hereunder or under the other Credit Documents or otherwise, in its capacity as the Administrative Agent or the L/C Issuer in any way relating to or arising out of this Agreement or the other Credit Documents; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s or the L/C Issuer’s, as applicable, gross negligence or willful misconduct, as determined by a final, non-appealable judgment of a court of competent jurisdiction. If any indemnity furnished to the Administrative Agent or the L/C Issuer for any purpose shall, in the opinion of the Administrative Agent or the L/C Issuer, be insufficient or become impaired, the Administrative Agent or the L/C Issuer may call for additional indemnity and cease, or not commence, to do the acts indemnified against, until such additional indemnity is furnished; provided that in no event shall this sentence require any Lender to indemnify the Administrative Agent or the L/C Issuer against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Lender’s Applicable Percentage thereof; and provided, further, that this sentence shall not be deemed to require any Lender to indemnify the Administrative Agent or the L/C Issuer against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding sentence.

9.7	Successor Administrative Agent.

(a)Administrative Agent shall have the right to resign at any time by giving prior written notice thereof to the Lenders and Borrower and Administrative Agent may be removed at any time after such notice of resignation from the Administrative Agent by an instrument or concurrent instruments in writing delivered to Borrower and Administrative Agent and signed by Requisite Lenders. The Administrative Agent shall have the right, but not the obligation, to appoint a financial institution to act as Administrative Agent hereunder, subject to the reasonable satisfaction of the Requisite Lenders and, so long as no Event of Default shall have occurred and be continuing, Borrower (such consent by Borrower not to be unreasonably withheld, conditioned or delayed; it being understood that Borrower will be deemed to have provided such consent, in the event that it shall have failed to respond to a consent request made in writing and delivered in accordance with Section 10.1 within 30 days of such delivery). If Administrative Agent provides notice of its resignation, Administrative Agent’s resignation shall become effective on the 10th Business Day after such notice of resignation. Upon any such notice of resignation or any such removal, if a successor Administrative Agent has not already been appointed by the retiring Administrative Agent, Requisite Lenders shall have the right, upon five (5) Business Days’ notice to Borrower, to appoint a successor Administrative Agent, subject to, so long as no Event of Default shall have occurred and be continuing, the consent of Borrower to such appointment (such consent by Borrower not to be unreasonably withheld, conditioned or delayed; provided that in no event shall any successor Administrative Agent be a Defaulting Lender; it being understood that Borrower will be deemed to have provided such consent, in the event that it shall have failed to respond to a consent request made in writing and delivered in accordance with Section 10.1 within 30 days of such delivery). If neither Requisite Lenders nor Administrative Agent have appointed a successor Administrative Agent, then the Requisite Lenders shall be deemed to have succeeded to, and become vested with, all the rights, powers, privileges and duties of the retiring Administrative Agent (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the L/C Issuer under any of the Credit Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed). Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to, and become vested with, all the rights, powers, privileges and duties of the retiring or removed Administrative Agent. The fees payable by Borrower to a

successor Administrative Agent shall be the same as those payable to its predecessor, unless otherwise agreed between Borrower and such successor. After any retiring or removed Administrative Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it (i) while it was Administrative Agent hereunder (but only in its capacity as Administrative Agent) and (ii) after such resignation or removal for as long as it continues to act in any capacity hereunder or under the other Credit Documents (but only to the extent such acts would customarily be undertaken by the Administrative Agent), including in respect of any actions taken in connection with transferring the agency to any successor Administrative Agent.

(b)Any resignation by Bank of America as Administrative Agent pursuant to this Section shall also constitute its resignation as the L/C Issuer. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder (unless the Borrower and such successor agree otherwise), (i) such successor shall succeed to, and become vested with, all of the rights, powers, privileges and duties of the retiring L/C Issuer, (ii) the retiring L/C Issuer shall be discharged from all of its duties and obligations hereunder or under the other Credit Documents, and (iii) the successor L/C Issuer shall issue letters of credit and bankers’ acceptances in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements, reasonably satisfactory to the retiring L/C Issuer, to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit. After Bank of America’s retirement hereunder as an L/C Issuer, the provisions of the Credit Documents shall inure to its benefit as to any actions taken or omitted to be taken by it with respect to, or in connection with, any Letters of Credit issued by it.

9.8	Proofs of Claim.

In case of the pendency of any proceeding under the Bankruptcy Code or other applicable Law or any other judicial proceeding relative to Borrower, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable, as herein expressed, or by declaration or otherwise, and irrespective of whether the Administrative Agent shall have made any demand on Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents, as may be necessary or advisable in order to have the claims of the Lenders and the other Beneficiaries (including fees, disbursements and other expenses of counsel) allowed in such judicial proceeding and (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same. Any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the other Beneficiaries to make such payments to the Administrative Agent. Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize, or consent to, or accept or adopt, on behalf of any Lender or other Beneficiary, any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or other Beneficiary to authorize the Administrative Agent to vote in respect of the claim of such Lender or such other Beneficiary in any such proceeding.

9.9	Non-Reliance on the Administrative Agent, the Arrangers and Other Lenders.

Except as otherwise set forth herein, no Arranger or Syndication Agent shall have any right, power, obligation, liability, responsibility or duty under this Agreement (or any other Credit Document), other than those applicable (to the extent such Arranger or Syndication Agent is a Lender) to all Lenders as such. Without limiting the foregoing, no Arranger or Syndication Agent shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any Arranger or Syndication Agent in deciding to enter into this Agreement

and each other Credit Document to which it is a party or in taking, or not taking, action hereunder or thereunder.

9.10	Tax Indemnification.

To the extent required by any applicable Law, Administrative Agent may deduct or withhold from any payment to any Lender an amount equivalent to any applicable withholding tax. If any Governmental Authority asserts a claim that Administrative Agent did not properly withhold tax from amounts paid to, or for the account of, any Lender (because the appropriate form was not delivered, or was not properly executed or because such Lender failed to notify Administrative Agent of a change in circumstances that rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason), then such Lender shall, and does hereby, indemnify and hold harmless Administrative Agent (without limiting the obligations of the Credit Parties hereunder), and shall make payment in respect thereof within 10 days after demand therefor, fully for all amounts paid, directly or indirectly, by Administrative Agent as Taxes or otherwise, and any and all related losses, claims, liabilities, penalties, interest and expenses (including the fees, charges and disbursements of any counsel for Administrative Agent), whether or not such Tax was correctly or legally asserted. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Credit Document against any amount due to the Administrative Agent under this Section 9.10. The agreements in this Section 9.10 shall survive the resignation and/or replacement of Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.

9.11	Pay-Off Letter

Upon termination of the Commitments and payment in full of all Obligations (other than contingent obligations not yet due) and expiration or termination or Acceptable Collateralization of all Letters of Credit, the Lenders and the L/C Issuer authorize the Administrative Agent to execute a pay-off letter to Borrower evidencing the termination of this Agreement (including Sections 5, 6 and 8) and the other Credit Documents; provided that all provisions that survive termination of this Agreement and the other Credit Documents shall survive such termination.

9.12	Certain ERISA Matters.

(a)Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, each Arranger and each Syndication Agent and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Credit Party, that at least one of the following is and will be true:

(i)

such Lender is not using “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments or this Agreement;

(ii)	the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company

general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement;

(iii)

(A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement; or

(iv)	such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.

(b)In addition, unless clause (i) in the immediately preceding paragraph (a) is true with respect to a Lender or such Lender has not provided another representation, warranty and covenant as provided in clause (iv) in the immediately preceding paragraph (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Credit Party, that:

(i)

the Administrative Agent is not a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Credit Document or any documents related hereto or thereto);

(ii)

the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is independent (within the meaning of 29 CFR § 2510.3-21) and is a bank, an insurance carrier, an investment adviser, a broker-dealer or other person that holds, or has under management or control, total assets of at least $50 million, in each case as described in 29 CFR § 2510.3-21(c)(1)(i)(A)-(E);

(iii)

the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies (including in respect of the Obligations);

(iv)	the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is a fiduciary under ERISA or the Internal

Revenue Code, or both, with respect to the Loans, the Letters of Credit, the Commitments and this Agreement and is responsible for exercising independent judgment in evaluating the transactions hereunder; and

(v)	no fee or other compensation is being paid directly to the Administrative Agent, any Arranger or any Syndication Agent or any their respective Affiliates for investment advice (as opposed to other services) in connection with the Loans, the Letters of Credit, the Commitments or this Agreement.

(c)The Administrative Agent, each Arranger and each Syndication Agent hereby informs the Lenders that each such Person is not undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or other payments with respect to the Loans, the Letters of Credit, the Commitments and this Agreement, (ii) may recognize a gain if it extended the Loans, the Letters of Credit or the Commitments for an amount less than the amount being paid for an interest in the Loans, the Letters of Credit or the Commitments by such Lender or (iii) may receive fees or other payments in connection with the transactions contemplated hereby, the Credit Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance fees, breakage or other early termination fees or fees similar to the foregoing.

SECTION 10.

MISCELLANEOUS

10.1

Notices.

(a)Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given to a Credit Party, the L/C Issuer or the Administrative Agent, shall be sent to such Person’s address, as set forth on Appendix A or in the other relevant Credit Document, and in the case of any Lender, the address, as indicated on Appendix A or otherwise indicated to Administrative Agent in writing. Each notice hereunder shall be in writing and may be personally served, or sent by telecopy or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telecopy, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided, no notice to the Administrative Agent shall be effective until received by the Administrative Agent.

(b)Electronic Communications.

(i)Notices and other communications to Lenders and the L/C Issuer hereunder may be delivered or furnished by Approved Electronic Communication (including e-mail, and Internet or intranet websites, including the Information Platform) pursuant to procedures approved by the Administrative Agent; provided, that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to Section 2, if such Lender or the L/C Issuer has notified the Administrative Agent that it is incapable of receiving notices under such Section by electronic communication. The Administrative Agent or Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided, further, that

approval of such procedures may be limited to particular notices or communications. Unless the Administrative Agent otherwise prescribes, (x) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement); provided, that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient and (y) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address, as described in the foregoing clause (x), of notification that such notice or communication is available and identifying the website address therefor.

(ii)Each Credit Party understands that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution and agrees and assumes the risks associated with such electronic distribution, except to the extent caused by the gross negligence or willful misconduct of the Administrative Agent, as determined by a final, non-appealable judgment of a court of competent jurisdiction.

(iii)The Information Platform and any Approved Electronic Communications are provided “as is” and “as available”. Neither the Administrative Agent nor any of its respective officers, directors, employees, agents, advisors or representatives (the “Administrative Agent Affiliates”) warrant the accuracy, adequacy, or completeness of the Approved Electronic Communications or the Information Platform and each expressly disclaims liability for errors or omissions in the Information Platform and the Approved Electronic Communications. No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by the Administrative Agent Affiliates in connection with the Information Platform or the Approved Electronic Communications. Each party hereto agrees that the Administrative Agent has no responsibility for maintaining or providing any equipment, software, services or any testing required in connection with any Approved Electronic Communication or otherwise required for the Information Platform. In no event shall the Administrative Agent nor any of the Administrative Agent Affiliates have any liability to any Credit Party, any Lender or any other Person for damages of any kind, whether or not based on strict liability and including direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Credit Party’s or the Administrative Agent’s transmission of communications or notices through the Information Platform, any other electronic platform or electronic messaging service, or through the internet.

(iv)Each Credit Party, each Lender, the L/C Issuer and the Administrative Agent agree that the Administrative Agent may, but shall not be obligated to, store any Approved Electronic Communications on the Information Platform in accordance with the Administrative Agent’s customary document retention procedures and policies.

(v)All uses of the Information Platform shall be governed by, and subject to, in addition to this Section 10.1(b), separate terms and conditions posted or referenced in such Information Platform and related agreements executed by the Lenders and their Affiliates in connection with the use of such Information Platform.

(vi)Any notice of Default or Event of Default may be provided by telephonic notice, if confirmed promptly thereafter by delivery of written notice thereof.

(vii)Each Public Lender agrees to cause at least one individual at, or on behalf of, such Public Lender to at all times have selected the “Private Side Information” or similar designation on

the content declaration screen of the Information Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Borrower materials that are not made available through the “Public Side Information” portion of the Information Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities laws.

10.2

Expenses.

Whether or not the transactions contemplated hereby shall be consummated, Borrower agrees to pay, promptly upon demand (i) all the actual and reasonable costs and expenses of preparation of the Credit Documents and any consents, amendments, waivers or other modifications thereto (whether or not effective); (ii) all the costs of furnishing all opinions by counsel for Borrower and the other Credit Parties; (iii) all the actual and reasonable costs and expenses (including the actual and reasonable fees, charges and disbursements of a single counsel to the Administrative Agent and the L/C Issuer (in addition to local or specialized counsel)) of the Administrative Agent and the L/C Issuer in connection with the negotiation, preparation, execution and administration of the Credit Documents and any consents, amendments, waivers or other modifications thereto (whether or not effective) and any other documents or matters requested by Borrower; (iv) all other actual and reasonable costs and expenses incurred by the Administrative Agent in connection with the syndication of the Loans and Commitments and the negotiation, preparation and execution of the Credit Documents and any consents, amendments, waivers or other modifications thereto and the transactions contemplated thereby; (v) all reasonable out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder; and (vi) after the occurrence of a Default or an Event of Default, all costs, amounts required to be indemnified pursuant to the provisions of any Credit Document, expenses, fees, commission, taxes and other amounts (including the actual and reasonable fees, charges and disbursements of a single counsel (in addition to local or specialized counsel, and, in the case of an actual or perceived conflict of interest (based on advice of counsel) where the Indemnitee or Indemnitees affected by such conflict inform you of such conflict, one additional firm of counsel for all such affected Indemnitees) and financial and other professional advisors for the Administrative Agent and a single counsel for the other Beneficiaries, taken as a whole) and costs of settlement incurred by the Administrative Agent or any Beneficiary in enforcing any Obligations of or in collecting any payments due from, any Credit Party hereunder or under the other Credit Documents by reason of such Default or Event of Default (including in connection with the enforcement of the Guaranty), and all reasonable expenses, liabilities and advances made or incurred by the Administrative Agent in connection therewith and all amounts for which the Administrative Agent is entitled to indemnification pursuant to the provisions of any Credit Document, until paid in full, or in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a “work out” or pursuant to any insolvency or bankruptcy cases or proceedings or otherwise incurred in connection with any bankruptcy or insolvency proceedings, including, without limitation, a case or cases under the United States Bankruptcy Code filed by or against any Credit Party.

10.3	Indemnity.

(a)In addition to the payment of expenses pursuant to Section 10.2, whether or not the transactions contemplated hereby shall be consummated, each Credit Party agrees to defend (subject to Indemnitees’ selection of counsel), indemnify, pay and hold harmless, the Administrative Agent, the L/C Issuer, the Arrangers and each Lender, their respective Affiliates and their respective officers, partners, directors, shareholders, trustees, employees, representatives, agents, advisors and attorneys (each, an “Indemnitee”), from and against any and all Indemnified Liabilities, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE

COMPARATIVE, CONTRIBUTORY, OR SOLE NEGLIGENCE OF SUCH PERSON; provided that no Credit Party shall have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities, to the extent such Indemnified Liabilities arise from the gross negligence , bad faith or willful misconduct of that Indemnitee or its Indemnitee Related Persons, as determined by a court of competent jurisdiction in a final, nonappealable order. To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Section 10.3 may be unenforceable, in whole or in part, because they are violative of any law or public policy, the applicable Credit Party shall contribute the maximum portion that it is permitted to pay and satisfy under applicable Law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees, or any of them.

(b)To the extent permitted by applicable Law, no Credit Party shall assert, and each Credit Party hereby waives, any claim against Lenders, the L/C Issuer, the Administrative Agent and their respective Affiliates, partners, directors, shareholders, trustees, employees, representatives, agents, advisors or attorneys, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, as a result of, or in any way related to, this Agreement or any Credit Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, and each Credit Party hereby waives, releases and agrees not to sue upon any such claim or any such damages, whether or not accrued, and whether or not known or suspected to exist in its favor.

(c)All amounts due under this Section 10.3 shall be due and payable within ten Business Days after demand therefor.

(d)To the extent Borrower for any reason fails to pay any amount required under Section 10.2 or paragraph (a) or (b) of this Section 10.3 to be paid by it to the Administrative Agent (or any sub-agent thereof) or any Affiliate of any of the foregoing within the time specified above, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Affiliate, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount (such indemnity shall be effective, whether or not the related losses, claims, damages, liabilities and related expenses are incurred, or asserted, by any party hereto or any third party); provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), in its capacity as such, or against any Affiliate of any of the foregoing acting for the Administrative Agent (or any such sub-agent) in connection with such capacity. The obligations of the Lenders under this paragraph (d) are subject to the provisions of Section 2.12. Each Lender further agrees that in the event a distribution to the Beneficiaries is made that does not conform to the provisions of Section 2.12(f), each Lender agrees that it shall turn over to the Administrative Agent all amounts payable (or which would have been payable to the Administrative Agent or made in conformity with Section 2.12(f)) to the Administrative Agent pursuant to Section 2.12(f).

10.4

Set Off.

In addition to any rights now or hereafter granted under applicable Law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default each Lender, the L/C Issuer and their respective Affiliates are hereby authorized by each Credit Party, at any time or from time to time, subject to the consent of Administrative Agent (such consent not to be unreasonably withheld or delayed), without notice to any Credit Party or to any other Person (other than Administrative Agent), any such notice being hereby expressly waived, to set off and to appropriate and

to apply any and all deposits (general or special, including Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts (in whatever currency)), and any other Indebtedness at any time held or owing by such Lender or the L/C Issuer to, or for the credit, or the account, of any Credit Party (in whatever currency) against and on account of the obligations and liabilities of any Credit Party to such Lender or the L/C Issuer hereunder and under the Letters of Credit and participations therein and the other Credit Documents, including all claims of any nature or description arising out of, or connected, herewith or with the Letters of Credit and participations therein or any other Credit Document, irrespective of whether or not (a) such Lender or the L/C Issuer shall have made any demand hereunder, (b) the principal of, or the interest or fees on, the Loans, any amounts drawn or fees payable in respect of the Letters of Credit or any other amounts due hereunder shall have become due and payable, and although such obligations and liabilities, or any of them, may be contingent or unmatured or (c) such obligation or liability is owed to a branch or office of such Lender or the L/C Issuer different from the branch or office holding such deposit or obligation or such Indebtedness.

10.5	Amendments and Waivers.

(a)Requisite Lenders’ Consent. Subject to Sections 2.14(c), 10.5(b) and 10.5(c), no amendment, modification, termination or waiver of any provision of the Credit Documents, or consent to any departure by any Credit Party therefrom, shall in any event be effective without the written concurrence of Borrower and (i) in the case of this Agreement, Administrative Agent and the Requisite Lenders or (ii) in the case of any other Credit Document, Administrative Agent, with the consent of the Requisite Lenders.

(b)Affected Lenders’ Consent. Subject to Section 2.14(c), without the written consent of each Lender (other than a Defaulting Lender) that would be affected thereby, no amendment, modification, termination, or consent shall be effective if the effect thereof would:

(i)	increase, or extend the maturity of, the Commitment of such Lender;

(ii)	waive, reduce or postpone any scheduled repayment due such Lender (but not prepayment);

(iii)

reduce the rate of interest on any Loan of such Lender (including, for the avoidance of doubt, any amendment to the definition of “Default Rate” and any waiver of any increase in the interest rate applicable to any Loan pursuant to Section 2.7) or any fee payable hereunder;

(iv)	extend the time for payment of any interest or fees to such Lender;

(v)	reduce the principal amount of any Loan;

(vi)	amend, modify, terminate or waive any provision of this Section 10.5(b) or Section 10.5(a) or (c), other than to add any provision that is subject to the consent of each affected Lender or all Lenders;

(vii)

amend Section 2.11(a), 2.11(b), 2.12(f), 2.13 or the definition of “Applicable Percentage,” “Requisite Lenders,” “Requisite Tranche Lenders,” “Requisite Tranche 1 Lenders,” or “Requisite Tranche 2 Lenders”; provided, with the consent of Administrative Agent and the Requisite Lenders, additional extensions of credit pursuant hereto may be included in the determination of “Applicable Percentage,” “Requisite Lenders,” “Requisite Tranche Lenders,”

“Requisite Tranche 1 Lenders,” or “Requisite Tranche 2 Lenders”, on substantially the same basis as the Commitments and Outstanding Amounts are included on the Closing Date;

(viii)

release all or substantially all of the value of the Guaranty or Guaranties, except as expressly provided in the Credit Documents; or

(ix)	consent to the assignment or transfer by any Credit Party of any of its rights and obligations under any Credit Document, except pursuant to any transaction permitted under Section 6.4.

(c)Other Consents. No amendment, modification, termination or waiver of any provision of the Credit Documents, or consent to any departure by any Credit Party therefrom, shall:

(i)

unless in writing and signed by the L/C Issuer, the Administrative Agent and the Requisite Tranche 2 Lenders (without the consent of any other Lender), affect the rights or duties of the L/C Issuer or any Tranche 2 Lender under this Agreement or any Issuer Document relating to any Letter of Credit issued, or to be issued, by it or amend any provision of Section 2.20;

(ii)	unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Credit Document; or

(iii)

amend or waive Section 8.1(k) or the definition of “Change of Control,” without consent of Lenders holding two-thirds of the sum of the (a) Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations being deemed, without duplication, “held” by such Lender for purposes of this definition) and (b) the aggregate unused Commitments; provided that the unused Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for this purpose.

Anything herein to the contrary notwithstanding, during such period as a Lender is a Defaulting Lender, to the fullest extent permitted by applicable Law, such Lender will not be entitled to vote in respect of amendments and waivers hereunder and the Commitment and the outstanding Loans of such Lender hereunder will not be taken into account in determining whether the Requisite Lenders or all of the affected Lenders, as required, have approved any such amendment or waiver (and the definition of “Requisite Lenders,” “Requisite Tranche Lenders,” “Requisite Tranche 1 Lenders” and “Requisite Tranche 2 Lenders” will automatically be deemed modified accordingly for the duration of such period); provided, that any such amendment or waiver that is described in any of clauses (i) through (v) of Section 10.5(b) or that would alter the terms of this proviso, will require the consent of such Lender.

(d)Execution of Amendments, etc. Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents, on behalf of such Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. Except to the extent that any such notice or demand is required to be given under this Agreement or any other Credit Document, no notice to, or demand on, any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 10.5 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by a Credit Party, on such Credit Party.

10.6	Successors and Assigns; Participations.

(a)Generally. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and permitted assigns . No Credit Party’s rights or obligations hereunder, nor any interest therein, may be assigned or delegated by any Credit Party without the prior written consent of the Administrative Agent and all Lenders, except as permitted in Section 10.5(b)(ix) (and any attempted assignment or transfer by any Credit Party without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, Affiliates of the Administrative Agent and Lenders and Indemnitees) any legal or equitable right, remedy or claim under, or by reason of, this Agreement.

(b)Borrower, the Administrative Agent and Lenders shall deem and treat the Persons listed as Lenders in the Register, as the holders and owners of the corresponding Commitments and Loans listed therein for all purposes hereof, and no assignment or transfer of any such Commitment or Loan shall be effective, in each case, unless and until recorded in the Register following receipt of a fully executed Assignment Agreement effecting the assignment or transfer thereof, together with the required forms and certificates regarding Tax matters and any fees payable in connection with such assignment, in each case, as provided in Section 10.6(d). Each assignment shall be recorded in the Register promptly following receipt by the Administrative Agent of the fully executed Assignment Agreement and all other necessary documents and approvals, prompt notice thereof shall be provided to Borrower and a copy of such Assignment Agreement shall be maintained, as applicable. The date of such recordation of a transfer shall be referred to herein as the “Assignment Effective Date.” Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Commitments or Loans. Solely for the purposes of maintaining the Register and for tax purposes, only Administrative Agent shall be deemed to be acting on behalf of the Credit Parties.

(c)Right to Assign. Each Lender shall have the right at any time to sell, assign or transfer all or a portion of its rights and obligations under this Agreement, including all or a portion of its Commitment or Loans owing to it or other Obligations (provided that pro rata assignments shall not be required and each assignment shall be of a uniform, and not varying, percentage of all rights and obligations under, and in respect of, any applicable Loan and any related Commitments), to any Eligible Assignee; provided that (i) unless the assignee is a Lender, the consent of the Administrative Agent and the L/C Issuer shall be required (each such consent not to be unreasonably withheld or delayed) and (ii) unless either (x) the assignee is a Lender or an Affiliate of a Lender or a Related Fund or (y) an Event of Default exists, the consent of Borrower shall be required (each such consent not to be unreasonably withheld, conditioned or delayed; it being understood that Borrower will be deemed to have provided such consent in the event that it shall have failed to respond to a consent request made in writing and delivered in accordance with Section 10.1 within 10 Business Days of such delivery); provided that each such assignment of Loans or Commitments pursuant to this Section 10.6(c) shall be in an aggregate amount of not less than $5,000,000 (or such lesser amount as may be agreed to by Borrower and the Administrative Agent or as shall constitute the aggregate amount of the Loans or the total Commitment, respectively, of the assigning Lender); provided, that the Related Funds of any individual Lender may aggregate their Loans for purposes of determining compliance with such minimum assignment amounts. Notwithstanding anything to the contrary contained herein, the Administrative Agent shall be under no obligation to determine whether an assignee is an Eligible Assignee and shall have no responsibility for monitoring or enforcing the requirement that only Eligible Assignees shall be Lenders.

(d)Mechanics. Assignments and assumptions of Loans and Commitments by Lenders shall be effected by manual execution and delivery to the Administrative Agent of an Assignment Agreement. Assignments made pursuant to the foregoing provision shall be effective as of the Assignment Effective Date. In connection with all assignments, there shall be delivered to the Administrative Agent such forms, certificates or other evidence, if any, with respect to United States federal income Tax withholding matters, as the assignee under such Assignment Agreement may be required to deliver pursuant to Section 2.16(e), together with payment to the Administrative Agent of a registration and processing fee of $3,500; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(e)Representations and Warranties of Assignee. Each Lender, upon execution and delivery hereof or upon succeeding to an interest in the Commitments and Loans, as the case may be, represents and warrants, as of the Closing Date or as of the Assignment Effective Date, that (i) it is an Eligible Assignee; (ii) it has experience and expertise in the making of, or investing in, commitments or loans such as the applicable Commitments or Loans, as the case may be, and is capable of evaluating the creditworthiness of Borrower; and (iii) it shall make, or invest in, as the case may be, its Commitments or Loans for its own account in the ordinary course and without a view to distribution of such Commitments or Loans within the meaning of the Securities Act or the Exchange Act or other federal securities laws (it being understood that, subject to the provisions of this Section 10.6, the disposition of such Commitments or Loans or any interests therein shall at all times remain within its exclusive control).

(f)Effect of Assignment. Subject to the terms and conditions of this Section 10.6, as of the “Assignment Effective Date” (i) the assignee thereunder shall have the rights and obligations of a “Lender” hereunder, to the extent of its interest in the Loans and Commitments, as reflected in the Register, and shall thereafter be a party hereto and a “Lender” for all purposes hereof; (ii) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned to the assignee, relinquish its rights (other than any rights which survive the termination hereof, including under Section 10.7) and be released from its obligations hereunder (and, in the case of an assignment covering all or the remaining portion of an assigning Lender’s rights and obligations hereunder, such Lender shall cease to be a party hereto on the Assignment Effective Date; provided that anything contained in any of the Credit Documents to the contrary notwithstanding, such assigning Lender shall continue to be entitled to the benefit of all indemnities hereunder, as specified herein, with respect to matters arising out of the prior involvement of such assigning Lender as a Lender hereunder); (iii) the Commitments shall be modified to reflect any Commitment of such assignee; and (iv) if any such assignment occurs after the issuance of any Note hereunder, the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes to the Administrative Agent for cancellation, and thereupon Borrower shall issue and deliver new Notes, if so requested by the assignee and/or assigning Lender, to such assignee and/or to such assigning Lender, with appropriate insertions, to reflect outstanding Loans of the assignee and/or the assigning Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with the requirements of this Section 10.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.6(g). Any assignment by a Lender pursuant to this Section 10.6 shall not in any way constitute, or be deemed to constitute, a novation, discharge, rescission, extinguishment or substitution of the Indebtedness hereunder, and any Indebtedness so assigned shall continue to be the same obligation and not a new obligation.

(g)Participations.

(i)Each Lender shall have the right at any time to sell one or more participations to any Person (other than a natural person (or a holding company, investment vehicle or trust for, or owned

and operated for the primary benefit of one or more natural persons), a Disqualified Person, Borrower, or any Affiliate of Borrower) in all or any part of its Commitments, Loans or in any other Obligation.

(ii)The holder of any such participation, other than an Affiliate of the Lender granting such participation (a “Participant”), shall not be entitled to require such Lender to take or omit to take any action hereunder, except with respect to any amendment, modification or waiver that would (A) increase, or extend the maturity of, the Commitment in which such Participant is participating, or reduce the rate or extend the time of payment of interest or fees on, or reduce the principal amount of, any Loan in which such Participant is participating, or increase the amount of the Participant’s participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory reduction in the Commitment shall not constitute a change in the terms of such participation, and that an increase in any Commitment or Loan shall be permitted without the consent of any Participant, if the Participant’s participation is not increased as a result thereof) or (B) amend the definition of “Applicable Percentage,” “Requisite Lenders,” or, to the extent of their participation in the relevant Tranche, “Requisite Tranche Lenders,” “Requisite Tranche 1 Lenders” or “Requisite Tranche 2 Lenders” except as such amendment is permitted by the proviso in Section 10.5(b)(vii).

(iii)Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.14(e), 2.15 and 2.16, to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (c) of this Section 10.6 (subject to the requirements and limitations therein, including the requirement to provide forms under Section 2.16(e)) (which forms shall be provided solely to the applicable Lender selling such participation); provided, that a Participant shall not be entitled to receive any greater payment under Section 2.15 or 2.16 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, except to the extent the entitlement to a greater payment results from a change in Law that occurs after such Participant acquires the applicable participation; provided, further, that nothing herein shall require any notice to Borrower or any other Person in connection with the sale of any participation. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.4, as though it were a Lender; provided, that such Participant agrees to be subject to Section 2.17, as though it were a Lender.

(iv)Each Lender that sells a participation shall, acting as a non-fiduciary agent of Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts of each Participant’s interest in the Commitments, Loans and other Obligations held by it (the “Participant Register”). The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the Participant for all purposes of this Agreement, notwithstanding any notice to the contrary. Any such Participant Register shall be confidential, except to the extent the relevant parties, acting reasonably and in good faith, determine that such disclosure is necessary to establish that such Commitment, Loan or other Obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. Unless otherwise required by the Internal Revenue Service, any disclosure required by the foregoing sentence shall be made by the relevant Lender directly and solely to the Internal Revenue Service.

(h)Certain Other Assignments and Participations. In addition to any other assignment or participation permitted pursuant to this Section 10.6, any Lender may assign, pledge and/or grant a security interest in (without the consent of Borrower or the Administrative Agent) all or any portion of its Loans, the other Obligations owed by or to such Lender, and its Notes, if any, to secure obligations of such Lender including to any Federal Reserve Bank, as collateral security pursuant to Regulation A of the Board of Governors and any operating circular issued by such Federal Reserve Bank; provided that no Lender, as between Borrower and such Lender, shall be relieved of any of its obligations hereunder as a result of any such assignment and pledge; provided, further, that in no event shall the

applicable Federal Reserve Bank, pledgee or trustee, be considered to be a “Lender” or be entitled to require the assigning Lender to take or omit to take any action hereunder.

(i)Resignation as L/C Issuer After Assignment. Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitment and Loans pursuant to Section 10.6(c), Bank of America upon 45 days’ notice to Borrower and the Lenders, may resign as the L/C Issuer. In the event of any such resignation as the L/C Issuer, Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer hereunder; provided, however, that no failure by Borrower to appoint any such successor shall affect the resignation of Bank of America as the L/C Issuer. If Bank of America resigns as the L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit issued by it and outstanding, as of the effective date of its resignation as the L/C Issuer, and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.20(c)). Subject to the previous sentence, upon the appointment of a successor L/C Issuer, (a) such successor shall succeed to, and become vested with, all of the rights, powers, privileges and duties of the retiring L/C Issuer and (b) the successor L/C Issuer shall issue letters of credit and bankers’ acceptances in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements, satisfactory to Bank of America, to effectively assume the obligations of Bank of America with respect to such Letters of Credit.

10.7	Survival of Representations, Warranties and Agreements.

All representations, warranties and agreements made herein shall survive the execution and delivery hereof and the making of any Credit Extension. Notwithstanding anything herein or implied by law to the contrary, the agreements of each Credit Party set forth in Sections 2.14(e), 2.15, 2.16, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in Sections 2.13, 9.3(b) and 9.6 shall survive the payment of the Loans, the cancellation or expiration of the Letters of Credit and the reimbursement of any amounts drawn thereunder, and the termination hereof.

10.8	No Waiver; Remedies Cumulative.

No failure or delay on the part of the Administrative Agent or any Lender in the exercise of any power, right or privilege hereunder or under any other Credit Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. The rights, powers and remedies given to the Administrative Agent and each Lender hereby are cumulative and shall be in addition to, and independent of, all rights, powers and remedies existing by virtue of any statute or rule of law or in any of the other Credit Documents. Any forbearance or failure to exercise, and any delay in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy.

10.9	Marshalling; Payments Set Aside.

Neither the Administrative Agent nor any Lender shall be under any obligation to marshal any assets in favor of any Credit Party or any other Person or against, or in payment of, any or all of the Obligations. To the extent that any Credit Party makes a payment or payments to Administrative Agent or Lenders (or to Administrative Agent, on behalf of Lenders), or Administrative Agent or Lenders enforce any security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff, or any part thereof, are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party

under any bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the Obligation, or part thereof, originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect, as if such payment or payments had not been made or such enforcement or setoff had not occurred.

10.10

Severability.

In case any provision herein or obligation hereunder or any Note or other Credit Document shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

10.11

Obligations Several; Independent Nature of Lenders’ Rights.

The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitment of any other Lender hereunder. Nothing contained herein or in any other Credit Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and each Lender shall be entitled to protect and enforce its rights arising out hereof and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose.

10.12

Headings.

Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect.

10.13

APPLICABLE LAW.

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

10.14

CONSENT TO JURISDICTION.

(a)ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY CREDIT PARTY ARISING UNDER, OR RELATING TO, THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, OR ANY OF THE OBLIGATIONS, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH CREDIT PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (i) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (ii) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (iii) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE CREDIT PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.1 AND IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE CREDIT PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (iv) AGREES THAT THE ADMINISTRATIVE AGENT AND LENDERS RETAIN THE

RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION.

(b)EACH CREDIT PARTY HEREBY AGREES THAT PROCESS MAY BE SERVED ON IT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE ADDRESSES PERTAINING TO IT, AS SPECIFIED IN SECTION 10.1. ANY AND ALL SERVICE OF PROCESS AND ANY OTHER NOTICE IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE EFFECTIVE AGAINST ANY CREDIT PARTY, IF GIVEN BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY ANY OTHER MEANS OR MAIL WHICH REQUIRES A SIGNED RECEIPT, POSTAGE PREPAID, MAILED, AS PROVIDED ABOVE.

10.15

WAIVER OF JURY TRIAL.

EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED ON, OR ARISING UNDER ANY OF THE CREDIT DOCUMENTS OR ANY DEALINGS BETWEEN OR AMONG THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH PARTY WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT, KNOWINGLY AND VOLUNTARILY, WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED, EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.15 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

10.16

Confidentiality.

The Administrative Agent, the L/C Issuer, the Arrangers, the Syndication Agent and Lender shall hold all non-public, confidential or proprietary information regarding Borrower and its Subsidiaries and their businesses clearly identified as such by Borrower and obtained by the Administrative Agent, the L/C Issuer, such Arranger, such Syndication Agent or such Lender pursuant to the requirements hereof in accordance with such Agent’s, the L/C Issuer’s, such Arranger’s, such Syndication Agent’s or such Lender’s customary procedures for handling confidential information of such nature; it being understood and agreed by Borrower that, in any event, the Administrative Agent, the L/C Issuer, an Arranger, an Syndication Agent or a Lender may make (i) disclosures of such information to

Affiliates of such Person and to their directors, officers, employees, agents and advisors (and to other persons authorized by a Lender, the Administrative Agent, the L/C Issuer, an Arranger or a Syndication Agent to organize, present or disseminate such information in connection with disclosures otherwise made in accordance with this Section 10.16); provided that such Affiliates, directors, officers, employees, agents, advisors or other persons are advised of, and agreed to, or are otherwise obligated to be bound by, the provisions of this Section 10.16, (ii) disclosures of such information reasonably required by any bona fide or potential assignee, transferee, Participant, sub-participant or counterparty in connection with the contemplated assignment, transfer, participation or transaction (x) by the Administrative Agent of any agency position, (y) by such Lender or the L/C Issuer of any Loans or Letters of Credit or any participations therein or (z) by any direct or indirect contractual counterparties, including, for the avoidance of doubt, in respect of any swap or derivative transactions (or the professional advisors thereto) (provided that such bona fide or potential assignees, transferees, participants, sub-participants, and counterparties and advisors are advised of, and agree to be bound by, the provisions of this Section 10.16), (iii) disclosure to any rating agency, when required by it; provided that, prior to any disclosure, such rating agency shall undertake in writing to preserve the confidentiality of any confidential information relating to the Credit Parties received by it from the Administrative Agent, the L/C Issuer, any Arranger or Syndication Agent or any Lender, (iv) disclosures to any Lender’s financing sources; provided that prior to any disclosure, such financing source is informed of the confidential nature of the information and agrees to be bound by the provisions of this Section 10.16, (v) disclosure of information which (A) becomes publicly available other than as a result of a breach of this Section 10.16 or (B) becomes available to Administrative Agent, any Arranger, any Syndication Agent, the L/C Issuer or any Lender on a non-confidential basis from a source other than Borrower, (vi) disclosures required or requested by any governmental agency by law or Financial Industry Regulatory Authority, New York Stock Exchange and any other “self-regulatory organizations” as defined by SEC rules or representative thereof or by the NAIC or pursuant to legal or judicial process, (vii) disclosures with consent of Borrower; provided, unless specifically prohibited by applicable Law or court order, the Administrative Agent, the L/C Issuer, such Arranger, such Syndication Agent or such Lender (as the case may be) shall make reasonable efforts to notify Borrower of any request or requirement by any governmental agency or representative thereof or by the NAIC or pursuant to legal or judicial process (other than any such request in connection with any examination of the financial condition or other routine examination of the Administrative Agent, the L/C Issuer, such Arranger, such Syndication Agent or such Lender (as the case may be) by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information, (viii) disclosures to any other party hereto and (ix) disclosures in connection with the exercise of any remedy or the enforcement of any right under this Agreement or any other Credit Document in any litigation or arbitration action or proceeding relating thereto, to the extent such disclosure is reasonably necessary in connection with such litigation or arbitration action or proceeding. Notwithstanding the foregoing, on or after the Closing Date, the Administrative Agent, the Arrangers and the Syndication Agents may, at their respective own expense, issue news releases and publish “tombstone” advertisements and other announcements relating to this transaction in newspapers, trade journals and other appropriate media, in each case, with the content thereof (other than with respect to “tombstone” advertisements) having been approved beforehand by Borrower. Notwithstanding any other provision of this Section 10.16, the parties (and each employee, representative, or other agent of the parties) may disclose to any and all Persons, without limitation of any kind, the Tax treatment and any facts that may be relevant to the Tax structure of the transactions contemplated by this Agreement and the other Credit Documents; provided, however, that no party (and no employee, representative, or other agent thereof) shall disclose any other information that is not relevant to an understanding of the Tax treatment and Tax structure of the transaction (including the identity of any party and any information that could lead another Person to determine the identity of any party), or any other information, to the extent that such disclosure could reasonably result in a violation of any applicable securities law. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and

service providers to the Agents and the Lenders in connection with the administration of this Agreement, the other Credit Documents and the Commitments.

10.17

Usury Savings Clause.

Notwithstanding any other provision herein, the aggregate interest rate charged or agreed to be paid with respect to any of the Obligations, including all charges or fees in connection therewith deemed in the nature of interest under applicable Law shall not exceed the Highest Lawful Rate. If the rate of interest (determined without regard to the preceding sentence) under this Agreement at any time exceeds the Highest Lawful Rate, the outstanding amount of the Loans made hereunder shall bear interest at the Highest Lawful Rate, until the total amount of interest due hereunder equals the amount of interest which would have been due hereunder, if the stated rates of interest set forth in this Agreement had at all times been in effect. In addition, if, when the Loans made hereunder are repaid in full, the total interest due hereunder (taking into account the increase provided for above) is less than the total amount of interest which would have been due hereunder, if the stated rates of interest set forth in this Agreement had at all times been in effect, then, to the extent permitted by law, Borrower shall pay to Administrative Agent an amount equal to the difference between the amount of interest paid and the amount of interest which would have been paid, if the Highest Lawful Rate had at all times been in effect. Notwithstanding the foregoing, it is the intention of Lenders and Borrower to conform strictly to any applicable usury laws. Accordingly, if any Lender contracts for, charges, or receives any consideration which constitutes, interest in excess of the Highest Lawful Rate, then any such excess shall be cancelled automatically and, if previously paid, shall be refunded to Borrower. In determining whether the interest contracted for, charged, or received, by Administrative Agent or a Lender exceeds the Highest Lawful Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest, throughout the contemplated term of the Obligations hereunder.

10.18

Guaranty.

(a)Each Lender hereby authorizes Administrative Agent, on behalf of, and for the benefit of, Lenders, to be the agent for and representative of Lenders with respect to the Guaranty.

(b)Administrative Agent shall release any Lien on any property granted to or held by Administrative Agent under any Credit Document, upon termination of the Commitments and payment in full of all Obligations (other than contingent reimbursement and indemnification obligations not yet accrued and payable).

(c)Subject to Section 10.5, without further written consent or authorization from any Lender, the Administrative Agent may execute any documents or instruments necessary to release any Guarantor from the Guaranty pursuant to Section 7.12 or with respect to which Requisite Lenders (or such other Lenders, as may be required to give such consent under Section 10.5) have otherwise consented.

(d)Any release of guarantee obligations pursuant to this Section 10.18 shall be deemed subject to the provision that such guarantee obligations shall be reinstated, if, after such release, any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Borrower or any Guarantor, or upon, or as a result of, the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payment had not been made.

10.19

Patriot Act.

Each Lender and Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Credit Parties that, pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Credit Parties, which information includes the name and address of the Credit Parties, a Beneficial Ownership Certification and other information that will allow such Lender or Administrative Agent, as applicable, to identify the Credit Parties in accordance with the Patriot Act.

10.20

Disclosure.

Each Credit Party and each Lender hereby acknowledges and agrees that Administrative Agent and/or its Affiliates and their respective Related Funds, from time to time, may hold investments in, and make other loans to, or have other relationships with, any of the Credit Parties and their respective Affiliates, including the ownership, purchase and sale of equity interests in Borrower, and each Credit Party and each Lender hereby expressly consents to such relationships.

10.21

Electronic Execution of Assignments.

The words “execution,” “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including assignments and assumptions pursuant to an Assignment Agreement, amendments or other modifications, Notices, waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability, as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that notwithstanding anything contained herein to the contrary the Administrative Agent is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it.

10.22

No Fiduciary Duty.

The Administrative Agent, each Lender, each Arranger, the L/C Issuer, each Syndication Agent and their respective Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”), may have economic interests that conflict with those of Borrower, its stockholders and/or its Affiliates. Borrower agrees that nothing in the Credit Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender or any Agent, on the one hand, and Borrower, its stockholders or its Affiliates, on the other hand. The Credit Parties acknowledge and agree that (i) the transactions contemplated by the Credit Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders and the Administrative Agent, on the one hand, and Borrower, on the other hand, and (ii) in connection therewith and with the process leading thereto, (x) no Lender and no Agent has assumed an advisory or fiduciary responsibility in favor of Borrower, its stockholders or its Affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise Borrower, its stockholders or its Affiliates on other matters) or any other obligation to Borrower except, the obligations expressly set forth in the Credit Documents and (y) each Lender is acting solely as principal, and not as the agent or fiduciary of Borrower, its management, stockholders, creditors or any other Person. Borrower acknowledges and agrees that Borrower has

consulted its own legal and financial advisors, to the extent it deemed appropriate, and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. Borrower agrees that it will not claim that any Lender or the Administrative Agent has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to Borrower, in connection with such transaction or the process leading thereto.

10.23

Entire Agreement.

This Agreement and the other Credit Documents represent the final agreement among the parties and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties. There are no oral agreements among the parties. This Agreement may be executed in counterparts (and by different parties hereto in separate counterparts), each of which shall constitute an original, but all of which, when taken together, shall constitute a single contract; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. Delivery of an executed counterpart of a signature page of any Credit Document by facsimile or other electronic imaging means (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of such Credit Document.

10.24

Acknowledgement and Consent to Bail-In of Affected Financial Institutions.

Solely to the extent an Affected Financial Institution is a party to this Agreement and notwithstanding anything to the contrary in any Credit Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Lender or L/C Issuer that is an Affected Financial Institution arising under any Credit Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a)the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender or L/C Issuer that is an Affected Financial Institution; and

(b)the effects of any Bail-In Action on any such liability, including, if applicable:

(i)	a reduction in full or in part or cancellation of any such liability;

(ii)

a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Credit Document; or

(iii)

the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.

10.25

Acknowledgement Regarding Any Supported QFCs.

To the extent that the Credit Documents provide support, through a guarantee or otherwise, for any agreement or instrument that is a QFC (such support, “QFC Credit Support”, and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the

regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Credit Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):

(i)

In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Credit Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Credit Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.

(ii)	As used in this Section 10.25, the following terms have the following meanings:

“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

[Signature Pages Intentionally Omitted]

EXHIBIT B

Schedule 2.1

Commitments and L/C Issuer Sublimit

Name of Lender	Tranche 1 Commitment	Tranche 1 Applicable Percentage	Tranche 2 Commitment	Tranche 2 Applicable Percentage	L/C Issuer Sublimit
Bank of America, N.A.	$24,000,000	12.000000000%	$12,000,000	12.000000000%	$100,000,000
Barclays Bank PLC	$24,000,000	12.000000000%	$12,000,000	12.000000000%	$0
Credit Suisse AG, Cayman Islands Branch	$24,000,000	12.000000000%	$12,000,000	12.000000000%	$0
Deutsche Bank AG New York Branch	$24,000,000	12.000000000%	$12,000,000	12.000000000%	$0
JPMorgan Chase Bank, N.A.	$24,000,000	12.000000000%	$12,000,000	12.000000000%	$0
Morgan Stanley Bank, N.A.	$24,000,000	12.000000000%	$12,000,000	12.000000000%	$0
Wells Fargo Bank, National Association	$24,000,000	12.000000000%	$12,000,000	12.000000000%	$0
Citibank, N.A.	$16,000,000	8.000000000%	$8,000,000	8.000000000%	$0
Citizens Bank, N.A.	$16,000,000	8.000000000%	$8,000,000	8.000000000%	$0
Total	$200,000,000	100.000000000%	$100,000,000	100.000000000%	$100,000,000

Exhibit 10.17

The CIT Group Inc. 2016 Omnibus Incentive Plan

Performance Share Unit Award Agreement

2020 PSU-ROTCE Award


“Participant”:
“Date of Award”:
“Number of PSUs Granted”:

Effective as of the Date of Award, this Award Agreement sets forth the grant of “Performance Share Units” (“PSUs”) by CIT Group Inc., a Delaware corporation (the “Company”), to the Participant, pursuant to the provisions of the CIT Group Inc. 2016 Omnibus Incentive Plan (the “Plan”). This Award Agreement memorializes the terms and conditions as approved by the Compensation Committee of the Board (the “Committee”). All capitalized terms shall have the meanings ascribed to them in the Plan, unless specifically set forth otherwise herein.

The parties hereto agree as follows:

(A)

Grant of Performance Share Units. The Company hereby grants to the Participant the Target Number of PSUs Granted, effective as of the Date of Award and subject to the terms and conditions of the Plan and this Award Agreement. Each PSU represents the unsecured right to receive a number of Shares, if any, in accordance with the terms and conditions of this Award Agreement. The Participant shall not be required to pay any additional consideration for the issuance of the Shares, if any, upon settlement of the PSUs.

The grant of PSUs to the Participant will not be effective and the Participant will not be entitled to the issuance of any Shares upon the settlement of the PSUs if the Participant does not accept this Award. It is a non-waivable condition precedent to the acceptance of this Award that the Participant agree to be legally bound to and comply with the terms and conditions of the Non-Competition, Non-Solicitation and Confidentiality Agreement attached hereto as Exhibit C (the “Restrictive Covenant Agreement”) and the Notice Period Agreement attached hereto as Exhibit D (the “Notice Period Agreement”). The Participant agrees and acknowledges that the attached Restrictive Covenant Agreement may impact the Participant’s future employment and that the Company would not have entered into this Award Agreement and granted PSUs to the Participant if the Participant did not agree to be legally bound by and to comply with the Restrictive Covenant Agreement. The Participant further agrees and acknowledges that the Company would not have entered into this Award Agreement and granted PSUs to the Participant if the Participant did not agree to be legally bound by and to comply with the Notice Period Agreement.

(B)	Vesting and Settlement of PSUs.

(1)

Except as otherwise provided in Section (C) or (D) below, the final number of Shares actually awarded to the Participant with respect to the Target Number of PSUs granted, if any, (the “Awarded Shares”) shall be based on the attainment of specified levels of the “Performance Measures” (each as defined and set forth in Exhibit A) that have been achieved during the “Performance Period” (as defined and set forth in Exhibit A).

(2)

Except as otherwise provided in Section (C) or (D) below, subject to the Participant’s continued employment with the Company and/or any Subsidiary or affiliate (the “Company Group”) from the Date of Award until the last day of the Performance Period (the “Final Performance Date”) and compliance with, and subject to, the terms and conditions of this Award Agreement, as soon as administratively practicable following the Final Performance Date but subject to Section (B)(3) below, the Committee shall certify the level of Performance Measures attained (the “Determination Date”). The Participant’s Awarded Shares, if any, shall be determined as of the Determination Date in accordance with the terms and conditions set forth in Exhibit A.

(3)

Except as otherwise provided in Section (C)(1) or (D) below, the Awarded Shares, if any, shall be delivered to the Participant within thirty (30) days following the Determination Date, but in no event later than March 15, 2023 (the “Settlement Date”), provided that the Settlement Date may be delayed, in the sole discretion of the Committee and in accordance with applicable law (including Section 409A (as defined below)), if the Committee is considering whether Section (L) applies to the Participant.

(4)

The Awarded Shares delivered to the Participant on the Settlement Date (or such other date Awarded Shares are settled in accordance with Section (C)(1) or (D) below, if applicable) shall not be subject to transfer restrictions and shall be fully paid, non-assessable and registered in the Participant’s name.

(5)

If, after the Date of Award and prior to the Determination Date (or such other date Awarded Shares are settled in accordance with Section (C)(1) or (D) below, if applicable) (the “Dividend Equivalent Period”), dividends with respect to the Awarded Shares are declared or paid by the Company, the Participant shall be credited with, and entitled to


2020ROTCE	1

receive, dividend equivalents in an amount, without interest, equal to the cumulative dividends declared or paid on a Share, if any, during the Dividend Equivalent Period, multiplied by the number of Awarded Shares. Unless otherwise determined by the Committee, dividend equivalents paid in cash shall not be reinvested in Shares and shall remain uninvested. The dividend equivalents credited in respect of the Awarded Shares shall be paid in cash or Shares, as applicable, on the Settlement Date (or such other date Awarded Shares are settled in accordance with Section (C)(1) or (D) below, if applicable).

(6)

In the sole discretion of the Committee and notwithstanding any other provision of this Award Agreement to the contrary, in lieu of the delivery of the Awarded Shares, the PSUs and any dividend equivalents payable in Shares, may be settled through a payment in cash equal to the Fair Market Value of the applicable number of the Awarded Shares, determined on (i) the Determination Date; (ii) the Final Performance Date if settlement is in accordance with Section (D)(1), (D)(2), (D)(3), (D)(4) or (D)(5) below; or (iii) in the case of settlement in accordance with Section (C)(1) or (D)(6) below, the date of the Participant’s “Separation from Service” (within the meaning of the Committee’s established methodology for determining “Separation from Service” for purposes of Section 409A (as defined below)) or the date of Disability, as applicable. Settlement under this Section (B)(6) shall be made at the time specified under Section (B)(3), (B)(5), (C)(1), (C)(2), (C)(3) or (D), as applicable.

(C)	Separation from Service.

(1)

Notwithstanding Section (B) above, if, after the Date of Award and prior to the Final Performance Date, the Participant incurs a Disability (as defined below) or a Separation from Service from the Company Group due to death, the PSUs shall vest immediately and the final number of Awarded Shares awarded to the Participant shall equal the Target Number of PSUs (the “Target Awarded Shares”) and the Participant (or the Participant’s beneficiary or legal representative, if applicable) shall not be entitled to any additional Shares based on the Company’s achievement of actual Performance Measures in accordance with Exhibit A. If this Section (C)(1) is applicable, then all references to “Awarded Shares” in Sections (B) and (L) shall mean Target Awarded Shares instead. The Target Awarded Shares shall be paid to the Participant (or the Participant’s beneficiary or legal representative, if applicable) within thirty (30) days following the Participant’s Disability or Separation from Service due to death. The Participant (or the Participant’s beneficiary or legal representative, if applicable) shall also be entitled to receive all credited and unpaid dividend equivalents with respect to the Target Awarded Shares and such dividend equivalents shall be payable at the same time such Target Awarded Shares are paid in accordance with this Section (C)(1). “Disability” shall have the same meaning as defined in the Company’s applicable long-term disability plan or policy last in effect prior to the first date the Participant suffers from such Disability; provided, however, to the extent a “Disability” event does not also constitute a “Disability” as defined in Section 409A, such Disability event shall not constitute a Disability for purposes of this Section (C)(1).

(2)

Notwithstanding Section (B) above and subject to Section (D) below, if, prior to the Final Performance Date, the Participant incurs a Separation from Service initiated by the Company without Cause (as defined below and including, for the avoidance of doubt, in connection with a sale of a business unit) and at such time the Participant does not satisfy the conditions of Retirement (as defined below), and subject to the terms and conditions of the Plan and this Award Agreement, including Section (L) below, on the date of such Separation from Service, the Participant’s Target Number of PSUs shall be pro-rated by multiplying the Target Number of PSUs by a fraction, (i) the numerator as the number of full and partial months that have transpired between the first day of the Performance Period and the date of such Separation from Service, rounded up to a whole number, and (ii) the denominator as 36 (the “Pro-Rata Target Number of PSUs”). Calculation and payment of the Awarded Shares, if any, payable to the Participant based on the Pro-Rata Target Number of PSUs (and any credited and unpaid dividend equivalents) shall be made in accordance with Section (B) above and Exhibit A, except the Participant shall no longer be required to be continually employed with the Company Group until the Final Performance Date as provided in Section (B)(2) above.

(3)

Notwithstanding Section (B) and (C)(2) above and subject to Section (D) below, if, prior to the Final Performance Date, the Participant incurs a Separation from Service initiated (i) by the Participant and at the time of such Separation from Service no grounds exist such that the Company could terminate the Participant for Cause, or (ii) by the Company without Cause (as defined below and including for the avoidance of doubt, in connection with a sale of a business unit), and, in each case, the Participant satisfies the conditions of Retirement (as defined below), and subject to the terms and conditions of the Plan and this Award Agreement, including Section (L) below, the final number of Awarded Shares, if any, payable to the Participant (and any credited and unpaid dividend equivalents) shall be made in accordance with Section (B) above and Exhibit A, except the Participant shall no longer be required to be continually employed with the Company Group until the Final Performance Date as provided in Section (B)(2) above. “Retirement” is defined as the Participant’s Separation from Service upon or after (A) attaining age 55 with at least 11 years of service with the Company Group, or (B) attaining age 60 with at least 6 years of service with the Company Group, in each case as determined in accordance with the Company Group’s policies and procedures. “Cause” means any of the following: (i) the commission of a misdemeanor involving moral turpitude or a felony; (ii) the Participant’s act or omission that causes or may reasonably be expected to cause material injury to the Company Group, its vendors, customers, business partners or affiliates or that results or is intended to result in personal gain at the expense of the Company Group, its vendors, customers, business partners or affiliates; (iii) the Participant’s substantial and continuing neglect of his or her job responsibilities for the Company Group (including excessive unauthorized absenteeism); (iv) the Participant’s failure to comply with, or violation of, the Company Group’s Code of Business Conduct; (v) the Participant’s act or omission, whether or not performed in the workplace, that precludes the Participant’s employment with any


2020ROTCE	2

member of the Company Group by virtue of Section 19 of the Federal Deposit Insurance Act; and (vi) the Participant’s violation of any federal or state securities or banking laws, any rules or regulations issued pursuant to such laws, or the rules and regulations of any securities or exchange or association of which the Participant or member of the Company Group is a member. Notwithstanding the foregoing and without limiting the Participant’s obligations under the Restrictive Covenant Agreement attached as Exhibit C hereto and any remedies thereunder, any Separation from Service as contemplated in clause (i) or clause (ii) above shall be deemed to not meet the conditions of Retirement for purposes of this Section (C)(3) if, at any time during the period from the date of such Separation from Service through the Final Performance Date, the Participant, without the Company Group’s prior written consent, engages directly or indirectly in any Financial Services Business (as defined below), whether as an employee, employer, director, officer, owner, stockholder, partner, member, joint venture(r), independent contractor, consultant, or other contingent worker. The Committee (or its designee) may, in its sole discretion, require the Participant to submit on or through the Final Performance Date an affidavit certifying that the Participant has not breached this post-retirement conduct restriction, and may condition vesting and settlement of all unvested PSUs on the timely receipt of such affidavit. In the event the Participant engages in a Financial Services Business as contemplated in this Section (C)(3), any unvested PSUs (A) shall be cancelled immediately and the Participant shall immediately forfeit any rights to, and shall not be entitled to receive any payments with respect to, the PSUs including, without limitation, dividend equivalents pursuant to Section (B)(5) if the Participant’s Separation from Service was originally intended to constitute a Separation from Service as contemplated in clause (i) above or (B) shall be reduced to the Pro-Rata Target Number of PSUs as contemplated under Section (C)(2) above if the Participant’s Separation from Service was originally intended to constitute a termination without Cause by the Company Group as contemplated in clause (ii) above. "Financial Services Business" is defined as the businesses of commercial and/or consumer banking, lending, financing, guaranteeing and/or other financial services including, but not limited to, deposit, credit, trust and investment services; corporate and specialty financing and banking; asset-based lending; equipment financing; franchise financing; healthcare financing; transportation financing and leasing and other forms of leasing; mortgage financing and services; real estate financing and investments; factoring and other commercial services; treasury management; asset management (including hedge funds); private equity; financial technology business and services; insurance business and services; brokerage and investment banking business and services; syndications; specialized business solutions; or any other businesses or services that the Company Group engages in or plans to be engaged in. The determination of whether a Participant is engaged in a Financial Services Business shall be made in the sole and exclusive discretion of the Chief Human Resources Officer or his/her designee, which determination shall be final, conclusive and binding on the Participant.

(4)

If, prior to the Final Performance Date, the Participant’s employment with the Company Group terminates for any reason, except to the extent provided for in this Section (C) or Section (D) below, the unvested PSUs shall be cancelled immediately and the Participant shall immediately forfeit any rights to, and shall not be entitled to receive any payments with respect to, the PSUs including, without limitation, dividend equivalents pursuant to Section (B)(5).

(D)	Change of Control.

(1)

Notwithstanding Section (B) above and subject to Sections (D)(2) through (D)(6) below, if, during the Participant’s employment with the Company Group but prior to the Final Performance Date, a Change of Control occurs, then for purposes of Section (B) above, the Performance Measures shall be deemed to have been satisfied at the “Target Levels” as defined and set forth in Exhibit A and the final number of Shares awarded to the Participant, subject to the Participant’s compliance with the terms and conditions of Section (B)(2) above (including, without limitation, the Participant’s continued employment with the Company Group until the Final Performance Date), shall equal the Target Awarded Shares. The Target Awarded Shares (and any credited and unpaid dividend equivalents) shall be delivered to the Participant following the Final Performance Date, as determined by the Committee in its sole discretion, but in no event later than March 15, 2023, and the Participant shall not be entitled to any additional Shares based on the Company’s achievement of actual Performance Measures in accordance with Exhibit A. If this Section (D)(1) is applicable, all references to “Awarded Shares” in Sections (B) and (L) shall mean Target Awarded Shares instead.

(2)

Notwithstanding Section (C)(2) and (D)(1) above, if, (i) during the Participant’s employment with the Company Group, but prior to the Final Performance Date, a Change of Control occurs and (ii) the Participant incurs a Separation from Service prior to the Final Performance Date that is described in Section (C)(2) above that occurs more than two years following such Change of Control, then the final number of Awarded Shares awarded to the Participant, subject to the terms and conditions set forth in Section (L) below, shall equal the Pro-Rata Target Number of PSUs attributable to such Separation of Service (the “Pro-Rata Awarded Shares”). The Pro-Rata Awarded Shares (and any credited and unpaid dividend equivalents) shall be delivered to the Participant following the Final Performance Date, as determined by the Committee in its sole discretion, but in no event later than March 15, 2023, the Participant shall no longer be required to be continually employed with the Company Group until the Final Performance Date as provided in Section (B)(2) above, and the Participant shall not be entitled to any additional Shares based on the Company’s achievement of actual Performance Measures in accordance with Exhibit A. If this Section (D)(2) is applicable, all references to “Awarded Shares” in Sections (B), (C)(2) and (L) shall mean Pro-Rata Awarded Shares instead.

(3)

Notwithstanding Section (C)(2) above, if, following the Participant’s Separation from Service described in Section (C)(2) above a Change of Control occurs prior to the Final Performance Date, then for purposes of Section (C)(2) above, the Performance Measures shall be deemed to have been satisfied at Target Levels and the final number of Awarded Shares awarded to the Participant, subject to the terms and conditions set forth in Section (L) below, shall equal the


2020ROTCE	3

Pro-Rata Awarded Shares. The Pro-Rata Awarded Shares (and any credited and unpaid dividend equivalents) shall be delivered to the Participant following the Final Performance Date, as determined by the Committee in its sole discretion, but in no event later than March 15, 2023, the Participant shall no longer be required to be continually employed with the Company Group until the Final Performance Date as provided in Section (B)(2) above, and the Participant shall not be entitled to any additional Shares based on the Company’s achievement of actual Performance Measures in accordance with Exhibit A. If this Section (D)(3) is applicable, all references to “Awarded Shares” in Sections (B), (C)(2) and (L) shall mean Pro-Rata Awarded Shares instead.

(4)

Notwithstanding Section (C)(3) and (D)(1) above, if, (i) during the Participant’s employment with the Company Group, but prior to the Final Performance Date, a Change of Control occurs and (ii) the Participant incurs a Separation from Service prior to the Final Performance Date that is described in Section (C)(3) above that occurs more than two years following such Change of Control, then the Target Awarded Shares (and any credited and unpaid dividend equivalents) shall be delivered to the Participant following the Final Performance Date, as determined by the Committee in its sole discretion, but in no event later than March 15, 2023, the Participant shall no longer be required to be continually employed with the Company Group until the Final Performance Date as provided in Section (B)(2) above, and the Participant shall not be entitled to any additional Shares based on the Company’s achievement of actual Performance Measures in accordance with Exhibit A. If this Section (D)(4) is applicable, all references to “Awarded Shares” in Sections (B), (C)(3) and (L) shall mean Target Awarded Shares instead.

(5)

Notwithstanding Section (C)(3) above, if, following the Participant’s Separation from Service described in Section (C)(3) above a Change of Control occurs prior to the Final Performance Date, then for purposes of Section (C)(3) above, the Performance Measures shall be deemed to have been satisfied at Target Levels and the final number of Awarded Shares awarded to the Participant, subject to the terms and conditions set forth in Section (L) below, shall equal the Target Awarded Shares. The Target Awarded Shares (and any credited and unpaid dividend equivalents) shall be delivered to the Participant following the Final Performance Date, as determined by the Committee in its sole discretion, but in no event later than March 15, 2023, the Participant shall no longer be required to be continually employed with the Company Group until the Final Performance Date as provided in Section (B)(2) above, and the Participant shall not be entitled to any additional Shares based on the Company’s achievement of actual Performance Measures in accordance with Exhibit A. If this Section (D)(5) is applicable, all references to “Awarded Shares” in Sections (B), (C)(3) and (L) shall mean Target Awarded Shares instead.

(6)

Notwithstanding any provision contained in the Plan or this Award Agreement to the contrary, if (i) prior to the Final Performance Date, a Change of Control occurs and (ii) within two years following such Change of Control, the Participant incurs a Separation from Service prior to the Final Performance Date that is (1) initiated by the Company without Cause, (2) initiated by the Participant for “Good Reason” (as defined below) or (3) due to the Participant’s Retirement, the PSUs shall vest immediately on such Separation from Service and the final number of Awarded Shares awarded to the Participant shall be the Target Awarded Shares. The Participant shall not be entitled to any additional Shares based on the Company’s achievement of actual Performance Measures in accordance with Exhibit A. Such Target Awarded Shares (and any credited and unpaid dividend equivalents) shall be settled within thirty (30) days following such Separation from Service, unless such accelerated vesting and settlement of PSUs (and dividend equivalents) following the Participant’s Separation from Service is prohibited or limited by applicable law and/or regulation. “Good Reason” shall mean, without the Participant’s consent, a material diminution of the Participant’s (x) base salary (except in the event of a compensation reduction applicable to the Participant and other employees of comparable rank and/or status), (y) the Participant is reassigned to a work location that is more than fifty miles from his or her immediately preceding work location and which increases the distance the Participant has to commute to work by more than fifty miles, or (z) duties and responsibilities (except a temporary reduction while the Participant is physically or mentally incapacitated or a modification in the duties and/or responsibilities of the Participant and other employees of comparable rank and/or status following a Change of Control), provided, that a Separation from Service for Good Reason shall not occur unless (A) the Participant has provided the Company written notice specifying in detail the alleged condition of Good Reason within thirty (30) days of the occurrence of such condition; (B) the Company has failed to cure such alleged condition within ninety (90) days following the Company’s receipt of such written notice; and (C) if the Committee (or its designee) has determined that the Company has failed to cure such alleged condition, the Participant initiates a Separation from Service within five (5) days following the end of such 90-day cure period.

(7)

For Sections (B)(2), (C)(2) and (C)(3) above, if a Change of Control occurs on or following the Final Performance Date but prior to the Determination Date, the Awarded Shares (or Pro-Rata Awarded Shares, if applicable), if any, as determined under Section (B)(2), (C)(2) or (C)(3) above based on actual achievement of the Performance Measures in accordance with Exhibit A, shall be delivered to the Participant following the Final Performance Date but no later than March 15, 2023.

(E)	Transferability. The PSUs are not transferable other than by last will and testament, by the laws of descent and distribution pursuant to a domestic relations order, or as otherwise permitted under Section 4.6 of the Plan.

(F)

Incorporation of Plan. The Plan includes terms and conditions governing all Awards granted thereunder and is incorporated into this Award Agreement by reference unless specifically stated herein. This Award Agreement and the rights of the Participant hereunder are subject to the terms and conditions of the Plan, as amended from time to time and as supplemented by this Award Agreement, and to such rules and regulations as the Committee may adopt under the Plan. If there is any inconsistency between


2020ROTCE	4

the terms of this Award Agreement and the terms of the Plan, the Plan’s terms shall supersede and replace the conflicting terms of this Award Agreement.

(G)	No Entitlements.

(1)

Neither the Plan nor the Award Agreement confers on the Participant any right or entitlement to receive compensation, including, without limitation, any base salary or incentive compensation, in any specific amount for any future fiscal year (including, without limitation, any grants of future Awards under the Plan) nor impacts in any way the Company Group’s determination of the amount, if any, of the Participant’s base salary or incentive compensation. This Award of PSUs made under this Award Agreement is completely independent of any other Awards or grants and is made at the sole discretion of the Company. The PSUs do not constitute salary, wages, regular compensation, recurrent compensation, pensionable compensation or contractual compensation for the year of grant or any prior or later years and shall not be included in, nor have any effect on or be deemed earned in any respect, in connection with the determination of employment-related rights or benefits under law or any employee benefit plan or similar arrangement provided by the Company Group (including, without limitation, severance, termination of employment and pension benefits), unless otherwise specifically provided for under the terms of such plan or arrangement or by the Company Group. The benefits provided pursuant to the PSUs are in no way secured, guaranteed or warranted by the Company Group.

(2)

The PSUs are awarded to the Participant by virtue of the Participant’s employment with, and services performed for, the Company Group. The Plan or the Award Agreement does not constitute an employment agreement. Nothing in the Plan or the Award Agreement shall modify the terms of the Participant’s employment, including, without limitation, the Participant’s status as an “at-will” employee of the Company Group, if applicable.

(3)

Subject to any applicable employment agreement, the Company reserves the right to change the terms and conditions of the Participant’s employment, including the division, subsidiary or department in which the Participant is employed. None of the Plan or the Award Agreement, the grant of PSUs, nor any action taken or omitted to be taken under the Plan or the Award Agreement shall be deemed to create or confer on the Participant any right to be retained in the employ of the Company Group, or to interfere with or to limit in any way the right of the Company Group to terminate the Participant’s employment at any time. Moreover, the Separation from Service provisions set forth in Section (C) or (D), as applicable, only apply to the treatment of the PSUs in the specified circumstances and shall not otherwise affect the Participant’s employment relationship. By accepting this Award Agreement, the Participant waives any and all rights to compensation or damages in consequence of the termination of the Participant’s office or employment for any reason whatsoever to the extent such rights arise or may arise from the Participant’s ceasing to have rights under, or be entitled to receive payment in respect of, any unvested PSUs that are cancelled or forfeited as a result of such termination, or from the loss or diminution in value of such rights or entitlements, including by reason of the operation of the terms of the Plan, this Award Agreement or the provisions of any statute or law to taxation. This waiver applies whether or not such termination amounts to a wrongful discharge or unfair dismissal.

(H)

No Rights as a Stockholder. The Participant will have no rights as a stockholder with respect to Shares covered by this Award Agreement (including voting rights) until the date the Participant or his nominee becomes the holder of record of such Shares on the Settlement Date or as provided in Section (C) or (D) above, if applicable.

(I)

Securities Representation. The grant of the PSUs and issuance of Shares upon vesting of the PSUs shall be subject to, and in compliance with, all applicable requirements of federal, state or foreign securities law. No Shares may be issued hereunder if the issuance of such Shares would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Shares may then be listed. As a condition to the settlement of the PSUs, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation.

The Shares are being issued to the Participant and this Award Agreement is being made by the Company in reliance upon the following express representations and warranties of the Participant. The Participant acknowledges, represents and warrants that:

(1)

He or she has been advised that he or she may be an “affiliate” within the meaning of Rule 144 under the Securities Act of 1933, as amended (the “Act”) and in this connection the Company is relying in part on his or her representations set forth in this section (I)(1); and

(2)

If he or she is deemed an affiliate within the meaning of Rule 144 of the Act, the Shares must be held indefinitely unless an exemption from any applicable resale restrictions is available or the Company files an additional registration statement (or a “re-offer prospectus”) with regard to such Shares and the Company is under no obligation to register the Shares (or to file a “re-offer prospectus”).

(3)

If he or she is deemed an affiliate within the meaning of Rule 144 of the Act, he or she understands that the exemption from registration under Rule 144 will not be available unless (i) a public trading market then exists for the Shares of the Company, (ii) adequate information concerning the Company is then available to the public, and (iii) other terms and conditions of Rule 144 or any exemption therefrom are complied with; and that any sale of the Shares may be made only in limited amounts in accordance with such terms and conditions.


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(J)	Notices. Any notice or communication given hereunder shall be in writing and shall be deemed to have been duly given when delivered in person or mailed by certified mail, postage and fees prepaid, or internationally recognized express mail service, as follows:

If to the Company, to:

CIT Group Inc.
1 CIT Drive
Livingston, New Jersey 07039
Attention: Senior Vice President, Compensation and Benefits

If to the Participant, to the address on file with the Company Group.

(K)

Transfer of Personal Data. In order to facilitate the administration of this Award, it will be necessary for the Company Group to collect, hold, and process certain personal information about the Participant. As a condition of accepting this Award, the Participant authorizes, agrees and unambiguously consents to the Company Group collecting, using, disclosing, holding and processing personal data and transferring such data to third parties (collectively, the “Data Recipients”) for the primary purpose of the Participant’s participation in, and the general administration of, the Plan and to the transmission by the Company Group of any personal data information related to the PSUs awarded under this Award Agreement, as required in connection with the Participant’s participation in the Plan (including, without limitation, the administration of the Plan) out of the Participant’s home country and including to countries with less data protection than the data protection provided by the Participant’s home country. This authorization and consent is freely given by the Participant. The Participant acknowledges that he/she has been informed that upon request, the Company will provide the name or title and contact information for an officer or employee of the Company Group who is able to answer questions about the collection, use and disclosure of personal data information.

(1)

The Data Recipients will treat the Participant’s personal data as private and confidential and will not disclose such data for purposes other than the management and administration of this Award and will take reasonable measures to keep the Participant’s personal data private, confidential, accurate and current.

(2)

Where the transfer is to a destination outside the country to which the Participant is employed, or outside the European Economic Area for Participants employed by the Company Group in the United Kingdom or Ireland, the Company shall take reasonable steps to ensure that the Participant’s personal data continues to be adequately protected and securely held. By accepting this Award, the Participant acknowledges that personal information about the Participant may be transferred to a country that does not offer the same level of data protection as the country in which the Participant is employed.

(L)	Cancellation; Recoupment; Related Matters.

(1)

The PSUs granted under this Agreement, and any Shares issued or any credited and unpaid dividend equivalents with respect to such Shares or other payments made in respect thereof, shall be subject to the CIT Group Inc. Incentive Compensation Recoupment Policy (“Recoupment Policy”) as the Company Group may amend from time to time, whether or not such Recoupment Policy is otherwise applicable to the Participant. By accepting the grant of PSUs under this Agreement, including the provisions of Exhibit A, Exhibit B, Exhibit C and Exhibit D, the Participant agrees and consents to the Company Group’s application, implementation and enforcement of (a) the provisions of Exhibits A, B, C and D, (b) the Recoupment Policy and (c) any provision of applicable law relating to cancellation, recoupment, rescission or payback of compensation and expressly agrees that the Company Group may take such actions as are necessary to effectuate the Recoupment Policy or applicable law without further consent or action being required by the Participant. To the extent that the terms of this Agreement and the Recoupment Policy conflict, the terms of the Recoupment Policy shall prevail.

(2)

In addition to the provisions of Section (L)(1) above, if during the two year period following the Final Performance Date a Clawback Trigger Event (as defined below) occurs, then the Committee (or its designee), in its sole discretion, may direct the Company, at any time from the Settlement Date (or such other date Awarded Shares are settled in accordance with Section (C)(1) or (D) above, if applicable) until the second anniversary of the Final Performance Date, to require the Participant to repay the Company immediately upon written demand by the Company any amount that does not exceed (1) the total Fair Market Value of such Shares (as of the Settlement Date (or such other date Awarded Shares are settled in accordance with Section (C)(1) or (D) above, if applicable)) that have been previously paid to the Participant under this Agreement, plus (2) the value of any other payments previously paid to the Participant under this Agreement, including, without limitation, any cash payments in accordance with Section (B)(6) above or any dividend equivalents. A “Clawback Trigger Event” shall be deemed to have occurred in the event (i) of a material restatement of the Company’s financial statements with respect to any fiscal year during the Performance Period; (ii) of a determination that this grant of PSUs was based, in whole or in part, on materially inaccurate financial or performance metrics for any period preceding the granting of this Award, whether or not a financial restatement is required and whether or not the Participant was responsible for the inaccuracy; (iii) of a determination by the Committee (or its designee), in its sole discretion, that the Participant has failed to comply with the Company’s risk policies or standards and/or failed to properly identify, raise or assess, in a timely manner and as reasonably expected, risks and/or concerns with respect to risks material to the Company or its business activities; (iv) the Participant has engaged in Detrimental Conduct (as defined in the Recoupment Policy) or violated any of the Company Policies during the Participant’s


2020ROTCE	6

employment, as determined by the Committee (or its designee) in its sole discretion, including if such determination is made following the Participant’s termination of employment; or (v) (i) a consolidated, pre-tax GAAP loss occurs in fiscal year 2022 or 2023, (ii) the Company incurs credit losses during such respective fiscal year 2022 or 2023 with regard to loan and lease transactions originated and booked during the Performance Period and (iii) such credit losses for such respective fiscal year equal or exceed such consolidated, pre-tax GAAP loss for such respective fiscal year (a “Pre-Tax Loss”). Notwithstanding the foregoing, any Pre-Tax Loss shall be determined after excluding the impact of (A) adjustments to or impairment of goodwill or other intangible assets, (B) changes in accounting principles during the Performance Period, (C) FSA charges and prepayment charges related to the prepayment or early extinguishment of the Company’s debt, (D) accelerated original issue discount (“OID”) on debt extinguishment related to the Goldman Sachs International (“GSI”) facility, (E) restructuring or business re-characterization activities, including, but not limited to, terminations of office leases, or reductions in force, that are reported by the Company, or (F) any other extraordinary or unusual items as determined by the Committee.

(3)

Notwithstanding anything contained in the Plan or this Award Agreement to the contrary, to the extent that the Company is required by law to include any additional recoupment, recovery or forfeiture provisions to outstanding Awards, then such additional provisions shall also apply to this Award Agreement as if they had been included as of the Date of Award and in the manner determined by the Committee in its sole discretion.

(4)

The remedies provided for in this Award Agreement shall be cumulative and not exclusive, and the Participant agrees and acknowledges that the enforcement by the Company of its rights hereunder shall not in any manner impair, restrict or limit the right of the Company to seek injunctive and other equitable or legal relief under applicable law or the terms of any other agreement between the Company and the Participant.

(M)	Miscellaneous.

(1)

It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Award Agreement, all of which shall be binding upon the Participant.

(2)

The Board may at any time, or from time to time, terminate, amend, modify or suspend the Plan, and the Board or the Committee may amend or modify this Award Agreement at any time; provided, however, that, except as provided herein, no termination, amendment, modification or suspension shall materially and adversely alter or impair the rights of the Participant under this Award Agreement, without the Participant’s written consent.

(3)

This Award Agreement is intended to comply with, or be exempt from, Section 409A of the Code and the regulations and guidance promulgated thereunder (“Section 409A”), and accordingly, to the maximum extent permitted, this Award Agreement shall be interpreted in a manner intended to be in compliance therewith. In no event whatsoever shall the Company Group be liable for any additional tax, interest or penalty that may be imposed on the Participant by Section 409A or any damages for failing to comply with Section 409A. If any provision of the Plan or the Award Agreement would, in the sole discretion of the Committee, result or likely result in the imposition on the Participant, a beneficiary or any other person of additional taxes or a penalty tax under Section 409A, the Committee may modify the terms of the Plan or the Award Agreement, without the consent of the Participant, beneficiary or such other person, in the manner that the Committee, in its sole discretion, may determine to be necessary or advisable to avoid the imposition of such penalty tax. Notwithstanding anything to the contrary in the Plan or the Award Agreement, to the extent that the Participant is a “Specified Employee” (within the meaning of the Committee’s established methodology for determining “Specified Employees” for purposes of Section 409A), payment or distribution of any amounts with respect to the PSUs that are subject to Section 409A will be made as soon as practicable following the first business day of the seventh month following the Participant’s Separation from Service from the Company Group or, if earlier, the date of the Participant’s death.

(4)

Delivery of the Shares underlying the PSUs or payment in cash (if permitted pursuant to Section (B)(6)) upon settlement is subject to the Participant satisfying all applicable federal, state, provincial, local, domestic and foreign taxes and other statutory obligations (including, without limitation, the Participant’s FICA obligation, National Insurance Contributions or Canada Pension Plan contributions, as applicable), provided that any Participant that is subject to tax regulation in the United Kingdom or Ireland shall also be subject to the provisions of Exhibit B attached hereto, if applicable. The Company shall have the power and the right to (i) deduct or withhold from all amounts payable to the Participant pursuant to the PSUs or otherwise, or (ii) require the Participant to remit to the Company, an amount sufficient to satisfy any applicable taxes required by law. The Company may permit or require the Participant to satisfy, in whole or in part, the tax obligations by withholding Shares that would otherwise be received upon settlement of the PSUs.

(5)

The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing Shares issued pursuant to this Award Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing Shares acquired pursuant to this Award Agreement in the possession of the Participant.


2020ROTCE	7

(6)

This Award Agreement shall be subject to all applicable laws, rules, guidelines and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required, or the Committee determines are advisable, including but not limited to any applicable laws or the rules, codes, or guidelines of any statutory or regulatory body in any jurisdiction relating to the remuneration of any Participant (in each case as may be in force from time to time). The Participant agrees to take all steps the Company determines are necessary to comply with all applicable provisions of federal, state and foreign securities law in exercising his or her rights under this Award Agreement.

(7)

Nothing in the Plan or this Agreement should be construed as providing the Participant with financial, tax, legal or other advice with respect to the PSUs. The Company recommends that the Participant consult with his or her financial, tax, legal and other advisors to provide advice in connection with the PSUs.

(8)

All obligations of the Company under the Plan and this Award Agreement, with respect to the Awards, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

(9)

To the extent not preempted by federal law, this Award Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware.

(10)

This Award Agreement may be executed in one or more counterparts, all of which taken together shall constitute one contract.

(11)

The Participant agrees that the Company may, to the extent permitted by applicable law and as provided for in Section 4.5 of the Plan, retain for itself securities or funds otherwise payable to the Participant pursuant to this Award Agreement, or any other Award Agreement under the Plan, to satisfy any obligation or debt that the Participant owes the Company or its affiliates under any Award Agreement, the Plan or otherwise; provided that the Company may not retain such funds or securities and set off such obligations or liabilities until such time as they would otherwise be distributable to the Participant, and to the extent that Section 409A is applicable, such offset shall not exceed the maximum offset then permitted under Section 409A.

(12)

The Participant acknowledges that if he or she moves to another country during the term of this Award Agreement, additional terms and conditions may apply and as provided for in Section 4.10.2 of the Plan and the Company reserves the right to impose other requirements to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Award Agreement. The Participant agrees to sign any additional agreements or undertaking that may be necessary to accomplish the foregoing.

(13)

The Participant acknowledges that he or she has reviewed the Company Policies, as defined in the Recoupment Policy, understands the Company Policies and agrees to be subject to the Company Policies that are applicable to the Participant, including, without limitation, the Regulatory Credit Classifications, as defined in the Recoupment Policy, and any credit risk policies in effect from time to time.

(14)

The Participant acknowledges that the Company is subject to certain regulatory restrictions that may, under certain circumstances, prohibit the accelerated vesting and distribution of any unvested PSUs as a result of, or following, a Participant’s Separation from Service.

(15)

The Participant acknowledges that his or her participation in the Plan as a result of this Award Agreement is further good and valuable consideration for the Participant’s obligations under any applicable non-competition, non-solicitation, non-inducement, confidentiality, confidential and/or proprietary information, notice period, inventions, developments, works made for hire, return of property or similar agreement or provisions in effect between the Participant and the Company, including, without limitation, the Restrictive Covenant Agreement and the Notice Period Agreement.

(16)

Neither this Award Agreement or the Shares that may be awarded hereunder represent any right to the payment of earned wages, and the rights of the Participant with respect to any Shares remains fully contingent and subject to the vesting and other terms and conditions of this Award Agreement.

(17)

Any cash payment made pursuant to Section (B)(5) or (B)(6) of this Award Agreement shall be calculated, where necessary, by reference to the prevailing U.S. dollar exchange rate on the proposed payment date (as determined by the Committee in its sole discretion).

(18)

In the event that any provision of this Award Agreement (including the provisions of Exhibits A, B, C and D attached hereto) is held to be unenforceable for being unduly broad as written, such provision shall be deemed amended to narrow its application to the extent necessary to make the provision valid and enforceable according to applicable law and shall be enforced as amended.

(N)

Acceptance of Award; Binding Non-Competition, Non-Solicitation and Confidentiality Agreement; Binding Notice Period Agreement. By accepting this Award of PSUs, the Participant is willingly and knowingly agreeing to, and intending to be bound by and to comply with, all of the terms contained in this Award Agreement, including (1) the


2020ROTCE	8

terms and conditions with respect to the vesting of the PSUs attached hereto as Exhibit A, (2) the terms and conditions of the Restrictive Covenant Agreement attached hereto as Exhibit C, and (3) the terms and conditions of the Notice Period Agreement attached hereto as Exhibit D.

The Participant agrees and acknowledges that the attached Restrictive Covenant Agreement may impact the Participant’s future employment and that the Company would not have entered into this Award Agreement and granted PSUs to the Participant if the Participant did not agree to be legally bound by and to comply in full with the Restrictive Covenant Agreement and the Notice Period Agreement. The Participant further agrees and acknowledges that (1) the attached Restrictive Covenant Agreement and Notice Period Agreement do not supersede, replace, invalidate or otherwise limit or affect any restrictions in any prior or other document or agreement between the Participant and any member of the Company Group regarding confidentiality, confidential and/or proprietary information, return of property, non-competition, non-solicitation or piracy of customers or clients or prospective customers or clients of any member of the Company Group, and/or non-solicitation/non-inducement or hiring of employees of any member of the Company Group, inventions, developments or works made for hire, notice period or other similar provisions (collectively, the “Existing Restrictions”), and (2) any such Existing Restrictions shall remain in full force and effect and the Participant shall remain bound by such Existing Restrictions. To the extent the restrictions contained in the Restrictive Covenant Agreement or Notice Period Agreement conflict in any way with any Existing Restrictions, such conflict shall be resolved by giving effect to the provision that provides the greatest protection to the Company Group that is enforceable under applicable law.

The Participant may accept this Award by indicating acceptance by e-mail or such other electronic means as the Company may designate in writing or by signing this Award Agreement if the Company does not require acceptance by email or such other electronic means. If the Participant desires to refuse the Award, the Participant must notify the Company in writing. Such notification should be sent to CIT Group Inc., Attention: Senior Vice President, Compensation and Benefits, 1 CIT Drive, Livingston, New Jersey 07039, no later than twenty-one (21) days after receipt of the Award Agreement. If the Participant has not accepted the Award within such twenty-one (21) days, it will be cancelled as of the Date of Award (unless the Company determines in its sole discretion to permit an extension of such period).

IN WITNESS WHEREOF, this Award Agreement (including any exhibits attached hereto) has been executed by the Company by one of its duly authorized officers as of the Date of Award.

CIT Group Inc.

Accepted and Agreed:


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EXHIBIT A

Vesting Terms and Conditions of the Performance Share Units

This Exhibit A sets forth the manner in which the number of Awarded Shares will be determined, if any.

(A)	Definitions. All capitalized terms shall have the meanings ascribed to them in the Award Agreement, unless specifically set forth otherwise herein. In addition, the following terms used in this Exhibit A shall have the meanings set forth below:

(1)

“ROTCE” means the Company’s return on average tangible common stockholder’s equity and, for the purpose of this measure, equates to average Adjusted Net Income as a percentage of average Adjusted Tangible Common Equity for the Performance Period, adjusted to exclude special, unusual or non-recurring items consistent with the Company’s public disclosures in its quarterly earnings or other press releases.

(2)

“Adjusted Net Income” means the Company’s after-tax net income from Continuing Operations applicable to common shareholders adjusted to exclude the impact during the Performance Period of (i) loss on debt extinguishments, (ii) the tax effected amortization of intangible assets, and (iii) other special, unusual or non-recurring items consistent with the Company’s public disclosures in its quarterly earnings or other press releases.

(3)

“Adjusted Tangible Common Equity” means the Company’s common stockholder’s equity less goodwill and intangible assets, adjusted to exclude disallowed deferred tax assets.

(4)

“Comparison Group” means the shares of common stock regularly traded on an applicable exchange of each of the companies in the KBW Nasdaq Bank Index, other than the Company, as of January 1, 2020, listed below:


Bank of America Corp. (NYSE: BAC)	New York Community Bancorp, Inc. (NYSE: NYCB)
Bank of New York Mellon Corp. (NYSE: BK)	Northern Trust Corporation (Nasdaq: NTRS)
Capital One Financial Corp. (NYSE: COF)	People’s United Financial, Inc. (Nasdaq: PBCT)
Citigroup Inc. (NYSE: C)	PNC Financial Services Group Inc. (NYSE: PNC)
Citizens Financial Group (NYSE: CFG)	Regions Financial Corporation (NYSE: RF)
Comerica Incorporated (NYSE: CMA)	State Street Corp. (NYSE: STT)
Fifth Third Bancorp (Nasdaq: FITB)	SVB Financial Group (Nasdaq: SIVB)
First Republic Bank (NYSE: FRC)	Truist Financial Corporation (NYSE: TFC)
Huntington Bancshares Incorporated (Nasdaq: HBAN)	U.S. Bancorp (NYSE: USB)
JPMorgan Chase & Co. (NYSE: JPM)	Wells Fargo & Co. (NYSE: WFC)
KeyCorp (NYSE: KEY)	Zions Bancorporation (Nasdaq: ZION)
M&T Bank Corporation (NYSE: MTB)

In the event that any company in the Comparison Group is involved in any event that results in that company ceasing to be actively traded on an applicable exchange at any time during the Performance Period, including, for the avoidance of doubt, in connection with an acquisition or divestiture, then such company may be removed by the Committee as a member of the Comparison Group and the determination of the relative TSR of the Company, as described below, will be adjusted accordingly.

(5)

“Payout Percentage” shall be the number expressed in the Performance Measure Factor Grid. The threshold Payout Percentage is l% and the maximum Payout Percentage is l%.

(6)

“Performance Measure Factor Grid” means the chart in Paragraph (C) below that provides the applicable Payout Percentage based on the levels of the Performance Measures that have been achieved.

(7)

“Performance Measures” means the performance measurements of ROTCE and TSR Provision used to determine the calculation of PSUs earned in accordance with this Exhibit A.

(8)

“Performance Period” means the period from January 1, 2020 through December 31, 2022.

(9)

“Total Shareholder Return” or “TSR” for the Company or any member of the Comparison Group is expressed as a percentage determined by dividing (A) (i) the average closing common stock price for the 20 consecutive trading days ending on the last trading day in the Performance Period, plus (ii) the sum of all dividends paid on the applicable common stock during the Performance Period assuming dividend reinvestment as of the ex-dividend date, minus (iii) the average closing common stock price for the 20 consecutive trading days immediately preceding the first day of the Performance Period, with dividends during the 20 consecutive trading days reinvested as of the ex-dividend date, if applicable, by (B) (i) the average closing common stock price for the 20 consecutive trading days immediately preceding the first day of the Performance Period with dividends during the 20 consecutive trading days reinvested as of the ex-dividend date, if applicable. The aforementioned closing stock prices will be as adjusted for stock splits or similar changes in capital structure.


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The TSR for any company in the Comparison Group will be negative one hundred percent (-100%) if that company: (i) files for bankruptcy, reorganization, or liquidation under any applicable chapter of the U.S. Bankruptcy Code; (ii) is the subject of an involuntary bankruptcy proceeding that is not dismissed within 30 days; (iii) is the subject of a stockholder approved plan of liquidation or dissolution; or (iv) ceases to conduct substantial business operations.

(10)

“Total Shareholder Return Adjustment Factor” or “TSR Adjustment Factor” means a factor that can increase or decrease the applicable Payout Percentage by up to l% but not to exceed the maximum Payout Percentage, based on the Company’s TSR as compared to the TSRs of the Comparison Group during the Performance Period.

(B)

In General. The total number of Shares deliverable to the Participant shall be equal to (i) the Target Number of PSUs (or Pro-Rata Target Number of PSUs, if applicable) multiplied by the applicable Payout Percentage based on the specified levels of Performance Measures that have been achieved during the Performance Period as provided in the Performance Measure Factor Grid; (ii) the Target Awarded Shares in accordance with Section (C)(1), (D)(1), (D)(4), (D)(5) or (D)(6) of the Agreement, if applicable, or (iii) the Pro-Rata Awarded Shares in accordance with Section (D)(2) or (D)(3) of the Agreement, if applicable.

(C)Performance Measure Factor Grid:


ROTCE Performance Factor			X	TSR Adjustment Factor		=	Payout Percentage

ROTCE		Payout Before TSR Adjustment Factor

< Min	<l%	l%
Min	l%	l%
	l%	l%					ROTCE Payout	TSR Adjustment Factor
	l%	l%			TSR		ROTCE Payout	80%	100%	120%
	l%	l%		TSR	Adjustment		l%	l%	l%	l%
	l%	l%		Percentile	Factor		l%	l%	l%	l%
	l%	l%		<=l%	l%		l%	l%	l%	l%
Target	l%	l%	X	l%	l%	=	l%	l%	l%	l%
	l%	l%		>=l%	l%		l%	l%	l%	l%
	l%	l%					l%	l%	l%	l%
	l%	l%
	l%	l%
	l%	l%
Max	l%	l%
> Max	>l%	l%

(1)

If the levels of Performance Measures attained falls between the amounts shown above, the applicable Payout Percentage will be determined by interpolation between the respective amounts shown above.

(2)

The “Target Level” for ROTCE is l%, the “Target Level” for the TSR Adjustment Factor is l%, and the “Minimum Level” for ROTCE is l%.

(3)

If the Minimum Level for ROTCE is not met, the PSUs eligible to vest will be forfeited.

(4)

After the end of the Performance Period, the Committee will rank each member of the Comparison Group according to TSR. The Company’s TSR percentile will then be compared to TSRs of the Comparison Group, including the Company, to determine the TSR Adjustment Factor.

(D)

Committee Determination. The Committee shall, in its sole discretion, determine the level of Performance Measures that have been satisfied during the Performance Period and the applicable Payout Percentage to be used to determine the number of Awarded Shares, if any, based on the application of the Performance Measure Factor Grid. The Committee may, in its sole discretion, adjust the Performance Measures and the Performance Measure Factor Grid to exclude the effect on satisfaction of the Performance Measures of any (i) corporate acquisition, divestiture or other discontinued operations, (ii) change in tax law or regulation or change in accounting principle under Generally Accepted Accounting Principles, (iii) item, event or occurrence that is extraordinary or unusual in nature or infrequent in occurrence, or (iv) other adjustment permissible under the Plan.


2020ROTCE	11

EXHIBIT B

Applicable Foreign Tax Provisions

All capitalized terms shall have the meanings ascribed to them in the Award Agreement, unless specifically set forth otherwise herein.

United Kingdom:

The Participant shall also, if requested by the Company, enter into any tax or National Insurance Contributions agreement or election the Company deems necessary, including, without limitation, any election under Section 431 of the Income Tax (Earnings and Pensions) Act 2003 in respect of the acquisition of the PSUs or the Shares issued thereunder.

Ireland:

In a case where the Company or an Affiliate or any other person (the “Relevant Person”) is obliged to (or would suffer a disadvantage if they were not to) account for any tax (in any jurisdiction) by virtue of the receipt of any benefit under this Award Agreement or the Plan (whether in cash or Shares) or for any pay related social insurance contributions that are payable or assessable (which, unless the Committee determines otherwise when this Award was made, shall not include employer’s pay related social insurance contributions in Ireland) (together, the “Tax Liability”), the Participant (or his personal representatives) must either:

(1)make a payment to the Relevant Person of an amount equal to the Tax Liability; or

(2)enter into arrangements acceptable to the Relevant Person to secure that such a payment is made (whether by authorizing the sale of some or all of the Shares on his or her behalf and the payment to the Relevant Person of the relevant amount out of the proceeds of sale or otherwise);

and in this regard the Participant (or his or her personal representatives) shall do all such things and execute such documents as the Relevant Person may reasonably require in connection with the satisfaction of the Tax Liability.


2020ROTCE	12

EXHIBIT C

CIT NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY AGREEMENT

This CIT Non-Competition, Non-Solicitation and Confidentiality Agreement (“Agreement”) is entered into between (“Employee”) and CIT Bank, N.A., including its parent entities, subsidiaries and affiliates within the CIT Group Inc. family of companies (and its or their successors and assigns) (collectively, “CIT” or the "Company”).

At-Will Employment. Employment with CIT is at-will which means that either CIT or Employee may terminate the employment relationship at any time, for any or no reason, with or without cause or prior notice (except as otherwise required by Employee’s Notice Period Agreement). Nothing in this Agreement alters Employee's status as an at-will employee or creates a contract of employment for any specific period of time or with respect to any other term or condition of employment.

2.	Nature of CIT’s Business. CIT provides commercial and residential financing, lending, leasing, factoring, banking, and advisory services to a wide variety of industries and customers throughout the United States of America and elsewhere.

Access to Confidential Information. Employee understands and agrees that CIT’s business depends on the preservation of its: (i) Confidential Information (as defined in Section 5(b) below); (ii) relationships with customers, clients and borrowers (which shall include any individual or entity who obtains or requests a financial product, program or service from CIT) (collectively "Client" or "Clients"); and (iii) personnel. Employee acknowledges that Employee has been or will be employed by the Company as part of its senior executive team and has had or will have access to Confidential Information and a range of existing and prospective Client relationships and opportunities on an international level and will benefit from compensation and benefit opportunities provided by the Company.

Consideration. In consideration of: (i) compensation and employment benefits and opportunities offered by CIT to Employee (including any annual discretionary short-term or long-term incentives); (ii) Employee’s employment or continued employment with CIT on an at-will basis (including any promotions); (iii) Employee's access to Confidential Information and existing or prospective Client relationships, vendor and/or other business relationships, and associated goodwill; (iv) specialized training provided by CIT; (v) the mutual covenants and agreements contained herein; and/or (vi) other good and valuable consideration, Employee promises to abide by the obligations set forth in this Agreement.

5.	Confidential Information.

(a)

Protection of Confidential Information. In the course of employment, Employee will be provided access to and/or develop valuable Confidential Information owned by CIT as well as Confidential Information owned by CIT’s Clients, vendors, franchisors, referral sources, strategic partners, licensors, and other third parties (collectively “Third Party” or “Third Parties”). Employee promises and agrees at all times during the term of Employee’s employment and thereafter to hold in strict confidence Confidential Information owned by CIT and/or any Third Party. Employee further agrees not to access, copy, disclose, distribute, misappropriate, remove, store, transmit or use, directly or indirectly, in whole or in part, any Confidential Information owned by CIT or any Third Party except as: (i) necessary in the ordinary course of the Employee's duties for CIT; (ii) required by applicable law; or (iii) authorized in writing by an employee who is an


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	1

Executive Vice President or higher level employee of CIT. During and after employment with CIT, Employee will take all reasonable measures to protect Confidential Information owned by CIT or any Third Party from any unauthorized use or disclosure.

(b)

Definition of Confidential Information. Employee agrees that "Confidential Information" means both tangible and intangible information owned by CIT or a Third Party which is in print, audio, visual, digital, electronically-stored or any other form that: (i) has been developed or acquired by CIT; (ii) constitutes a trade secret or is proprietary in nature; (iii) is not generally known publicly or to CIT’s competitors; and (iv) the Company has treated as confidential. Confidential Information includes, but is not limited to:

(i)

Board of Director and Executive Management Committee presentations and materials; operations review materials; operations plans; business, financial, advertising or marketing opportunities, proposals, presentations, plans, budgets, strategies or methods; financial information including forecasts/projections, expense management, budgets, data, financial statements and tax returns; financial management and accounting policies and procedures; risk, credit and pricing policies, procedures, and terms; prices and rates; profit margins; secondary marketing and hedging models; loan, lease and other financial program applications and supporting documents and information; operations and procedure manuals, materials, policies and memoranda; software programs; source code; data models; production reports; security and proprietary technology; analyses; research and developments; know how; methodologies; designs; inventions; innovations; processes; patents; and other business, financial or technical information, improvements, ideas, and concepts, whether or not patentable or whether or not copyrightable;

(ii)

information regarding prospective, existing or former Clients or other Third Parties, including:

the identities and contact information of the Third Parties and/or their key decision makers; Third Party financial and account information, credit worthiness, business plans, forecasts/projections, financial statements, tax returns, trade secrets/patents, and potential transactions; CIT’s analysis of such Third Parties; the particular needs and/or preferences of Third Parties and CIT’s strategies for satisfying those needs and preferences; the existence and terms of any agreements, contracts or programs with Third Parties;

the name, address, email address, telephone number, Social Security number, driver’s license number, employer, place of employment, mother’s maiden name, wage information, income, account number, loan number, account balance, and payment history, transaction or loss history, overdraft history, credit card numbers, debit or ATM card numbers, personal identification number, password, credit history and credit score, information obtained from a consumer or commercial credit reporting agency, information regarding transactions and experiences and creditworthiness, financial transaction data, or other data which can be reasonably linked to such information; and

any other information relating to Third Parties.


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	2

(iii)

information regarding former, existing or potential loans, leases or other financial products or programs, including revenues, costs and profitability;

(iv)

information regarding proprietary integrated distribution networks and technology platforms, including any customizations or improvements made to commercially available hardware or software products, and any networks and technology platforms developed for any franchise financing programs or other lending programs or finance and lease products, including network architecture and software code;

(v)

information regarding employees, directors, officers, agents, independent contractors, consultants and/or other forms of contingent workers, including their skills and abilities, assignments, and performance;

(vi)

information regarding, or used in, employee training;

(vii)

information regarding past, present or potential mergers, acquisitions, divestitures and other transaction information and documents, whether or not the transaction was completed;

(viii)

information regarding CIT stock or assets;

(ix)

information marked “Internal Use Only,” “Confidential,” “Restricted” or other similar classification; and

(x)

information which may be available from public sources but which has been compiled through time and effort and is not available in such compiled form.

(c)

Questions regarding Confidential Information. The foregoing are only examples of CIT’s Confidential Information. If Employee is uncertain as to whether any particular information or material constitutes Confidential Information, Employee shall ask Employee’s manager or, if Employee is no longer employed by CIT, CIT’s General Counsel, prior to use or disclosure of such information or material.

(d)

Continuing Obligations with respect to Confidential Information. Confidential information includes such information disclosed to Employee prior to or after the execution of this Agreement, and shall continue until a specific item of Confidential Information either becomes public knowledge or independently comes into the possession of Employee in a lawful manner unrelated to Employee’s employment with CIT. Employee agrees that Confidential Information does not cease to be confidential if disclosed to a Third Party or other person or entity through any confidentiality agreement or similar protection, as long as the information is not voluntarily made public by CIT. Further, at all times during employment, Employee shall promptly advise Employee’s Human Resources representative and CIT’s Law Department of any known or suspected unauthorized (intentional or unintentional) use or disclosure of CIT’s Confidential Information.

(e)

Former Employer Information. Employee agrees that Employee will not, during Employee’s employment with CIT, improperly use or disclose any proprietary information or trade secrets of any former employer or other person or entity and that Employee will


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	3

not bring onto the premises of CIT any unpublished or published documents containing confidential or proprietary information belonging to any such employer, person, or entity unless consented to in writing by such employer, person, or entity.

(f)

National Labor Relations Act Exclusion. Nothing contained in this Agreement is intended to prohibit or restrict communications regarding wages, benefits, or other terms and conditions of employment, or that otherwise are legally protected under the National Labor Relations Act (if and only to the extent applicable), or under any applicable federal, state or local laws.

(g)

Whistleblower Protections. Nothing in this Agreement prohibits or restricts Employee from: (i) filing a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission, the Department of Justice or any other federal, state or local governmental agency or commission (“Government Agency”); (ii) communicating with any Government Agency or otherwise participating in any investigation or proceeding that may be conducted by any Government Agency with respect to a potential violation of law or regulation, including providing documents or other information, without notice to the Company; or (iii) receiving an award from a government-administered whistleblower award program for providing information to a Government Agency.

(h)

NOTICE PURSUANT TO THE DEFEND TRADE SECRETS ACT OF 2016. Notwithstanding the terms of this Section 5, Employee acknowledges that Employee has hereby been notified that Employee shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret where the disclosure is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Furthermore, Employee understands that if Employee files a lawsuit alleging that Employee was subjected to retaliation by an employer for reporting a suspected violation of law, Employee may disclose the trade secret to Employee’s attorney and use the trade secret information in the court proceeding, if Employee files any document containing the trade secret under seal, and does not disclose the trade secret, except as permitted by court order. Notwithstanding the foregoing, Employee expressly agrees to honor the confidentiality obligations in this Agreement and will share Confidential Information with Employee’s attorney or with the government official or agency only in accordance with this Section. Nothing in this Agreement shall be construed to permit or condone unlawful conduct including, but not limited to, the theft or misappropriation of Company property, trade secrets or information.

6.	Inventions and Other Developments. With regard to any and all inventions or developments that relate to the Company’s business, involve the use of CIT information or property, or that Employee develops or acquires within the scope of Employee’s employment by the Company (“Developments”):

(a)

All Developments and related records or information in any form shall become and remain the exclusive property of the Company and, to the extent Employee has any rights thereto, Employee hereby assigns all such rights, title, and interest to the Company, except as provided in the state notices set forth in the Invention Notice Schedule attached as


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	4

Schedule 1 to this Agreement, which, if applicable, Employee acknowledges having read and received. All copyrightable Developments shall be deemed "works made for hire" under the U.S. Copyright Act for CIT's benefit.

(b)

Upon request, Employee, whether during or after Employee’s employment by the Company, shall execute, acknowledge and deliver to the Company all assignments and other documents which the Company deems necessary to: (a) vest the Company with full and exclusive right, title, and interest to the Developments, and (b) enable the Company to file and prosecute an application for, or acquire, maintain or enforce, all letters of patent, mask work, trademark registrations (including domain names), and copyrights covering the Developments.

(c)

If CIT is unable for any reason to secure Employee’s signature to apply for or to pursue an application for registration or other protection of any Developments and intellectual property rights assigned to CIT, then Employee hereby irrevocably designates and appoints CIT and its duly authorized officers and agents as Employee’s agent and attorney in fact, to act for and on Employee’s behalf to execute and file any such applications, to do all other lawfully permitted acts to further the prosecution and issuance of letters of patent, mask work, trademark registrations (including domain names) and copyrights and any acts necessary to obtain and enforce the full benefits, enjoyment, rights and title, with the same legal force and effect as if executed by Employee. Employee hereby waives and quitclaims to CIT any and all claims, of any nature whatsoever, which Employee now has or may hereafter have for infringement of any patents, mask works, trademark registrations (including domain names) and copyrights resulting from any such application for letters of patent, mask work, trademark registrations (including domain names) and copyright registrations assigned hereunder to CIT.

Prior Inventions and Other Developments. Employee represents that there are no inventions or developments, whether or not patented, copyrighted or trademarked, which Employee conceived or created solely or jointly prior to employment with CIT and which Employee intends to exclude from this Agreement, except as appended hereto.

8.	Exit Interview. Employee shall, if requested, participate in an exit interview, identify future business or employment plans, describe the nature of those plans, and reaffirm in writing Employee’s obligations set forth in this Agreement.

Notice of New Employment or Business. For one (1) year after employment with CIT, Employee shall: (i) promptly notify CIT in writing of any new employment or business engagement, including the name and address of the entity and the nature of Employee’s new duties; (ii) promptly notify all recruiters, employment agencies, employment consultants, prospective employers and/or prospective business or other contracting partners of Employee’s restrictions under this Agreement; and (iii) consent to CIT notifying any person with whom Employee enters into an employment or other business or contractual relationship of Employee’s obligations under this Agreement.

10.

Non-Competition. During employment with CIT and for one (1) year thereafter, Employee shall not, without CIT's prior written consent, compete with CIT by engaging, in a competitive capacity, either directly or through the direction, control or actions of others, in any Competing Business whether as an employee, employer, director, officer, owner, stockholder, partner, member, joint venturer, independent contractor, consultant, or other contingent worker. The geographic reach of this non-competition restriction shall be the United States of America and any other country in which CIT


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	5

conducted business during Employee’s employment, and Employee acknowledges and agrees that Employee’s work was international in scope. For purposes of this Agreement:

(a)

“Competing Business” is any person or entity that competes with CIT in the sale, origination, marketing, production, distribution, research or development of Competing Products in the same markets; and

(b)

“Competing Products” are any products or services in existence or under development that compete with any products or services of CIT about which Employee obtained Confidential Information or for which Employee provided advisory services or had sales, origination, marketing, production, distribution, risk, credit, finance, technology, research, development, strategic or other job-related responsibilities in the last twenty-four (24) months of employment with CIT.

11.

Non-Solicitation of Customers and Clients. During employment with CIT and for one (1) year thereafter, Employee shall not, directly or through the direction, control or actions of others: (i) solicit for any Competing Business any Client of CIT or any specifically identified prospective Client of CIT; (ii) utilize any of CIT’s Confidential Information to solicit, take away or divert business from, and/or influence or attempt to influence, any Client of CIT or any specifically identified prospective Client of CIT; or (iii) cause or attempt to cause a Client of CIT or any specifically identified prospective Client of CIT to terminate or diminish its business with CIT. These restrictions shall apply only to Clients of CIT or specifically identified prospective Clients of CIT whom, in Employee’s last twenty-four (24) months of employment with CIT, Employee (i) solicited or interacted with on behalf of CIT, (ii) maintained a business relationship for CIT, or (iii) obtained Confidential Information about on behalf of CIT.

12.

Non-Inducement of Employees. During employment with CIT and for one (1) year thereafter, Employee shall not, directly or through the direction, control or actions of others: (i) solicit, recruit, induce or otherwise encourage CIT employees to end their employment with CIT or become employed with or otherwise engaged by any person or entity other than CIT; (ii) take any action to assist any subsequent employer or any other person or entity in soliciting or inducing any CIT employee to end their employment with CIT or become employed with or otherwise engaged by any person or entity other than CIT; or (iii) hire or retain (as an employee, independent consultant/contractor or other contingent worker) any person who was employed with CIT within the preceding six (6) months.

13.

Minimum Restriction Necessary; Severability. The parties hereto intend to restrict the activities of Employee only to the extent necessary for the protection of the Company’s legitimate business interests. In the event that any provision of this Agreement (including the provisions of Schedule 1 attached hereto) is held to be unenforceable for being unduly broad as written, such provision shall be deemed amended to narrow its application to the extent necessary to make the provision valid and enforceable according to applicable law and shall be enforced as amended. Any such modification shall not affect the other provisions or clauses of this Agreement in any respect. The invalidity or unenforceability of any provision or clause of this Agreement shall not affect the continued validity or enforceability of any other provisions or clauses hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision or clause were omitted.

14.

Extended Duration for Violations and During Lawsuit. Employee agrees that the duration of the non-competition, non-solicitation and non-inducement obligations set forth in Sections 10-12 of this Agreement (the "Restrictions") shall be extended by, and their expirations tolled during, the period of time in which Employee is in breach of those Restrictions. Employee further agrees that the duration of the Restrictions in this Agreement shall be extended and their expirations


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	6

tolled upon the filing of any lawsuit challenging the validity or enforceability of the Agreement until the lawsuit is finally resolved and all rights of appeal have expired. Asserting any claims against CIT will not relieve Employee of the Restrictions or constitute a defense to enforcement of this Agreement, unless otherwise provided by law. The purpose of this section is to ensure that CIT receives the full one (1) year of protection from unfair competition upon which CIT has relied in entering into this Agreement and that Employee does not benefit from any breach or challenge.

15.

Notification to New Employer. Employee acknowledges and consents that if Employee leaves CIT’s employment and is employed by a new employer, CIT may notify any such new employer of Employee’s obligations under this Agreement, and that such notification will not be deemed a tortious interference with Employee’s new employment.

16.

Company’s Remedies. The parties agree that the services to be rendered by Employee are special and unique in nature, as well as international in scope and responsibility. Employee hereby acknowledges and agrees that: (i) any breach or violation of this Agreement would result in irreparable injury to the Company; and (ii) the enforcement of a remedy by way of injunction would not prevent Employee from earning a living. Employee further acknowledges and agrees that Employee’s breach of any of the Restrictions will not be adequately compensated by monetary damages alone and that, in the event of a breach, CIT shall be entitled to: (i) preliminary and permanent injunctive relief in addition to any other legal or equitable remedies available to CIT; (ii) an equitable accounting of all profits or benefits arising out of such violation or breach; and (iii) direct, incidental, and consequential damages to CIT arising from the violation or breach. These rights and remedies shall be cumulative and in addition to any and all other rights and remedies to which CIT may be entitled. If Employee is found to have breached this Agreement or CIT is successful in obtaining a court order prohibiting Employee from violating this Agreement, CIT will be entitled to collect from Employee its damages and reasonable attorneys’ fees incurred by CIT in seeking to enforce this Agreement.

17.	Scope of Restrictions. Employee acknowledges and agrees that the Restrictions and other obligations placed on Employee in this Agreement are reasonable and necessary to protect and preserve CIT's legitimate business interests.

18.

Choice of Law. This Agreement shall be governed and construed in accordance with the laws of the State of New York, without reference to principles of conflict of laws. For purposes of any action, lawsuit or other proceedings brought to enforce this Agreement or relating to or arising from this Agreement, Employee hereby submits to and consents to the exclusive jurisdiction of the courts in the State of New York, including the U.S. federal courts located therein.

19.

General Terms; Entire Agreement. This Agreement shall not supersede, replace or diminish Employee’s common law obligations to CIT as Employee’s current or former employer. Employee agrees and acknowledges that (1) this Agreement does not supersede, replace, invalidate or otherwise limit or affect any restrictions in any prior or other document or agreement between Employee and CIT regarding confidentiality, confidential and/or proprietary information, return of property, non-competition, non-solicitation or piracy of customers or Clients of CIT or prospective customers or Clients of CIT, and/or non-solicitation/non-inducement or hiring of employees of CIT, inventions, developments or works made for hire or other similar provisions (collectively, the “Existing Restrictions”), and (2) any such Existing Restrictions shall remain in full force and effect and Employee shall remain bound by such Existing Restrictions. To the extent the restrictions contained in this Agreement conflict in any way with any Existing Restrictions, such conflict shall be resolved by giving effect to the provision that provides the greatest protection to CIT that is enforceable under applicable law. Employee's obligations under this Agreement shall survive separation of Employee's employment with CIT for any reason and, shall likewise survive any changes in the terms and conditions of


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	7

Employee’s employment. This Agreement will inure to the benefit of CIT, its successors and assigns without Employee’s further approval or consent. However, Employee may not assign this Agreement or delegate any responsibilities thereunder. No waiver of any rights under this Agreement shall be effective unless expressed in writing by the party to be charged. The waiver by CIT of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. Except as expressly permitted herein, this Agreement may be amended or modified only by a written agreement executed by the Employee and a duly authorized representative of CIT or CIT’s successor. Except as set forth above in this Section 19, this Agreement supersedes all prior agreements, promises, and representations, whether oral or written, express or implied, only to the extent they contradict or conflict with the provisions hereof and provided this Agreement is deemed enforceable. This Agreement shall be construed in accordance with the intent of the parties, as expressed herein and not strictly for or against either party.

EMPLOYEE UNDERSTANDS THAT THIS AGREEMENT AFFECTS IMPORTANT RIGHTS. EMPLOYEE HAS READ THIS AGREEMENT CAREFULLY, HAS BEEN GIVEN A REASONABLE PERIOD OF TIME TO CONSIDER IT, HAS HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL TO THE EXTENT EMPLOYEE WISHES TO DO SO, AND IS SATISFIED THAT EMPLOYEE UNDERSTANDS IT COMPLETELY.

CIT Bank, N.A.

EMPLOYEE:


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	8

Schedule 1

to Exhibit C

Invention Notice Schedule

If Employee lives in one of the states listed below, the notice for such state will apply to Section 6 of the CIT Non-Competition, Non-Solicitation and Confidentiality Agreement, and Employee acknowledges that Employee has read and received such notice:

California

The following notice applies to employees who live in the State of California:

In accordance with California law, this Agreement does not apply to inventions that I developed entirely on my own time without using the Company's equipment, supplies, facilities or trade secret information, except for those inventions that either: (a) relate, at the time of conception or reduction to practice of the invention, to the Company's business, or actual or demonstrably anticipated research or development of the Company; or (b) result from any work performed by me for the Company.

Illinois

The following notice applies to employees who live in the State of Illinois:

In accordance with Illinois law, this Agreement does not apply to, and I have no obligation to assign to the Company, an invention for which no equipment, supplies, facility, or trade secret information of the Company was used and which was developed entirely on my own time, unless (a) the invention relates (i) to the business of the Company, or (ii) to the Company's actual or demonstrably anticipated research and development, or (b) the invention results from any work performed by me for the Company.

Kansas

The following notice applies to employees who live in the State of Kansas:

In accordance with Kansas law, this Agreement does not apply to an invention for which no equipment, supplies, facility or trade secret information of the Company was used and which was developed entirely on my own time, unless: (a) the invention relates directly to the business of the Company or to the Company's actual or demonstrably anticipated research or development; or (b) the invention results from any work performed by me for the Company.

Minnesota

The following notice applies to employees who live in the State of Minnesota:

In accordance with Minnesota law, this Agreement does not apply to an invention for which no equipment, supplies, facility or trade secret information of the Company was used and which was developed entirely on my own time, and (a) which does not relate (i) directly to the business of the Company or (ii) to the Company's actual or demonstrably anticipated research or development, or (b) which does not result from any work performed by me for the Company.


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	9

North Carolina

The following notice applies to employees who live in the State of North Carolina:

In accordance with North Carolina law, this Agreement does not apply to an invention that I developed entirely on my own time without using the Company's equipment, supplies, facility or trade secret information except for those inventions that (a) relate to the Company's business or actual or demonstrably anticipated research or development, or (b) result from any work performed by me for the Company.

Utah

The following notice applies to employees who live in the State of Utah:

I acknowledge and agree that this Agreement is not an employment agreement under Utah law or otherwise. However, if and only to the extent this Agreement is deemed to be covered by the restrictions set forth in Utah Code Ann. § 34-39-3, this Agreement will not apply to an invention that is created by me entirely on my own time and is not an employment invention as defined in Utah Code Ann. § 34-39-2(1), except as permitted under Utah Code Ann. § 34-39-3.

Washington

The following notice applies to employees who live in the State of Washington:

In accordance with Washington law, this Agreement does not apply to, and I have no obligation to assign or offer to assign to the Company, any of my rights in an invention for which no equipment, supplies, facilities or trade secret information of the Company was used and which was developed entirely on my own time, unless (a) the invention relates (i) directly to the business of the Company or (ii) to the Company's actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by me for the Company.


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	10

EXHIBIT D

NOTICE PERIOD AGREEMENT

This Notice Period Agreement (“Agreement”) is entered into between

(“Employee”) and CIT Bank, N.A., including its parent entities, subsidiaries and affiliates within the CIT Group Inc. family of companies (and its or their successors and assigns) (collectively, “CIT” or the "Company”).

At-Will Employment. Employment with CIT is at-will, which means that either CIT or Employee may terminate the employment relationship at any time, for any or no reason, with or without cause or prior notice (except as otherwise required by this Agreement). Nothing in this Agreement alters Employee's status as an at-will employee or creates a contract of employment for any specific period of time or with respect to any other term or condition of employment.

Consideration. In consideration of: (i) compensation and employment benefits and opportunities offered by CIT to Employee (including any annual discretionary short-term or long-term incentives); (ii) Employee's employment or continued employment with CIT on an at-will basis (including any promotions); (iii) Employee’s access to CIT confidential and/or proprietary information, and existing or prospective client, vendor and/or other business relationships and associated goodwill; (iv) specialized training provided by CIT; (v) the mutual covenants and agreements contained herein; and/or (vi) other good and valuable consideration, Employee promises to abide by the obligations set forth in this Agreement.

3.	Nature of Employee’s Position. Employee has been offered or holds a senior or executive level position with CIT which CIT considers critical to its business operations.

Notice Period. In exchange for Employee’s compensation, benefits, employment and other consideration outlined in paragraph 2 of this Agreement and notwithstanding anything contained herein or under any plan, program, arrangement or policy of, or agreement with, the Company to the contrary including, but not limited to, the at-will nature of Employee’s employment, Employee hereby agrees to provide the Company with 90 days advance written notice of Employee’s intent to end Employee’s employment with the Company (the “Notice Period”). The Notice Period will commence on the date that Employee delivers written notice of intent to end Employee’s employment and end 90 days thereafter (on the “Resignation Date”), unless waived or terminated earlier by the Company as described in paragraph 6 of this Agreement. Employee will remain an employee of the Company throughout the Notice Period and will continue to receive Employee’s base salary and be eligible for the employee benefits in effect during the Notice Period. In the event of Employee’s voluntary resignation, Employee will not be eligible for any annual discretionary short-term or long-term incentives not yet awarded for any period, whether before, on or after the Resignation Date. Any annual discretionary short-term or long-term incentives awarded prior to the Resignation Date will continue to be governed by the terms of the applicable award agreements, plans and policies.

Continuing Obligations. During the Notice Period, Employee will be expected to continue to undertake such duties and responsibilities as are assigned to Employee by the Company, including duties to assist the Company with the transition of Employee’s responsibilities and maintaining the Company’s business, business relationships, and goodwill. Employee also will continue to be bound by and must comply with Employee’s: duty of loyalty to CIT; applicable obligations with respect to confidentiality, confidential and/or proprietary information, inventions, developments, works made for hire, non-solicitation/non-inducement, non-competition or other similar provisions (including, without limitation, those obligations set forth in other agreements with the Company, which shall remain in effect); and all other fiduciary duties and obligations owed to the Company. Employee also will be


NOTICE PERIOD	1

required to comply with CIT’s Code of Business Conduct, Employee Handbook and all other applicable Company policies, as amended from time to time.

CIT Right to Terminate. The Company expressly reserves the right, in its sole and absolute discretion, to waive or terminate all or part of the Notice Period, change or suspend any of Employee’s duties and powers and relocate Employee’s office for all or part of the Notice Period including, without limitation, directing or requiring that Employee remain away from the Company’s premises during all or part of the Notice Period, and/or take such other action(s) as determined by the Company to aid and assist in the transition process associated with Employee’s departure. Employee is required to abide by the Company’s direction during the Notice Period, which direction shall be final, conclusive and binding on Employee. In the event that the Notice Period is waived or terminated, in whole or in part, by the Company, Employee’s compensation and benefits will end on the last day of Employee’s employment.

Return of CIT Property. On or before the Resignation Date, on a date to be set by the Company, Employee shall return to the Company all CIT property then in Employee’s possession and all property made available to Employee in connection with Employee’s service to the Company including, without limitation, any and all cellular telephones, PDAs, Blackberries, iPads, tablets, computers, keys, card keys, security passes, Company identification cards, Company credit or phone cards, office supplies, computer access codes and programs, templates developed by the Company, and any and all tangible matter containing confidential and/or proprietary information.

Irreparable Harm. Given the strategic nature and importance of Employee’s position with CIT, Employee hereby acknowledges that the Company, and its client relationships, business operations and business opportunities, would likely suffer irreparable harm if Employee was to resign or otherwise end Employee’s employment without providing sufficient notice to the Company and an opportunity for an orderly transition of Employee’s responsibilities and business relationships. Employee also acknowledges and agrees that, because Employee’s services are personal and unique, and because Employee will have access to and will be acquainted with the Company’s confidential and/or proprietary information, to the fullest extent permitted by applicable law, the Notice Period will be enforceable by equitable relief, without bond and without prejudice to any other rights or remedies that the Company may have for breach of the Notice Period.

9.	Scope of Restrictions. Employee acknowledges and agrees that the obligations placed on Employee in this Agreement are reasonable and necessary to protect and preserve CIT's legitimate business interests.

10.

Choice of Law. This Agreement shall be governed and construed in accordance with the laws of the state of New York, without regard to conflicts of law principles. For purposes of any action, lawsuit or other proceedings brought to enforce this Agreement or relating to or arising from this Agreement, Employee hereby submits to and consents to the jurisdiction of the courts in the State of New York, including the U.S. federal courts located therein.

11.

General Terms. This Agreement shall not supersede, replace or diminish Employee’s statutory or common law obligations to CIT as Employee’s current or former employer or Employee’s other applicable obligations with respect to confidentiality, confidential and/or proprietary information, return of property, inventions, developments, works made for hire, non-solicitation/non-inducement, non-competition or other similar provisions (including, without limitation, those obligations set forth in other agreements with the Company which shall remain in effect), or any other agreements, provisions, promises or obligations regarding notice of resignation or termination that do not contradict or conflict with the provisions of this Agreement. To the extent any provision contained in this Agreement conflicts in any way with any other applicable provisions, such conflict shall be resolved by giving effect to the


NOTICE PERIOD	2

provision that provides the greatest protection to CIT that is enforceable under applicable law. This Agreement will inure to the benefit of CIT, its successors and assigns without Employee’s further approval or consent. However, Employee may not assign this Agreement or delegate any responsibilities thereunder. In the event that any provision of this Agreement is held to be unenforceable for being unduly broad as written, such provision shall be deemed amended to narrow its application to the extent necessary to make the provision valid and enforceable according to applicable law and shall be enforced as amended. Any such modification shall not affect the other provisions or clauses of this Agreement in any respect. The invalidity or unenforceability of any provision or clause of this Agreement shall not affect the continued validity or enforceability of any other provisions or clauses hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision or clause were omitted. No waiver of any rights under this Agreement shall be effective unless expressed in writing by the party to be charged. The waiver by CIT of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. Except as expressly permitted herein, this Agreement may be amended or modified only by a written agreement executed by Employee and the Company’s Chief Human Resources Officer or General Counsel and/or their designees or CIT’s successor. Except as set forth above in this paragraph 11, this Agreement supersedes all prior agreements, provisions, promises, obligations, understandings and representations, whether oral or written, express or implied, only to the extent they contradict or conflict with the provisions of this Agreement and provided that this Agreement is deemed enforceable. This Agreement shall be construed in accordance with the intent of the parties, as expressed herein, and not strictly for or against either party.

CIT Bank, N.A.

EMPLOYEE:


NOTICE PERIOD	3

Exhibit 10.18

The CIT Group Inc. 2016 Omnibus Incentive Plan

Performance-Based Restricted Stock Unit Award Agreement

2020 Long-Term Incentive PBRSU Award


“Participant”:
“Date of Award”:
“Number of RSUs Granted”:

Effective as of the Date of Award, this Award Agreement sets forth the grant of Restricted Stock Units (“RSUs”) by CIT Group Inc., a Delaware corporation (the “Company”), to the Participant, pursuant to the provisions of the CIT Group Inc. 2016 Omnibus Incentive Plan (the “Plan”). This Award Agreement memorializes the terms and conditions as approved by the Compensation Committee of the Board (the “Committee”). All capitalized terms shall have the meanings ascribed to them in the Plan, unless specifically set forth otherwise herein.

The parties hereto agree as follows:

(A)

Grant of RSUs. The Company hereby grants to the Participant the Number of RSUs Granted, effective as of the Date of Award and subject to the terms and conditions of the Plan and this Award Agreement. Each RSU represents the unsecured right to receive one Share in the future following the vesting of the RSU in accordance with this Award Agreement. The Participant shall not be required to pay any additional consideration for the issuance of the Shares upon settlement of the RSUs.

The grant of RSUs to the Participant will not be effective and the Participant will not be entitled to the issuance of any Shares upon the settlement of the RSUs if the Participant does not accept this Award. It is a non-waivable condition precedent to the acceptance of this Award that the Participant agree to be legally bound to and comply with the terms and conditions of the Non-Competition, Non-Solicitation and Confidentiality Agreement attached hereto as Exhibit B (the “Restrictive Covenant Agreement”) and the Notice Period Agreement attached hereto as Exhibit C (the “Notice Period Agreement”). The Participant agrees and acknowledges that the attached Restrictive Covenant Agreement may impact the Participant’s future employment and that the Company would not have entered into this Award Agreement and granted RSUs to the Participant if the Participant did not agree to be legally bound by and to comply with the Restrictive Covenant Agreement. The Participant further agrees and acknowledges that the Company would not have entered into this Award Agreement and granted RSUs to the Participant if the Participant did not agree to be legally bound by and to comply with the Notice Period Agreement..

(B)	Vesting and Settlement of RSUs.

(1)

Subject to (A) the Participant’s continued employment with the Company and/or any Subsidiary or affiliate (the “Company Group”) from the Date of Award until the applicable Vesting Date (as defined below), (B) Section (B)(2) and (C) compliance with, and subject to, the terms and conditions of this Award Agreement, one-third (33 1/3%) of the RSUs shall vest on March 1, 2021, March 1, 2022, and March 1, 2023 (each a “Vesting Date”).

(2)

As promptly as practicable following the end of each fiscal year in the 2020 through 2022 “Performance Period” (each such fiscal year, a “Measurement Year”), the Committee shall determine whether the Company’s Capital Ratio (as defined below) met or exceeded the applicable minimum for well-capitalized banks as established by the Federal Reserve for the Measurement Year most recently completed (the “Performance Requirement”). If the Performance Requirement was not met for that Measurement Year, the Committee may cancel all or a portion of the RSUs that otherwise would have vested on the immediately following Vesting Date, after taking into account such factors as (i) the magnitude of the Capital Ratio below the minimum, (ii) the Participant’s degree of involvement (including the degree to which the Participant was involved in decisions that are determined to have contributed to a Capital Ratio below the minimum), (iii) the Participant’s performance and (iv) such other factors as deemed appropriate. Any such determination will be in the sole discretion of the Committee and will be final and binding. “Capital Ratio” means, with respect to each fiscal year, the Company’s Common Equity Tier 1 capital ratio, as shown on the Company’s consolidated financial statements for such fiscal year, but calculated excluding any special, unusual or non-recurring items as determined by the Committee in its sole discretion.

(3)

Each vested RSU shall be settled through the delivery of one Share within thirty (30) days following the applicable Vesting Date (a “Settlement Date”), provided that any fractional Share shall vest and be settled on the last Vesting Date and Settlement Date, respectively, and provided further that the Settlement Date may be delayed, in the sole discretion of the Committee and in accordance with applicable law (including Section 409A (as defined below)), if the Committee is considering whether Sections (B)(2) and/or (L) apply to the Participant.


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(4)

The Shares delivered to the Participant on the applicable Settlement Date (or such date determined in accordance with Section (C) or (D)) shall not be subject to transfer restrictions and shall be fully paid, non-assessable and registered in the Participant’s name.

(5)

If, after the Date of Award and prior to the applicable Vesting Date, dividends with respect to Shares are declared or paid by the Company, the Participant shall be credited with, and entitled to receive, dividend equivalents in an amount, without interest, equal to the cumulative dividends declared or paid on a Share, if any, during such period multiplied by the number of unvested RSUs. Unless otherwise determined by the Committee, dividend equivalents paid in cash shall not be reinvested in Shares and shall remain uninvested. The dividend equivalents credited in respect of vested RSUs shall be paid in cash or Shares, as applicable, on the Settlement Date.

(6)

Except for Participants who are tax residents of Canada, in the sole discretion of the Committee and notwithstanding any other provision of this Award Agreement to the contrary, in lieu of the delivery of Shares, the RSUs and any dividend equivalents payable in Shares may be settled through a payment in cash equal to the Fair Market Value of the applicable number of Shares, determined on the applicable Vesting Date or, in the case of settlement in accordance with Section (C)(1) or (D), the date of the Participant’s “Separation from Service” (within the meaning of the Committee’s established methodology for determining “Separation from Service” for purposes of Section 409A) or the date of Disability, as applicable. Settlement under this Section (B)(6) shall be made at the time specified under Sections (B)(3), (B)(5), (C)(1), (C)(2) or (D), as applicable.

(C)	Separation from Service.

(1)

If, after the Date of Award and prior to an applicable Settlement Date, the Participant incurs a Disability (as defined below) or a Separation from Service from the Company Group due to death, each RSU, to the extent unvested, shall vest immediately and shall settle through the delivery of one Share within thirty (30) days following the Participant’s Disability or Separation from Service due to death. The Participant (or the Participant’s beneficiary or legal representative, if applicable) shall also be entitled to receive all credited and unpaid dividend equivalents at the time the RSUs are settled in accordance with this Section (C)(1). “Disability” shall have the same meaning as defined in the Company’s applicable long-term disability plan or policy last in effect prior to the first date the Participant suffers from such Disability; provided, however, for a Participant that is a US taxpayer at any time during the period the RSUs vest and become settled hereunder and to the extent a “Disability” event does not also constitute a “Disability” as defined in Section 409A, such Disability event shall not constitute a Disability for purposes of this Section (C)(1).

(2)

If, after the Date of Award and prior to an applicable Settlement Date, the Participant incurs a Separation from Service initiated (i) by the Participant and at the time of such Separation from Service the Participant meets the conditions of Retirement (as defined below) and no grounds exist such that the Company could terminate the Participant for Cause, or (ii) by the Company without Cause (as defined below and including, for the avoidance of doubt, in connection with a sale of a business unit), and subject to the terms and conditions of the Plan and this Award Agreement, including Section (L) below, the RSUs (and any credited and unpaid dividend equivalents), to the extent unvested as of such Separation from Service, shall continue to vest and be settled on the applicable Vesting Date and Settlement Date in accordance with Sections (B)(1), (B)(2) and (B)(3) above, unless such continued vesting and settlement of RSUs (and dividend equivalents) following the Participant’s Separation from Service is prohibited or limited by applicable law and/or regulation. “Retirement” is defined as the Participant’s Separation from Service upon or after (A) attaining age 55 with at least 11 years of service with the Company Group, or (B) attaining age 60 with at least 6 years of service with the Company Group, in each case as determined in accordance with the Company Group’s policies and procedures. “Cause” means any of the following: (i) the commission of a misdemeanor involving moral turpitude or a felony; (ii) the Participant’s act or omission that causes or may reasonably be expected to cause material injury to the Company Group, its vendors, customers, business partners or affiliates or that results or is intended to result in personal gain at the expense of the Company Group, its vendors, customers, business partners or affiliates; (iii) the Participant’s substantial and continuing neglect of his or her job responsibilities for the Company Group (including excessive unauthorized absenteeism); (iv) the Participant’s failure to comply with, or violation of, the Company Group’s Code of Business Conduct; (v) the Participant’s act or omission, whether or not performed in the workplace, that precludes the Participant’s employment with any member of the Company Group by virtue of Section 19 of the Federal Deposit Insurance Act; and (vi) the Participant’s violation of any federal or state securities or banking laws, any rules or regulations issued pursuant to such laws, or the rules and regulations of any securities or exchange or association of which the Participant or member of the Company Group is a member. Notwithstanding the foregoing and without limiting the Participant’s obligations under the Restrictive Covenant Agreement attached as Exhibit B hereto and any remedies thereunder, any Separation from Service as contemplated in clause (i) above shall be deemed to not meet the conditions of Retirement for purposes of this Section (C)(2) if, at any time during the period from the date of such Separation from Service through the last Vesting Date, the Participant, without the Company Group’s prior written consent, engages directly or indirectly in any Financial Services Business (as defined below), whether as an employee, employer, director, officer, owner, stockholder, partner, member, joint venture(r), independent contractor, consultant, or other contingent worker. The Committee (or its designee) may, in its sole discretion, require the Participant to submit on or prior to each Vesting Date an affidavit certifying that the Participant has not breached this post-retirement conduct restriction, and may condition vesting and settlement of


2020LTIRSU	2

all unvested RSUs on the timely receipt of such affidavit. In the event the Participant engages in a Financial Services Business as contemplated in this Section (C)(2), any unvested RSUs shall be cancelled immediately and the Participant shall immediately forfeit any rights to, and shall not be entitled to receive any payments with respect to, the RSUs including, without limitation, dividend equivalents pursuant to Section (B)(5) if the Participant’s Separation from Service was originally intended to constitute a Separation from Service as contemplated in clause (i) above. "Financial Services Business" is defined as the businesses of commercial and/or consumer banking, lending, financing, guaranteeing and/or other financial services including, but not limited to, deposit, credit, trust and investment services; corporate and specialty financing and banking; asset-based lending; equipment financing; franchise financing; healthcare financing; transportation financing and leasing and other forms of leasing; mortgage financing and services; real estate financing and investments; factoring and other commercial services; treasury management; asset management (including hedge funds); private equity; financial technology business and services; insurance business and services; brokerage and investment banking business and services; syndications; specialized business solutions; or any other businesses or services that the Company Group engages in or plans to be engaged in. The determination of whether a Participant is engaged in a Financial Services Business shall be made in the sole and exclusive discretion of the Chief Human Resources Officer or his/her designee, which determination shall be final, conclusive and binding on the Participant.

(3)

If, prior to an applicable Vesting Date, the Participant’s employment with the Company Group terminates for any reason other than as set forth in Section (C)(1), (C)(2) or (D), the unvested RSUs shall be cancelled immediately and the Participant shall immediately forfeit any rights to, and shall not be entitled to receive any payments with respect to, the RSUs including, without limitation, dividend equivalents pursuant to Section (B)(5).

(D)	Change of Control.

(1)

Notwithstanding any provision contained in the Plan or this Award Agreement to the contrary, if a Change of Control occurs before the last day of the Performance Period, the Performance Requirement in Section (B)(2) will not apply to the RSUs that will vest in accordance with this Award Agreement for any uncompleted fiscal years in the Performance Period.

(2)

Notwithstanding any provision contained in the Plan or this Award Agreement to the contrary, if, prior to an applicable Settlement Date, a Change of Control occurs and within two years of such Change of Control the Participant incurs a Separation from Service (i) due to the Participant’s Retirement, (ii) initiated by the Company without Cause or (iii) initiated by the Participant for “Good Reason” (as defined below), the RSUs (and any credited and unpaid dividend equivalents), to the extent unvested, shall vest upon such Separation from Service and be settled within thirty (30) days following such Separation from Service, unless such accelerated vesting and settlement of RSUs (and dividend equivalents) following the Participant’s Separation from Service is prohibited or limited by applicable law and/or regulation. “Good Reason” shall mean, without the Participant’s consent, a material diminution of the Participant’s (x) base salary (except in the event of a compensation reduction applicable to the Participant and other employees of comparable rank and/or status), (y) the Participant is reassigned to a work location that is more than fifty miles from his or her immediately preceding work location and which increases the distance the Participant has to commute to work by more than fifty miles, or (z) duties and responsibilities (except a temporary reduction while the Participant is physically or mentally incapacitated or a modification in the duties and/or responsibilities of the Participant and other employees of comparable rank and/or status following a Change of Control), provided, that a Separation from Service for Good Reason shall not occur unless (A) the Participant has provided the Company written notice specifying in detail the alleged condition of Good Reason within thirty (30) days of the occurrence of such condition; (B) the Company has failed to cure such alleged condition within ninety (90) days following the Company’s receipt of such written notice; and (C) if the Committee (or its designee) has determined that the Company has failed to cure such alleged condition, the Participant initiates a Separation from Service within five (5) days following the end of such 90-day cure period.

(E)	Transferability. The RSUs are not transferable other than by last will and testament, by the laws of descent and distribution pursuant to a domestic relations order, or as otherwise permitted under Section 4.6 of the Plan.

(F)

(G)	No Entitlements.

(1)

Neither the Plan nor the Award Agreement confer on the Participant any right or entitlement to receive compensation, including, without limitation, any base salary or incentive compensation, in any specific amount for any future fiscal year (including, without limitation, any grants of future Awards under the Plan), nor impact in any way the Company Group’s determination of the amount, if any, of the Participant’s base salary or incentive compensation. This Award of RSUs


2020LTIRSU	3

made under this Award Agreement is completely independent of any other Awards or grants and is made at the sole discretion of the Company. The RSUs do not constitute salary, wages, regular compensation, recurrent compensation, pensionable compensation or contractual compensation for the year of grant or any prior or later years and shall not be included in, nor have any effect on or be deemed earned in any respect, in connection with the determination of employment-related rights or benefits under law or any employee benefit plan or similar arrangement provided by the Company Group (including, without limitation, severance, termination of employment and pension benefits), unless otherwise specifically provided for under the terms of such plan or arrangement or by the Company Group. The benefits provided pursuant to the RSUs are in no way secured, guaranteed or warranted by the Company Group.

(2)

The RSUs are awarded to the Participant by virtue of the Participant’s employment with, and services performed for, the Company Group. The Plan or the Award Agreement does not constitute an employment agreement. Nothing in the Plan or the Award Agreement shall modify the terms of the Participant’s employment, including, without limitation, the Participant’s status as an “at will” employee of the Company Group, if applicable.

(3)

Subject to any applicable employment agreement, the Company reserves the right to change the terms and conditions of the Participant’s employment, including the division, subsidiary or department in which the Participant is employed. None of the Plan or the Award Agreement, the grant of RSUs, nor any action taken or omitted to be taken under the Plan or the Award Agreement shall be deemed to create or confer on the Participant any right to be retained in the employ of the Company Group, or to interfere with or to limit in any way the right of the Company Group to terminate the Participant’s employment at any time. Moreover, the Separation from Service provisions set forth in Section (C) or (D), as applicable, only apply to the treatment of the RSUs in the specified circumstances and shall not otherwise affect the Participant’s employment relationship. By accepting this Award Agreement, the Participant waives any and all rights to compensation or damages in consequence of the termination of the Participant’s office or employment for any reason whatsoever to the extent such rights arise or may arise from the Participant’s ceasing to have rights under, or be entitled to receive payment in respect of, any unvested RSUs that are cancelled or forfeited as a result of such termination, or from the loss or diminution in value of such rights or entitlements, including by reason of the operation of the terms of the Plan, this Award Agreement or the provisions of any statute or law to taxation. This waiver applies whether or not such termination amounts to a wrongful discharge or unfair dismissal.

(H)

No Rights as a Stockholder. The Participant will have no rights as a stockholder with respect to Shares covered by this Award Agreement (including voting rights) until the date the Participant or his nominee becomes the holder of record of such Shares on an applicable Settlement Date or as provided in Section (C) or (D), if applicable.

(I)

Securities Representation. The grant of the RSUs and issuance of Shares upon vesting of the RSUs shall be subject to, and in compliance with, all applicable requirements of federal, state or foreign securities law. No Shares may be issued hereunder if the issuance of such Shares would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Shares may then be listed. As a condition to the settlement of the RSUs, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation.

(1)

He or she has been advised that he or she may be an “affiliate” within the meaning of Rule 144 under the Securities Act of 1933, as amended (the “Act”), and in this connection the Company is relying in part on his or her representations set forth in this section (I)(1); and

(2)

(3)

(J)	Notices. Any notice or communication given hereunder shall be in writing and shall be deemed to have been duly given when delivered in person or mailed by certified mail, postage and fees prepaid, or internationally recognized express mail service, as follows:

If to the Company, to:


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CIT Group Inc.
1 CIT Drive
Livingston, New Jersey 07039
Attention: Senior Vice President, Compensation and Benefits

If to the Participant, to the address on file with the Company Group.

(K)

Transfer of Personal Data. In order to facilitate the administration of this Award, it will be necessary for the Company Group to collect, hold, and process certain personal information about the Participant. As a condition of accepting this Award, the Participant authorizes, agrees and unambiguously consents to the Company Group collecting, using, disclosing, holding and processing personal data and transferring such data to third parties (collectively, the “Data Recipients”) for the primary purpose of the Participant’s participation in, and the general administration of, the Plan and to the transmission by the Company Group of any personal data information related to the RSUs awarded under this Award Agreement, as required in connection with the Participant’s participation in the Plan (including, without limitation, the administration of the Plan) out of the Participant’s home country and including to countries with less data protection than the data protection provided by the Participant’s home country. This authorization and consent is freely given by the Participant. The Participant acknowledges that he/she has been informed that upon request, the Company will provide the name or title and contact information for an officer or employee of the Company Group who is able to answer questions about the collection, use and disclosure of personal data information.

(1)

(2)

(L)	Cancellation; Recoupment; Related Matters.

(1)

The RSUs granted under this Agreement, and any Shares issued or any credited and unpaid dividend equivalents with respect to such Shares or other payments made in respect thereof, shall be subject to the CIT Group Inc. Incentive Compensation Recoupment Policy (“Recoupment Policy”) as the Company Group may amend from time to time, whether or not such Recoupment Policy is otherwise applicable to the Participant. By accepting the grant of RSUs under this Agreement, including the provisions of Exhibit A, Exhibit B, and Exhibit C, the Participant agrees and consents to the Company Group’s application, implementation and enforcement of (a) the provisions of Exhibits A, B, and C, (b) the Recoupment Policy and (c) any provision of applicable law relating to cancellation, recoupment, rescission or payback of compensation and expressly agrees that the Company Group may take such actions as are necessary to effectuate the Recoupment Policy or applicable law without further consent or action being required by the Participant. To the extent that the terms of this Agreement and the Recoupment Policy conflict, the terms of the Recoupment Policy shall prevail.

(2)

(3)

(M)	Miscellaneous.

(1)

(2)


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(3)

This Award Agreement is intended to comply with, or be exempt from, Section 409A of the Code and the regulations and guidance promulgated thereunder (“Section 409A”), and accordingly, to the maximum extent permitted, this Award Agreement shall be interpreted in a manner intended to be in compliance therewith. In no event whatsoever shall the Company Group be liable for any additional tax, interest or penalty that may be imposed on the Participant by Section 409A or any damages for failing to comply with Section 409A. If any provision of the Plan or the Award Agreement would, in the sole discretion of the Committee, result or likely result in the imposition on the Participant, a beneficiary or any other person of additional taxes or a penalty tax under Section 409A, the Committee may modify the terms of the Plan or the Award Agreement, without the consent of the Participant, beneficiary or such other person, in the manner that the Committee, in its sole discretion, may determine to be necessary or advisable to avoid the imposition of such penalty tax. Notwithstanding anything to the contrary in the Plan or the Award Agreement, to the extent that the Participant is a “Specified Employee” (within the meaning of the Committee’s established methodology for determining “Specified Employees” for purposes of Section 409A), payment or distribution of any amounts with respect to the RSUs that are subject to Section 409A will be made as soon as practicable following the first business day of the seventh month following the Participant’s Separation from Service from the Company Group or, if earlier, the date of the Participant’s death.

(4)

Delivery of the Shares underlying the RSUs or payment in cash (if permitted pursuant to Section (B)(6)) upon settlement is subject to the Participant satisfying all applicable federal, state, provincial, local, domestic and foreign taxes and other statutory obligations (including, without limitation, the Participant’s FICA obligation, National Insurance Contributions or Canada Pension Plan contributions, as applicable), provided, that any Participant that is subject to tax regulation in the United Kingdom or Ireland shall also be subject to the provisions of Exhibit A attached hereto, if applicable. The Company shall have the power and the right to (i) deduct or withhold from all amounts payable to the Participant pursuant to the RSUs or otherwise, or (ii) require the Participant to remit to the Company, an amount sufficient to satisfy any applicable taxes required by law. The Company may permit or require the Participant to satisfy, in whole or in part, the tax obligations by withholding Shares that would otherwise be received upon settlement of the RSUs.

(5)

(6)

This Award Agreement shall be subject to all applicable laws, rules, guidelines and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required, or the Committee determines are advisable, including but not limited to any applicable laws or the rules, codes or guidelines of any statutory or regulatory body in any jurisdiction relating to the remuneration of any Participant (in each case as may be in force from time to time). The Participant agrees to take all steps the Company determines are necessary to comply with all applicable provisions of federal, state and foreign securities law in exercising his or her rights under this Award Agreement.

(7)

Nothing in the Plan or this Agreement should be construed as providing the Participant with financial, tax, legal or other advice with respect to the RSUs. The Company recommends that the Participant consult with his or her financial, tax, legal and other advisors to provide advice in connection with the RSUs.

(8)

(9)

To the extent not preempted by federal law, this Award Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware.

(10)

This Award Agreement may be executed in one or more counterparts, all of which taken together shall constitute one contract.

(11)

(12)


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comply with local law or facilitate the administration of the Award Agreement. The Participant agrees to sign any additional agreements or undertaking that may be necessary to accomplish the foregoing.

(13)

(14)

The Participant acknowledges that the Company is subject to certain regulatory restrictions that may, under certain circumstances, prohibit the accelerated vesting and distribution of any unvested RSUs as a result of, or following, a Participant’s Separation from Service.

(15)

(16)

(17)

(18)

In the event that any provision of this Award Agreement (including the provisions of Exhibits A, B and C attached hereto) is held to be unenforceable for being unduly broad as written, such provision shall be deemed amended to narrow its application to the extent necessary to make the provision valid and enforceable according to applicable law and shall be enforced as amended.

(N)

Acceptance of Award; Binding Non-Competition, Non-Solicitation and Confidentiality Agreement; Binding Notice Period Agreement. By accepting this Award of RSUs, the Participant is willingly and knowingly agreeing to, and intending to be bound by and to comply with, all of the terms contained in this Award Agreement, including (1) the terms and conditions of the Restrictive Covenant Agreement attached hereto as Exhibit B, and (2) the terms and conditions of the Notice Period Agreement attached hereto as Exhibit C.

The Participant agrees and acknowledges that the attached Restrictive Covenant Agreement may impact the Participant’s future employment and that the Company would not have entered into this Award Agreement and granted RSUs to the Participant if the Participant did not agree to be legally bound by and to comply in full with the Restrictive Covenant Agreement and the Notice Period Agreement. The Participant further agrees and acknowledges that (1) the attached Restrictive Covenant Agreement and Notice Period Agreement do not supersede, replace, invalidate or otherwise limit or affect any restrictions in any prior or other document or agreement between the Participant and any member of the Company Group regarding confidentiality, confidential and/or proprietary information, return of property, non-competition, non-solicitation or piracy of customers or clients or prospective customers or clients of any member of the Company Group, and/or non-solicitation/non-inducement or hiring of employees of any member of the Company Group, inventions, developments or works made for hire, notice period or other similar provisions (collectively, the “Existing Restrictions”), and (2) any such Existing Restrictions shall remain in full force and effect and the Participant shall remain bound by such Existing Restrictions. To the extent the restrictions contained in the Restrictive Covenant Agreement or Notice Period Agreement conflict in any way with any Existing Restrictions, such conflict shall be resolved by giving effect to the provision that provides the greatest protection to the Company Group that is enforceable under applicable law.

IN WITNESS WHEREOF, this Award Agreement (including any exhibits attached hereto) has been executed by the Company by one of its duly authorized officers as of the Date of Award.


2020LTIRSU	7

CIT Group Inc.

Accepted and Agreed:


2020LTIRSU	8

EXHIBIT A

Applicable Foreign Tax Provisions

All capitalized terms shall have the meanings ascribed to them in the Award Agreement, unless specifically set forth otherwise herein.

United Kingdom:

Ireland:

(1)make a payment to the Relevant Person of an amount equal to the Tax Liability; or


2020LTIRSU	9

EXHIBIT B

CIT NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY AGREEMENT

2.	Nature of CIT’s Business. CIT provides commercial and residential financing, lending, leasing, factoring, banking, and advisory services to a wide variety of industries and customers throughout the United States of America and elsewhere.

5.	Confidential Information.

(a)


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	1

(b)

(i)

(ii)

information regarding prospective, existing or former Clients or other Third Parties, including:

any other information relating to Third Parties.


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	2

(iii)

information regarding former, existing or potential loans, leases or other financial products or programs, including revenues, costs and profitability;

(iv)

(v)

(vi)

information regarding, or used in, employee training;

(vii)

information regarding past, present or potential mergers, acquisitions, divestitures and other transaction information and documents, whether or not the transaction was completed;

(viii)

information regarding CIT stock or assets;

(ix)

information marked “Internal Use Only,” “Confidential,” “Restricted” or other similar classification; and

(x)

information which may be available from public sources but which has been compiled through time and effort and is not available in such compiled form.

(c)

(d)

(e)


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	3

(f)

(g)

(h)

6.	Inventions and Other Developments. With regard to any and all inventions or developments that relate to the Company’s business, involve the use of CIT information or property, or that Employee develops or acquires within the scope of Employee’s employment by the Company (“Developments”):

(a)


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	4

provided in the state notices set forth in the Invention Notice Schedule attached as Schedule 1 to this Agreement, which, if applicable, Employee acknowledges having read and received. All copyrightable Developments shall be deemed "works made for hire" under the U.S. Copyright Act for CIT's benefit.

(b)

(c)

8.	Exit Interview. Employee shall, if requested, participate in an exit interview, identify future business or employment plans, describe the nature of those plans, and reaffirm in writing Employee’s obligations set forth in this Agreement.

10.


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	5

venturer, independent contractor, consultant, or other contingent worker. The geographic reach of this non-competition restriction shall be the United States of America and any other country in which CIT conducted business during Employee’s employment, and Employee acknowledges and agrees that Employee’s work was international in scope. For purposes of this Agreement:

(a)

(b)

11.

12.

13.

14.	Extended Duration for Violations and During Lawsuit. Employee agrees that the duration of the non-competition, non-solicitation and non-inducement obligations set forth in


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	6

Sections 10-12 of this Agreement (the "Restrictions") shall be extended by, and their expirations tolled during, the period of time in which Employee is in breach of those Restrictions. Employee further agrees that the duration of the Restrictions in this Agreement shall be extended and their expirations tolled upon the filing of any lawsuit challenging the validity or enforceability of the Agreement until the lawsuit is finally resolved and all rights of appeal have expired. Asserting any claims against CIT will not relieve Employee of the Restrictions or constitute a defense to enforcement of this Agreement, unless otherwise provided by law. The purpose of this section is to ensure that CIT receives the full one (1) year of protection from unfair competition upon which CIT has relied in entering into this Agreement and that Employee does not benefit from any breach or challenge.

15.

16.

17.	Scope of Restrictions. Employee acknowledges and agrees that the Restrictions and other obligations placed on Employee in this Agreement are reasonable and necessary to protect and preserve CIT's legitimate business interests.

18.

19.


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	7

Agreement conflict in any way with any Existing Restrictions, such conflict shall be resolved by giving effect to the provision that provides the greatest protection to CIT that is enforceable under applicable law. Employee's obligations under this Agreement shall survive separation of Employee's employment with CIT for any reason and, shall likewise survive any changes in the terms and conditions of Employee’s employment. This Agreement will inure to the benefit of CIT, its successors and assigns without Employee’s further approval or consent. However, Employee may not assign this Agreement or delegate any responsibilities thereunder. No waiver of any rights under this Agreement shall be effective unless expressed in writing by the party to be charged. The waiver by CIT of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. Except as expressly permitted herein, this Agreement may be amended or modified only by a written agreement executed by the Employee and a duly authorized representative of CIT or CIT’s successor. Except as set forth above in this Section 19, this Agreement supersedes all prior agreements, promises, and representations, whether oral or written, express or implied, only to the extent they contradict or conflict with the provisions hereof and provided this Agreement is deemed enforceable. This Agreement shall be construed in accordance with the intent of the parties, as expressed herein and not strictly for or against either party.

CIT Bank, N.A.

EMPLOYEE:

Schedule 1

to Exhibit B

Invention Notice Schedule


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	8

California

The following notice applies to employees who live in the State of California:

Illinois

The following notice applies to employees who live in the State of Illinois:

Kansas

The following notice applies to employees who live in the State of Kansas:

Minnesota

The following notice applies to employees who live in the State of Minnesota:

North Carolina

The following notice applies to employees who live in the State of North Carolina:


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	9

Utah

The following notice applies to employees who live in the State of Utah:

Washington

The following notice applies to employees who live in the State of Washington:


NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY	10

EXHIBIT C

NOTICE PERIOD AGREEMENT

This Notice Period Agreement (“Agreement”) is entered into between (“Employee”) and CIT Bank, N.A., including its parent entities, subsidiaries and affiliates within the CIT Group Inc. family of companies (and its or their successors and assigns) (collectively, “CIT” or the "Company”).

Consideration. In consideration of: (i) compensation and employment benefits and opportunities offered by CIT to Employee (including any annual discretionary short-term or long-term incentives); (ii) Employee's employment or continued employment with CIT on an at-will basis (including any promotions); (iii) Employee’s access to CIT confidential and/or proprietary information, and existing or prospective client, vendor and/or other business relationships and associated goodwill; (iv) specialized training provided by CIT; (v) the mutual covenants and agreements contained herein; and/or (vi) other good and valuable consideration, Employee promises to abide by the obligations set forth in this Agreement.

3.	Nature of Employee’s Position. Employee has been offered or holds a senior or executive level position with CIT which CIT considers critical to its business operations.


NOTICE PERIOD	1

effect); and all other fiduciary duties and obligations owed to the Company. Employee also will be required to comply with CIT’s Code of Business Conduct, Employee Handbook and all other applicable Company policies, as amended from time to time.

9.	Scope of Restrictions. Employee acknowledges and agrees that the obligations placed on Employee in this Agreement are reasonable and necessary to protect and preserve CIT's legitimate business interests.

10.

11.


NOTICE PERIOD	2

promises or obligations regarding notice of resignation or termination that do not contradict or conflict with the provisions of this Agreement. To the extent any provision contained in this Agreement conflicts in any way with any other applicable provisions, such conflict shall be resolved by giving effect to the provision that provides the greatest protection to CIT that is enforceable under applicable law. This Agreement will inure to the benefit of CIT, its successors and assigns without Employee’s further approval or consent. However, Employee may not assign this Agreement or delegate any responsibilities thereunder. In the event that any provision of this Agreement is held to be unenforceable for being unduly broad as written, such provision shall be deemed amended to narrow its application to the extent necessary to make the provision valid and enforceable according to applicable law and shall be enforced as amended. Any such modification shall not affect the other provisions or clauses of this Agreement in any respect. The invalidity or unenforceability of any provision or clause of this Agreement shall not affect the continued validity or enforceability of any other provisions or clauses hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision or clause were omitted. No waiver of any rights under this Agreement shall be effective unless expressed in writing by the party to be charged. The waiver by CIT of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. Except as expressly permitted herein, this Agreement may be amended or modified only by a written agreement executed by Employee and the Company’s Chief Human Resources Officer or General Counsel and/or their designees or CIT’s successor. Except as set forth above in this paragraph 11, this Agreement supersedes all prior agreements, provisions, promises, obligations, understandings and representations, whether oral or written, express or implied, only to the extent they contradict or conflict with the provisions of this Agreement and provided that this Agreement is deemed enforceable. This Agreement shall be construed in accordance with the intent of the parties, as expressed herein, and not strictly for or against either party.

CIT Bank, N.A.

EMPLOYEE:


NOTICE PERIOD	3

EXHIBIT 31.1

CERTIFICATIONS

I, Ellen R. Alemany, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of CIT Group Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 5, 2020

	/s/ Ellen R. Alemany
	Ellen R. Alemany

	Chairwoman and Chief Executive Officer CIT Group Inc.

EXHIBIT 31.2

CERTIFICATIONS

I, John Fawcett, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of CIT Group Inc.;

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 5, 2020



	/s/ John Fawcett
	John Fawcett

	Executive Vice President and Chief Financial Officer CIT Group Inc.

EXHIBIT 32.1

Certification Pursuant to Section 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of CIT Group Inc. (“CIT”) on Form 10-Q for the quarter ended March 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ellen R. Alemany, the Chief Executive Officer of CIT, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that;

(i) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of CIT.

Dated: May 5, 2020

	/s/ Ellen R. Alemany
	Ellen R. Alemany

	Chairwoman and Chief Executive Officer CIT Group Inc.

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

EXHIBIT 32.2

Certification Pursuant to Section 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of CIT Group Inc. (“CIT”) on Form 10-Q for the quarter ended March 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Fawcett, the Chief Financial Officer of CIT, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that;

(i) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of CIT.

Dated: May 5, 2020

	/s/ John Fawcett
	John Fawcett

	Executive Vice President and Chief Financial Officer CIT Group Inc.

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.