EXHIBIT 10.4
ITT INDUSTRIES, INC.
2003 EQUITY INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AWARD AGREEMENT
THIS AGREEMENT (the "Agreement"), effective as of the 8th day of March, 2005, by
and between ITT Industries, Inc. (the "Company") and ________________ (the
"Optionee"), WITNESSETH:
WHEREAS, the Optionee is now employed by the Company or an Affiliate (as defined
in the Plan) as an employee, and in recognition of the Optionee's valued
services, the Company, through the Compensation and Personnel Committee of its
Board of Directors (the "Committee"), desires to provide an opportunity for the
Optionee to acquire or enlarge stock ownership in the Company pursuant to the
provisions of the Company's 2003 Equity Incentive Plan (the "Plan");
NOW, THEREFORE, in consideration of the terms and conditions set forth in this
Agreement and pursuant to the provisions of the Plan, a copy of which is
attached hereto and incorporated herein as part of this Agreement, and any
administrative rules and regulations related to the Plan as may be adopted by
the Committee, the parties hereto hereby agree as follows:
1. GRANT OF OPTIONS. In accordance with, and subject to, the terms and
conditions of the Plan and this Agreement, the Company hereby confirms the
grant on March 8, 2005 to the Optionee of the option to purchase from the
Company all or any part of an aggregate of XXXX shares of common stock of
the Company (the "Option"), at the purchase price of $XX.XX per share (the
"Option Price" or "Exercise Price"). The Option shall be a Nonqualified
Stock Option.
2. TERMS AND CONDITIONS. It is understood and agreed that the Option is
subject to the following terms and conditions:
(a) EXPIRATION DATE. The Option shall expire on March 8, 2012, or, if
the Optionee's employment terminates before that date, on the date
specified in subsection (e) below.
(b) EXERCISE OF OPTION. The Option may not be exercised until it has
become vested.
(c) VESTING. Subject to subsections 2(a) and 2(e), the Option shall vest
as follows:
(i) 1/3 of the Option shall vest on March 8, 2006,
(ii) 1/3 of the Option shall vest on March 8, 2007 and
(iii) 1/3 of the Option shall vest on March 8, 2008;
Subject to subsections 2(a) and 2(e), to the extent not earlier
vested pursuant to paragraphs (i), (ii), and (iii) of this
subsection (c), the Option shall vest in full upon the first to
occur of the following events:
(A) termination of the Optionee's employment due to Retirement (as
defined below), Disability (as defined below), or death; or
(C) an Acceleration Event (as defined in the Plan).
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(d) PAYMENT OF EXERCISE PRICE AND TAX WITHHOLDING. Permissible methods
for payment of the Exercise Price and for satisfaction of tax
withholding obligations upon exercise of the Option shall be as
described in Sections 6.6 and Article 14 of the Plan, or, if the
Plan is amended, successor provisions. In addition to the methods of
exercise permitted by Section 6.6 of the Plan, the Optionee may
exercise the Option by way of a broker-assisted cashless exercise in
a manner consistent with the Federal Reserve Board's Regulation T,
unless the Committee determines that such exercise method is
prohibited by law.
(e) EFFECT OF TERMINATION OF EMPLOYMENT.
If the Optionee's employment terminates before March 8, 2012, the
Option shall expire on the date set forth below, as applicable:
(i) Death. If the Optionee's employment is terminated as a result
of the Optionee's death, the Option shall expire on the
earlier of March 8, 2012 or the date three years after; the
termination of the Optionee's employment due to death.
(ii) Retirement or Disability. If the Optionee's employment is
terminated as a result of the Optionee's Retirement (as
defined below), or Disability (as defined below), the Option
shall expire on the earlier of March 8, 2012 or the date five
years after the termination of the Optionee's employment due
to Retirement or Disability. For purposes of this Section
2(e)(ii), employment shall include any period in which
severance is paid in the form of salary continuation.
(iii) Voluntary Termination; Cause. If the Optionee's employment is
terminated by the Optionee for any reason other than
Retirement (as defined below), Disability (as defined below)
or death, or by the Company (or an Affiliate, as the case may
be) for cause (as determined by the Committee), the vested and
unvested portions of the Option shall expire on the date of
the termination of this Optionee's employment.
(iv) Other Termination by the Company. If the Optionee's
employment is terminated by the Company (or an Affiliate, as
the case may be) for other than cause (as determined by the
Committee), and not because of the Optionee's Retirement (as
defined below), Disability (as defined below), or death, the
vested portion of the Option shall expire on the earlier of
March 8, 2012 or the date three months after the termination
of the Optionee's employment (for purposes of this Section
2(e)(iv), employment shall include any period in which
severance is paid in the form of salary continuation). Any
portion of the Option that is not vested (or the entire
Option, if no part was vested) as of the date the Optionee's
employment terminates shall be forfeited immediately on the
date of termination of employment, and such unvested portion
of the Option (the entire Option, if no portion was vested on
the date of termination) shall not thereafter be exercisable.
Notwithstanding the foregoing, if an Optionee's employment is
terminated on or after an Acceleration Event (A) by the Company (or
an Affiliate, as the case may be) for other than cause (as
determined by the Committee), and not because of the Optionee's
Retirement (as defined below), Disability (as defined below), or
death, or (B) by the Optionee because the Optionee in good faith
believed that as a result of such Acceleration Event he or she was
unable effectively to discharge
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his or her present duties or the duties of the position the Optionee
occupied just prior to the occurrence of such Acceleration Event,
the Option shall in no event expire before the earlier of the date
that is 7 months after the Acceleration Event or March 8, 2012.
RETIREMENT. For purposes of this Agreement, the term "Retirement"
shall mean the termination of the Optionee's employment if, at the
time of such termination, the Optionee is eligible to commence
receipt of retirement benefits under a traditional formula defined
benefit pension plan maintained by the Company or an Affiliate (or
would be eligible to receive such benefits if he or she were a
participant in such traditional formula defined benefit pension
plan).
DISABILITY. For purposes of this Agreerment, the term "Disability"
shall mean the complete and permanent inability of the Optionee to
perform all of his or her duties under the terms of his or her
employment, as determined by the Committee upon the basis of such
evidence, including independent medical reports and data, as the
Committee deems appropriate or necessary.
(f) COMPLIANCE WITH LAWS AND REGULATIONS. The Option shall not be
exercised at any time when its exercise or the delivery of shares
hereunder would be in violation of any law, rule, or regulation that
the Company may find to be valid and applicable.
(g) OPTIONEE BOUND BY PLAN AND RULES. Optionee hereby acknowledges
receipt of a copy of the Plan and agrees to be bound by the terms
and provisions thereof. Optionee agrees to be bound by any rules and
regulations for administering the Plan as may be adopted by the
Committee during the life of the Option. Terms used herein and not
otherwise defined shall be as defined in the Plan.
This Agreement is issued, and the Option evidenced hereby is granted, in White
Plains, New York, and shall be governed and construed in accordance with the
laws of the State of New York.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its
Chairman, President and Chief Executive Officer, or a Vice President, as of the
8th day of March, 2005.
Agreed to: ITT INDUSTRIES, INC.
Steven R. Loranger
_____________________________
Optionee
Dated:_______________________ Dated: March 8, 2005
Enclosures
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