EX-10.9






Exhibit 10.9




ITT Corporation

Special Senior Executive Severance Pay Plan

(amended and restated as of December 31, 2008)




1. Purpose




     The purpose of this ITT Corporation Special Senior Executive 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 (“Special Severance Executives”) 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 Special Severance Executives who are short term disabled as of a
Potential Acceleration Event within the meaning of the Company’s short term disability plans)
(other than Special Severance Executives on periodic severance as of a Potential Acceleration
Event) who are in Band A or B or were in Band A or B at any time within the two year period
immediately preceding an Acceleration Event and such other employees of the Company who shall be
designated as covered employees in Band A or B under the Plan by the Compensation and Personnel
Committee of ITT’s Board of Directors.



     “Bands A and B” shall have the meaning given such terms under the executive
classification system of the ITT Human Resources Department as in effect immediately preceding an
Acceleration Event. 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.



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 Act), other than ITT or a subsidiary of ITT or any employee benefit plan sponsored by ITT or a
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),









 



2



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 Special Severance Executive involving willful
malfeasance or gross negligence or the Special Severance Executive’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 Special Severance Executive 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.



     “Good Reason” shall mean (i) without the Special Severance Executive’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 Special Severance Executive, (A) a reduction in the Special Severance
Executive’s annual base compensation (whether or not deferred), (B) the assignment to the Special
Severance Executive of any duties inconsistent in any material respect with the Special Severance
Executive’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
Special Severance Executive’s express written consent, the Company’s requiring the Special
Severance Executive’s work location to be other than within twenty-five (25) miles of the location
where such Special Severance Executive 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 90th day following the later of its occurrence or the Special
Severance Executive’s knowledge thereof, unless the Special Severance Executive has given the
Company notice thereof prior to such date.









 



3


     “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, a Special Severance Executive’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 a Special Severance Executive’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 a Special Severance Executive 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 a Special Severance Executive 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.



5. Severance Benefits




     Band A Benefits



     Severance Benefits for Special Severance Executives (i) in Band A at the time of a Qualifying
Termination or at any time during the two (2) year period immediately preceding the Acceleration
Event or (ii) designated as a covered employee in Band A in accordance with Section 2 hereof:



     • Accrued Rights - The Special Severance Executive’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 Special Severance Executive in accordance with Company policy prior to the date of
the Special Severance Executive’s termination of employment and such employee benefits, if any, as
to which the Special Severance Executive 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 sum of (x) three (3) times the highest annual base salary
rate paid (whether or not deferred) to the Special Severance Executive at any time during the three
year period immediately preceding the Special Severance Executive’s termination of employment, and
(y) three (3) times the highest annual bonus paid or awarded (whether or not deferred) to
the Special Severance Executive in respect of either (i) the three (3) years preceding an
Acceleration Event or (ii) the three (3) years preceding the Special Severance Executive’s
termination of employment.









 



4


     • Benefits and Perquisites



          > Continued health and life insurance benefits and perquisites (including, without
limitation, any Company-provided automobile and any tax or financial advisory services) for a
three (3) year period following the Special Severance Executive’s termination of employment at the
same cost to the Special Severance Executive, and at the same coverage levels, as provided to the
Special Severance Executive (and the Special Severance Executive’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 Special Severance Executive’s pension
benefit under the ITT Salaried Retirement Plan and, as applicable, Excess Pension Plan IA, Excess
Pension Plan IB and/or Excess Pension Plan II of the Company 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 outside the United States)
(“Pension Plans”) as of the Special Severance Executive’s termination of employment and
(ii) the total lump sum value of the Special Severance Executive’s pension benefit under the
Pension Plans after crediting an additional three (3) years of age and three (3) years of
eligibility and benefit service to the Special Severance Executive and applying the highest annual
base salary rate and highest bonus determined above under “Severance Pay” with respect to each of
the additional three (3) years of service so credited for purposes of determining 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 Special Severance Executive having a pension benefit under any of the Pension Plans as of
the Special Severance Executive’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 three (3) years of age and three (3) years of eligibility
service for purposes of the Company’s retiree health and retiree life insurance benefits. This
provision shall apply to any Special Severance Executives covered under such benefits any time
during the three (3) year period immediately preceding the Special Severance Executive’s
termination of employment.




          > Payment of a lump sum amount (“Savings Plan Lump Sum Amount”) equal to
three (3) times the following amount: the highest annual base salary rate determined above under
“Severance Pay” times the highest percentage rate of Company Contributions (not to exceed
three and on-half percent (31/2%) with respect to the Special Severance Executive under the ITT
Investment and Savings Plan for Salaried Employees and/or the ITT Excess Savings Plan (or
corresponding savings plan arrangements outside the United States) (“Savings Plans”)
(including matching contributions and floor contributions) at any time during the three (3) year
period immediately preceding the Special Severance Executive’s termination of employment or the
three (3) year period immediately preceding the Acceleration Event. This provision shall apply to
any Special Severance Executive 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.









 



5


     Band B Benefits



     Severance Benefits for Special Severance Executives (i) in Band B at the time of a Qualifying
Termination or at any time during the two (2) year period immediately preceding the Acceleration
Event or (ii) designated as a covered employee in Band B in accordance with Section 2 hereof;
provided, that a Special Severance Executive who is in Band B at the time of a Qualifying
Termination but was in Band A anytime during the two (2) year period immediately preceding the
Acceleration Event shall be entitled to Severance Benefits as a Special Severance Executive in
Band A and shall not be entitled to the Severance Benefits set forth below:



     • Accrued Rights - The Special Severance Executive’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 Special Severance Executive in accordance with Company policy prior to the date of
the Special Severance Executive’s termination of employment and such employee benefits, if any, as
to which the Special Severance Executive 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 sum of (x) two (2) times the highest annual base salary
rate paid (whether or not deferred) to the Special Severance Executive at any time, during the
three (3) year period immediately preceding the Special Severance Executive’s termination of
employment, and (y) two (2) times the highest annual bonus paid or awarded (whether or not
deferred) to the Special Severance Executive in respect of either (i) the three (3) years preceding
an Acceleration Event or (ii) the three (3) years preceding the Special Severance Executive’s
termination of employment.



     • Benefits and Perquisites



          > Continued health and life insurance benefits and perquisites (including, without
limitation, any Company provided automobile and any tax or financial advisory services) for a two
year period following the Special Severance Executive’s termination of employment at the same cost
to the Special Severance Executive, and at the same coverage levels, as provided to the Special
Severance Executive (and the Special Severance Executive’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 Special Severance Executive’s pension
benefit under the ITT Salaried Retirement Plan and, as applicable, Excess Pension Plan IA, Excess
Pension Plan IB and/or Excess Pension Plan II of the Company 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 outside the United States)
(“Pension Plans”) as of the Special Severance Executive’s termination of employment and
(ii) the total lump sum value of the Special Severance Executive’s pension benefit under the
Pension Plans after crediting an additional two (2) years of age and two (2) years of eligibility
and benefit service to the Special Severance Executive and applying the highest annual base salary
rate and highest bonus determined above under “Severance Pay” with respect to each of










 



6



the additional two (2) years of service so credited for purposes of determining 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 Special Severance Executive having a pension benefit under any of the Pension Plans as of
the Special Severance Executive’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 two (2) years of eligibility
service for purposes of the Company’s retiree health and retiree life insurance benefits. This
provision shall apply to any Special Severance Executives covered under such benefits any time
during the three (3) year period immediately preceding the Special Severance Executive’s
termination of employment.




          > Payment of a lump sum amount (“Savings Plan Lump Sum Amount”) equal to two (2)
times the following amount: the highest annual base salary rate determined above under “Severance
Pay” times the highest percentage rate of Company Contributions (not to exceed three and
one-half percent (31/2%)) with respect to the Special Severance Executive under the ITT Investment
and Savings Plan for Salaried Employees and/or the ITT Excess Savings Plan (or corresponding
savings plan arrangements outside the United States) (“Savings Plans”) (including matching
contributions and floor contributions) at any time during either the three (3) year period
immediately preceding the Special Severance Executive’s termination of employment or the three (3)
year period immediately preceding the Acceleration Event. This provision shall apply to any
Special Severance Executive who is a member of any of the Savings Plans at any time during such
three (3) year period.




     • Outplacement – Outplacement services for one year.



     General



     With respect to the provision of benefit and perquisites during the above described respective
three and two year periods, if, for any reason at any time the Company is unable to treat the
Special Severance Executive as being eligible for ongoing participation in any Company employee
benefit plans or perquisites in existence immediately prior to the termination of employment of the
Special Severance Executive, and if, as a result thereof, the Special Severance Executive does not
receive a benefit or perquisite or receives a reduced benefit or perquisite, the Company shall
provide such benefits or perquisites by making available equivalent benefits or perquisites from
other sources in a manner consistent with Section 15 below.



6. Form of Payment of Severance Pay and Lump Sum Payments




     Severance Pay shall be paid in cash, in non-discounted equal periodic installment payments
corresponding to the frequency and duration of the severance payments that the Special Severance
Executive would have been entitled to receive from the Company as a normal severance benefit in the
absence of the occurrence of an Acceleration Event. The Pension Lump









 



7



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 Special Severance Executive terminates.



7. Termination of Employment — Other




     The Severance Benefits shall only be payable upon a Special Severance Executive’s termination
of employment due to a Qualifying Termination; provided, that if, following the occurrence
of an Acceleration Event, a Special Severance Executive is terminated due to the Special Severance
Executive’s death or disability (as defined in the long-term disability plan in which the Special
Severance Executive is entitled to participate (whether or not the Special Severance Executive
voluntarily participates in such plan)) and, at the time of such termination, the Special Severance
Executive 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, 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
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 Special Severance Executive. 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 Special Severance Executive as a result of the Company’s
refusal to provide any of the Severance Benefits to which the Special Severance Executive 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 Special Severance Executive 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 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 Special Severance Executive may be made without the
prior written consent of such Special Severance Executive 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.









 



8


10. Offset




     Any Severance Benefits provided to a Special Severance Executive under this Plan shall be
offset in a manner consistent with Section 15 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, perquisites or outplacement
services, which the Special Severance Executive receives or is entitled to receive, (i) under the
ITT Corporation Senior Executive Severance Pay Plan; (ii) pursuant to any other Company policy,
practice, program or arrangement; (iii) pursuant to any Company employment agreement or other
agreement with the Company; or (iv) by virtue of any law, custom or practice excluding, however,
any unemployment compensation in the United States, unless the Special Severance Executive
voluntarily expressly waives (which the Special Severance Executive 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 Special Severance Executive (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 Special Severance Executive 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 Special Severance Executive
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 Special Severance
Executive shall be entitled to receive an additional payment (the “Gross-Up Payment”) in an
amount such that after payment by the Special Severance Executive 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 Special Severance Executive
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 Special Severance Executive and the Company (the “Accounting
Firm”) which shall provide detailed supporting calculations both to the Company and the Special
Severance Executive within ten (10) business days of the receipt of notice from the Special
Severance Executive 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
Special Severance Executive 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 Special Severance Executive’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









 



9



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 Special Severance Executive when due. If the
Accounting Firm determines that no Excise Tax is payable by the Special Severance Executive, it
shall so indicate to the Special Severance Executive in writing. Any determination by the
Accounting Firm shall be binding upon the Company and the Special Severance Executive. As a result
of the uncertainty in the application of Section 4999 of the Code, it is possible that the amount
of the Gross-Up Payment determined by the Accounting Firm to be due to (or on behalf of) the
Special Severance Executive was lower than the amount actually due (“Underpayment”). In
the event that the Company exhausts its remedies pursuant to this Section 11 and the Special
Severance Executive 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 Special Severance Executive.



     The Special Severance Executive 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 Special Severance Executive 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. Special Severance Executive 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 Special Severance Executive in writing prior to the expiration of such period that it
desires to contest such claim, Special Severance Executive 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 Special Severance Executive 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 Special Severance Executive to
pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the
Special Severance Executive 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
Special Severance Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Special Severance Executive, on an interest-free basis, and shall
indemnify and hold the Special Severance Executive 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









 



10



advance; provided, further, that if the Special Severance Executive is
required to extend the statute of limitations to enable the Company to contest such claim, the
Special Severance Executive 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 Special Severance Executive 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 Special Severance Executive of an amount paid or advanced by the
Company pursuant to this Section 11, the Special Severance Executive becomes entitled to receive
any refund with respect to a Gross-Up Payment, the Special Severance Executive 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 Special Severance Executive of an amount advanced by the
Company pursuant to Section 11, a determination is made that the Special Severance Executive shall
not be entitled to any refund with respect to such claim and the Company does not notify the
Special Severance Executive 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 Special Severance Executive 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 Special Severance Executive’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 Special Severance Executive’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 Special Severance Executive 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. Any payments that the Company is required to pay to or on behalf of the
Special Severance Executive pursuant to this Section 11 shall be paid to the Special Severance
Executive within the time periods specified above; provided, however, that in no
event shall such payments be made later than the end of the calendar year following the calendar
year during which the Special Severance Executive remits the corresponding Excise Tax payments to
any taxing authority or incurs the corresponding expenses.



12. Miscellaneous




     The Special Severance Executive shall not be entitled to any notice of termination or pay in
lieu thereof.









 



11


     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 Special Severance Executive
employment for any specified period and does not limit the right of the Company to terminate the
employment of the Special Severance Executive at any time.



     If a Special Severance Executive should die while any amount is still payable to the Special
Severance Executive hereunder had the Special Severance Executive continued to live, all such
amounts shall be paid in accordance with this Plan to the Special Severance Executive’s designated
heirs or, in the absence of such designation, to the Special Severance Executive’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
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 and a Special Severance
Executive.



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 (3) 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 Corporation

1133 Westchester Avenue

White Plains, New York 10604



Attention: General Counsel










 



12



If to Special Severance Executive:



To the most recent address of Special Severance Executive set forth in the personnel records of ITT.




14. Adoption Date




     This Plan was initially adopted by ITT on March 10, 1997 (“Adoption Date”) and does
not apply to any termination of employment which occurred or which was communicated to the Special
Severance Executive prior to the Adoption Date.



15. Section 409A




     This Plan is intended to comply with Section 409A of the Code and will be interpreted in a
manner intended to comply with Section 409A of the Code. Notwithstanding anything herein to the
contrary, (i) if at the time of the Special Severance Executive’s termination of employment with
the Company the Special Severance Executive is a “specified employee” as defined in Section 409A of
the Code (and any related regulations or other pronouncements thereunder) and the deferral of the
commencement of any payments or benefits otherwise payable hereunder as a result of such
termination of employment is necessary in order to prevent any accelerated or additional tax under
Section 409A of the Code, then the Company will defer the commencement of the payment of any such
payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid
or provided to the Special Severance Executive) until the date that is six months following the
Special Severance Executive’s termination of employment with the Company (or the earliest date as
is permitted under Section 409A of the Code), at which point all payments deferred pursuant to this
Section 15 shall be paid to the Special Severance Executive in a lump sum and (ii) if any other
payments of money or other benefits due hereunder could cause the application of an accelerated or
additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if
deferral will make such payment or other benefits compliant under Section 409A of the Code, or
otherwise such payment or other benefits shall be restructured, to the extent possible, in a
manner, determined by the Company, that does not cause such an accelerated or additional tax. To
the extent any reimbursements or in-kind benefits due under this Plan constitute “deferred
compensation” under Section 409A of the Code, any such reimbursements or in-kind benefits shall be
paid in a manner consistent with Treas. Reg. Section 1.409A-3(i)(1)(iv). Each payment made under
this Plan shall be designated as a “separate payment” within the meaning of Section 409A of the
Code. The Company shall consult with Special Severance Executives in good faith regarding the
implementation of the provisions of this section; provided that neither the Company nor any of its
employees or representatives shall have any liability to Special Severance Executives with respect
thereto.