Xxxxxx X. Xxxxxx, Xx. The CIT Group, Inc. T: 000 000-0000
Chairman, President and 000 XXX Xxxxx F: 000 000-0000
Chief Executive Officer Xxxxxxxxxx, XX 00000-0000 xx.xxxxxx@xxx.xxx
CIT [LOGO]
September 13, 2000
Xx. Xxxxxx X. Xxxxx
000 Xxxxxxx Xxxxx
Xxxxxxxx Xxxxx, XX 00000
Dear Xxx,
The purpose of this letter agreement (the "Employment Agreement") is to
set forth the terms and conditions of your employment with The CIT Group, Inc.
(the "Company") as follows:
1. Term. This Employment Agreement will be effective as of September 1,
2000 (the "Effective Date"). The term of this Employment Agreement (the "Term")
will begin on the Effective Date and, except as otherwise provided in paragraph
4 below, end on December 31, 2002. This Employment Agreement and the Term may be
extended for one (1) 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 ("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 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 Plan and
receive all fringe benefits, vacations and supplemental pension benefits, for
which your level of employment makes you eligible in accordance with the
Company's policies and the terms of such plans.
(e) Modifications. The Company may at any time or from time to time
amend, modify, suspend or terminate any bonus or incentive compensation or
employee 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 employee benefit plans or programs provided to you
hereunder unless such reduction is consistent with reductions affecting
similarly situated employees of the Company.
4. Termination of Your 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 fifteen
(15) days prior notice by the Company to you. For purposes of this Employment
Agreement, "Cause" means any of the following: (1) action by you involving
willful malfeasance in connection with the performance of your duties hereunder,
(2) your unreasonable neglect or refusal to perform the executive duties
assigned to you under this Employment Agreement, (3) your being convicted of a
crime constituting a felony under federal or applicable state or local law, (4)
your engaging in any activity that is directly or indirectly in competition with
the Company or any affiliate or in any activity that is inimical to the best
interests of the Company or any affiliate, or (5) your violation of the
Company's policy covering standards of corporate conduct as determined by the
Company's CEO. If the Company terminates your employment for Cause, all the
Company's obligations under this Employment Agreement shall thereupon cease and
terminate, except for those amounts specified in paragraph 5(a)(2).
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(b) By You. You may terminate your employment with the Company at
any time during the Term, with or without Good Reason, upon fifteen (15) days
prior notice by you to the Company. For purposes of this Employment Agreement,
"Good Reason" means (1) the assignment to you of duties and responsibilities not
commensurate with your status as a senior executive of the Company, (2) the
failure of the Company to provide compensation and benefits to you at the levels
required herein, (3) following a Change of Control as defined in paragraph 7(d),
you are required by the Company, or if applicable a Subsidiary, or a successor
to the Company or a Subsidiary, without your consent to relocate or perform a
significant portion of your duties under this Employment Agreement outside a
fifty (50) mile radius from your present principal place of employment, (4) the
failure of the Company to adhere in any substantial manner to any of its other
covenants herein, or (5) the failure of the Company to offer to renew this
Employment Agreement on the terms and conditions (including payment of base
salary and participation in Incentive Plans and benefit programs) at least as
favorable in the final year of your last Employment Agreement, unless, at the
time of the Company's failure to offer to renew this Employment Agreement, you
have reached the age of 65 and you can be lawfully required to retire.
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 such termination (the "Termination
Date") and the Company will pay to you, subject to paragraph 6 and, with respect
to paragraphs 5(a)(1), (3) and (4) subject to the condition that you execute and
deliver to the Company an effective general release of any and all claims you
have or may have against the Company as of the Termination Date, in a form
prepared by the Company, the following:
(1) An amount equal to two (2) times your then current Base
Salary plus two (2) times the average annual bonus you
received in the prior two (2) years under The CIT Group,
Inc. Bonus Plan, plus a pro-rata annual bonus amount for
that portion of the bonus year up to the Termination
Date, based on the average annual bonus, if any, paid in
the prior two (2) full years. This payment shall be
payable fifty percent (50%) in twelve (12) equal
installments at the end of each of the twelve (12)
months following the Termination Date, and fifty percent
(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
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provisions of paragraph 6(b)(i), 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.
Notwithstanding the provisions of this paragraph
5(a)(1), if you have received, are scheduled to receive
or are otherwise eligible to receive all or any portion
of a "Special Payment" in accordance with paragraph 7(b)
below, the amount payable to you under this paragraph
5(a)(1) shall be reduced by the amount of such "Special
Payment" paid or payable to you under paragraph 7(b).
(2) All previously earned and accrued entitlements and
benefits from the Company, including any such
entitlements and benefits under the Company's pension,
disability, life insurance and medical plans, policies
and programs.
(3) (a) Continued benefit coverage which permits you to
continue to receive, for two (2) years from the
Termination Date, at the Company's expense, life
insurance and medical, dental and disability benefits at
least comparable to those provided by the Company to you
on the Termination Date, provided that such benefits
shall cease if you obtain other employment with
comparable benefits, as determined by the Company; and
(b) two (2) years additional benefit service and age
credit under the Company's Retirement Plan and the
Executive Retirement Plan, except that to the extent you
participate in the cash balance arrangement under the
Company's Retirement Plan, rather than receiving two (2)
years additional benefit service and age credit under
the Company's Retirement Plan, your cash balance account
will be increased as of the Termination Date as if you
had received two (2) years of additional contributions
based on your compensation as of the Termination Date.
(The amount of any benefit payable as a result of such
two (2) year additional service and age credit shall be
paid from the applicable benefit or retirement plan as
permitted by the provisions of such
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applicable benefit or retirement plan and the Code, or
in the event not paid from the applicable benefit or
retirement plan, such benefit shall be paid by the
Company).
(4) Outplacement services, not to exceed a reasonable cost,
until such time as you accept new employment.
(5) Any awards due to you under the terms of the Company's
Long-Term Equity Compensation Plan (the "ECP") or any
successor 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 Retirement Plan,
if any.
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 or Termination By You Without Good Reason.
If your employment is terminated by the Company for Cause 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).
(c) 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 Term will terminate as of the date of your death or disability
and you or your beneficiary will receive the benefits specified in paragraphs
5(a)(2),(5) and (6) plus an amount equal to your Base Salary on such date for
one (1) year. Disability will be determined in a manner consistent with the
Company's Long-Term Disability Plan.
6. Confidentiality and Competitive Activity.
(a) Confidential information. 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") 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 confidential information. For this purpose,
confidential
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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 or DKB
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 Employment Agreement.
(b) Competition and Solicitation. If (1) you resign with or without
Good Reason, (2) your employment is terminated by the Company with or without
Cause, (3) you retire under the terms of the Company's Retirement Plan, or (4)
solely for the purposes of (ii) below, you resign following the expiration of
this Employment Agreement, then for one (1) year after the Termination Date, in
the case of clause (i) below, and for two (2) years after the Termination Date,
in the case of clause (ii) below, you will not, without the written consent of
the Board, directly or indirectly, (i) 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 United States or
Canada 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 (ii) 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-(6)month period preceding the date of such hiring, or
solicit, entice, persuade or induce any person or entity doing business with the
Company or DKB 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 (1%) of any class of publicly traded securities of any such business;
provided that such securities entitle you to no more than one percent (1%) 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, and their respective subsidiaries and affiliates. In addition, you further
acknowledge that the Company, DKB 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
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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).
(d) Enforceability. If a court determines that any of the provisions
of this paragraph 6 are unenforceable because of the duration or geographical
scope of such provisions, the parties hereto agree that the duration or scope of
such provisions, as the case may be, shall be reduced so that such provision
becomes enforceable and, in its reduced form, such provision shall then be
enforceable and shall be enforced.
7. Change of Control.
(a) Contract Extension. If during the Term, a "Change of Control"
occurs as defined in paragraph 7(d), 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 while you
are an active employee of the Company, a Change of Control should occur on or
prior to December 31, 2002, you will receive a special payment (the "Special
Payment"). The amount of such Special Payment shall equal the sum of your annual
bonuses, if any, for the two (2) immediately preceding calendar years under The
CIT Group, Inc. Bonus Plan and will be payable over a two (2) year period as
follows: one-third (1/3) of the payment shall be paid to you within thirty (30)
days after the date of the Change of Control; one-third (1/3) shall be paid to
you on or before the first anniversary date of such Change of Control; and
one-third (1/3) shall be paid to you on or before the second anniversary date of
such Change of Control, provided, however, the Company, in its sole discretion,
may accelerate the payment of all or any part of the Special Payment determined
in accordance with this paragraph 7(b). Notwithstanding the foregoing provisions
of this paragraph, all or any part of such Special Payment shall not be payable
to you if during the two (2) year period commencing on the date of a Change of
Control, and ending on the second anniversary of such date: (1) your employment
is involuntarily terminated by the Company for "Cause" as defined in the
Employment Agreement; (2) you voluntarily terminate employment with the Company
for any reason other than "Good Reason" as defined in the Employment Agreement;
or (3) you breach any confidentiality or competition covenant under paragraph 6
of the Employment Agreement. For purposes of this paragraph 7(b), a termination
of your employment on account of your death, disability or retirement on or
after age fifty-five (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.
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(c) Awards Granted Under the ECP. Upon a Change of Control (as
defined in paragraph 7(d)), (1) all Awards granted under The CIT Group, Inc.
Long-Term Equity Compensation Plan (the "Plan") shall vest and become
exercisable; (2) any Period of Restriction (as defined in the Plan) and other
restrictions imposed on Restricted Stock (as defined in the Plan) shall lapse;
and (3) the Performance Target (as defined in the Plan) with respect to all
outstanding Awards shall be deemed to have been attained upon a Change of
Control.
(d) Change of Control Defined. For purposes of this Employment
Agreement, a "Change of Control" shall be deemed to have occurred if: (1) any
Person or Group other than DKB or an Affiliate 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 combination of the persons who were directors of the
Company immediately before the Transaction, and persons designated by 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 shall not require the extension of the
Term hereunder.
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 Employment
Agreement. Any notice, consent or other communication made or given in
connection with this Employment Agreement will be in writing and will be deemed
to have been duly given when delivered or five (5) 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 Employment Agreement (attention:
General Counsel, if to the Company).
(b) Entire Agreement. This Employment Agreement supersedes and
renders null and void any and all existing agreements and understandings between
you and the Company or any of its subsidiaries or affiliates relating to the
terms and conditions of your employment.
(c) Amendments and Waivers. No provisions of this Employment
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 Employment Agreement on any occasion will not
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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 Employment
Agreement.
(d) Successors. This Employment Agreement shall be binding upon and
inure to the benefit of you and the Company and its successors and permitted
assigns. Neither this Employment 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 Employment Agreement in violation of the foregoing provisions will be void.
(e) Governing Law. This Employment 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 Employment Agreement, the
Company will pay your reasonable legal fees if you recover any amount on such
claim. Except as provided herein, 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 any provision of this Employment Agreement is
invalid or unenforceable, the balance of this Employment 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, 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.
(i) Tax Gross-Up. In the event that any payment made to you pursuant
to this Employment Agreement with the Company becomes subject to excise taxes
under Section 4999 of the Code, the Company will pay to you the amount of such
excise taxes plus all federal, state and local taxes applicable to the Company's
payment of such excise taxes including any additional excise taxes due under
Section 4999 of the Code with respect to payments made pursuant to this
Employment Agreement.
The determination of amounts required to be paid under this Employment
Agreement shall be made by an independent auditor selected and paid by the
Company. Such independent auditor shall be a nationally recognized United
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States public accounting firm, which may be the independent accounting firm used
by the Company to audit its financial statements.
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, INC.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
--------------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Chairman, President & CEO
Agreed:
/s/ Xxxxxx X. Xxxxx
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