THE CIT GROUP, INC.
December 6, 1996
Xx. Xxxxxx Xxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Nikita
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 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.
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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 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 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.
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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.
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, yon
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).
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(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 confidential information. For this
purpose, confidential information means nonpublic 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
nonprofessional 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 security holders
of such business in matters on which such securityholders are entitled to vote.
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(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).
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 day 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)
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"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.
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.
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(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, 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: /s/ Xxxxxx X. Xxxxxx, Xx.
------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: President & CEO
Agreed: /s/ Xxxxxx Xxxxxx
