Document:

exv10w1

Exhibit 10.1

October 4, 2011

Mr. David F. Melcher

Chief Executive Officer and President

Exelis Inc.

1650 Tysons Blvd., Suite 1700

McLean, VA 22314

Dear Dave:

The purpose of this letter is to set forth the terms and conditions of your employment with Exelis
Inc. (the “Company”), effective as of the Distribution Date, (the Distribution Date has the meaning
set forth in the Distribution Agreement). The Company agrees to employ you as Chief Executive
Officer and President and you agree to discharge faithfully, diligently, and to the best of your
ability, your duties. You will report directly to the Board of Directors of the Company (the
“Board”). Your principal work location will be McLean, VA. You will be an at-will employee at all
times.

	 	1.	 	Compensation and Benefits.

	 	a.	 	Annual Base Salary. Your beginning annual base salary will be
$930,000. Your salary will be subject to review by the Compensation and Personnel
Committee of the Board from time to time for consideration of possible increases
based on your performance and other relevant circumstances.
	 
	 	b.	 	Target Annual Incentive. Beginning with performance year 2012,
your annual incentive target will be set at 100% of base salary (“Target Annual
Incentive”). The amount earned by you in respect of your Target Annual Incentive
is discretionary and subject to your individual and Company performance, as
determined by the Compensation and Personnel Committee of the Board.
	 
	 	c.	 	2012 Long-Term Incentive Awards. You are eligible to
participate in the Company’s long-term incentive program with an annual target
long-term incentive compensation opportunity. Your 2012 Long-Term Incentive Award
will be set at $3,800,000, valued using the same

 

 

	 	 	 	methodology used to value 2012 long-term incentive awards to other senior management
of the Company generally. The forms of award will be based on the 2012 Exelis Inc.
long-term incentive award program, subject to review and approval of the
Compensation and Personnel Committee of the Board. Such long-term incentive awards
will be granted under the terms of the 2011 Exelis Inc. Omnibus Incentive Plan (or a
successor plan).
	 
	 	d.	 	Founders’ Grant. Your Founder’s Grant will be granted shortly
following the spin-off of the Company from ITT Corporation and will have a
value of $5,700,000, such value determined by the Compensation and Personnel
Committee of the Board using the same methodology used to value founders’ grants to
other senior management of the Company generally. One half of the Founder’s Grant
award will be granted in the form of nonqualified stock options, with a per-share
exercise price equal to the fair market value of a share of the Company’s stock on
the date of grant and a ten-year term. The stock options will vest in equal annual
installments on the first, second and third anniversaries of the grant date subject
to your continued employment through each such vesting date. Should your
employment be terminated by the Company other than for Cause (as defined below)
before your stock options vest in full, they will continue to vest for the period
during which you are receiving Severance Pay (as defined below), notwithstanding
any provision of the applicable award agreement to the contrary. The remaining
half of the Founder’s Grant award will be granted in the form of restricted stock
units, which will cliff vest on the third anniversary of the grant date, subject to
your continued employment through such vesting date. Upon vesting, these units
will be settled immediately in shares of common stock of the Company, subject to
satisfaction of all taxes due. Should your employment be terminated by the Company
other than for Cause before such units vest, a prorated portion of such units will
vest and be settled immediately upon your termination date, with your termination
date considered to be the Scheduled Termination Date (as defined below), it being
understood that in determining the prorated portion of such units that will vest,
you shall be deemed to have continued your employment until the last day of the
Severance Pay Period (as defined below), notwithstanding any provision of the
applicable award agreement to the contrary. The Founder’s Grant equity award will
be granted under the terms of the 2011 Exelis Inc. Omnibus Incentive Plan.
	 
	 	e.	 	Benefits. You and your eligible dependants will be eligible to
participate in the benefit programs and plans of the Company and its subsidiaries
for which you are now eligible or for which you may become eligible in accordance
with their provisions during the term of this agreement as in effect from time to
time. Nothing in this letter

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	 	 	 	agreement shall limit the Company’s ability to change, modify, cancel or amend any
such policies or plans.
	 
	 	f.	 	Vacation. You are entitled to 5 weeks of paid vacation
annually.

	 	2.	 	Termination of Employment.

	 	a.	 	Termination of Employment for Cause. You will not be eligible
for Severance Pay if your employment is terminated by the Company for Cause or if
you voluntarily terminate your employment for any reason (including as a result of
your retirement after reaching the Normal Retirement Date (as defined below) or
failing to return from an approved leave of absence, including a medical leave of
absence).

	 	i.	 	“Cause” shall mean action by you involving
willful malfeasance or gross negligence or your failure to act involving
material nonfeasance that would tend to have a materially adverse effect
on the Company. No act or omission on your part shall be considered
“willful” unless it is done or committed in bad faith or without
reasonable belief that the action or omission was in the best interests
of the Company.
	 
	 	ii.	 	“Normal Retirement Date” shall mean the
first day of the month which coincides with or follows your 65th
birthday.

	 	b.	 	Severance Pay Upon Termination of Employment Not for Cause. If
the Company terminates your employment other than for Cause and other than as a
result of your death or disability, in any case prior to your Normal Retirement
Date, you shall be provided severance pay in an amount equal to two (2) times the
sum of (x) the annual base salary in effect on the effective date of the
termination of your employment (the “Scheduled Termination Date”), and (y) your
Target Annual Incentive as of your Scheduled Termination Date (the “Severance
Pay”).

	 	i.	 	Terms and Conditions Applicable to Severance Pay.
Severance Pay shall be paid in the form of periodic payments over a
period of 24 months after the Scheduled Termination Date according to the
regular payroll schedule (the “Severance Pay Period”).

	 	1.	 	Severance Pay will, subject to your
obligation to timely execute and deliver to the Company and not
revoke the Release (as defined herein), commence on the first
business day after the 60th day following the Scheduled Termination
Date, with any installments of Severance Pay that would otherwise
have been paid during the first 60 days after the Scheduled
Termination Date delayed and

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	 	 	 	paid in a lump sum on such 60th day after the Scheduled Termination
Date.
	 
	 	2.	 	In the event of your death during the
Severance Pay Period, the amount of Severance Pay remaining shall
be paid in a discounted lump sum to your spouse or to such other
beneficiary or beneficiaries designated by you in writing, or, if
you are not married and failing such designation, to your estate.
	 
	 	3.	 	During the Severance Pay Period you
must continue to be available to render to the Company reasonable
assistance, consistent with the level of your prior position with
the Company, at times and locations that are mutually acceptable.
In requesting such services, the Company will take into account any
other commitments which you may have. After the Scheduled
Termination Date and normal wind-up of your former duties pursuant
to the prior two sentences, you will not be required to perform any
regular services for the Company.
	 
	 	4.	 	Severance Pay will cease if you are
rehired by the Company.

	 	ii.	 	Benefits During Severance Pay. During the
Severance Pay Period, except as provided herein, you will continue to be
eligible for participation in Company employee benefit plans in
accordance with the provisions of such plans as in effect from time to
time. You will not be eligible to participate in any Company tax
qualified retirement plans, non-qualified excess or supplemental benefit
plans, short-term or long-term disability plans, the Company business
travel accident plan or any new employee benefit plan or any improvement
to any existing employee benefit plan adopted by the Company after the
Scheduled Termination Date.
	 
	 	iii.	 	Excluded Executive Compensation Plans, Programs,
Arrangements, and Perquisites. During the Severance Pay Period, you will
not be eligible to accrue any vacation or participate in or receive
awards under any (i) bonus program, (ii) special termination programs,
(iii) tax or financial advisory services, (iv) stock option or stock
related plans for executives (provided that you will be eligible to
exercise any outstanding stock options in accordance with the terms of
any applicable stock option plan), (v) new or revised executive
compensation programs that may be introduced after the Scheduled
Termination Date or (vi) other executive compensation program, plan,
arrangement, practice, policy or perquisites (except as

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	 	 	 	provided otherwise in clause (v) above), unless specifically authorized by
the Company in writing.

	 	c.	 	Disqualifying Conduct. If during the Severance Pay Period, you (i)
engage in any activity which is inimical to the best interests of the Company; (ii)
disparage the Company, its business, employees or directors; (iii) fail to comply
with any Company Covenant Against Disclosure and Assignment of Rights to
Intellectual Property; (iv) without the Company’s prior written consent, induce any
employee of the Company to leave his or her Company employment; (v) without the
Company’s prior written consent, engage in, become affiliated with, or become
employed by any business competitive with the Company; or (vi) fail to comply with
applicable provisions of the Company’s Code of Conduct or applicable Company
Corporate Policies or any applicable Company Subsidiary Code or policies, then the
Company will have no further obligation to provide Severance Pay.
	 
	 	d.	 	Release. The Company shall not be required to pay or continue any
installments of Severance Pay or provide any termination benefits in accordance
with this agreement unless you execute and deliver to the Company within 52 days
following the Scheduled Termination Date a release, in a form provided by the
Company, pursuant to which you discharge and release the Company, its affiliates,
and their respective directors, officers, employees and employee benefit plans from
all claims (other than for benefits to which you are entitled under any Company
employee benefit plans) arising out of your employment or termination of employment
(the “Release”), and such Release is not revoked by you within the seven-day
statutory revocation period. You will also be required to resign your officership
and any directorship upon your last day of active service with the Company.
	 
	 	e.	 	Treatment of Severance Pay and Other Compensation. Any Severance Pay
or other compensation, including but not limited to any equity awards provided to
you under this agreement, shall be treated in a manner consistent with the
provisions of Section 409A of the Code. Coordination of Severance Pay with any pay
or benefits provided by any applicable Company short-term or long-term disability
plan shall be in accordance with the provisions of those plans.
	 
	 	f.	 	Miscellaneous. Except as provided in this agreement, you shall not be
entitled to any notice of termination or pay in lieu thereof.

	 	i.	 	In cases where Severance Pay is provided under this
agreement, pay in lieu of any unused current year vacation entitlement
will be paid to you in a lump sum.
	 
	 	ii.	 	Benefits under this agreement are paid for entirely
by the Company from its general assets.

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	 	iii.	 	Any outstanding long-term incentive awards will be
treated in accordance with the applicable plans and award agreements.

	 	3.	 	Termination due to an Acceleration Event. If your employment is terminated due
to a severance-qualifying termination under the terms of the Special Senior Executive
Severance Pay Plan attached to this letter as Exhibit A, you will be entitled to receive
the severance benefits provided under the terms of the Special Senior Executive Severance
Pay Plan to the extent set forth in Section 10 of such plan.
	 
	 	4.	 	Compliance with Section 409A of the Code. This agreement 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) any
payments that qualify for the “short-term deferral” exception or another exception under
Section 409A of the Code shall be paid under the applicable exception, (ii) to the extent
necessary in order to prevent any accelerated or additional tax under Section 409A of the
Code, all payments made and benefits provided upon your termination of employment shall
only be made and provided upon a “separation from service” within the meaning of Section
409A of the Code, (iii) if at the time of your termination of employment with the Company
you are a “specified employee” as defined in Section 409A of the Code 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 you) until the date that is six months
following your termination of employment with the Company (or the earliest date as is
permitted under Section 409A of the Code without any accelerated or additional tax under
Section 409A of the Code), at which point all payments deferred pursuant to such six-month
delay shall be paid to you in a lump sum, and (iv) 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 would avoid such accelerated or additional tax 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 you in good faith
regarding the implementation of the provisions of this

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	 	 	 	section; provided that neither the Company nor any of its employees or representatives shall
have any liability to you with respect thereto.
	 
	 	5.	 	Miscellaneous. 

	 	a.	 	Notices. Notices given pursuant to this letter agreement shall
be in writing and shall be deemed received when personally delivered, or on the
date of written confirmation of receipt by (i) overnight carrier, (ii) telecopy,
(iii) registered or certified mail, return receipt requested, postage paid, or (iv)
such other method of deliver as provides a written confirmation of delivery.
Notice to the Company shall be directed to:

SVP, Chief Human Resources Officer

Exelis Inc.

1650 Tysons Blvd., Suite 1700

McLean, VA 22102

	 	 	 	Notices to or with respect to you will be directed to you, or in the event of your
death, your executors, personal representatives or distributes, at your home address
as set forth in the records of the Company.

	 	b.	 	Assignment of this Letter Agreement. This letter agreement is
personal to you and shall not be assignable by you without the prior written
consent of the Company. This letter agreement shall inure to the benefit of and be
binding upon the Company and its respective successors and assigns. The Company
may assign this letter agreement, without your consent, to any successor (whether
directly or indirectly, by agreement, purchase, merger, consolidation, operation of
law or otherwise) to all, substantially all or a substantial portion of the
business and/or assets of the Company, as applicable. If and to the extent that
this letter agreement is so assigned, the “Company” as used throughout this letter
agreement shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid. In the event of your death, all amounts and
benefits then payable or otherwise due to you will be paid or provided to your
estate except to the extent you have appointed a beneficiary in writing pursuant to
the terms of any particular plan, policy or arrangement.

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	 	c.	 	Merger of Terms. Except as expressly provided herein, this
letter agreement supersedes all prior discussions and agreements between you and
the Company with respect to the subject matters covered herein.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	/s/ Linda S. Sanford
 	 
	 	Linda S. Sanford, Chair 	 
	 	ITT Compensation & Personnel
Committee 	 
	 

Accepted:

	 	 	 

	/s/ David F. Melcher
	 	October 14, 2011
	David F. Melcher

	 	Date
	Chief Executive Officer and President
	 	 
	Exelis Inc.
	 	 

8exv10w1

EXECUTION COPY

Exhibit 10.1

RESIGNATION AGREEMENT

          This Resignation Agreement (this “Agreement”), by and between ITT Corporation, an Indiana
corporation (the “Company”), and Steven R. Loranger (the “Executive”), is dated as of October 14,
2011 (the “Execution Date”). Any capitalized terms used but not defined herein shall have the
meaning set forth in the Employment Agreement between the Company and the Executive, dated as of
June 28, 2004 (as amended on December 18, 2008, the “Employment Agreement”).

          WHEREAS, the Executive has been employed by the Company as its President, Chief Executive
Officer and Chairman of the Board of Directors of the Company (the “Board”); and

          WHEREAS, the Company and the Executive have agreed that it is in the best interest of the
Company and the Executive for the Executive to resign, and they wish to set forth their mutual
agreement as to the terms and conditions of such resignation;

          NOW, THEREFORE, the Company and the Executive hereby agree as follows:

          1. Resignation. Effective upon the spin-off of Xylem Inc. (“Xylem”) and Exelis Inc.
(“Exelis”) from the Company (the “Resignation Date”), the Executive hereby resigns from his
employment with the Company, from his position as a member and Chairman of the Board, and from all
other positions the Executive then holds as an officer of the Company or member of the Board or as
an officer or member of the board of directors of any subsidiary or affiliate of the Company,
including Xylem and Exelis (the Company and all of its subsidiaries and affiliates, including Xylem
and Exelis, are hereinafter referred to as the “Affiliated Entities”) or as a fiduciary of any
employee benefit plan of the Affiliated Entities. If the Resignation Date does not occur, this
Agreement shall be null and void ab initio, and the Executive shall have no rights hereunder. The
Company and the Executive agree that such resignation shall constitute a “separation from service”
within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).
No Notice of Termination shall be required pursuant to Section 11(h) of the Employment Agreement.

          2. Chairman Emeritus of Xylem. Effective as of immediately following the Resignation
Date, the Executive shall become a director and Chairman Emeritus of Xylem and a director of
Exelis.

          3. Severance Payments and Benefits. Pursuant to the terms and conditions set forth in
this Section 3, the Executive shall be entitled to receive the following payments and benefits:

          (a) Accrued Base Salary. Consistent with the Employment Agreement, the Executive
shall, pursuant to subclause (A) of clause (i) of the third sentence of Section 11(c) of the
Employment Agreement, receive within five days following the Resignation Date a lump-sum cash
payment of any earned but unpaid Base Salary through the Resignation Date.

          (b) Accrued Obligation Amount. Consistent with the Employment Agreement, subject to
the Executive’s signing, timely delivery to the Company and nonrevocation of each of the release
contemplated by Section 7 of this Agreement in the form of

 

 

this Agreement (the “Release”) and the
Additional Release (as defined in Section 7) and continuing compliance with the covenants set forth
in Section 5 (subject to the terms of Section 11(g) of the Employment Agreement), within five (5)
days following the Resignation Date, the Executive shall, pursuant to subclause (C) of clause (i)
of the third sentence of Section 11(c) of the Employment Agreement, be paid an amount equal to the
product of (i) the Executive’s Base Salary as of the Resignation Date (i.e., $1,200,000)
and (ii) a fraction, the numerator of which is the number of days from January 1, 2011 through the
Resignation Date and the denominator of which is 365.

          (c) Cash Severance. Consistent with the Employment Agreement, on the first business
day following the six month anniversary of the Resignation Date (the “First Payment Date”), subject
to the Executive’s signing, timely delivery to the Company and non-revocation of each of the
Release and the Additional Release and continuing compliance with the covenants set forth in
Section 5, the Executive shall, pursuant to subclause (A) of clause (ii) of the third sentence of
Section 11(c) of the Employment Agreement and the fourth sentence of Section 11(c) of the
Employment Agreement, be paid an amount equal to $1,380,000 and, on the first business day of each
of the 18 months immediately following the First Payment Date, the Executive shall receive a
payment equal to $230,000 such that at the end of the 24-month period following the Resignation
Date (solely for explanation and not in limitation or expansion of the obligation under this
Section 3(c)), the Executive shall have received $5,520,000 under this Section 3(c).

          (d) Health and Welfare Benefits. Consistent with the Employment Agreement, in
addition, subject to the Executive’s signing, timely delivery to the Company and non-revocation of
each of the Release and the Additional Release and continuing compliance with the covenants set
forth in Section 5, the Company shall, pursuant to the fifth sentence of Section 11(c) of the
Employment Agreement, continue to provide health and other welfare benefits to the Executive and
his spouse and dependents, if any, for the two-year period immediately following the Resignation
Date, as such benefits are provided from time to time to actively employed senior executives of the
Company; provided, that the Company’s obligation to provide such health and other welfare benefits
shall cease at the time the Executive becomes eligible for such benefits from another employer;
provided, further, that the Executive shall be responsible for the full payment of all premiums for
all health and other welfare benefits for the period between the Resignation Date and the First
Payment Date with the Company reimbursing the Executive for applicable employer portion of such
payments on the First Payment Date. Consistent with the Employment Agreement, to the extent that
the health and other welfare benefits provided for in this Section 3(d) are not permissible after
termination of employment under the terms of the benefit plans of the Company then in effect (and
cannot be provided through the Company’s paying the applicable premium for the Executive under
COBRA), the Company shall, pursuant to the sixth sentence of Section 11(c) of the Employment
Agreement, purchase for the Executive from third party providers health or welfare plan coverage on
a non-group basis, for the required period, substantially similar (including tax effects) to those
health and other welfare benefits that would otherwise be lost to the Executive and his spouse and
dependents as a result of the Executive’s termination.

          (e) Transaction Success Incentive. Subject to the Executive’s signing, timely
delivery to the Company and non-revocation of each of the Release and the Additional Release

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and continuing compliance with the covenants set forth in Section 5, the Executive shall be eligible to
receive an amount with a target equal to $600,000 earned by the Executive in respect of the
Executive’s “Transaction Success Incentive” award, subject to achievement of the applicable
performance goals as determined by the Board in its sole discretion consistent with its
determination of such achievement for other executives, which shall be paid to the Executive at the
time that the Company pays bonuses granted in respect of fiscal year 2011 (i.e., by March
15, 2012).

          (f) Special Pension. Consistent with the Employment Agreement, following the
Resignation Date, the Executive shall receive his accrued special pension benefit pursuant to the
terms and conditions of Section 7 of the Employment Agreement (it being understood that the
Applicable Percentage is 46 percent). Pursuant to Section 7 of the Employment Agreement, the
special pension benefit shall be paid as an actuarially equivalent 100% joint and survivor annuity
for the benefit of the Executive and the Executive’s spouse. On the First Payment Date, Executive
(or, in the event of his death, his spouse) shall be paid an amount equal to $450,580.44, and, on
the first business day of each month thereafter, the Executive (or, in the event of his death, his
spouse) shall receive a payment equal to $75,096.74. In the event of the death of the Executive
prior to the First Payment Date, the Executive’s Beneficiary shall receive an immediate lump sum
payment equal to the actuarial equivalent of the benefit to which the Executive would have been
entitled pursuant to Section 7 of the Employment Agreement had Executive’s employment been
terminated by the Company without Cause immediately prior to Executive’s death.

          (g) Excess Pension Plan and Excess Savings Plan. Following the Resignation Date, the
Executive or, to the extent provided under the applicable plan, his beneficiary or estate, shall
receive distribution of the Executive’s vested and accrued benefits as of the Resignation Date
under the Company’s Excess Pension Plan and Excess Savings Plan in accordance with their respective
terms. A copy of the Executive’s current accrued vested benefit and payment schedule for both the
Excess Pension Plan and the Excess Savings Plan are attached hereto as Exhibit A.

          (h) Deferred Compensation Plan,401(k) Plan and Pension Plan. Following the
Resignation Date, the Executive or, to the extent provided under the applicable plan, his
beneficiary or estate, shall receive distribution of the Executive’s vested account balance under
the Company’s Deferred Compensation Plan in accordance with the Executive’s previously filed
elections and the terms of the Deferred Compensation Plan. A copy of the Executive’s current
accrued vested benefit and payment schedule for the Deferred Compensation Plan is attached hereto
as Exhibit B. In addition, the Executive shall be entitled to receive his vested benefits
under the Company’s Salaried Investment and Savings Plan and the Company’s Salaried Retirement Plan
in accordance with the terms thereof with the Executive’s current accrued vested benefit under such
plans attached hereto as Exhibit B.

          (i) Retiree Medical. Consistent with the Employment Agreement, subject to the
Executive’s signing, timely execution and non-revocation of each of the Release and the Additional
Release and continuing compliance with the covenants set forth in Section 5, following the
Resignation Date, the Executive shall, pursuant to Section 11(f) of the
Employment Agreement, be entitled to retiree medical coverage in accordance with the terms of
the Company’s retiree medical arrangement in effect for persons joining the Company on the

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Effective Date, and Executive’s termination hereunder shall be considered a retirement for purposes
of such arrangement.

          (j) Six-month delay. Consistent with the Employment Agreement, any restricted stock
units or any benefits under any deferred compensation plan provided to Executive pursuant to this
Section 3 that must be delayed until the First Payment Date shall be treated during such six-month
period, and adjusted for investment performance in the same manner, as outstanding restricted stock
units or deferred compensation, as the case may be.

          (k) Benefits and Reimbursement of Expenses. Consistent with the Employment Agreement,
(i) the Company shall, within thirty days following the Executive’s presentation of an invoice to
the Company, reimburse the Executive for any (A) unreimbursed business expenses incurred by the
Executive on or prior to the Resignation Date pursuant to the Company’s reimbursement policies, and
(B) financial and tax planning services incurred by the Executive prior to the Resignation Date in
accordance with Section 8(c) of the Employment Agreement; provided that such amount in the case of
(B) shall in no event exceed the lesser of $110,000 or the amount actually owed by the Executive to
his financial and tax planning advisors, and (ii) the Company shall, within thirty days following
Executive’s presentation of an invoice to the Company, reimburse to or pay directly on behalf of
the Executive, the amount payable by the Executive to an attorney of the Executive’s choice that
the Executive has retained to advise the Executive with regard to the negotiation and execution of
this Agreement; provided that such amount in the case of (ii) shall in no event exceed the lesser
of $165,000 and the amount actually owed by the Executive to such attorney based on such attorney’s
customary hourly fee in effect as of the date hereof.

          4. Equity and Performance Awards. Exhibit C hereto sets forth a complete list
of all stock options, restricted stock units, restricted shares and total shareholder return awards
held by the Executive and outstanding as of the Execution Date. Such awards will be converted into
awards denominated in shares of each of the Company, Xylem, and Exelis based on the conversion
formula used for shareholders of the Company’s common stock (with appropriate adjustments to the
exercise prices of any stock options the Executive holds to maintain the aggregate “spread” value
and ratio of the per-share exercise price to the underlying stock price on or about the Resignation
Date). Consistent with the Employment Agreement, as of the Resignation Date, subject to the
Executive’s continuing compliance with Section 5, any such awards that are unvested as of the
Resignation Date shall, pursuant to the eighth sentence of Section 11(c) of the Employment
Agreement, continue to vest or be forfeited, if applicable, in the manner contemplated by the terms
and conditions of the applicable award agreements (as set forth in Exhibit C hereto).

          5. Restrictive Covenants. The Executive acknowledges and agrees that the provisions
of Section 13 of the Employment Agreement shall survive termination of the Executive’s employment
and that the Executive shall continue to be subject to such covenants following the Resignation
Date (it being understood that, for purposes of Section 13 of the Employment Agreement, the
“Company” shall be construed to include the Company, Xylem and Exelis and their respective
subsidiaries and affiliates). Each of the Company, Xylem and Exelis
shall be an intended third party beneficiary to this provision and shall have full and
unfettered rights to enforce this provision.

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          6. Release. (a) In consideration of the payments and benefits set forth in this
Agreement, the Executive for himself, his heirs, administrators, representatives, executors,
successors and assigns (collectively, the “Releasors”) does hereby irrevocably and unconditionally
release, acquit and forever discharge each of the Company, Xylem, Exelis and their respective
subsidiaries, shareholders, affiliates, divisions, trustees, officers, directors, partners, agents,
and former and current employees, including without limitation all persons acting by, through,
under or in concert with any of them (collectively, the “Releasees”), from any and all charges,
complaints, claims, liabilities, obligations, promises, agreements, controversies, damages,
remedies, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses
(including attorneys’ fees and costs) of any nature whatsoever, known or unknown, whether in law or
equity and whether arising under federal, state or local law and in particular including any claim
for discrimination based upon race, color, ethnicity, sex, age (including the Age Discrimination in
Employment Act), national origin, religion, disability, or any other unlawful criterion or
circumstance, which the Executive and Releasors had, now have, or may have in the future against
each or any of the Releasees from the beginning of the world until the Execution Date relating to
the Executive’s employment with the Company and its subsidiaries and affiliates other than claims
for compensation and benefits under this Agreement.

               (b) The Executive acknowledges that: (i) this entire Agreement is written in a manner
calculated to be understood by him; (ii) he has been advised to consult with an attorney before
executing this Agreement; (iii) he was given a period of 21 days within which to consider this
Agreement; and (iv) to the extent he executes this Agreement before the expiration of the 21-day
period, he does so knowingly and voluntarily and only after consulting his attorney. The Executive
shall have the right to cancel and revoke this Agreement during a period of seven days following
the Execution Date, and this Agreement shall not become effective, and, subject to the terms and
conditions of Section 6(d), no amounts or benefits the payment or provision of which is subject to
the Executive’s signing, timely delivery to the Company and non-revocation of the Release pursuant
to the terms of this Agreement shall be paid or provided hereunder until the day after the
expiration of such seven-day period (the “Revocation Date”). The seven-day period of revocation
shall commence upon the Execution Date. In order to revoke this Agreement, the Executive shall
deliver to the Company, prior to the Revocation Date, a written notice of revocation. Upon such
revocation, this Agreement shall be null and void and of no further force or effect.

               (c) In consideration of the benefits set forth in this Agreement, the Company, for itself,
Xylem, Exelis and their respective subsidiaries, successors and assigns (collectively “Company
Releasors”) do hereby irrevocably and unconditionally release, acquit and forever discharge each of
the Executive and his representatives, successors and assigns (collectively, “Company Releasees”)
from any and all charges, complaints, claims, liabilities, obligations, promises, agreements,
controversies, damages, remedies, actions, causes of action, suits, rights, demands, costs, losses,
debts and expenses (including attorneys’ fees and costs) of any nature whatsoever, known or
unknown, whether in law or equity and whether arising under federal, state or local law, which the
Company Releasors had, now have, or may have in the future against each or any of the Company
Releasees from the beginning of the world until the
Execution Date relating to the Executive’s employment with the Company and its subsidiaries
and affiliates other than other than claims as to which all material facts are not actually known to

-5-

 

any member of the Board (other than the Executive) on the Execution Date or for claims under
this Agreement.

               (d) As of the Resignation Date, the Executive and the Company shall execute an additional
release for charges, complaints, claims, liabilities, obligations, promises, agreements,
controversies, damages, remedies, actions, causes of action, suits, rights, demands, costs, losses,
debts and expenses (including attorneys’ fees and costs) of any nature whatsoever, known or
unknown, whether in law or equity and whether arising under federal, state or local law from the
Execution Date through the Resignation Date (the “Additional Release”). The Additional Release
shall be in the form set forth as Exhibit D hereto.

          7. Entire Agreement; Other Benefits. This Agreement sets forth the entire agreement of
the Company and the Executive with respect to the subject matter hereof, and, as of immediately
prior to the Resignation Date, supersedes in its entirety the Employment Agreement and any
severance plan, policy or arrangement of any of the Affiliated Entities. Without limiting the
generality of the foregoing, the Executive expressly acknowledges and agrees that except as
specifically set forth in this Agreement, he is not entitled to receive any severance pay,
severance benefits, compensation or employee benefits of any kind whatsoever from any of the
Affiliated Entities. There are no restrictions, agreements, promises, warranties, covenants or
undertakings between the parties with respect to the subject matter herein other than those
expressly set forth herein. Neither this Agreement nor the Exhibits hereto may be altered,
modified, or amended except by written instrument signed by the parties hereto. In the event that
the terms of any plan under which any award referenced in this Agreement is granted would limit or
restrict in any way any right provided under this Agreement, the terms of this Agreement shall
supersede the terms of such plan. Notwithstanding the foregoing, Sections 11(g), 13, 14, 15,
16(b), 16(c), 16(d), 16(f), 16(g), 16(h), 16(l), 16(m) and 16(n) shall survive the termination of
the Employment Agreement and shall apply with respect to this Agreement.

          8. Notices. All notices and other communications hereunder shall be in writing; shall
be delivered by hand delivery to the other party or mailed by registered or certified mail, return
receipt requested, postage prepaid; shall be deemed delivered upon actual receipt; and shall be
addressed as follows:

If to the Executive:

At the most recent address for the Executive on the records of the Company.

With a copy to:

Mayer Brown LLP

71 South Wacker Drive

Chicago, IL 60606

Fax: (312) 701-7711

-6-

 

Attn: Herbert W. Krueger

If to the Company:

ITT Corporation

1133 Westchester Avenue

White Plains, NY 10604

Fax: 914-696-2961

Attn: General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance
herewith.

          9. Arbitration. Any controversy or claim arising out of or relating to Section 13 of
the Employment Agreement and Section 5 of this Agreement (or the breach thereof) shall be settled
by a state or federal court located in Westchester County, New York. Any controversy or claim
arising out of or related to any other provision of this Agreement shall be settled by final,
binding and non-appealable arbitration in Westchester County, New York by three arbitrators.
Subject to the following provisions, the arbitration shall be conducted in accordance with the
Commercial Rules of the American Arbitration Association (the “Association”) then in effect. One
of the arbitrators shall be appointed by the Company, one shall be appointed by Executive and the
third shall be appointed by the first two arbitrators. If the first two arbitrators cannot agree
on the third arbitrator within 30 days of the appointment of the second arbitrator, then the third
arbitrator shall be appointed by the Association and shall be experienced in the resolution of
disputes under termination agreements for CEOs of major corporations. Any award entered by the
arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by either
party in accordance with applicable law in any court of competent jurisdiction. This arbitration
provision shall be specifically enforceable. The arbitrators shall have no authority to modify any
provision of this Agreement or to award a remedy for a dispute involving this Agreement other than
a benefit specifically provided under or by virtue of the Agreement. Each party shall be
responsible for its own expenses relating to the conduct of the arbitration or litigation
(including reasonable attorneys’ fees and expenses) and shall share the fees of the American
Arbitration Association and the arbitrators, if applicable, equally.

-7-

 

          IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement as of the date
first set forth above.

	 	 	 	 	 
	 	 	 
	 	/s/ Steven R. Loranger
 	 
	 	Steven R. Loranger 	 
	 	 	 
	 	ITT Corporation

 	 
	 	By:  	/s/ Linda Sanford
 	 
	 	 	Linda Sanford 	 
	 	 	Chairman of the Compensation & Personnel

Committee of the Board of Directors 	 
	 

 

 

EXHIBIT A

EXCESS PENSION PLAN

On the First Payment Date, Executive shall be paid an amount equal to $109,847.70, and, on the
first business day of each month thereafter, the Executive shall receive a payment equal to
$18,307.95.

EXCESS SAVINGS PLAN

As of August 30, 2011, Executive has an accrued total balance of $606,661.11. The accrued total
balance as of the First Payment Date shall be paid in a single lump sum payment on the First
Payment Date.

 

 

EXHIBIT B

DEFERRED COMPENSATION PLAN

As of August 30, 2011, Executive has an accrued total balance of $8,042,007.09, consisting of
$1,384,681.53 accrued in Executive’s Deferral 2005 Account Balance (the “2005 Deferral Account”)
and $6,657,325.56 otherwise accrued under the plan (the “Remaining Account”). The accrued total
balance in respect of the 2005 Deferral Account as of the First Payment Date shall be paid in five
annual installments with the first such installment to be made on the First Payment Date and the
subsequent four installments adjusted to reflect investment performance made on the anniversaries
of the Resignation Date. The accrued total balance in respect of the Remaining Account as of the
First Payment Date shall be paid in ten annual installments with the first such installment to be
made on the First Payment Date and the subsequent nine installments adjusted to reflect investment
performance made on the anniversaries of the Resignation Date.

ITT SALARIED INVESTMENT AND SAVINGS PLAN

As of August 30, 2011, Executive has an accrued total balance of $265,258.26.

ITT SALARIED RETIREMENT PLAN

Assuming a Resignation Date of October 31, 2011, the Executive is entitled to a single life annuity
payment equal to $1,288.18 per month.

 

 

EXHIBIT C

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Number of Shares	 	Number of Shares	 	Expiration of
	 	 	Grant Date /	 	 	 	 	 	Vesting/Settlement	 	That Vest in	 	Forfeited in	 	Exercise Period for
	 	 	Exercise Price (if	 	Number of Shares	 	Date in Connection	 	Connection with	 	Connection with	 	Vested Options /
	Equity Award	 	applicable)	 	Subject to Award	 	with Resignation	 	Resignation	 	Resignation	 	Tax Comments
	Stock Options

	 	March 5, 2009 /
$33.19
	 	 	165,690	 	 	Vest on March 5,
2012
	 	 	165,690	 	 	 	0	 	 	3/5/2016
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stock Options

	 	March 5, 2010 /
$53.49
	 	 	132,265	 	 	Vest on March 5,
2013
	 	 	132,265	 	 	 	0	 	 	Seven-year
anniversary of
Resignation Date
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stock Options

	 	March 3, 2011 /
$57.68
	 	 	133,835	 	 	Vest upon earlier
of March 3, 2014 or
two years after
Resignation Date
	 	 	115,247*	 	 	 	18,588*	 	 	Seven-year
anniversary of
Resignation Date
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stock Options

	 	June 28, 2004 /
$41.52
	 	 	250,000	 	 	Fully vested as of
date hereof
pursuant to award
agreement
	 	 	0	 	 	 	0	 	 	10/31/2012
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stock Options

	 	March 8, 2005/
$45.47
	 	 	199,120	 	 	Fully vested as of
date hereof
pursuant to award
agreement
	 	 	0	 	 	 	0	 	 	3/8/2012
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stock Options

	 	March 6, 2006/
$52.68
	 	 	83,612	 	 	Fully vested as of
date hereof
pursuant to award
agreement
	 	 	0	 	 	 	0	 	 	3/6/2013
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stock Options

	 	March 7, 2007/
$57.99
	 	 	89,235	 	 	Fully vested as of
date hereof
pursuant to award
agreement
	 	 	0	 	 	 	0	 	 	3/7/2014
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stock Options

	 	March 10, 2008/
$53.09
	 	 	100,000	 	 	Fully vested as of
date hereof
pursuant to award
agreement
	 	 	0	 	 	 	0	 	 	3/10/2015
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Restricted Stock

	 	March 5, 2009
	 	 	52,243	 	 	Vest on March 5,
2012
	 	 	52,243	 	 	 	0	 	 	Shares to be
withheld on
Resignation Date to
satisfy withholding
obligation

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Number of Shares	 	Number of Shares	 	Expiration of
	 	 	Grant Date /	 	 	 	 	 	Vesting/Settlement	 	That Vest in	 	Forfeited in	 	Exercise Period for
	 	 	Exercise Price (if	 	Number of Shares	 	Date in Connection	 	Connection with	 	Connection with	 	Vested Options /
	Equity Award	 	applicable)	 	Subject to Award	 	with Resignation	 	Resignation	 	Resignation	 	Tax Comments
	Restricted Stock

	 	March 5, 2010
	 	 	41,267	 	 	Vest on March 5,
2013
	 	 	41,267	 	 	 	0	 	 	Shares to be
withheld on
Resignation Date to
satisfy withholding
obligation
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Restricted Stock 

Units

	 	March 3, 2011
	 	 	36,442	 	 	Immediately upon
Resignation Date;
Distribution of
shares on First
Payment Date.
	 	 	31,381*	 	 	 	5,061*	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Restricted Stock 

Units

	 	June 28, 
2004
	 	 	134,567**	 	 	Fully vested as of
date hereof
pursuant to award
agreement.
Distribution of
shares on First
Payment Date.	 	 	 	 	 	 	 	 	 	 

 

			
	* 	 	Numbers calculated assuming Resignation Date and effective date of spin-off occur on October
31, 2011. If actual date is later than October 31, 2011, calculation of numbers listed above will
need to be recalculated to include any additional amounts for which Executive is entitled to
vesting based on additional service.
	 
	**	 	Number of RSUs expected to further increase on October 3, 2011 based on dividends paid on such
date and prior to First Payment Date.

	 	 	 	 	 	 	 	 	 
	TSR Award	 	 	Target Value	 	 	Treatment in Connection with Resignation
	2009-2011 Award	 	$	1,980,000	 	 	(A) amount equal to $1,870,000
multiplied by the applicable percentage
for the TSR determined based on actual
performance for the performance period
up to the Resignation Date; plus
	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	(B) amount equal to $110,000.

	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	Such total amount of (A) and (B) in
respect of award shall be settled in
cash as soon as practicable after the
Resignation Date (in no event later than
March 15, 2012).*
	 	 	 	 	 	 	 	 	 

	2010-2012 Award	 	$	1,980,000	 	 	(A) amount equal to $1,210,000
multiplied by the applicable percentage
for the TSR determined based on actual
performance for the performance period
up to the Resignation Date; plus
	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	(B) amount equal to $770,000.

	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	Such total amount of (A) and (B) in
respect of award shall be settled in
cash as soon as practicable after
December 31, 2012 (in no event later
than March 15, 2013).*

 

 

	 	 	 	 	 	 	 	 	 
	TSR Award	 	 	Target Value	 	 	Treatment in Connection with Resignation
	2011-2013 Award	 	$	2,133,300	 	 	(A) amount equal to $592,583.33
multiplied by the applicable percentage
for the TSR determined based on actual
performance for the performance period
up to the Resignation Date; plus
	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	(B) amount equal to $1,540,716,67.

	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	Such total amount of (A) and (B) in
respect of award shall be settled in
cash as soon as practicable after
December 31, 2013 (in no event later
than March 15, 2014). *

 

			
	*	 	Numbers calculated assuming Resignation Date and effective date of spin-off occur on October
31, 2011. If actual date is later than October 31, 2011, calculation of numbers listed above will
need to be recalculated to adjust amounts to which Executive is entitled.

 

 

EXHIBIT D

Additional Release

Any capitalized terms used but not defined herein this Additional Release (as defined in the
Resignation Agreement between ITT Corporation, an Indiana corporation (the “Company”), and Steven
R. Loranger (the “Executive”), dated as of October 14, 2011 (the “Agreement”)) shall have the
meaning set forth in the Agreement.

	1.	 	In consideration of the payments and benefits set forth in the Agreement, the Executive for
himself, his heirs, administrators, representatives, executors, successors and assigns
(collectively, the “Releasors”) does hereby irrevocably and unconditionally release, acquit
and forever discharge each of the Company, Xylem, Exelis and their respective subsidiaries,
shareholders, affiliates, divisions, trustees, officers, directors, partners, agents, and
former and current employees, including without limitation all persons acting by, through,
under or in concert with any of them (collectively, the “Releasees”), from any and all
charges, complaints, claims, liabilities, obligations, promises, agreements, controversies,
damages, remedies, actions, causes of action, suits, rights, demands, costs, losses, debts and
expenses (including attorneys’ fees and costs) of any nature whatsoever, known or unknown,
whether in law or equity and whether arising under federal, state or local law and in
particular including any claim for discrimination based upon race, color, ethnicity, sex, age
(including the Age Discrimination in Employment Act), national origin, religion, disability,
or any other unlawful criterion or circumstance, which the Executive and Releasors had, now
have, or may have in the future against each or any of the Releasees from the Execution Date
until the Resignation Date relating to the Executive’s employment with the Company and its
subsidiaries and affiliates other than claims for compensation and benefits under the
Agreement.

	2.	 	The Executive acknowledges that: (i) this Additional Release is written in a manner
calculated to be understood by him; (ii) he has been advised to consult with an attorney
before executing this Additional Release; (iii) he was given a period of 21 days within which
to consider this Additional Release; and (iv) to the extent he executes this Additional
Release before the expiration of the 21-day period, he does so knowingly and voluntarily and
only after consulting his attorney. The Executive shall have the right to cancel and revoke
this Additional Release during a period of seven days following the Resignation Date, and this
Additional Release shall not become effective, and no amounts or benefits the payment or
provision of which is subject to the Executive’s signing, timely delivery to the Company and
non-revocation of this Additional Release pursuant to the terms of the Agreement shall be paid
or provided under the Agreement until the day after the expiration of such seven-day period
(the “Additional Release Revocation Date”). The seven-day period of revocation shall commence
upon the Resignation Date. In order to revoke this Additional Release, the Executive shall
deliver to the Company, prior to the Additional Release Revocation Date, a written notice of
revocation. Upon such revocation, this Additional Release shall be null and void and of no
further force or effect.

	3.	 	In consideration of the benefits set forth in the Agreement, the Company, for itself, Xylem,
Exelis and their respective subsidiaries, successors and assigns (collectively “Company

 

 

	 	 	Releasors”) do hereby irrevocably and unconditionally release, acquit and forever discharge each
of the Executive and his representatives, successors and assigns (collectively, “Company
Releasees”) from any and all charges, complaints, claims, liabilities, obligations, promises,
agreements, controversies, damages, remedies, actions, causes of action, suits, rights, demands,
costs, losses, debts and expenses (including attorneys’ fees and costs) of any nature
whatsoever, known or unknown, whether in law or equity and whether arising under federal, state
or local law, which the Company Releasors had, now have, or may have in the future against each
or any of the Company Releasees from the Execution Date until the Resignation Date relating to
the Executive’s employment with the Company and its subsidiaries and affiliates other than other
than claims as to which all material facts are not actually known to any member of the Board
(other than the Executive) on the Resignation Date or for claims under the Agreement.

IN WITNESS WHEREOF, each of the parties hereto has duly executed this Additional Release as of
October ___, 2011.

	 	 	 	 	 
	 	 	 
	 	

 	 
	 	Steven R. Loranger 	 
	 	 	 
	 
	 	ITT Corporation

 	 
	 	By:  	 	 
	 	 	Linda Sanford 	 
	 	 	Chairman of the Compensation & Personnel

Committee of the Board of Directors

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