EXHIBIT 10.4
THE CIT GROUP, INC.
November 2, 1998
Xx. Xxxxxx X. Xxxxx
000 XXX Xxxxx
Xxxxxxxxxx, XX 00000
Dear Xxx:
Reference is made to your employment agreement, dated December 29, 1989,
with The CIT Group, Inc. (the "Company"), as amended by letter agreements dated
November 16, 1992, December 20, 1994 and December 6, 1996 (the "Employment
Agreement"). The Board of Directors (the "Board") of 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 Employment Agreement will be effective as of November 2,
1998. The term of this Employment Agreement (the "Term") will be for a period of
twenty-six (26) months beginning on November 2, 1998 and, except as otherwise
provided in paragraph 4 below, ending on December 31, 2000. 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 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 (1) a supplemental
pension benefit and (2) 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 Sections 415 and
401(a)(17) of the Internal Revenue Code of 1986, as amended (the "Code").
(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 you hereunder.
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, (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 Company policy covering standards of corporate conduct; provided
that the determination of Cause shall be made 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).
(b) By You. You may terminate your employment with the Company at
any time during the Term, with or without Good Reason, upon fifteen
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(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), the requirement by the Company, or, if applicable, a
Subsidiary, or a successor to the Company or a Subsidiary, without your consent,
that you 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 or (4) 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 such termination (the "Termination
Date") and the Company will pay to you, subject to paragraph 6, the following
sums:
(1) An amount equal to two (2) times your then current Base Salary plus
the sum of your annual bonuses, if any, for the two (2) immediately
preceding calendar 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 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
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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) 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, Two (2) years additional benefit service and age credit
under the Company's Retirement Plan and the Executive Retirement
Plan. (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 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) 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 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.
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(b) For Cause Termination or Termination By You Without Good Reason.
Subject to paragraph 7(c), 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),(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 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 (2) two 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, stockhoIder, employee, director, officer, agent, consultant or
otherwise), with or without compensation, any business in the United States
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
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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-(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 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, 2000, 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
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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.
(c) Termination of Employment After a Change of Control for Awards
Granted under the ECP. Notwithstanding the provisions of Article 14 of the ECP:
If an Executive's employment with the Company is terminated by the Company, or,
if applicable, a Subsidiary, or a successor to the Company or a Subsidiary, on
or after a Change of Control and prior to the first anniversary of such Change
of Control:
(1) If you terminate employment for Good Reason or your employment with
the Company is terminated by the Company, or if applicable, a
Subsidiary, or a successor to the Company or a Subsidiary, on or
after a Change of Control and prior to the first anniversary of such
Change of Control: (i) any and all Options other than Options
granted in consideration of the termination of The CIT Group, Inc.
Career Incentive Plan (the "CIT Career Incentive Plan") or granted
in consideration of The CIT Group, Inc. Initial Public Offering (the
"CIT Initial Public Offering"), shall become immediately
exercisable, and shall remain exercisable throughout their entire
term; and (ii) any Period of Restriction and restrictions imposed on
Restricted Stock, other than Restricted Stock granted in
consideration of the termination of the CIT Career Incentive Plan or
granted in consideration of the CIT Initial Public Offering, shall
lapse.
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(2) If you terminate employment for Good Reason or your employment with
the Company is terminated by the Company, or, if applicable, a
Subsidiary, or a successor to the Company or a Subsidiary, on or
after a Change of Control and prior to November 1, 2002, (i) All
Options granted in consideration of the termination of the CIT
Career Incentive Plan or granted in consideration of the CIT Initial
Public Offering held by the Participant, if any, shall become
immediately exercisable and shall remain exercisable throughout
their entire term; and (ii) any Period of Restriction and all
restrictions imposed on Restricted Stock granted in consideration of
the termination of the CIT Career Incentive Plan or granted in
consideration of the CIT Initial Public Offering, if any, shall
lapse.
(3) All terms with respect to the ECP that are not otherwise defined
herein, are defined in the ECP.
(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 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. MiscelIaneous.
(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).
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(b) Entire Agreement. This Employment 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 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 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 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 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
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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 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: President & CEO
Agreed:
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
