Exhibit 10.9
EXELIS INC. 1997 ANNUAL INCENTIVE PLAN
1. PURPOSE
     The purpose of this Exelis Inc. 1997 Annual Incentive Plan is to provide
incentive compensation in the form of a bonus to eligible executives of Exelis
Inc. (the “Company”) for achieving specific pre-established performance
objectives and to continue to motivate participating executives to achieve their
business goals, while tying a portion of their compensation to measures
affecting shareholder value; provided, however, that for purposes of grants made
under the Predecessor Plan, the term “Company” shall include the ITT Corporation
(the “Predecessor Corporation”) as the original grantor. The Incentive Plan
seeks to enable the Company to continue to be competitive in its ability to
attract and retain executives of the highest caliber.
     This Exelis Inc. 1997 Annual Incentive Plan (the “Incentive Plan”) first
became effective as of October 31, 2011 following the spin-off of Exelis Inc.
from the Predecessor Corporation on October 31, 2011; provided, however, that
for purposes of grants made under the Predecessor Plan, the term “Incentive
Plan” shall include shall include the Predecessor Plan as it existed at the time
of the grant. The Predecessor Corporation maintained a similar plan prior to the
spin-off (the “Predecessor Plan”), and the Incentive Plan was created to govern
the awards under the Predecessor Plan, as revised to reflect the spin-off from
the Predecessor Corporation. The Plan shall remain in effect as provided in
Article IX hereof, and participants shall receive full credit for their service
and participation with the Predecessor Corporation as provided in Article IX
hereof.
2. PLAN ADMINISTRATION
     The Compensation and Personnel Committee (the “Committee”) of the Board of
Directors (the “Board”) of the company shall have full power and authority to
administer, construe and interpret the provisions of the Incentive Plan and to
adopt and amend administrative rules and regulations, agreements, guidelines and
instruments for the administration of the Incentive Plan and for the conduct of
its business as the Committee considers appropriate.
     The Committee shall have full power, to the extent permitted by law, to
delegate its authority to any officer or employee of the Company to administer
and interpret the procedural aspects of the Incentive Plan, subject to the terms
of the Incentive Plan, including adopting and enforcing rules to decide
procedural and administrative issues.
     The Committee may rely on opinions, reports or statements of officers or
employees of the Company and of counsel to the Company (inside or retained
counsel), public accountants and other professional or expert persons.
     The Board reserves the right to amend or terminate the Incentive Plan in
whole or in part at any time; provided, however, that no amendments shall
adversely affect or impair the rights of any participant previously accrued
thereby, without the written consent of the participant.

 

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     No member of the Committee shall be liable for any action taken or omitted
to be taken or for any determination made by him or her in good faith with
respect to the Incentive Plan, and the Company shall indemnify and hold harmless
each member of the Committee against any cost or expense (including counsel
fees) or liability (including any sum paid in settlement of a claim with the
approval of the Committee) arising out of any act or omission in connection with
the administration or interpretation of the Incentive Plan, unless arising out
of such person’s own fraud or bad faith.
3. ELIGIBLE EXECUTIVES
     Executives of the Company or its affiliates in salary grade 19 and above
shall be eligible to participate in the Incentive plan; provided, however, that
for purposes of grants made under the Predecessor Plan, the term “Company” shall
include ITT Corporation as the original grantor.
4. PLAN YEAR, PERFORMANCE PERIODS, PERFORMANCE MEASURES AND PERFORMANCE TARGETS
     Each fiscal year of the Incentive Plan (the “Plan Year”) shall begin on
January 1 and end on December 31. The performance period (the “Performance
Period”) with respect to which bonuses may be payable under the Incentive Plan
shall be the Plan Year unless the Committee designates one or more different
Performance Periods.
     The Committee shall establish the performance measures (the “Performance
Measures”) to be used which may include, but shall not be limited to, net
operating profit after tax, economic value added, earnings per share, return on
equity, return on total capital, or such other measures as determined by the
Committee. In addition, Performance Measures may be based upon other objectives
such as negotiating transactions or sales and developing long-term goals. The
Performance Measures shall be objectively determinable and, to the extent that
they are expressed in standard accounting terms, shall be according to generally
accepted accounting principles as in existence on the date on which the
applicable Performance Period is established and without regard to any changes
in such principles after such date. For purposes of the Plan, economic value
added shall mean the amount of economic profit created in excess of the amount
required to satisfy the obligations to and normal expectations of the Company’s
lenders and investors.
     The Committee shall establish the performance targets (the “Performance
Targets”) to be achieved which shall be based on one or more Performance
Measures relating to the Company as a whole or to the specific businesses of the
Company, subsidiaries, operating companies, or operating units as determined by
the Committee and shall be expressed as an objective formula to be used in
calculating the amount of bonus award each executive shall be eligible to
receive. There may be a sliding scale of payment dependent upon the percentage
levels of achievement of Performance Targets.
     The Performance Measures and Performance Targets, which may be different
with respect to each executive and each Performance Period, must be set forth in
writing by the Committee within the first ninety (90) days of the applicable
Performance Period.

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5. CERTIFICATION OF PERFORMANCE TARGETS AND CALCULATION OF BONUS AWARDS
     After the end of each Performance Period, and prior to the payment for such
Performance Period, the Committee must certify in writing the degree to which
the Performance Targets for the Performance Period were achieved, including the
specific target objective or objectives and the satisfaction of any other
material terms of the bonus award. The Committee shall calculate the amount of
each executive’s bonus for such Performance Period based upon the Performance
Measures and Performance Targets for each executive. In establishing Performance
Targets and Performance Measures and in calculating the degree of achievement
thereof, the Committee may ignore extraordinary items, property transactions,
changes in accounting standards and losses or gains arising from discontinued
operations. The Committee shall have authority and discretion to increase or
decrease the amount of any executive’s bonus as so determined, and may totally
eliminate any bonus award if it determines in its absolute and sole discretion
that such action is appropriate in order to reflect the executive’s performance
or unanticipated factors during the Performance Period.
6. PAYMENT OF AWARDS
     Approved bonus awards shall be payable by the Company in cash to each
executive, or to the executive’s estate in the event of the executive’s death,
as soon as practicable after the end of each Performance Period. No bonuses may
be paid under the Incentive Plan until the Committee has certified in writing
that the relevant Performance Targets were achieved.
     If an executive is not an employee on the last day of the Performance
Period, the Committee shall have sole discretion to determine what portion, if
any, the executive shall be entitled to receive with respect to any award for
the Performance Period. The Committee shall have the authority to adopt
appropriate rules and regulations for the administration of the Incentive Plan
in such termination cases.
     The Company retains the right to deduct from any bonus awards paid under
the Incentive Plan any Federal, state, local or foreign taxes required by law to
be withheld with respect to such payment.
7. OTHER TERMS AND CONDITIONS
     Any award made under this Incentive Plan shall be subject to the discretion
of the Committee. No person shall have any legal claim to be granted an award
under the Incentive Plan and the Committee shall have no obligation to treat
executives uniformly. Except as may be otherwise required by law, bonus awards
under the Incentive Plan shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, charge,
garnishment, execution, or levy of any kind, either voluntary or involuntary.
Bonuses awarded under the Incentive Plan shall be payable from the general
assets of the Company, and no executive shall have any claim with respect to any
specific assets of the Company.
     Nothing contained in the Incentive Plan shall give any executive the right
to continue in the employment of the Company or affect the right of the Company
to terminate an executive.

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8. ACCELERATION EVENT.
     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 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 (20%) or more of the outstanding Common Stock $1 par value, of
the Company (the “Stock”): (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 twenty percent (20%) 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 consummation of (A) any consolidation, business combination or
merger involving the Company, other than a consolidation, business combination
or merger involving the Company 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 the Company (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 the Company (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 the Company, (iv) there shall have been a change
in a majority of the members of the Board of Directors of the Company 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 (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 were 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 the
Company or any subsidiary of the Company or any employee benefit plan (or
related trust) sponsored by the Company or a subsidiary of the Company) 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.
     Upon the occurrence of such Acceleration Event, the Performance Measures
for each Performance Period with respect to which bonuses may be payable under
the Incentive Plan shall be deemed to be achieved at the greater of (i) the
Performance Target established for such Performance Measures or (ii) the
Company’s actual achievement of such Performance Measures as of the Acceleration
Event. Payment of the bonuses, for the full year, will be made to each
Participating Executive, in cash, within five (5) business days following such
Acceleration Event.

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9. MISCELLANEOUS.
     The Incentive Plan shall be effective October 31, 2011. The Plan shall
remain in effect unless/until terminated by the Board; provided, however, that
if an Acceleration Event has occurred no amendment or termination shall impair
the rights of any executive with respect to any prior award.
     This Incentive Plan shall be construed and governed in accordance with the
laws of the State of New York.
     Notwithstanding any other provision of the Incentive Plan to the contrary,
all prior service and participation by a participant with the Predecessor
Corporation shall be credited in full towards a participant’s service and
participation with the Company.

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