Summary of CIT GROUP INC - Yahoo! Finance

Entry into a Material Definitive Agreement, Unregistered Sale of Equity Securities,

Item 1.01 Entry Into a Material Definitive Agreement.

On December 23, 2008, as part of the Capital Purchase Program established by the U.S. Department of Treasury (the "Treasury") under the Emergency Economic Stabilization Act of 2008 (the "EESA"), CIT Group Inc. (the "Company" or the "Registrant") entered into a Letter Agreement (including the Securities Purchase Agreement - Standard Terms incorporated by reference therein, the "Purchase Agreement") with the Treasury pursuant to which the Company agreed to issue and sell to the Treasury (i) 2,330,000 shares of the Company's Fixed Rate Cumulative Perpetual Preferred Stock, Series D, par value $0.01 per share, having a liquidation preference of $1,000 per share (the "Series D Preferred Stock") and
(ii) a ten-year warrant to purchase up to 88,705,584 shares of the Company's common stock, par value $0.01 per share (the "Common Stock"), at an initial exercise price of $3.94 per share (the "Warrant"), for an aggregate purchase price of $2.33 billion in cash. All of the proceeds from the sale of the Series D Preferred Stock will be treated as Tier 1 capital for regulatory purposes.

The Company expects to execute the remaining agreements with Treasury and issue the Series D Preferred Stock and the Warrant on or about December 31, 2008.

Cumulative dividends on the Series D Preferred Stock will accrue on the liquidation preference at a rate of 5% per annum for the first five years, and at a rate of 9% per annum thereafter, but will be paid only when declared by the Company's Board of Directors. Declared dividends on the Series D Preferred Stock will be payable quarterly, in arrears. The Series D Preferred Stock has no maturity date and ranks senior to the Common Stock (and pari passu with the Company's 6.350% Non-Cumulative Preferred Stock, Series A, the Company's Non-Cumulative Preferred Stock, Series B and the Company's 8.75% Non-Cumulative Perpetual Convertible Preferred Stock, Series C) with respect to the payment of dividends and distributions and amounts payable upon liquidation, dissolution and winding up of the Company.

The Series D Preferred Stock generally is non-voting, other than class voting on certain matters that could adversely affect the Series D Preferred Stock. If dividends on the Series D Stock have not been paid for an aggregate of six quarterly dividend periods or more, whether or not consecutive, the Company's authorized number of directors will be automatically increased by two and the holders of the Series D Preferred Stock, voting together with the holders of any then outstanding voting parity stock, will have the right to elect those directors at the Company's next annual meeting of stockholders or at a special meeting of stockholders called for that purpose. These two directors will be elected annually and will serve until all accrued and unpaid dividends on the Series D Preferred Stock have been paid in full.

After the date that is three years from the date of issuance of the Series D Preferred Stock, the Company may, at its option, redeem, in whole or in part, from time to time, the Series D Preferred Stock then outstanding. Prior to this date, the Company may redeem the Series D Preferred Stock if (i) the Company has raised aggregate gross proceeds in one or more Qualified Equity Offerings (as defined in the Purchase Agreement and set forth below) of not less than the Minimum Amount (as defined in the Purchase Agreement) and (ii) the aggregate redemption price does not exceed the aggregate net cash proceeds from such Qualified Equity Offerings. Any redemption of the Series D Preferred Stock shall be at a redemption price equal to (i) the Liquidation Preference per share plus
(ii) any accrued and unpaid dividends. Holders of the Series D Preferred Stock do not have any right to require the redemption or repurchase of any shares of the Series D Preferred Stock. Any redemption of the Series D Preferred Stock is subject to the consent of the Board of Governors of the Federal Reserve System.

The Purchase Agreement defines a "Qualified Equity Offering" to mean the sale and issuance for cash by the Company, to persons other than the Company or any Company subsidiary, after the closing, of shares of Perpetual Preferred Stock, Common Stock or any combination of such stock, that, in each case, qualify as and may be included in Tier 1 Capital of the Company at the time of issuance under the applicable risk-based capital guidelines of the Board of Governors of the Federal Reserve System (other than any such sales and issuances made pursuant to agreements or arrangements entered into, or pursuant to financing plans which were publicly announced on or prior to October 13, 2008). . . .

Item 3.03 Material Modification to Rights of Security Holders.

Prior to the date that is three years from the date of issuance of the Series D Preferred Stock, unless the Company has redeemed the Series D Preferred Stock or Treasury has transferred the Series D Preferred Stock to a third party, the consent of the Treasury will be required for the Company to (1) increase its Common Stock dividend or (2) redeem, purchase or acquire any shares of its Common Stock or other equity or capital securities, other than in connection with benefit plans consistent with past practice and certain other circumstances specified in the Purchase Agreement.

In addition, our ability to declare or pay dividends or repurchase our common stock or other equity or capital securities will be subject to restrictions in the event that we fail to declare and pay (or set aside for payment) full dividends on the Series D Preferred Stock.

Item 8.01 Other Events.

On December 24, 2008, the Company issued a press release announcing the final results of its offer to exchange certain of its outstanding notes (the "Notes Exchange"). The Notes Exchange expired at 5:00 p.m., New York City time, on Tuesday, December 23, 2008. A copy of the press release is filed as Exhibit 99.1 hereto and incorporated by reference herein.

On December 24, 2008, the Notes Exchange was consummated. Approximately $2.412 billion aggregate principal amount of old notes were validly tendered and not withdrawn. Approximately $2.352 billion aggregate principal amount of old notes were tendered pursuant to the mixed election, approximately $1.641 billion of which were accepted after proration. Approximately $59.937 million aggregate principal amount of old notes were tendered pursuant to the notes election, all of which were accepted for payment. Based on the final results, the Notes Exchange generated approximately $1.149 billion of regulatory capital in the form of new subordinated notes and approximately $547 million in cash was paid to holders of tendered old notes.