Document:

exv10w16

Exhibit 10.16

Exelis Inc.

Special Senior Executive Severance Pay Plan

1. Purpose

     The purpose of this Exelis Inc. 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.

     The Plan first became effective as of October 31, 2011 following the spin-off of Exelis Inc.
from ITT Corporation (the “Predecessor Corporation”) on October 31, 2011. The Predecessor
Corporation maintained a similar plan prior to the spin-off (the “Predecessor Plan”), and the Plan
was created to continue service accruals under the Predecessor Plan. The Plan shall remain in
effect as provided in Section 9 hereof, and covered employees shall receive full credit for their
service and participation with the Predecessor Corporation as provided in Section 5 hereof.

2. Covered Employees

     Covered employees under this Plan (“Special Severance Executives”) are active full-time,
regular salaried employees of Exelis Inc., (“Exelis”) and of any subsidiary company (“Exelis
Subsidiary”) (collectively or individually as the context requires “Company” ; provided, however,
that for purposes of service under the Predecessor Plan, Company shall include the Predecessor
Corporation) (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 Exelis’s
Board of Directors.

     “Bands A and B” shall have the meaning given such terms under the executive classification
system of the Exelis Human Resources Department as in effect immediately preceding an Acceleration
Event. After the occurrence of an Acceleration Event, the terms “Exelis”, “Exelis Subsidiary” and
“Company” as used herein shall also include, respectively and as the context requires, any
successor company to Exelis or any successor company to any Exelis 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
the Company or a subsidiary of the Company or any employee benefit plan

 

 

sponsored by the Company or a subsidiary of the Company, is the beneficial owner directly or
indirectly of twenty percent (20%) or more of the outstanding Common Stock $1 par value, of the
Company (the “Stock”); (ii) any person (within the meaning of Section 13(d) of the Act), other than
the Company or a subsidiary of the Company, or any employee benefit plan sponsored by the Company
or a subsidiary of the Company, shall purchase shares pursuant to a tender offer or exchange offer
to acquire any Stock of the Company (or securities convertible into Stock) for cash, securities or
any other consideration, provided that after consummation of the offer, the person in question is
the beneficial owner (as such term is defined in Rule 13d-3 under the Act), directly or indirectly,
of twenty percent (20%) or more of the outstanding Stock of the Company (calculated as provided in
paragraph (d) of Rule 13d-3 under the Act in the case of rights to acquire Stock); (iii) the
consummation of (A) any consolidation, business combination or merger involving the Company, other
than a consolidation, business combination or merger involving the Company in which holders of
Stock immediately prior to the consolidation, business combination or merger (x) hold fifty percent
(50%) or more of the combined voting power of the Company (or the corporation resulting from the
merger or consolidation or the parent of such corporation) after the merger and (y) have the same
proportionate ownership of common stock of the Company (or the corporation resulting from the
merger or consolidation or the parent of such corporation), relative to other holders of Stock
immediately prior to the merger, business combination or consolidation, immediately after the
merger as immediately before, or (B) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all the assets of the
Company, (iv) there shall have been a change in a majority of the members of the Board of Directors
of the Company within a 12-month period unless the election or nomination for election by the
Company’s stockholders of each new director during such 12-month period was approved by the vote of
two-thirds of the directors then still in office who (x) were directors at the beginning of such
12-month period or (y) whose nomination for election or election as directors was recommended or
approved by a majority of the directors who were directors at the beginning of such 12-month period
or (v) any person (within the meaning of Section 13(d) of the Act) (other than the Company or any
subsidiary of the Company or any employee benefit plan (or related trust) sponsored by the Company
or a subsidiary of the Company) becomes the beneficial owner (as such term is defined in Rule 13d-3
under the Act) of twenty percent (20%) or more of the Stock.

     “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

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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.

     “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.

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     • Severance Pay — The sum of (x) three (3) times the current annual base salary rate paid or
in effect (whether or not deferred) with respect to the Special Severance Executive at the time of
the Special Severance Executive’s termination of employment, and (y) three (3) times the current
annual bonus paid or awarded (whether or not deferred) to the Special Severance Executive in
respect of either (i) an Acceleration Event or (ii) the Special Severance Executive’s termination
of employment.

     • Benefits and Perquisites

     > Continued health and life insurance benefits 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 Exelis
Inc. Salaried Retirement Plan and, as applicable, Exelis Inc. Excess Pension Plan IA, Exelis Inc.
Excess Pension Plan IB, Exelis Inc. Excess Pension Plan IIA, and/or Exelis Inc. Excess Pension Plan
IIB 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 one-half
percent (31/2%) with respect to the Special Severance Executive under the Exelis Inc. Investment
and Savings Plan for Salaried Employees and/or the Exelis Inc. Excess Savings Plan (or
corresponding savings plan arrangements outside the United States) (“Savings

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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.

     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 current annual base salary rate paid or in
effect (whether or not deferred) with respect to the Special Severance Executive at the Special
Severance Executive’s termination of employment, and (y) two (2) times the current annual bonus
paid or awarded (whether or not deferred) to the Special Severance Executive in respect of either
(i) an Acceleration Event or (ii) the Special Severance Executive’s termination of employment.

• Benefits and Perquisites

     > Continued health and life insurance benefits 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 Exelis
Inc. Salaried Retirement Plan and, as applicable, Exelis Inc. Excess Pension Plan IA, Exelis Inc.
Excess Pension Plan IB, Exelis Inc. Excess Pension Plan IIA, and/or Exelis Inc. Excess Pension Plan
IIB 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

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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 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 Exelis Inc. Investment and
Savings Plan for Salaried Employees and/or the Exelis Inc. 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 benefits and perquisites described above 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.

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     Notwithstanding any other provision of the Plan to the contrary, all prior service and
participation by a Special Severance Executive with the Predecessor Corporation shall be credited
in full towards a Special Severance Executive’s service and participation with the Company.

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 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 the Company, 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 Exelis 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.

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9. Termination or Amendment

     Exelis 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.

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
Exelis Inc. 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 would constitute an “excess
parachute payment” within the meaning of Section 280G of the Code, then the aggregate of all
Payments shall be reduced so that the Present Value of the aggregate of all Payments does not
exceed the Safe Harbor Amount; provided, however, that no such reduction shall be effected, if the
Net After-tax Benefit to Special Severance Executive of receiving all of the Payments exceeds the
Net After-tax Benefit to Special Severance Executive resulting from having such Payments so
reduced. In the event a reduction is required pursuant hereto, the order of reduction shall be
first all cash payments on a pro rata basis, then any equity compensation on a pro rata basis, and
lastly medical and dental coverage.

     For purposes of this Section 11, the following terms have the following meanings:

     (i) “Net After-tax Benefit” shall mean the Present Value of a Payment net of all federal state
and local income, employment and excise taxes imposed on Special Severance Executive with respect
thereto, determined by applying the highest marginal rate(s) applicable to an individual for
Special Severance Executive’s taxable year in which the Change in Control occurs.

     (ii) “Payment” means any payment or distribution or provision of benefits by the Company to or
for the benefit of Special Severance Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but determined without regard
to any reductions required by this Section 11.

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     (iii) “Present Value” shall mean such value determined in accordance with Section 280G(d)(4)
of the Code.

     (iv) “Safe Harbor Amount” shall be an amount expressed in Present Value which maximizes the
aggregate Present Value of Payments without causing any Payment to be subject to excise tax under
Section 4999 of the Code or the deduction limitation of Section 280G of the Code.

     All determinations required to be made under this Section 11, including whether and when a
reduction is required and the amount of such reduction 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 reduction, 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

     All fees and expenses of the Accounting Firm shall be borne solely by the Company. 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.

12. Miscellaneous

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

     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.

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     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 Exelis Inc. 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:

Exelis Inc.

1650 Tysons Boulevard, Suite 1700

McLean, Virginia 22102

Attention: General Counsel

     If to Special Severance Executive:

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

14. Adoption Date

     This Plan was initially adopted by Exelis Inc. on October 31, 2011 (“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

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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.

11exv10w17

Exhibit 10.17

Exelis Inc.

Senior Executive Severance Pay Plan

1. Purpose

     The purpose of this Exelis Inc. Senior Executive Severance Pay Plan (“Plan”) is to assist in
occupational transition by providing severance pay for employees covered by this Plan whose
employment is terminated under conditions set forth in this Plan.

     The Plan first became effective as of October 31, 2011 following the spin-off of Exelis Inc.
from ITT Corporation (the “Predecessor Corporation”) on October 31, 2011. The Predecessor
Corporation maintained a similar plan prior to the spin-off (the “Predecessor Plan”), and the Plan
was created to continue service accruals under the Predecessor Plan. The Plan shall remain in
effect as provided in Section 12 hereof, and Executives shall receive full credit for their service
and participation with the Predecessor Corporation as provided in Section 4 hereof.

2. Covered Employees

     Covered employees under this Plan (“Executives”) are full-time, regular salaried employees of
Exelis Inc. (“Exelis”) and of any subsidiary company (“Exelis Inc. Subsidiary”) (collectively or
individually as the context requires “Company”) who are United States citizens, or who are employed
in the United States, in Band A currently (Senior Vice Presidents and above to be further defined
by the Exelis Compensation and Personnel Committee) at any time within the two year period
immediately preceding the date the Company selects as the Executive’s last day of active employment
(“Scheduled Termination Date”).

3. Severance Pay Upon Termination of Employment

     If the Company terminates an Executive’s employment, the Executive shall be provided severance
pay in accordance with the terms of this Plan except where the Executive:

     • is terminated for cause,

     • accepts employment or refuses comparable employment with a purchaser as provided in Section
8, “Divestiture”,

     • is terminated with a Scheduled Termination Date on or after the Executive’s Normal
Retirement Date as defined herein, or

     • voluntarily terminates employment with the Company prior to the Scheduled Termination Date.

     No severance pay will be provided under this Plan where the Executive terminates employment
by:

     • voluntarily resigning,

 

 

     • voluntarily retiring, or

     • failing to return from an approved leave of absence (including a medical leave of absence).

     No severance pay will be provided under this Plan upon any termination of employment as a
result of the Executive’s death or disability.

     “Normal Retirement Date” shall mean the first of the month which coincides with or follows the
Executive’s 65th birthday.

4. Schedule of Severance Pay

     Severance pay will be provided in accordance with the following Schedule of Severance Pay
which sets forth the months of Base Pay which is provided to an Executive based upon the
Executive’s Years of Service as of the Scheduled Termination Date.

	 	 	 
	Years of Service	 	Months of Base Pay
	Less than 4
	 	12
	4
	 	13
	5
	 	14
	6
	 	15
	7
	 	16
	8
	 	17
	9
	 	18
	10
	 	19
	11
	 	20
	12
	 	21
	13
	 	22
	14
	 	23
	15 or more
	 	24

     “Base Pay” shall mean the annual base salary rate payable or in effect with respect to the
Executive at the Scheduled Termination Date divided by twelve (12) months. Such annual base salary
rate shall in no event be less than the highest annual base salary rate paid or in effect with
respect to the Executive at any time during the twenty-four month (24) period immediately preceding
the Scheduled Termination Date.

     “Years of Service” shall mean the total number of completed years of employment since the
Executive’s Exelis system service date to the Scheduled Termination Date, rounded to the nearest
whole year; provided that, for the purposes of “Years of Service,” service shall include years with
the Predecessor Corporation. The Exelis system service date is the date from which employment in
the Exelis system is recognized for purposes of determining eligibility for vesting under the
applicable Company retirement plan covering the Executive on the Scheduled Termination Date;
provided, however, that for purposes of service under the Predecessor Plan,
employment in the Predecessor Corporation’s system is recognized for purposes of determining
eligibility for vesting under the applicable retirement plan covering the Executive.

2

 

     Notwithstanding the above Schedule of Severance Pay, (i) in no event shall months of Base Pay
provided to an Executive exceed the number of months remaining between the Scheduled Termination
Date and the Executive’s Normal Retirement Date or (ii) shall severance pay exceed the equivalent
of twice the Executive’s total annual compensation during the year immediately preceding the
Scheduled Termination Date.

     Notwithstanding any other provision of the Plan to the contrary, all prior service and
participation by an Executive with the Predecessor Corporation shall be credited in full towards an
Executive’s service and participation with the Company.

5. Form of Payment of Severance Pay

     Severance pay shall be paid in the form of periodic payments according to the regular payroll
schedule (“Severance Pay”). Severance Pay will commence within 60 days following the Scheduled
Termination Date.

     In the event of an Executive’s death during the period the Executive is receiving Severance
Pay, the amount of severance pay remaining shall be paid in a discounted lump sum to the
Executive’s spouse or to such other beneficiary or beneficiaries designated by the Executive in
writing, or, if the Executive is not married and failings such designation, to the estate of the
Executive. Any discounted lump sum paid under this Plan shall be equal to the present value of the
remaining periodic payments of severance pay as determined by Exelis using an interest rate equal
to the prime rate at Citibank in effect on the date of the Executive’s death.

     If an Executive is receiving Severance Pay, the Executive must continue to be available to
render to the Company reasonable assistance, consistent with the level of the Executive’s 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 the Executive may have.
After the Scheduled Termination Date and normal wind up of the Executive’s former duties, the
Executive will not be required to perform any regular services for the Company. In the event the
Executive secures other employment during the period the Executive is receiving Severance Pay, the
Executive must promptly notify the Company.

     Severance Pay will cease if an Executive is rehired by the Company.

6. Benefits During Severance Pay

     As long as an Executive is receiving Severance Pay, except as provided in this Section or in
Section 7, the Executive will continue to be eligible for participation in Company employee benefit
plans in accordance with the provisions of such plans as in effect on the Scheduled Termination
Date. An Executive 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.

7. Excluded Executive Compensation Plans, Programs, Arrangements, and Perquisites

3

 

     During the period an Executive is receiving Severance Pay, the Executive will not be eligible
to accrue any vacation or participate in any (i) bonus program, (ii) special termination programs,
(iii) tax or financial advisory services, (iv) new awards under any stock option or stock related
plans for executives (provided that the Executive 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 and
(vi) any other executive compensation program, plan, arrangement, practice, policy or perquisites
unless specifically authorized by Exelis in writing. The period during which an Executive is
receiving Severance Pay does not count as service for the purpose of any Exelis long term incentive
award program unless otherwise provided in plan documents previously approved by the Board of
Directors or Compensation and Personnel Committee.

8. Divestiture

     If an Exelis Subsidiary or division of Exelis or a portion thereof at which an Executive is
employed is sold or divested and if (i) the Executive accepts employment or continued employment
with the purchaser or (ii) refuses employment or continued employment with the purchaser on terms
and conditions substantially comparable to those in effect immediately preceding the sale or
divestiture, the Executive shall not be provided severance pay under this Plan. The provisions of
this Section 8 apply to divestitures accomplished through sales of assets or through sales of
corporate entities.

9. Disqualifying Conduct

     If during the period an Executive is receiving Severance Pay, the Executive (i) engages in any
activity which is inimical to the best interests of the Company; (ii) disparages the Company; (iii)
fails to comply with any Company Covenant Against Disclosure and Assignment of Rights to
Intellectual Property; (iv) without the Company’s prior consent, induces any employees of the
Company to leave their Company employment; (v) without the Company’s prior consent, engages in,
becomes affiliated with, or becomes employed by any business competitive with the Company; or (vi)
fails to comply with applicable provisions of the Exelis Code of Conduct or applicable Exelis
Corporate Policies or any applicable Exelis Subsidiary Code or policies, then the Company will have
no further obligation to provide severance pay.

10. Release

     The Company shall not be required to make or continue any severance payments under this Plan
unless the Executive executes and delivers to Exelis within 45 days following the Scheduled
Termination Date a release, satisfactory to Exelis, in which the Executive discharges and releases
the Company and the Company’s directors, officers, employees and employee benefit plans from all
claims (other than for benefits to which Executive is entitled under any Company employee benefit
plan) arising out of Executive’s employment or termination of employment.

11. Administration of Plan

     This Plan shall be administered by Exelis, 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

4

 

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 Exelis shall be final, conclusive and binding on all parties affected thereby.

12. Termination or Amendment

     Exelis may terminate or amend this Plan (“Plan Change”) at any time except that no such Plan
Change may reduce or adversely affect severance pay for any Executive whose employment terminates
within two years of the effective date of such Plan Change provided that the Executive was a
covered employee under this Plan on the date of such Plan Change.

13. Offset

     Any severance pay provided to an Executive under this Plan shall be offset in a manner
consistent with Section 15 by reducing such severance pay by any severance pay, salary
continuation, termination pay or similar pay or allowance which Executive receives or is entitled
to receive (i) under any other Company plan, policy practice, program, arrangement; (ii) pursuant
to any employment agreement or other agreement with the Company; (iii) by virtue of any law, custom
or practice. Any severance pay provided to Executive under this Plan shall also be offset by
reducing such severance pay by any severance pay, salary continuation pay, termination pay or
similar pay or allowance received by the Executive as a result of any prior termination of
employment with the Company.

     Coordination of severance pay with any pay or benefits provided by any applicable Exelis
short-term or long-term disability plan shall be in accordance with the provisions of those plans.

14. Miscellaneous Except as provided in this Plan, the Executive shall not be entitled to any
notice of termination or pay in lieu thereof.

     In cases where severance pay is provided under this Plan, pay in lieu of any unused current
year vacation entitlement will be paid to the Executive in a lump sum.

     Benefits under this Plan are paid for entirely by the Company from its general assets.

     This Plan is not a contract of employment, does not guarantee the Executive employment for any
specified period and does not limit the right of the Company to terminate the employment of the
Executive at any time.

     The 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

15. Section 409A

     This Plan is intended to comply with Section 409A of the Internal Revenue Code of 1986, as
amended (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 Executive’s termination of employment with the Company the Executive is a “specified

5

 

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 Executive) until a date
that is six months following the 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 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
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
Executives with respect thereto.

16. Adoption Date and Amendments

     This Plan was adopted by Exelis on October 31, 2011 (“Adoption Date”) and does not apply to
any termination of employment which occurred or which was communicated to the Executive prior to
the Adoption Date.

6

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