EXHIBIT 10.10
ITT INDUSTRIES
ENHANCED SEVERANCE PAY PLAN
(AMENDED AND RESTATED AS OF JULY 13, 2004)
1. PURPOSE
The purpose of this ITT Industries 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.
2. COVERED EMPLOYEES
Covered employees under this Plan ("EMPLOYEES") are active full-time,
regular salaried employees of ITT Industries, Inc., ("ITT INDUSTRIES") and of
any subsidiary company ("ITT INDUSTRIES 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 Industries 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 Industries 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 Industries 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 INDUSTRIES",
"ITT INDUSTRIES SUBSIDIARY" and "COMPANY" as used herein shall also include,
respectively and as the context requires, any successor company to ITT
Industries or any successor company to any ITT Industries Subsidiary and any
affiliate of any such successor company.
3. DEFINITIONS
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
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Act), other than ITT Industries or a subsidiary of ITT Industries or any
employee benefit plan sponsored by ITT Industries or a subsidiary of ITT
Industries, is the beneficial owner directly or indirectly of twenty percent
(20%) or more of the outstanding Common Stock $1 par value, of ITT Industries
(the "STOCK"); (ii) any person (within the meaning of Section 13(d) of the Act),
other than ITT Industries or a subsidiary of ITT Industries, or any employee
benefit plan sponsored by ITT Industries or a subsidiary of ITT Industries,
shall purchase shares pursuant to a tender offer or exchange offer to acquire
any Stock of ITT Industries (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 Industries (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 Industries shall approve (A) any
consolidation, business combination or merger involving ITT Industries, other
than a consolidation, business combination or merger involving ITT Industries 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 Industries (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 Industries (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 Industries, (iv) there shall have been a change in a majority of
the members of the Board of Directors of ITT Industries within a 12-month period
unless the election or nomination for election by ITT Industries' 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 Industries or
any subsidiary of ITT Industries or any employee benefit plan (or related trust)
sponsored by ITT Industries or a subsidiary of ITT Industries) 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, 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 Industries
Headquarters, White Plains, New York, as in effect immediately preceding an
Acceleration Event and (y) four (4) weeks (in lieu of notice of termination),
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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 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 promptly after receipt of notice thereof given by the
Employee, (A) a reduction in the Employee's annual base salary or annual bonus
or service recognition award (as measured by the highest bonus or highest
service recognition award paid or awarded, in respect of the three (3) calendar
years preceding an Acceleration Event), 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) or any reduction in any
material compensation or benefits arrangement, (B) the assignment to the
Employee of any duties inconsistent in any 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 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.
"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 Industries 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.
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"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 (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 absent a showing of bad faith on the
Employee's part.
5. SEVERANCE BENEFITS
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.
- Benefits
- 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.
- 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 Industries Salaried Retirement Plan and, as applicable,
ITT Industries 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
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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
Compensation under the Pension Plans. The above total lump sum values shall be
determined in the manner provided in the Excess Pension Plans of the Company for
determination of lump sum benefits upon the occurrence of an Acceleration Event,
as defined in said Plans. This provision shall apply to any Employee having a
pension benefit under any of the Pension Plans as of the Employee's termination
of employment. An example of the calculation of benefits set forth in this
paragraph is set forth on Schedule A.
- Crediting of an additional two (2) years of age and an additional two
(2) years of eligibility service equal to the Employee's Enhanced Severance
Period for purposes of the Company's retiree health and retiree life insurance
benefits. This provision shall apply to any Employees covered under such
benefits any time during the three (3) year period immediately preceding the
Employee's termination of employment.
- Payment of a lump sum amount ("SAVINGS PLAN LUMP SUM AMOUNT") equal to
the number of weeks of the Employee's Enhanced Severance Period times the
following amount: the highest annual base salary rate determined above under
"Enhanced Week's Pay", divided by 52 weeks, times the highest percentage rate of
Company Contributions (not to exceed 3 1/2%) with respect to the Employee under
the ITT Industries Investment and Savings Plan for Salaried Employees and/or the
ITT Industries Excess Savings Plan (or corresponding savings plan arrangements
(i) outside the United States or (ii) as may be designated by an Authorized
Officer of Designee) ("SAVINGS PLANS") (including matching contributions and
floor contributions) at any time during the three (3) year period immediately
preceding the Employee's termination of employment or the three (3) year period
immediately preceding the Acceleration Event. This provision shall apply to any
Employee who is a member of any of the Savings Plans at any time during such
three (3) year period.
- Outplacement - Outplacement services for one (1) year.
With respect to the provision of benefits during the above period equal to
the Employee's Enhanced Severance Period, if, for any reason at any time the
Company is unable to treat the Employee as being eligible for ongoing
participation in any Company employee benefit plans in existence immediately
prior to the termination of employment of the Employee, and if, as a result
thereof, the Employee does not receive a benefit or receives a reduced benefit
the Company shall provide such benefits by (i) direct payment to the Employee of
the amounts the Employee would have received from such benefit plan had the
Employee continued to be eligible or (ii) at the Company's option, making
available equivalent benefits from other sources.
6. FORM OF PAYMENT OF SEVERANCE PAY AND LUMP SUM PAYMENTS
Severance Pay shall be paid in cash, in a non-discounted lump sum within
five (5)
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business days after the date the employment of the Employee terminates. The
Pension Lump Sum Amount and the Savings Plan Lump Sum Amount shall be paid in
cash within thirty (30) calendar days after the date the employment of the
Employee terminates.
7. TERMINATION OF EMPLOYMENT - OTHER
The Severance Benefits shall only be payable upon an Employee's
termination of employment due to a Qualifying Termination; provided, that if,
following the occurrence of an Acceleration Event, an Employee is terminated due
to the Employee's death or disability (as defined in the long-term disability
plan in which the Employee is entitled to participate (whether or not the
Employee voluntarily participates in such plan)) and, at the time of such
termination, the Employee had grounds to resign with Good Reason, such
termination of employment shall be deemed to be a Qualifying Termination.
8. ADMINISTRATION OF PLAN
This Plan shall be administered by ITT Industries, who shall have the
exclusive right to interpret this Plan, adopt any rules and regulations for
carrying out this Plan as may be appropriate and decide any and all matters
arising under this Plan, including but not limited to the right to determine
appeals. Subject to applicable Federal and state law, all interpretations and
decisions by ITT Industries shall be final, conclusive and binding on all
parties affected thereby.
Notwithstanding the preceding paragraph, following an Acceleration Event,
any controversy or claim arising out of or relating to this Plan, or the breach
thereof, shall be settled by arbitration administered by the American
Arbitration Association under its Commercial Arbitration Rules and the entire
cost thereof shall be borne by the Company. The location of the arbitration
proceedings shall be reasonably acceptable to the Employee. Judgment on the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. The Company shall pay all legal fees, costs of litigation,
prejudgment interest, and other expenses which are incurred in good faith by the
Employee as a result of the Company's refusal to provide any of the Severance
Benefits to which the Employee becomes entitled under this Plan, or as a result
of the Company's (or any third party's) contesting the validity, enforceability,
or interpretation of this Plan, or as a result of any conflict between the
Employee and the Company pertaining to this Plan. The Company shall pay such
fees and expenses from the general assets of the Company.
9. TERMINATION OR AMENDMENT
ITT Industries may terminate or amend this Plan ("PLAN CHANGE") at any
time except, that following the occurrence of (i) an Acceleration Event or (ii)
a Potential Acceleration Event, no Plan Change that would adversely affect any
Employee may be made without the prior written consent of such Employee affected
thereby; provided, however, that (ii) above shall cease to apply if such
Potential Acceleration Event does not result in the occurrence of an
Acceleration Event.
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10. OFFSET
Any Severance Benefits provided to an Employee under this Plan shall be
offset by reducing (x) any Severance Pay hereunder by any severance pay, salary
continuation pay, termination pay or similar pay or allowance and (y) any other
Severance Benefits hereunder by corresponding employee benefits, or outplacement
services, which the Employee receives or is entitled to receive, (i) pursuant to
any other Company policy, practice program or arrangement, (ii) pursuant to any
Company employment agreement or other agreement with the Company, or (iii) by
virtue of any law, custom or practice excluding, however, any unemployment
compensation in the United States, unless the Employee voluntarily expressly
waives (which the Employee shall have the exclusive right to do) in writing any
such respective entitlement.
11. EXCISE TAX
In the event that it shall be determined that any payment or distribution
by the Company to or for the benefit of the Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Plan or otherwise,
but determined without regard to any additional payments required under this
Section 11 such payments or distributions being referred to herein as
"PAYMENTS") would give rise to liability of the Employee for the excise tax
imposed by Section 4999 of the Internal Revenue Code, as amended (the "CODE"),
or that any interest or penalties are incurred by the Employee with respect to
such excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "EXCISE TAX"), then the Employee
shall be entitled to receive an additional payment (the "GROSS-UP PAYMENT") in
an amount such that after payment by the Employee of all Federal, state and
local taxes (including any interest or penalties imposed with respect to such
taxes), including without limitation, any income and employment taxes (and any
interest and penalties imposed with respect to such taxes) and Excise Tax
imposed upon the Gross-Up Payment, the Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
All determinations required to be made under this Section 11, including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by a nationally recognized accounting firm mutually agreed to by
the Employee and the Company (the "ACCOUNTING FIRM") which shall provide
detailed supporting calculations both to the Company and the Employee within ten
(10) business days of the receipt of notice from the Employee that there has
been a Payment, or such earlier time as is requested by the Company; provided
that for purposes of determining the amount of any Gross-Up Payment, the
Employee shall be deemed to pay federal income tax at the highest marginal rates
applicable to individuals in the calendar year in which any such Gross-Up
Payment is to be made and deemed to pay state and local income taxes at the
highest effective rates applicable to individuals in the state or locality of
the Employee's residence or place of employment, whichever is higher, in the
calendar year in which any such Gross-Up Payment is to be made. All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 11, shall be paid by
the Company to the Employee when due. If the Accounting Firm determines that no
Excise Tax is payable by the Employee, it shall so indicate to the Employee in
writing. Any determination by the Accounting Firm shall be binding upon the
Company and the Employee. As a result of the uncertainty in the application of
Section 4999 of the Code, it is
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possible that the amount of the Gross-Up Payment determined by the Accounting
Firm to be due to (or on behalf of) the Employee was lower than the amount
actually due ("UNDERPAYMENT"). In the event that the Company exhausts its
remedies pursuant to this Section 11 and the Employee thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Employee.
The Employee shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of any Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after Employee is informed in
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. Employee shall not pay
such claim prior to the expiration of the thirty day period following the date
on which it gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due). If the
Company notifies Employee in writing prior to the expiration of such period that
it desires to contest such claim, Employee shall (i) give the Company any
information reasonably requested by the Company relating to such claim, (ii)
take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company, (iii) cooperate with the Company in good
faith in order to effectively contest such claim and (iv) permit the Company to
participate in any proceedings relating to such claim; provided, however, that
the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Employee harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 11, the Company
shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Employee to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, further, that if the
Company directs the Employee to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to the Employee, on an interest-free
basis, and shall indemnify and hold the Employee harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; provided, further, that if the
Employee is required to extend the statute of limitations to enable the Company
to contest such claim, the Employee may limit this extension solely to such
contested amount. The Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Employee shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
If, after the receipt by the Employee of an amount paid or advanced by the
Company pursuant to this Section 11, the Employee becomes entitled to receive
any refund with respect to
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a Gross-Up Payment, the Employee shall (subject to the Company's complying with
the requirements of Section 11) promptly pay to the Company the amount of such
refund received (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Employee of an amount advanced
by the Company pursuant to Section 11, a determination is made that the Employee
shall not be entitled to any refund with respect to such claim and the Company
does not notify the Employee in writing of its intent to contest such denial of
refund prior to the expiration of thirty (30) days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of
the Gross-Up Payment required to be paid.
In the event the Gross-Up Payment shall fail to make the Employee whole on
an after-tax basis, whether by reason of either (i) an adjustment made by the
Internal Revenue Service or state taxing authority or (ii) because the
Employee's actual effective tax rate was higher than the rate used by the
Accounting Firm as determined pursuant to Section 11 for the year in which the
Gross-Up Payment was made, the Gross-Up Payment shall be recalculated
("RECALCULATED GROSS-UP PAYMENT"), using the Employee's actual effective tax
rate, once it is known for the calendar year in which the Gross-Up Payment is
made, and the Company shall reimburse the Employee for the full amount of any
amount by which the Recalculated Gross-Up Payment exceeds the Gross-Up Payment
("ADDITIONAL GROSS-UP PAYMENT").
The Gross-Up Payment and any Additional Gross-Up Payment shall be paid out
of the general assets of the Company.
12. MISCELLANEOUS
The Employee shall not be entitled to any notice of termination or pay in
lieu thereof except as included as part of Severance Pay as provided herein.
Severance Benefits under this Plan are paid entirely by the Company from
its general assets.
This Plan is not a contract of employment, does not guarantee the Employee
employment for any specified period and does not limit the right of the Company
to terminate the employment of the Employee at any time.
If an Employee should die while any amount is still payable to the
Employee hereunder had the Employee continued to live, all such amounts shall be
paid in accordance with this Plan to the Employee's designated heirs or, in the
absence of such designation, to the Employee's estate.
The numbered section headings contained in this Plan are included solely
for convenience of reference and shall not in any way affect the meaning of any
provision of this Plan.
If, for any reason, any one or more of the provisions or part of a
provision contained in this Plan shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision or part of a provision of this
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Plan not held so invalid, illegal or unenforceable, and each other provision or
part of a provision shall to the full extent consistent with law remain in full
force and effect.
The Plan shall be governed by and construed in accordance with the laws of
the State of New York without regard to the conflicts of laws provisions
thereof.
The Plan shall be binding on all successors and assigns of the ITT
Industries and an Employee.
13. NOTICES
Any notice and all other communication provided for in this Plan
shall be in writing and shall be deemed to have been duly given when delivered
by hand or overnight courier or three days after it has been mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth below, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
If to the Company:
ITT Industries, Inc.
4 West Red Oak Lane
White Plains, New York 10604
Attention: General Counsel
If to Employee:
To the most recent address of Employee set forth in the personnel records
of ITT Industries.
14. ADOPTION DATE
This Plan was adopted by ITT Industries on April 15, 1997 ("ADOPTION
DATE") and does not apply to any termination of employment which occurred or
which was communicated to the Employee prior to the Adoption Date.
ENHANCED SEVERANCE PAY PLAN
EXAMPLE OF POTENTIAL PENSION ENHANCEMENT
BASIC INPUT DATA
Date of Event 12/31/2004
Employee Age 55
Employee Service 20
Current Salary Rate 139,000
Estimated Social Security Benefit (Mo.) 1,400
HISTORICAL EARNINGS
BASE EXECUTIVE
YEAR EARNINGS BONUS
1998 104,167 42,000
1999 109,375 53,000
2000 114,208 62,500
2001 119,583 70,000
2002 125,500 90,000
2003 131,500 85,000
2004 137,917 87,000
IMPLIED EARNINGS
Year 1 139,000 90,000
Year 2 139,000 90,000
CALCULATION OF PENSION BENEFIT
ACTUAL ENHANCED IMPROVEMENT
Final Average Pay 204,641.67 222,983.33
Age 55.00 57.00
Service 20.00 22.00
Gross Monthly Pension 6,821.39 8,176.06 1,354.67
Less: Social Security Offset (350.00) (385.00) (35.00)
Net Monthly Pension @ Age 65 6,471.39 7,791.06 1,319.67
Early Retirement Reduction Factor 75.00% 85.00%
Net Pension Payable after age 62 4,766.04 6,564.65 1,798.61
Net Pension Payable to age 62 5,116.04 6,949.65 1,833.61
Lump Sum Value of Benefit from Enhanced
Severance Pay Plan 397,925.45
Note: In addition to the lump sum payment shown, any portion of the actual
benefit that is payable under the Excess Pension Plan would be paid in a lump
sum