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EXHIBIT 10.7
THE CIT GROUP, INC.
December 6, 1996
Xx. Xxxxxx X. Xxxxx
000 XXX Xxxxx
Xxxxxxxxxx, XX 00000
Dear Xxx:
Reference is made to your employment agreement, dated December 29, 1989
(the "Employment Agreement"), with The CIT Group Holdings, Inc. (the "Company),
as amended by letter agreements dated November 16, 1992 and December 20, 1994.
The Board of Directors (the "Board") of The CIT Group Holdings, Inc. (the
"Company"), is pleased to extend your employment agreement with the Company on
the following terms and conditions, all other terms and conditions being null
and void:
1. TERM. This letter agreement will be effective as of January 1, 1997.
The term of this Agreement (the "Term") will be for a period of twenty-four
months beginning on January 1, 1997 and, except as otherwise provided in
paragraph 4 below, ending on December 31, 1998. This letter agreement and the
Term may be extended for one or more additional periods by written agreement
signed by you and the Company at any time prior to the end of the Term then in
effect.
2. DUTIES. During the Term, you will serve in such capacities and
devote substantially all of your business time and energies to the business of
the Company and faithfully, diligently and competently perform such duties, as
are assigned to you by the Chief Executive Officer of the Company (the "CEO") or
pursuant to his delegation.
3. COMPENSATION AND BENEFITS. In full consideration for all services
rendered by you in all capacities during the Term, you will receive the
following compensation and benefits:
(a) BASE SALARY. An annual base salary of not less than the
amount you received immediately prior to the commencement of this current
employment agreement payable in accordance with the customary payroll practices
of the Company. Your Base Salary and performance will be reviewed by the CEO or
pursuant to his delegation during the Term pursuant to normal Company practices.
Your Base Salary may be increased (but not reduced) by the CEO from time to
time, based upon your performance and responsibilities, pursuant to the
Company's standard procedures for salary adjustments.
(b) BONUSES. You will participate in all executive bonus and
incentive compensation plans (collectively, "Incentive Plans") now or hereafter
maintained by the
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Company for which your level of employment makes you eligible in accordance with
the Company's policies and the terms of such Incentive Plans.
(c) EXPENSE REIMBURSEMENT. The Company will reimburse you, in
accordance with applicable policies and practices of the Company in effect from
time to time, for your ordinary and necessary business expenses.
(d) OTHER BENEFITS. You will be eligible to participate in all
employee retirement and welfare benefit plans now or hereafter maintained by or
on behalf of the Company, including the Company's Executive Retirement Program
and receive all fringe benefits and vacations, for which your level of
employment makes you eligible in accordance with the Company's policies and the
terms of such plans. In addition, the Company will provide you with (i) a
supplemental pension benefit and (ii) a supplemental savings benefit, in each
case in an amount equal to the value of the benefit you would be entitled to
receive under the Company's Retirement Plan or Savings Incentive Plan, as the
case may be, but for the limitations on the amount of such benefits imposed by
Internal Revenue Code Sections 415 and 401(a) (17). In connection with your
benefits under the Company's Executive Retirement Program, the Company will not
unreasonably withhold its consent to your retirement.
(e) MODIFICATIONS. The Company may at any time or from time to
time amend, modify, suspend or terminate any bonus, incentive compensation or
other benefit plans or programs provided hereunder for any reason and without
your consent; provided that, without your consent, the Company may not reduce
the aggregate value of the benefits provided to the Executive hereunder, or
administer the Company Executive Retirement Program in a manner substantially
inconsistent with past practices.
4. TERMINATION OF THE EXECUTIVE'S EMPLOYMENT.
(a) BY THE COMPANY. The Company may terminate your employment
in its sole discretion at any time during the Term, with or without Cause, upon
written notice by the Company to you, and your employment will terminate on the
date such notice is given. For purposes of this letter agreement, "Cause" means
(1) Nonperformance, defined as your substantial failure to perform your duties
or responsibilities, as determined by the CEO, or (2) Malfeasance, defined as
(A) your gross negligence, recklessness or malfeasance in the performance of
your duties hereunder, (B) your committing any criminal act, act or fraud or
other misconduct resulting or intending to result directly or indirectly in gain
or personal enrichment at the expense of the Company, or (C) your engaging in
any conduct relating to the business of the Company that could reasonably be
expected to have a materially detrimental effect on the business or financial
condition of the Company. For purposes hereof, you will be deemed to have
committed an act if, based upon the Company's investigation of the facts, it
reasonably concludes that you committed such an act.
(b) BY YOU. You may terminate your employment with the Company
at any time during the Term, with or without Good Reason, upon written notice by
you to the Company, and your employment will terminate on the date such notice
is given. For purposes of this letter agreement, "Good Reason" means the
assignment to you of duties and responsibilities
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not commensurate with your status as a senior executive of the Company, the
failure of the Company to provide compensation and benefits to you at the levels
required herein or the failure of the Company to adhere in any substantial
manner to any of its other covenants herein.
5. SEVERANCE PAYMENT.
(a) WITHOUT CAUSE AND GOOD REASON TERMINATION. If during the
Term the Company terminates your employment without Cause or you terminate your
employment for Good Reason, all compensation payable to you under paragraph 3
hereof will cease as of the effective date of notice of such termination (the
"Termination Date") and the Company will pay to you, subject to paragraph 6, the
following sums:
1) Your Base Salary on the Termination Date for
the greater of 24 months or the remainder of
the Term, payable 50% in 12 equal
installments at the end of each of the 12
months following the Termination Date, and
50% in a lump sum on the anniversary of the
Termination Date. If, however, prior to the
anniversary of the Termination Date, you
violate the noncompetition provisions of
paragraph 6(b)(A), then the Company will
have no obligation to make any of the
payments that remain payable by the Company
under this paragraph 5(a)(1) on or after the
date of such violation.
2) All previously earned and accrued
entitlements and benefits from the Company,
including any such entitlements and benefits
under the Company's pension, disability and
life insurance plans, policies and programs.
3) Continued participation for eighteen months
under the Company's welfare benefit plans in
which you participated immediately prior to
the Termination Date.
4) The reasonable costs of outplacement
services until such time as you accept new
employment.
5) Any awards due to you under the terms of the
Company's "Career Incentive Plan" (Long Term
Incentive) or any plan as may have been
hereafter adopted by the Company. Upon such
payment, all of your rights under all such
plans will then terminate.
6) All benefits payable to you under the terms
and conditions of the Company's Executive
Benefits Program, if any.
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All of the amounts and benefits to be provided pursuant to clauses (3),
(4), (5) and (6) above shall be provided without duplication for the amounts and
benefits to be provided pursuant to clause (2) above.
(b) FOR CAUSE TERMINATION - NONPERFORMANCE.
1) If your employment is terminated by the
Company for Cause based on Nonperformance,
as determined by the current CEO (Xxxxxx X.
Xxxxxx, Xx.), you will promptly receive the
amounts and benefits specified in paragraphs
5(a)(2), (3) and (4) above. In addition, you
will receive an amount equal to your Base
Salary on the Termination Date for 12
months, payable in 12 equal installments at
the end of each of the 12 months following
the Termination Date.
2) If your employment is terminated by the
Company for Cause based on Nonperformance,
as determined by the CEO (if other than
Xxxxxx X. Xxxxxx, Xx.), you will promptly
receive the amounts and benefits specified
in paragraph 5(a)(2), (3) and (4) above. In
addition, you will receive an amount equal
to your Base Salary on the Termination Date
for 24 months, payable 50% in 12 equal
installments at the end of each of the 12
months following the Termination Date, and
50% in a lump sum on the anniversary of the
Termination Date.
(c) FOR CAUSE TERMINATION - MALFEASANCE OR TERMINATION BY YOU
WITHOUT GOOD REASON. If your employment is terminated by the Company for Cause
based on Malfeasance or if you terminate your employment for any reason other
than Good Reason, you will receive only the amounts specified in paragraph
5(a)(2)
(d) DEATH OR DISABILITY. In the event of your death or your
disability due to physical or mental illness or other disability which renders
you unable, on other than a temporary basis, to perform the duties of your
employment, the Employment Term will terminate as of the date of your death or
disability and you will receive the benefits specified in paragraph 5(a)(2) and
(6) plus an amount equal to your Base Salary on such date for one year.
Disability will be determined by the CEO or pursuant to his delegation in a
manner consistent with the Company's Long Term Disability Plan.
6. CONFIDENTIALITY AND COMPETITIVE ACTIVITY.
(a) You acknowledge that you have acquired and will continue
to acquire during the Term, confidential information regarding the business of
the Company, Dai-Ichi Kangyo Bank (DKB), Chase Manhattan Corporation (CMC) and
their respective subsidiaries and affiliates. Accordingly, you agree that,
without the written consent of the Board, you will not, at any time, disclose to
any unauthorized person or otherwise use any such
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confidential information. For this purpose, confidential information means
non-public information concerning the financial data, business strategies,
product development (and proprietary product data), customer lists, marketing
plans, and other proprietary information concerning the Company, DKB or CMC and
their respective subsidiaries and affiliates, except for specific items which
have become publicly available other than as a result of your breach of this
letter agreement.
(b) During the Term and, if you resign with or without Good
Reason or your employment is terminated by the Company with or without Cause
prior to the end of the Term, then for one year after the Termination Date, in
the case of clause (A) below, and for two years after the Termination Date, in
the case of clause (B) below, you will not, without the written consent of the
Board, directly or indirectly, (A) knowingly engage or be interested in (as
owner, partner, stockholder, employee, director, officer, agent, consultant or
otherwise), with or without compensation, any business in the New York
metropolitan area which is in competition with any line of business actively
being conducted on the Termination Date by the Company or any of its
subsidiaries; provided that if your employment has been terminated by the
Company without Cause or you have terminated your employment with the Company
for Good Reason, you may so compete in which event you shall forfeit your right
to receive future severance payments pursuant to paragraph 5(a)(1) hereof and
(B) whether or not your termination of employment occurred without Cause or for
Good Reason, hire any person who was employed by the Company or any of its
subsidiaries or affiliates (other than persons employed in a clerical or other
non-professional position) within the six-month period preceding the date of
such hiring, or solicit, entice, persuade or induce any person or entity doing
business with the Company, DKB or CMC and their respective subsidiaries and
affiliates, to terminate such relationship or to refrain from extending or
renewing the same. Nothing herein, however, will prohibit you from acquiring or
holding not more than one percent of any class of publicly traded securities of
any such business; provided that such securities entitle you to no more than one
percent of the total outstanding votes entitled to be cast by securityholders of
such business in matters on which such securityholders are entitled to vote.
(c) REMEDY FOR BREACH. You hereby acknowledge that the
provisions of this paragraph 6 are reasonable and necessary for the protection
of the Company, DKB, CMC and their respective subsidiaries and affiliates. In
addition, you further acknowledge that the Company, DKB, CMC and their
respective subsidiaries and affiliates will be irrevocably damaged if such
covenants are not specifically enforced. Accordingly, you agree that, in
addition to any other relief to which the Company may be entitled, the Company
will be entitled to seek and obtain injunctive relief (without the requirement
of any bond) from a court of competent jurisdiction for the purposes of
restraining you from any actual or threatened breach of such covenants. In
addition, and without limiting the Company's other remedies, in the event of any
breach by you of such covenants, the Company will have no obligation to pay any
of the amounts that remain payable by the Company under paragraph 5(a)(1).
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7. CHANGE OF CONTROL.
(a) CONTRACT EXTENSION. If during the Term, a "Change of
Control" occurs as defined hereafter, the Term of your employment shall
automatically be extended until the second anniversary date of such Change of
Control.
(b) SPECIAL PAYMENT. In addition to the compensation and
benefits already required under the provisions of your Employment Agreement, if
a Change of Control should occur on or prior to December 31, 1998, you will
receive a special payment (the "Special Payment"). The amount of such Special
Payment shall equal the sum of your prior two years' annual bonuses under The
CIT Group Bonus Plan and will be payable over a two-year period as follows: 1/3
of the payment shall be paid to you within 30 days after the date of the Change
of Control; 1/3 shall be paid to you on or before the first anniversary date of
such Change of Control; and 1/3 shall be paid to you on or before the second
anniversary date of such Change of Control. Notwithstanding the foregoing
provisions of this paragraph, all or any part of such Special Payment shall not
be payable to you: (1) to the extent that such Special Payment or any part
thereof, when aggregated with any other benefit or compensation payment due or
owing to you, on account of a Change of Control, under the Employment Agreement
or any other benefit program maintained by the Company, would cause you to be
subject to taxation under Section 4999 of the Internal Revenue Code of 1986, as
amended, or (2) if during the two-year period commencing on the date of a Change
of Control, and ending on the second anniversary of such date: (i) your
employment is involuntarily terminated by the Company for "Cause" as defined in
the Employment Agreement; (ii) you voluntarily terminate employment with the
Company for any reason other than "Good Reason" as defined in the Employment
Agreement; or (iii) you breach any noncompetition or confidentiality covenant
under Section 6 of the Employment Agreement. For purposes of this Paragraph (b)
"Special Payment", a termination of your employment on account of your death,
disability or retirement on or after age 55 under the terms of the Company's
retirement plan shall constitute a termination for "Good Reason." In the absence
of a separate beneficiary designation, your beneficiary under the Group Life
Insurance Plan will receive any Special Payment remaining to be paid upon your
death.
(c) CHANGE OF CONTROL DEFINED. For purposes of this letter
agreement, a "Change of Control" shall be deemed to have occurred if: (1) any
Person or Group other than DKB or CMC or their Affiliates becomes the Beneficial
Owner, directly or indirectly, of securities representing a majority of the
combined voting power of the Company's then outstanding securities generally
entitled to vote for the election of directors (capitalized terms not otherwise
defined herein are used as defined under the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder); or (2) as a
result of a cash tender offer, merger or other business combination, sales of
assets or contested election, or any combination of the foregoing transactions
(a "Transaction"), the persons who were directors of the Company immediately
before the Transaction shall cease to constitute a majority of the Board of the
Company or of any successor to the Company. Notwithstanding the foregoing, a
Change of Control resulting from a Change of Control of DKB or CMC shall not
require the extension of the Term hereunder.
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8. MISCELLANEOUS.
(a) SURVIVAL; NOTICES. The obligations of the Company in
paragraph 5 and your obligations in paragraph 6 will survive the termination of
this letter agreement. Any notice, consent or other communication made or given
in connection with this letter agreement will be in writing and will be deemed
to have been duly given when delivered or five days after mailed by United
States registered or certified mail, return receipt requested, to the parties at
the address set forth on the first page of this letter agreement (attention:
General Counsel, if to the Company).
(b) ENTIRE AGREEMENT. This letter agreement supersedes any and
all existing agreements between you and the Company or any of its subsidiaries
or affiliates relating to the terms of your employment.
(c) AMENDMENTS AND WAIVERS. No provisions of this letter
agreement may be amended, modified, waived or discharged except as agreed to in
writing by you and the Company. The failure of a party to insist upon strict
adherence to any term of this letter agreement on any occasion will not be
considered a waiver thereof or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this letter
agreement.
(d) SUCCESSORS. This letter agreement shall be binding upon
and inure to the benefit of you and the Company and its successors and permitted
assigns. Neither this letter agreement nor any of the rights of the parties
hereunder may be assigned by either party hereto except that the Company may
assign its rights and obligations hereunder to a corporation or other entity
that acquires substantially all of its assets. Any assignment or transfer of
this letter agreement in violation of the foregoing provisions will be void.
(e) GOVERNING LAW. This letter agreement will be governed by
and construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in that State.
(f) LEGAL COUNSEL; OFFSETS AND REDUCTIONS. In the event you
obtain legal counsel to enforce your rights under this letter agreement, the
Company will pay you reasonable legal fees if you recover any amount on such
claim. Except as provided in paragraph 6, if your employment is terminated by
the Company, your severance shall not be subject to any offsets or reductions
for your subsequently earned income or reduction by reason of any claim by the
Company.
(g) SEVERABILITY. If the provision of this letter agreement is
invalid or unenforceable, the balance of this letter agreement will remain in
effect, and if such provision is inapplicable to any person or circumstance, it
will nevertheless remain applicable to all other persons and circumstances.
(h) WITHHOLDING. The Company is authorized to withhold from
any benefit provided or payment due hereunder the amount of withholding taxes
due any federal,
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state, or local authority in respect of such benefit or payment and to take such
other action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such withholding taxes.
If you are in agreement with the terms of this letter, please so
indicate by signing and returning the enclosed copy of this letter, whereupon
this letter shall constitute a binding agreement between you and the Company.
Very truly yours,
THE CIT GROUP HOLDINGS, INC.
By:
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Name:
Title:
Agreed:
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