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Exhibit 10(a)
ITT INDUSTRIES, INC.
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ITT INDUSTRIES 1996 RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
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PLAN INFORMATION
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THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
OCTOBER 1, 2000
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Additional information about the Plan and its administration may be
obtained without charge by written or oral request to the Manager -- Stock
Administration and Cash Management, ITT Industries, Inc. ("ITT Industries"), 4
West Red Oak Lane, White Plains, NY 10604, telephone number (914) 641-2000.
The following documents filed by ITT Industries or its predecessor, ITT
Corporation, a Delaware corporation ("ITT Corporation"), with the Securities and
Exchange Commission (the "Commission") (File No. 1-5627) are hereby incorporated
by reference in this Prospectus:
(a) Annual Report on Form 10-K for the year ended December 31, 1999;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31,
and June 30, 2000;
(c) Proxy Statement for the Special Meeting of Shareholders of ITT
Corporation on September 21, 1995 (Filed with the Commission on August 28,
1995); and.
(d) Form 8-A dated December 20, 1995.
All documents filed with the Commission by ITT Industries pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended, since the end of the fiscal year covered by such Form 10-K and prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining unsold
shall be deemed to be incorporated by reference in the Prospectus and to be a
part thereof from the date of filing such documents. Any statement contained in
a document incorporated or deemed to be incorporated by reference in the
Prospectus shall be deemed to be modified or superseded for purposes of the
Prospectus to the extent that a statement contained in the Prospectus or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference in the Prospectus modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Prospectus. Any of the above
documents, as well as ITT Industries' most recent annual report to shareholders
and any other report or communication distributed to ITT Industries'
shareholders generally, may be obtained without charge by written or oral
request to the Manager -- Stock Administration and Cash Management, ITT
Industries, Inc., 4 West Red Oak Lane, White Plains, NY 10604, telephone number
(914) 641-2000.
TABLE OF CONTENTS
General Information......................................... 2
The ITT Industries 1996 Restricted Stock Plan for 3
Non-Employee Directors....................................
Administration of the Plan.................................. 7
Resale Restrictions......................................... 7
Federal Tax Treatment....................................... 7
GENERAL INFORMATION
ITT Industries is offering up to 100,000 shares of its Common Stock, $1 par
value (the "Common Stock"), pursuant to the ITT Industries 1996 Restricted Stock
Plan for Non-Employee Directors (the "Plan"). The Common Stock will be made
available from authorized but unissued shares, shares held by ITT Industries in
its treasury, or shares purchased in the open market. The Plan is not subject to
the requirements of the Employee Retirement Income Security Act of 1974.
Directors of ITT Industries who are not employees of ITT Industries or any of
its subsidiaries are eligible to participate in the Plan. As more fully set
forth in the Plan, a non-employee director's "annual retainer" (as defined in
the Plan) will be paid in the form of annual automatic grants of shares of
restricted Common Stock. The Plan is set forth below.
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ITT INDUSTRIES 1996 RESTRICTED STOCK PLAN
FOR NON-EMPLOYEE DIRECTORS
ARTICLE I -- PLAN ADMINISTRATION AND ELIGIBILITY
1.1 PURPOSE
The purpose of the ITT Industries 1996 Restricted Stock Plan for
Non-Employee Directors (the "Plan") is to attract and retain persons of ability
as Directors of ITT Industries, Inc. (the "Company") and to provide them with a
closer identity with the interests of the Company's stockholders by paying the
Annual Retainer in common stock of the Company.
1.2 ADMINISTRATION
The Plan shall be administered by the Compensation and Personnel Committee
of the Board of Directors (hereinafter referred to as the "Committee"). The
Committee shall have the responsibility of interpreting the Plan and
establishing and amending such rules and regulations necessary or appropriate
for the administration of the Plan. All interpretations of the Plan or any
Restricted Stock awards issued under it shall be final and binding upon all
persons having an interest in the Plan. No member of the Committee shall be
liable for any action or determination taken or made in good faith with respect
to this Plan or any award granted hereunder.
1.3 ELIGIBILITY
Directors of the Company who are not employees of the Company or any of its
subsidiaries shall be eligible to participate in the Plan.
1.4 STOCK SUBJECT TO THE PLAN
(a) The maximum number of shares which may be granted under the Plan shall
be 100,000 shares of common stock of the Company (the "Stock").
(b) If any Restricted Stock is forfeited by a Director in accordance with
the provisions of Section 2.2(e), such shares of Restricted Stock shall be
restored to the total number of shares available for grant pursuant to the Plan.
(c) Upon the grant of a Restricted Stock award the Company may distribute
newly issued shares or treasury shares.
ARTICLE II -- RESTRICTED STOCK
2.1 RESTRICTED STOCK AWARDS
Restricted Stock awards shall be made automatically on the date of the
Annual Meeting of Stockholders, to each Director elected at the meeting or
continuing in office following the meeting. The award shall equal the number of
whole shares arrived at by dividing the Annual Retainer that is in effect for
the calendar year within which the award date falls, by the Fair Market Value of
the Company's common stock. Fractional shares shall be paid in cash.
(a) "Annual Retainer" shall mean the amount that is payable to a Director
for service on the Board of Directors during the calendar year. Annual Retainer
shall not include fees paid for attendance at any Board or Committee meeting.
(b) "Fair Market Value" shall mean the average of the high and low prices
per share of the Company's common stock on the date of the Annual Meeting, as
reported by the New York Stock Exchange Composite Tape.
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2.2 TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS
(a) Written Agreement -- Each Restricted Stock award shall be evidenced by
a written agreement delivered to the Director in such form as the Committee
shall prescribe. Such agreement shall include the restrictions described under
Section 2.2(c) and any other restrictions and conditions on the shares as the
Committee deems appropriate.
(b) Shares held in Escrow -- The Restricted Stock subject to such award
shall be registered in the name of the Director and held in escrow by the
Committee until the restrictions on such shares lapse as described below.
(c) Restrictions -- Restricted Stock granted to a Director may not be sold,
assigned, transferred, pledged or otherwise disposed of, except by will or the
laws of descent and distribution, prior to the earliest of the following dates:
(1) The fifth anniversary of the date of grant, unless the Director
shall have elected no later than October 31 of the calendar year
immediately prior to the fifth anniversary of the date of such grant to
extend the period of restriction with respect to such grant. The extension
of such period of restriction shall be to such time as shall be either (w)
the tenth anniversary of such date of grant or (x) six months and one day
after such time as the restrictions set forth in Section 2.2(c) other than
this clause (1) shall otherwise lapse; provided, however, that if the
Director has elected under clause (w) and the event referred to in clause
(x) occurs first, the Director shall be deemed to have elected under clause
(x). In the event that the Director has elected under clause (w) and
anticipates that the event referred to in clause (x) will not occur prior
to the tenth anniversary of such date of grant, the Director may elect, no
later than October 31 of the calendar year immediately prior to the tenth
anniversary of such date of grant a second extension of the period of
restriction to such time as shall be either (y) the fifteenth anniversary
of such date of grant or (z) six months and one day after such time as the
restrictions set forth in Section 2.2(c) other than this clause (1) shall
otherwise lapse; provided, however, that if the Director has elected under
clause (y) and the event referred to in clause (z) occurs first, the
Director shall be deemed to have elected under clause (z).
(2) Retirement from the Board at age 72.
(3) "Change in Control" of the Company. A "Change in Control" shall be
deemed to have occurred 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 the Company or a subsidiary of
the Company or any employee benefit plan sponsored by the Company or a
subsidiary of the Company, is the beneficial owner directly or
indirectly of twenty percent or more of the outstanding Stock of the
Company;
(ii) any person (within the meaning of Section 13(d) of the Act),
other than the Company or a subsidiary of the Company or any employee
benefit plan sponsored by the Company or a subsidiary of the Company,
shall purchase shares pursuant to a tender offer or exchange offer to
acquire any Stock of the Company (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 fifteen percent or more of the outstanding Stock of the
Company (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 the Company shall approve (A) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Stock
of the Company would be converted into cash, securities or other
property, other than a merger of the Company in which holders of Stock
of the Company immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
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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 the
Company; or
(iv) there shall have been a change in a majority of the members of
the Board within a 12-month period unless the election or nomination for
election by the Company's 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 were Directors at the beginning of such
12-month period.
(4) Death of the Director.
(5) Disability of the Director.
(6) Termination of service from the Board on account of (i) a physical
or mental condition that, in the opinion of a qualified physician, is
expected to impede the Director's ability to fulfill his or her principal
duties for a period of at least three months; (ii) the relocation of the
Director's principal place of business to a location that increases the
time required for such Director to travel to the Company's headquarters by
more than 50%; (iii) the acceptance by the Director of a position (other
than an honorary position) in the government of the United States, any
State or any municipality or any subdivision thereof or any organization
performing any quasi-governmental function; (iv) any circumstances which,
in the opinion of outside counsel to the Company, would (or could
reasonably be expected to) conflict with applicable law or any written
policy of the Company; or (v) any other circumstance in which the Committee
believes, in its sole discretion, that the purposes for which the grants of
Restricted Stock were made have been fulfilled, and as such is consistent
with the intention of the Plan.
(7) Notwithstanding Section 2.2(c)(2) hereof, retirement from the
Board at or after attaining age 65, provided that such Director was a
member of the Board of Directors of the Company's corporate predecessor,
ITT Corporation, a Delaware corporation, on December 18, 1995 and served as
a Director of the Company thereafter.
(d) Dividends and Voting Rights -- The Director shall, subject to Section
2.2(c), possess all incidents of ownership of the shares of Restricted Stock
including the right to receive dividends with respect to such shares and to vote
such shares.
(e) The Company shall deliver to the Director, or the beneficiary of such
Director, if applicable, all of the shares of stock that were awarded to the
Director as Restricted Stock, within 30 days following the lapse of restrictions
as described under Section 2.2(c). If the Director discontinues serving on the
Board prior to the date upon which restrictions lapse as described under Section
2.2(c), such Director's Restricted Stock will be forfeited by the Director and
transferred to and reacquired by the Company at no cost to the Company.
ARTICLE III -- GENERAL PROVISIONS
3.1 AUTHORITY
Appropriate officers of the Company designated by the Committee are
authorized to execute Restricted Stock agreements, and amendments thereto, in
the name of the Company, as directed from time to time by the Committee.
3.2 ADJUSTMENTS IN THE EVENT OF CHANGE IN COMMON STOCK OF THE COMPANY
In the event of any reorganization, merger, recapitalization,
consolidation, liquidation, stock dividend, stock split, reclassification,
combination of shares, rights offering, split-up, or extraordinary dividend
(including a spin-off) or divestiture, or any other change in the corporate
structure or shares, the number and kind of shares which thereafter may be
granted under the Plan and the number of shares of Restricted Stock awarded
pursuant to Section 2.1 with respect to which all restrictions have not lapsed,
shall be appropriately adjusted consistent with such change in such manner as
the Board in its discretion may deem equitable to prevent
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substantial dilution or enlargement of the rights granted to, or available for,
Directors participating in the Plan. Any fractional shares resulting from such
adjustments shall be eliminated.
3.3 RIGHTS OF DIRECTORS
The Plan shall not be deemed to create any obligation on the part of the
Board to nominate any Director for reelection by the Company's stockholders or
to retain any Director at any particular rate of compensation. The Company shall
not be obligated to issue Stock pursuant to an award of Restricted Stock for
which the restrictions hereunder have lapsed if such issuance would constitute a
violation of any applicable law. Except as provided herein, no Director shall
have any rights as a stockholder with respect to any shares of Restricted Stock
awarded to him.
3.4 BENEFICIARY
A Director may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and may, from
time to time, amend or revoke such designation. In the event of the death of a
Director, his beneficiary shall have the right to receive the shares of
Restricted Stock awarded pursuant to the Plan. If no designated beneficiary
survives the Director, the executor or administrator of the Director's estate
shall be deemed to be the Director's beneficiary.
3.5 LAWS AND REGULATIONS
The Committee shall have the right to condition any issuance of shares to
any Director hereunder on such Director's undertaking in writing to comply with
such restrictions on the subsequent disposition of such shares as the Committee
shall deem necessary or advisable as a result of any applicable law or
regulation. The Committee may postpone the delivery of stock following the lapse
of restrictions with respect to awards of Restricted Stock for such time as the
Committee in its discretion may deem necessary, in order to permit the Company
with reasonable diligence (i) to effect or maintain registration of the Plan, or
the shares issuable upon the lapse of certain restrictions respecting awards of
Restricted Stock, under the Securities Act of 1933 or the securities laws of any
applicable jurisdiction, or (ii) to determine that such shares and the Plan are
exempt from such registration; the Company shall not be obligated by virtue of
any Restricted Stock agreement or any provision of the Plan to recognize the
lapse of certain restrictions respecting awards of Restricted Stock or issue
shares in violation of said Act or of the law of the government having
jurisdiction thereof.
3.6 AMENDMENT, SUSPENSION AND DISCONTINUANCE OF THE PLAN
The Board may from time to time amend, suspend or discontinue the Plan,
provided that the Board may not, without the approval of the holders of a
majority of the outstanding shares entitled to vote, take any action which would
cause the Plan to no longer comply with Rule 16b-3 under the Act, or any
successor rule or other regulatory requirement.
No amendment, suspension or discontinuance of the Plan shall impair a
Director's right under a Restricted Stock award previously granted to him
without his consent.
3.7 GOVERNING LAW
This Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of New York.
3.8 EFFECTIVE DATE AND DURATION OF THE PLAN
This Plan shall be effective upon the Distribution Date (as defined in the
Proxy Statement of ITT Corporation dated August 30, 1995) subject to the
approval of the Plan by the stockholders of ITT Corporation, and shall terminate
on December 31, 2005, provided that grants of Restricted Stock made prior to the
termination of the Plan may vest following such termination in accordance with
their terms.
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ADMINISTRATION OF THE PLAN
The Compensation and Personnel Committee of the Board of Directors of ITT
Industries, the members of which serve during the pleasure of the Board,
administers the Plan but does not act as a trustee or in any other fiduciary
capacity with respect thereto.
RESALE RESTRICTIONS
The Plan contains no restrictions on the resale of Common Stock once the
Plan restriction period has ended. However, persons who may be deemed to be
affiliates of ITT Industries may not reoffer or resell shares of Common Stock in
a transaction which is not registered under the Securities Act of 1933, as
amended (the "Act"), except pursuant to Rule 144 under the Act or another
exemption thereunder. Rule 144 requires, among other things, that (1) any sales
of Common Stock by such affiliates must be made through a broker, and (2) an
appropriate Form 144 must be mailed to the Securities and Exchange Commission
prior to or concurrently with the placing of a sell order with the broker, with
certain exceptions.
FEDERAL TAX TREATMENT
Set forth below is a summary of the federal income tax consequences under
the Internal Revenue Code of 1986, as amended (the "Code"), of the grant and
vesting of restricted stock awarded to a director of ITT Industries ("Director")
under the Plan. The following summary does not include any discussion of state,
local or foreign income tax consequences or the effect of gift, estate or
inheritance taxes, any of which may be significant to a particular Director
eligible to receive an award. In addition, this summary does not apply to every
specific transaction that may occur. Each recipient of an award under the Plan
should consult his or her tax advisor for advice pertaining to his or her
particular circumstances. The Plan is not qualified under Section 401(a) of the
Code.
Under the Code, a Director normally will not realize taxable income and ITT
Industries will not be entitled to a deduction upon the grant of restricted
stock, since such stock is subject to a "substantial risk of forfeiture" (as
defined in the Code). At the time such restrictions lapse and the shares of
restricted stock are no longer subject to a substantial risk of forfeiture, a
Director will realize taxable compensation (ordinary income) in an amount equal
to the fair market value on the date the restrictions lapse, of the number of
shares of Common Stock which have become nonforfeitable or transferable.
Likewise, ITT Industries will be entitled to a deduction in the same amount in
the same year, provided ITT Industries complies with applicable tax withholding
requirements. However, a Director may make an income recognition election under
Section 83(b) of the Code (an "83(b) Election") within 30 days of the award and
recognize taxable ordinary income in the year the shares of restricted stock are
awarded in an amount equal to their fair market value at the time of the award,
determined without regard to the restrictions. In that event, ITT Industries
will be entitled to a deduction in such year in the same amount, provided ITT
Industries complies with applicable tax withholding requirements. Any gain or
loss realized by the recipient upon the subsequent disposition of Common Stock
will be capital gain (or loss) to the extent the proceeds of sale exceed the
fair market value of the shares on the date of grant, which became the
Director's tax basis as a result of the 83(b) Election. If the Director makes an
83(b) Election and subsequently terminates his employment during the restriction
period, thus forfeiting the shares of restricted stock, the taxes paid on the
award of the shares are also forfeited and ITT Industries must include as
ordinary income the amount it previously deducted in the year of grant with
respect to such shares. Any dividends with respect to the shares of restricted
stock that are paid or made available to a recipient who has not made an 83(b)
Election while the shares remain forfeitable are treated as additional
compensation taxable as ordinary income to the Director and deductible by ITT
Industries when paid. If an 83(b) Election has been made with respect to the
restricted stock, the dividends represent ordinary dividend income to the
Director and are not deductible by ITT Industries.
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