ITT Corporation
Enhanced Severance Pay Plan
(amended and restated as of December 31, 2008)
The purpose of
this ITT Corporation Enhanced Severance Pay Plan (“
Plan ”) is to assist in occupational transition by
providing Severance Benefits, as defined herein, for employees
covered by this Plan whose employment is terminated under
conditions set forth in this Plan.
Covered employees
under this Plan (“ Employees ”) are active
full-time, regular salaried employees of ITT Corporation (“
ITT ”) and of any subsidiary company (“ ITT
Subsidiary ”) (collectively or individually as the
context requires “ Company ”) (including
Employees who are short term disabled as of a Potential
Acceleration event within the meaning of the Company’s short
term disability benefit plans) (other than Employees on periodic
severance as of a Potential Acceleration Event) who are or were, at
any time within the two year period immediately preceding the
Employees’ termination of employment (other than executives
covered by the ITT Special Senior Executive Severance Pay Plan),
either (i) United States or Canadian citizens or who are
employed in the United States or Canada, whose primary employment
location is at ITT Headquarters, White Plains, New York (and
satellite locations, including, without limitation, ITT Pension and
Savings Plan (Clifton, New Jersey), ITT TDS (Palm Coast, Florida),
ITT Flight Operations (New Castle, Delaware), ITT Shared Services
(Ft. Wayne, Indiana and Seneca Falls, New York), ITT Industries of
Canada (Toronto, Ontario) and ITT Industries (Shanghai, China)) or
(ii) worldwide staff whose primary responsibility is in
support of ITT Defense Headquarters (McLean, Virginia), ITT Fluid
Technology Headquarters (Upper Saddle River, New Jersey), ITT
Motion and Flow Control Headquarters (Upper Saddle River, New
Jersey) or ITT Electronic Components Headquarters (Santa Ana,
California) and such other employees of the Company who shall be
designated as covered employees thereunder by the Chief Executive
or the Senior Vice President, Director-Human Resources of ITT or a
designee of such officers (“ Authorized Officers or
Designees ”). No person who is employed on a temporary,
occasional or seasonal basis is eligible under this
Plan.
After the
occurrence of an Acceleration Event, the terms “ ITT
”, “ ITT Subsidiary ” and “
Company ” as used herein shall also include,
respectively and as the context requires, any successor company to
ITT or any successor company to any ITT Subsidiary and any
affiliate of any such successor company.
An “
Acceleration Event ” shall occur if (i) a report
on Schedule 13D shall be filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the
Securities Exchange Act of 1934 (the “ Act ”)
disclosing that any person (within the meaning of
Section 13(d) of the Act), other than ITT or a subsidiary of
ITT or any employee benefit plan sponsored by ITT or a
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subsidiary of
ITT, is the beneficial owner directly or indirectly of twenty
percent (20%) or more of the outstanding Common Stock $1 par value,
of ITT (the “ Stock ”); (ii) any person
(within the meaning of Section 13(d) of the Act), other than
ITT or a subsidiary of ITT, or any employee benefit plan sponsored
by ITT or a subsidiary of ITT, shall purchase shares pursuant to a
tender offer or exchange offer to acquire any Stock of ITT (or
securities convertible into Stock) for cash, securities or any
other consideration, provided that after consummation of the
offer, the person in question is the beneficial owner (as such term
is defined in Rule 13d-3 under the Act), directly or
indirectly, of twenty percent (20%) or more of the outstanding
Stock of ITT (calculated as provided in paragraph (d) of
Rule 13d-3 under the Act in the case of rights to acquire
Stock); (iii) the stockholders of ITT shall approve
(A) any consolidation, business combination or merger
involving ITT, other than a consolidation, business combination or
merger involving ITT in which holders of Stock immediately prior to
the consolidation, business combination or merger (x) hold
fifty percent (50%) or more of the combined voting power of
ITT (or the corporation resulting from the merger or consolidation
or the parent of such corporation) after the merger and
(y) have the same proportionate ownership of common stock of
ITT (or the corporation resulting from the merger or consolidation
or the parent of such corporation), relative to other holders of
Stock immediately prior to the merger, business combination or
consolidation, immediately after the merger as immediately before,
or (B) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all the assets of ITT, (iv) there shall have
been a change in a majority of the members of the Board of
Directors of ITT within a 12-month period unless the election or
nomination for election by ITT’ stockholders of each new
director during such 12-month period was approved by the vote of
two-thirds of the directors then still in office who (x) were
directors at the beginning of such 12-month period or
(y) whose nomination for election or election as directors was
recommended or approved by a majority of the directors who where
directors at the beginning of such 12-month period or (v) any
person (within the meaning of Section 13(d) of the Act) (other
than ITT or any subsidiary of ITT or any employee benefit plan (or
related trust) sponsored by ITT or a subsidiary of ITT) becomes the
beneficial owner (as such term is defined in Rule 13d-3 under
the Act) of twenty percent (20%) or more of the
Stock.
“Cause” shall mean action by the Employee
involving willful malfeasance or gross negligence or the
Employee’s failure to act involving material nonfeasance that
would tend to have a materially adverse effect on the Company. No
act or omission on the part of the Employee shall be considered
“willful” unless it is done or omitted in bad faith or
without reasonable belief that the action or omission was in the
best interests of the Company.
“Enhanced Severance Period” shall mean the
period, expressed in weeks, equal to the sum of (x) two
times the normal severance pay or termination pay period of
weeks for the Employee (the “Normal Severance
Period” ), determined as if the Employee were an employee
of the same grade, and having the same years of service, covered by
and eligible for the severance pay or termination pay plans or
policies at ITT Headquarters, White Plains, New York, as in effect
immediately preceding an Acceleration Event and
(y) four (4) weeks (in lieu of notice of termination),
provided that the Enhanced Severance Period shall not exceed
108 weeks and shall not be less than the Minimum Severance
Period.
“Enhanced Week’s Pay” shall mean the sum
of (x) the highest annual base salary rate paid to the
Employee at any time during the three (3) year period
immediately preceding the
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Employee’s termination of employment and
(y) the highest annual bonus or service recognition award paid
or awarded to the Employee in respect of either (i) the
three (3) years preceding an Acceleration Event or
(ii) the three (3) years preceding the Employee’s
termination of employment, including, among the bonuses and service
recognition awards taken into account for this purpose, any bonus
or service recognition award paid or awarded by reason of an
Acceleration Event, without regard to whether such bonus or service
recognition award is paid during such three year period or after an
Acceleration Event, divided by 52 weeks.
“Good
Reason” shall mean (i) without the Employee’s
express written consent and excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company or its affiliates within
30 days after receipt of notice thereof given by the Employee,
(A) a reduction in the Employee’s annual base
compensation (whether or not deferred), (B) the assignment to
the Employee of any duties inconsistent in any material respect
with the Employee’s position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities, or (C) any other action by the Company or
its affiliates which results in a material diminution in such
position, authority, duties or responsibilities; (ii) without
the Employee’s express written consent, the Company’s
requiring the Employee’s work location to be other than
within twenty-five (25) miles of the location where such
Employee was principally working immediately prior to the
Acceleration Event; or (iii) any failure by the Company to
obtain the express written assumption of this Plan from any
successor to the Company; provided that “Good
Reason” shall cease to exist for an event on the 90
th day following the later of its occurrence or the
Employee’s knowledge thereof, unless the Employee has given
the Company notice thereof prior to such date.
“Minimum
Severance Period” shall mean (i) with respect to
Employees with less than twenty (20) years of service with the
Company, twenty-six (26) weeks, (ii) with respect to
Employees with between twenty (20) and twenty-five (25)
years of service with the Company, 52 weeks, (iii) with
respect to Employees with greater than twenty-five (25) years
of service with the Company but less than or equal to
thirty (30) years of service with the Company,
seventy-eight (78) weeks and (iv) with respect to
Employees with greater than thirty (30) years of service with
the Company, one hundred and four (104) weeks. For purposes
hereof, “years of service” shall have the same meaning
as in the termination pay plans or policies at ITT Headquarters,
White Plains, New York, as in effect immediately preceding an
Acceleration Event and shall be determined as of the date of the
Employee’s termination of employment with the
Company.
“
Potential Acceleration Event ” shall mean any
execution of an agreement, the commencement of a tender offer or
any other transaction or event that if consummated would result in
an Acceleration Event.
4. Severance
Benefits Upon Termination of Employment
If an
Employee’s employment with the Company is terminated due to a
Qualifying Termination, he or she shall receive the severance
benefits set forth in Section 5 hereof (“ Severance
Benefits ”). For purposes hereof, (i) a “
Qualifying Termination ” shall mean a termination of
an Employee’s employment with the Company either (x) by
the Company without Cause (A) within the two (2) year
period commencing on the date of the occurrence of an Acceleration
Event or (B) prior to the occurrence of an Acceleration Event
and either
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(1) following the public announcement of
the transaction or event which ultimately results in such
Acceleration Event or (2) at the request of a party to, or
participant in, the transaction or event which ultimately results
in an Acceleration Event; or (y) by an Employee for Good
Reason within the two (2) year period commencing with the date
of the occurrence of an Acceleration Event and (ii) a
determination by an Employee that he or she has “Good
Reason” hereunder shall be final and binding on the parties
hereto unless the Company can establish by a preponderance of the
evidence that “Good Reason” does not exist.
Severance Benefits
for Employees:
• Accrued
Rights — The Employee’s base salary through the date of
termination of employment, any annual bonus earned but unpaid as of
the date of termination for any previously completed fiscal year,
reimbursement for any unreimbursed business expenses properly
incurred by the Employee in accordance with Company policy prior to
the date of the Employee’s termination of employment and such
employee benefits, if any, as to which the Employee may be entitled
under the employee benefit plans of the Company, including without
limitation, the payment of any accrued or unused vacation under the
Company’s vacation policy.
• Severance
Pay — The number of weeks of the Employee’s Enhanced
Severance Period times the Employee’s Enhanced Week’s
Pay, paid in the form described in Section 6 below.
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Continued health and life insurance
benefits and perquisites (including, without limitation, any
Company-provided automobile and any tax or financial advisory
services) for a period equal to the Employee’s Enhanced
Severance Period following the Employee’s termination of
employment at the same cost to the Employee, and at the same
coverage levels, as provided to the Employee (and the
Employee’s eligible dependents) immediately prior to his or
her termination of employment.
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Payment of a lump sum amount
(“ Pension Lump Sum Amount ”) equal to the
difference between (i) the total lump sum value of the
Employee’s pension benefit under the ITT Salaried Retirement
Plan and, as applicable, ITT Excess Pension Plan II or any
successor plan; provided that the benefits under such
successor plan is no less favorable than the benefits under the
plans set forth herein (or corresponding pension arrangements
(i) outside the United States or (ii) as may be
designated by an Authorized Officer or Designee) (“
Pension Plans ”) as of the Employee’s
termination of employment and (ii) the total lump sum value of
the Employee’s pension benefit under the Pension Plans after
crediting to the Employee an additional two (2) years of age
and two (2) years of eligibility and benefit service and
applying the highest annual base salary rate and highest bonus or
service recognition award determined above under “Enhanced
Week’s Pay” with respect to the additional period of
service so credited for purposes of determining the Final Average
Comp
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