Document:

EX-10.5

    Exhibit 10.5

 

    ITT
    Corporation

 

    2003
    Equity Incentive Plan

    (amended and restated as of February 15, 2008)

 

    Article 1.

    

 

    Establishment,
    Purpose, and Duration
    

 

    1.1  Establishment.  ITT Corporation,
    an Indiana corporation (hereinafter referred to as the
    “Company”), establishes an incentive
    compensation plan to be known as the 2003 Equity Incentive Plan
    (hereinafter referred to as the “Plan”), as set
    forth in this document. The Plan permits the grant of
    Nonqualified Stock Options, Incentive Stock Options, Stock
    Appreciation Rights (SARs), Restricted Stock, and Restricted
    Stock Units.

 

    The Plan first became effective as of May 13, 2003 (the
    “Effective Date”) and was previously knows as
    the “ITT Industries, Inc. 2003 Long-Term Incentive
    Plan.” The Plan was amended and restated as of
    February 15, 2008, subject to shareholder approval. The
    Plan shall remain in effect as provided in Section 1.3
    hereof.

 

    1.2  Purpose of the Plan.  The
    purpose of the Plan is to promote the long-term interests of the
    Company and its shareholders by strengthening the Company’s
    ability to attract and retain Employees of the Company and its
    Affiliates and members of the Board of Directors upon whose
    judgment, initiative, and efforts the financial success and
    growth of the business of the Company largely depend, and to
    provide an additional incentive for such individuals through
    share ownership and other rights that promote and recognize the
    financial success and growth of the Company and create value for
    shareholders.

 

    1.3  Duration of the Plan.  The Plan
    shall commence as of the Effective Date, as described in
    Section 1.1 hereof, and shall remain in effect, subject to
    the right of the Committee to amend or terminate the Plan at any
    time pursuant to Article 13 hereof, until all Shares
    subject to it shall have been purchased or acquired according to
    the Plan’s provisions.

 

    Article 2.

    

 

    Definitions
    

 

     Whenever used in the Plan, the following terms shall have the
    meanings set forth below, and when the meaning is intended, the
    initial letter of the word shall be capitalized.

 

    2.1  “Acceleration Event” shall be
    deemed to have occurred as of the first day that any one or more
    of the following conditions have been satisfied:

 

    (a) a report on Schedule 13D shall be filed with the
    Securities and Exchange Commission pursuant to
    Section 13(d) of the Exchange Act disclosing that any
    person (within the meaning of Section 13(d) of the Exchange
    Act), other than the Company or a Subsidiary or any employee
    benefit plan sponsored by the Company or a Subsidiary, 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”);

 

    (b) any person (within the meaning of Section 13(d) of
    the Exchange Act), other than the Company or a Subsidiary, or
    any employee benefit plan sponsored by the Company or a
    Subsidiary, 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, 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 Exchange Act in the case of rights to acquire Stock);

 

    (c) the stockholders of the Company shall approve

    

    1

 

    (i) 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

 

    (ii) 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;

 

    (d) there shall have been a change in a majority of the
    members of the Board 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 where directors at the beginning of such
    12-month
    period; or

 

    (e) any person (within the meaning of Section 13(d) of
    the Exchange Act) (other than the Company or a Subsidiary or any
    employee benefit plan (or related trust) sponsored by the
    Company or a Subsidiary) becomes the Beneficial Owner of twenty
    percent (20%) or more of the Stock.

 

    2.2  “Affiliate” shall mean any
    Subsidiary and any other Person that directly, or indirectly
    through one or more intermediaries, controls, or is controlled
    by, or is under common control with, the Person specified.

 

    2.3  “Award” means, individually or
    collectively, a grant under this Plan of Nonqualified Stock
    Options, Incentive Stock Options, SARs, Restricted Stock, and
    Restricted Stock Units.

 

    2.4  “Award Agreement” means either
    (i) an agreement entered into by the Company and a
    Participant setting forth the terms and provisions applicable to
    Awards granted under this Plan, or (ii) a statement issued
    by the Company to a Participant describing the terms and
    conditions of such Award.

 

    2.5  “Beneficial Owner” or
    “Beneficial Ownership” shall have the meaning
    ascribed to such term in
    Rule 13d-3
    of the General Rules and Regulations under the Exchange Act.

 

    2.6  “Board” or “Board of
    Directors” means the Board of Directors of the Company.

 

    2.7  “Code” means the
    U.S. Internal Revenue Code of 1986, as amended from time to
    time.

 

    2.8  “Committee” means the
    Compensation and Personnel Committee of the Board.

 

    2.9  “Company” means ITT Corporation,
    an Indiana corporation, and any successor thereto as provided in
    Article 15 herein.

 

    2.10  “Covered Employee” means a
    Participant who is a “Covered Employee,” as defined in
    Code Section 162(m) and the regulations promulgated under
    Code Section 162(m), or any successor statute.

 

    2.11  “Director” means any individual
    who is a member of the Board of Directors.

 

    2.12  “Employee” means any employee
    of the Company or its Affiliates.

 

    2.13  “Exchange Act” means the
    Securities Exchange Act of 1934, as amended from time to time,
    or any successor act thereto.

 

    2.14  “Fair Market Value” means a
    price that is based on the opening, closing, actual, high, low,
    or average selling prices of a Share on the New York Stock
    Exchange (“NYSE”) or other established
    stock exchange (or exchanges) on the applicable date, the
    preceding trading day, the next succeeding trading day, or an
    average of trading days, as determined by the Committee in its
    discretion.

    

    2

 

    Such definition of Fair Market Value shall be specified in the
    Award Agreement and may differ depending on whether Fair Market
    Value is in reference to the grant, exercise, vesting, or
    settlement or payout of an Award. If, however, the accounting
    standards used to account for equity awards granted to
    Participants are substantially modified subsequent to the
    Effective Date of the Plan, the Committee shall have the ability
    to determine an Award’s Fair Market Value based on the
    relevant facts and circumstances. If Shares are not traded on an
    established stock exchange, Fair Market Value shall be
    determined by the Committee based on objective criteria.

 

    2.15  “Freestanding SAR” means a SAR
    that is granted independently of any Options, as described in
    Article 7 herein.

 

    2.16  “Grant Price” means the amount
    to which the Fair Market Value of a Share is compared pursuant
    to Section 7.6 to determine the amount of payment that
    should be made upon exercise of a SAR

 

    2.17  “Incentive Stock Option” or
    “ISO” means an Option that meets the
    requirements of Code Section 422, or any successor
    provision, and that is not designated as a Nonqualified Stock
    Option.

 

    2.18  “Insider” shall mean an
    individual who is, on the relevant date, an officer, Director,
    or more than ten percent (10%) Beneficial Owner of any class of
    the Company’s equity securities that is registered pursuant
    to Section 12 of the Exchange Act, as determined by the
    Board or the Committee in accordance with Section 16 of the
    Exchange Act.

 

    2.19  “Nonqualified Stock Option” or
    “NQSO” means an Option that is not intended to
    meet the requirements of Code Section 422, or that
    otherwise does not meet such requirements.

 

    2.20  “Option” means an Incentive
    Stock Option or a Nonqualified Stock Option to purchase Shares,
    as described in Article 6 herein.

 

    2.21  “Option Price” means the price
    at which a Share may be purchased by a Participant pursuant to
    an Option.

 

    2.22  “Participant” means an Employee
    or Director who has been selected to receive an Award or who has
    an outstanding Award granted under the Plan.

 

    2.23  “Performance-Based
    Compensation” means an Award that is qualified as
    Performance-Based Compensation under Code Section 162(m).

 

    2.24  “Performance Measures” means
    measures as described in Article 9, the attainment of which
    may determine the amount of payout
    and/or
    vesting with respect to Awards.

 

    2.25  “Performance Period” means the
    period of time during which the performance goals must be met in
    order to determine the amount of payout
    and/or
    vesting with respect to an Award.

 

    2.26  “Period of Restriction” means
    the period when Restricted Stock or Restricted Stock Units are
    subject to a substantial risk of forfeiture (based on the
    passage of time, the achievement of performance goals, or upon
    the occurrence of other events as determined by the Committee,
    at its discretion) and transfer restrictions, as provided in
    Article 8 herein.

 

    2.27  “Person” shall have the meaning
    given in Section 3(a) (9) of the Exchange Act, as
    modified and used in Sections 13(d) and 14(d) thereof.

 

    2.28  “Plan Year” means the fiscal
    year.

 

    2.29  “Restricted Stock” means an
    Award granted to a Participant pursuant to Article 8 herein.

 

    2.30  “Restricted Stock Unit” means
    an Award granted to a Participant pursuant to Article 8
    herein.

 

    2.31  “Share” means a share of common
    stock of the Company, $1.00 par value per share.

 

    2.32  “Stock Appreciation Right” or
    “SAR” means an Award granted to a Participant
    pursuant to Article 7 herein.

    

    3

 

    2.33  “Subsidiary” means any
    corporation, partnership, joint venture, limited liability
    company, or other entity (other than the Company) in an unbroken
    chain of entities beginning with the Company if each of the
    entities other than the last entity in the unbroken chain owns
    at least fifty percent (50%) of the total combined voting power
    in one of the other entities in such chain.

 

    2.34  “Tandem SAR” means a SAR that
    is granted in connection with a related Option pursuant to
    Article 7.

 

    Article 3.

    

 

    Administration
    

 

    3.1  General.  The Committee shall be
    responsible for administering the Plan. The Committee may employ
    attorneys, consultants, accountants, and other persons, and the
    Committee, the Company, and its officers and Directors shall be
    entitled to rely upon the advice, opinions, or valuations of any
    such persons. All actions taken and all interpretations and
    determinations made by the Committee shall be final and binding
    upon the Participants, the Company, and all other interested
    persons.

 

    3.2  Authority of the Committee.  The
    Committee shall have full and exclusive discretionary power to
    interpret the terms and the intent of the Plan and to determine
    eligibility for Awards and to adopt such rules, regulations, and
    guidelines for administering the Plan as the Committee may deem
    necessary or proper. Such authority shall include, but not be
    limited to, selecting Award recipients, establishing all Award
    terms and conditions and, subject to Article 13, adopting
    modifications and amendments to the Plan or any Award Agreement,
    including without limitation, any that are necessary to comply
    with the laws of the countries in which the Company and its
    Affiliates operate.

 

    3.3  Delegation.  The Committee may
    delegate to one or more of its members or to one or more agents
    or advisors such administrative duties as it may deem advisable,
    and the Committee or any person to whom it has delegated duties
    as aforesaid may employ one or more persons to render advice
    with respect to any responsibility the Committee or such person
    may have under the Plan. The Committee may, by resolution,
    authorize one or more officers of the Company to do one or both
    of the following: (a) designate Employees and Directors to
    be recipients of Awards; and (b) determine the size of the
    Award; provided, however, the Committee shall not
    delegate such responsibilities to any such officer for Awards
    granted to an Employee that is considered an elected officer of
    the Company, or to the extent it would unintentionally cause
    Performance-Based Compensation to lose its status as such.

 

    Article 4.

    

 

    Shares
    Subject to the Plan and Maximum Awards
    

 

    4.1  Number of Shares Available for
    Awards.  Subject to adjustment as provided in
    Section 4.2 herein, the number of Shares hereby reserved
    for issuance to Participants under the Plan shall be fifteen
    million four hundred thousand (15,400,000).

 

    The number of Shares that may be issued under the Plan for
    Awards other than Options granted with an Option Price equal to
    at least Fair Market Value on the date of grant or SARs with a
    Grant Price equal to at least Fair Market Value on the date of
    grant shall not exceed four million (4,000,000).

 

    All of the reserved Shares may be used as ISOs.

 

    Any Shares related to Awards which terminate by expiration,
    forfeiture, cancellation, or otherwise without the issuance of
    such Shares, are settled in cash in lieu of Shares, or are
    exchanged with the Committee’s permission for Awards not
    involving Shares, shall be available again for grant under the
    Plan. Notwithstanding the foregoing, upon the exercise of a
    stock-settled Stock Appreciation Right, the number of Shares
    subject to the Award that are then being exercised shall be
    counted against the maximum aggregate number of Shares that may
    be issued under the Plan as provided above, on the basis of one
    Share for every Share subject thereto, regardless of the actual
    number of Shares used to settle the Stock Appreciation Right
    upon exercise. The Shares available for issuance under the Plan
    may be authorized and unissued Shares or treasury Shares.

    

    4

 

    The following limits (“Award Limits”)
    shall apply to Awards:

 

    (a) Options:  The maximum aggregate number
    of Shares that may be granted in the form of Options, pursuant
    to any Award granted in any one Plan Year to any one Participant
    shall be six hundred thousand (600,000).

 

    (b) SARs:  The maximum number of Shares
    that may be granted in the form of Stock Appreciation Rights,
    pursuant to any Award granted in any one Fiscal Year to any one
    Participant shall be six hundred thousand (600,000).

 

    (c) Restricted Stock or Restricted Stock
    Units:  The maximum aggregate grant with respect
    to Awards of Restricted Stock or Restricted Stock Units granted
    in any one Plan Year to any one Participant shall be three
    hundred thousand (300,000).

 

    4.2  Adjustments in Authorized
    Shares.  In the event of any equity restructuring
    (within the meaning of Financial Accounting Standards
    No. 123 (revised 2004) that causes the per share value
    of Shares to change, such as a stock dividend, stock split, spin
    off, rights offering, or recapitalization through a large,
    nonrecurring cash dividend, the Committee shall cause there to
    be made an equitable adjustment to: (a) the number and, if
    applicable, kind of shares that may be issued under the Plan or
    pursuant to any type of Award under the Plan, (b) the Award
    Limits, (c) the number and, if applicable, kind of shares
    subject to outstanding Awards and (d) as applicable, the
    Option Price or Grant Price of any then outstanding Awards. In
    the event of any other change in corporate structure or
    capitalization, such as a merger, consolidation, any
    reorganization (whether or not such reorganization comes within
    the definition of such term in Section 368 of the Code) or
    any partial or complete liquidation of the Company, the
    Committee, in its sole discretion, in order to prevent dilution
    or enlargement of Participants’ rights under the Plan,
    shall cause there to be made such equitable adjustments
    described in the foregoing sentence. Any fractional shares
    resulting from adjustments made pursuant to this
    Section 4.2 shall be eliminated. Any adjustment made
    pursuant to this Section 4.2 shall be conclusive and
    binding for all purposes of the Plan.

 

    Except to the extent it would unintentionally cause Performance
    Based Compensation to fail to qualify for the performance based
    exception to Code Section 162(m), appropriate adjustments
    may also be made by the Committee in the terms of any Awards
    under the Plan to reflect such changes or distributions and to
    modify any other terms of outstanding Awards on an equitable
    basis, including modifications of performance goals and changes
    in the length of Performance Periods. The determination of the
    Committee as to the foregoing adjustments, if any, shall be
    conclusive and binding on Participants under the Plan.

 

    Subject to the provisions of Article 12, without affecting
    the number of Shares reserved or available hereunder, the
    Committee may authorize the issuance or assumption of benefits
    under this Plan in connection with any merger, consolidation,
    acquisition of property or stock, share exchange, amalgamation,
    reorganization or similar transaction upon such terms and
    conditions as it may deem appropriate; provided, however, that
    no such issuance or assumption shall be made without affecting
    the number of Shares reserved or available hereunder if it would
    prevent the granting of ISOs under the Plan.

 

    Article 5.

    

 

    Eligibility
    and Participation
    

 

    5.1  Eligibility.  Individuals
    eligible to participate in this Plan include all Employees and
    Directors.

 

    5.2  Actual Participation.  Subject
    to the provisions of the Plan, the Committee may, from time to
    time, select from all eligible individuals, those to whom Awards
    shall be granted and shall determine the form and amount of each
    Award.

    

    5

 

    Article 6.

    

 

    Stock Options
    

 

    6.1  Grant of Options.  Subject to
    the terms and provisions of the Plan, Options may be granted to
    Participants in such number, and upon such terms, and at any
    time and from time to time as shall be determined by the
    Committee.

 

    ISOs may not be granted following the ten-year
    (10) anniversary of the date the Plan was last approved by
    shareholders in a manner that satisfies the shareholder approval
    requirements applicable to ISOs. ISOs may be granted only to
    Employees.

 

    6.2  Award Agreement.  Each Option
    grant shall be evidenced by an Award Agreement that shall
    specify the Option Price, the duration of the Option, the number
    of Shares to which the Option pertains, the conditions upon
    which an Option shall become vested and exercisable, and such
    other provisions as the Committee shall determine which are not
    inconsistent with the terms of the Plan. The Award Agreement
    also shall specify whether the Option is intended to be an ISO
    or an NQSO.

 

    6.3  Option Price.  Subject to the
    following sentence, the Option Price for each grant of an Option
    under this Plan shall be as determined by the Committee;
    provided, however, the Option Price shall not be less than one
    hundred percent (100%) of the Fair Market Value of a Share on
    the date the Option is granted. For Options granted to
    Participants outside the United States, the Committee, in order
    to comply with local tax laws and regulations, has the authority
    to grant Options at a price that is less than the Fair Market
    Value of a Share on the date of grant.

 

    6.4  Duration of Options.  Each
    Option granted to a Participant shall expire at such time as the
    Committee shall determine at the time of grant; provided,
    however, no Option shall be exercisable later than the tenth
    (10th) anniversary of its grant.

 

    6.5  Exercise of Options.  Options
    granted under this Article 6 shall be exercisable at such
    times and be subject to such terms and conditions as the
    Committee shall in each instance approve, which need not be the
    same for each grant or for each Participant.

 

    6.6  Payment.  Options granted under
    this Article 6 shall be exercised by the delivery of notice
    of exercise to an agent designated by the Company or by
    complying with any alternative procedures which may be
    authorized by the Committee, setting forth the number of Shares
    with respect to which the Option is to be exercised.

 

    A condition of the issuance of the Shares as to which an Option
    shall be exercised shall be the payment of the Option Price. The
    Option Price of any Option shall be payable to the Company in
    full either: (a) in cash or its equivalent, (b) by
    tendering (either by actual delivery or attestation) previously
    acquired Shares having an aggregate Fair Market Value at the
    time of exercise equal to the Option Price (provided the
    Shares tendered must have been held by the Participant for at
    least six (6) months prior to their tender to satisfy the
    Option Price or have been purchased on the open market),
    (c) by a combination of (a) and (b), or (d) any
    other method approved by the Committee in its sole discretion.
    The Committee shall determine acceptable methods for tendering
    Shares as payment upon exercise of an Option and may impose such
    limitations and prohibitions on the use of Shares to exercise an
    Option as it deems appropriate.

 

    Subject to any governing rules or regulations, as soon as
    practicable after receipt of written notification of exercise
    and full payment (including satisfaction of any applicable tax
    withholding), the Company shall deliver to the Participant
    evidence of book entry Shares, or upon the Participant’s
    request, Share certificates in an appropriate amount based upon
    the number of Shares purchased under the Option(s).

 

    Unless otherwise determined by the Committee, all payments under
    all of the methods indicated above shall be paid in United
    States dollars.

 

    6.7  Restrictions on Share
    Transferability.  The Committee may impose such
    restrictions on any Shares acquired pursuant to the exercise of
    an Option granted under this Article 6 as it may deem
    advisable, including, without limitation, restrictions under
    applicable federal securities laws, under the requirements of
    any stock exchange or market upon which such Shares are then
    listed
    and/or
    traded, and under any blue sky or state securities laws
    applicable to such Shares.

    

    6

 

    6.8  Termination of Employment.  The
    impact of a termination of a Participant’s employment or
    service as a Director on an Option’s vesting and exercise
    period shall be determined by the Committee, in its sole
    discretion, in the Participant’s Award Agreement, and need
    not be uniform among Option grants or Participants.

 

    6.9  Transferability of
    Options.  During his or her lifetime, only the
    Participant shall have the right to exercise the Options. After
    the Participant’s death, the Participant’s estate or
    beneficiary shall have the right to exercise such Options.

 

    (a) Incentive Stock Options.  No ISO
    granted under the Plan may be sold, transferred, pledged,
    assigned, or otherwise alienated or hypothecated, other than by
    will or by the laws of descent and distribution.

 

    (b) Nonqualified Stock Options.  Except as
    otherwise provided in a Participant’s Award Agreement, no
    NQSO granted under this Article 6 may be sold, transferred,
    pledged, assigned, or otherwise alienated or hypothecated, other
    than by will or by the laws of descent and distribution. Under
    no circumstances may an NQSO be transferable for value or
    consideration.

 

    6.10  Notification of Disqualifying
    Disposition.  If any Participant shall make any
    disposition of Shares issued pursuant to the exercise of an ISO
    under the circumstances described in Section 421(b) of the
    Code (relating to certain disqualifying dispositions), such
    Participant shall notify the Company of such disposition within
    ten (10) days thereof.

 

    Article 7.

    

 

    Stock
    Appreciation Rights
    

 

    7.1  Grant of SARs.  Subject to the
    terms and conditions of the Plan, SARs may be granted to
    Participants at any time and from time to time as shall be
    determined by the Committee. The Committee may grant
    Freestanding SARs, Tandem SARs, or any combination of these
    forms of SARs.

 

    Subject to the terms and conditions of the Plan, the Committee
    shall have complete discretion in determining the number of SARs
    granted to each Participant and, consistent with the provisions
    of the Plan, in determining the terms and conditions pertaining
    to such SARs.

 

    The SAR Grant Price for each grant of a Freestanding SAR shall
    be determined by the Committee and shall be specified in the
    Award Agreement. Subject to the following sentence, the SAR
    Grant Price shall not be less than one hundred percent (100%) of
    the Fair Market Value of a Share on the date the SAR is granted.
    For SARs granted to Participants outside the United States, the
    Committee, in order to comply with local tax laws and
    regulations, has the authority to grant SARs at a price that is
    less than the Fair Market Value of a Share on the date of grant.
    The Grant Price of Tandem SARs shall be equal to the Option
    Price of the related Option.

 

    7.2  SAR Agreement.  Each SAR Award
    shall be evidenced by an Award Agreement that shall specify the
    Grant Price, the term of the SAR, and such other provisions as
    the Committee shall determine.

 

    7.3  Term of SAR.  Subject to the
    following sentence, the term of a SAR granted under the Plan
    shall be determined by the Committee, in its sole discretion,
    provided that, except as determined otherwise by the
    Committee and specified in the SAR Award Agreement, no SAR shall
    be exercisable later than the tenth (10th) anniversary of its
    grant. For SARs granted to Participants outside the United
    States, the Committee has the authority to grant SARs that have
    a term greater than ten (10) years.

 

    7.4  Exercise of Freestanding
    SARs.  Freestanding SARs may be exercised upon
    whatever terms and conditions the Committee, in its sole
    discretion, imposes upon them.

 

    7.5  Exercise of Tandem SARs.  Tandem
    SARs may be exercised for all or part of the Shares subject to
    the related Option upon the surrender of the right to exercise
    the equivalent portion of the related Option. A Tandem SAR may
    be exercised only with respect to the Shares for which its
    related Option is then exercisable.

 

    Notwithstanding any other provision of this Plan to the
    contrary, with respect to a Tandem SAR granted in connection
    with an ISO: (a) the Tandem SAR will expire no later than
    the expiration of the underlying ISO; (b) the value of the
    payout with respect to the Tandem SAR may be for no more than
    one hundred percent (100%) of the

    

    7

 

    difference between the Option Price of the underlying ISO and
    the Fair Market Value of the Shares subject to the underlying
    ISO at the time the Tandem SAR is exercised; and (c) the
    Tandem SAR may be exercised only when the Fair Market Value of
    the Shares subject to the ISO exceeds the Option Price of the
    ISO.

 

    7.6  Payment of SAR Amount.  Upon the
    exercise of a SAR, a Participant shall be entitled to receive
    payment from the Company in an amount determined by multiplying:

 

    (a) The difference between the Fair Market Value of a Share
    on the date of exercise over the Grant Price; by

 

    (b) The number of Shares with respect to which the SAR is
    exercised.

 

    At the discretion of the Committee, the payment upon SAR
    exercise may be in cash, in Shares of equivalent value, in some
    combination thereof, or in any other manner approved by the
    Committee at its sole discretion. The Committee’s
    determination regarding the form of SAR payout shall be set
    forth in the Award Agreement pertaining to the grant of the SAR.

 

    7.7  Termination of Employment.  The
    impact of a termination of a Participant’s employment or
    service as a Director on a SAR’s vesting and exercise
    period shall be determined by the Committee, in its sole
    discretion, in the Participant’s Award Agreement, and need
    not be uniform among SAR grants or Participants.

 

    7.8  Nontransferability of
    SARs.  Except as otherwise provided in a
    Participant’s Award Agreement, no SAR granted under the
    Plan may be sold, transferred, pledged, assigned, or otherwise
    alienated or hypothecated, other than by will or by the laws of
    descent and distribution. Under no circumstances may an SAR be
    transferable for value or consideration. Further, except as
    otherwise provided in a Participant’s Award Agreement, all
    SARs granted to a Participant under the Plan shall be
    exercisable during his or her lifetime only by such Participant.

 

    7.9  Other Restrictions.  The
    Committee shall impose such other conditions
    and/or
    restrictions on any Shares received upon exercise of a SAR
    granted pursuant to the Plan as it may deem advisable. This
    includes, but is not limited to, requiring the Participant to
    hold the Shares received upon exercise of a SAR for a specified
    period of time.

 

    Article 8.

    

 

    Restricted
    Stock and Restricted Stock Units
    

 

    8.1  Grant of Restricted Stock or Restricted Stock
    Units.  Subject to the terms and conditions of the
    Plan, the Committee, at any time and from time to time, may
    grant Shares of Restricted Stock
    and/or
    Restricted Stock Units to Participants in such amounts as the
    Committee shall determine. Restricted Stock Units shall be
    similar to Restricted Stock except that no Shares are actually
    awarded to the Participant on the date of grant.

 

    8.2  Restricted Stock or Restricted Stock Unit
    Agreement.  Each Restricted Stock
    and/or
    Restricted Stock Unit grant shall be evidenced by an Award
    Agreement that shall specify the Period(s) of Restriction, the
    number of Shares of Restricted Stock or the number of Restricted
    Stock Units granted, and such other provisions as the Committee
    shall determine.

 

    8.3  Transferability.  Except as
    provided in this Article 8, the Shares of Restricted Stock
    and/or
    Restricted Stock Units granted herein may not be sold,
    transferred, pledged, assigned, or otherwise alienated or
    hypothecated until the end of the applicable Period of
    Restriction established by the Committee and specified in the
    Award Agreement (and in the case of Restricted Stock Units until
    the date of delivery or other payment), or upon earlier
    satisfaction of any other conditions, as specified by the
    Committee, in its sole discretion, and set forth in the Award
    Agreement.

 

    8.4  Other Restrictions.  The
    Committee shall impose such other conditions
    and/or
    restrictions on any Shares of Restricted Stock or Restricted
    Stock Units granted pursuant to the Plan as it may deem
    advisable including, without limitation, a requirement that
    Participants pay a stipulated purchase price for each Share of
    Restricted Stock or each Restricted Stock Unit, restrictions
    based upon the achievement of specific performance

    

    8

 

    goals, time-based restrictions on vesting following the
    attainment of the performance goals, time-based restrictions,
    and/or
    restrictions under applicable federal or state securities laws.

 

    To the extent deemed appropriate by the Committee, the Company
    may retain the certificates representing Shares of Restricted
    Stock in the Company’s possession until such time as all
    conditions
    and/or
    restrictions applicable to such Shares have been satisfied or
    lapse.

 

    Except as otherwise provided in this Article 8, Shares of
    Restricted Stock covered by each Restricted Stock Award shall
    become freely transferable by the Participant after all
    conditions and restrictions applicable to such Shares have been
    satisfied or lapse (including satisfaction of any applicable tax
    withholding obligations), and Restricted Stock Units shall be
    paid in cash, Shares, or a combination of cash and Shares as the
    Committee, in its sole discretion shall determine.

 

    8.5  Voting Rights.  To the extent
    permitted or required by law, as determined by the Committee,
    Participants holding Shares of Restricted Stock granted
    hereunder may be granted the right to exercise full voting
    rights with respect to those Shares during the Period of
    Restriction. A Participant shall have no voting rights with
    respect to any Restricted Stock Units granted hereunder.

 

    8.6  Dividends and Other
    Distributions.  During the Period of Restriction,
    Participants holding Shares of Restricted Stock or Restricted
    Stock Units granted hereunder may, if the Committee so
    determines, be credited with dividends paid with respect to the
    underlying Shares or dividend equivalents while they are so held
    in a manner determined by the Committee in its sole discretion.
    The Committee may apply any restrictions to the dividends or
    dividend equivalents that the Committee deems appropriate. The
    Committee, in its sole discretion, may determine the form of
    payment of dividends or dividend equivalents, including cash,
    Shares, Restricted Stock, or Restricted Stock Units.

 

    8.7  Termination of Employment.  The
    impact of a termination of a Participant’s employment or
    service as a Director on Restricted Stock or Restricted Stock
    Unit vesting and payment shall be determined by the Committee,
    in its sole discretion, in the Participant’s Award
    Agreement, and need not be uniform among Award grants or
    Participants.

 

    8.8  Section 83(b)
    Election.  The Committee may provide in an Award
    Agreement that the Award of Restricted Stock is conditioned upon
    the Participant making or refraining from making an election
    with respect to the Award under Section 83(b) of the Code.
    If a Participant makes an election pursuant to
    Section 83(b) of the Code concerning a Restricted Stock
    Award, the Participant shall be required to file promptly a copy
    of such election with the Company.

 

    Article 9.

    

 

    Performance
    Measures
    

 

    Unless and until the Committee proposes for shareholder vote and
    the shareholders approve a change in the general Performance
    Measures set forth in this Article 9, the performance goals
    upon which the payment or vesting of an Award to a Covered
    Employee that is intended to qualify as Performance-Based
    Compensation shall be limited to the following Performance
    Measures:

 

    (a) Net earnings;

 

    (b) Earnings per share;

 

    (c) Net sales growth;

 

    (d) Net income (before or after taxes);

 

    (e) Net operating profit;

 

    (f) Return measures (including, but not limited to, return
    on assets, capital, equity, or sales);

 

    (g) Cash flow (including, but not limited to, operating
    cash flow and free cash flow);

    

    9

 

    (h) Cash flow return on capital;

 

    (i) Earnings before or after taxes, interest, depreciation,
    and/or
    amortization;

 

    (j) Gross or operating margins;

 

    (k) Productivity ratios;

 

    (l) Share price (including, but not limited to, growth
    measures and total shareholder return);

 

    (m) Expense targets;

 

    (n) Margins;

 

    (o) Operating efficiency;

 

    (p) Customer satisfaction;

 

    (q) Employee satisfaction metrics;

 

    (r) Human resources metrics;

 

    (s) Working capital targets; and

 

    (t) EVA®.

 

    Any Performance Measure(s) may be used to measure the
    performance of the Company or an Affiliate as a whole or any
    business unit of the Company or an Affiliate or any combination
    thereof, as the Committee may deem appropriate, or any of the
    above Performance Measures as compared to the performance of a
    group of comparator companies, or published or special index
    that the Committee, in its sole discretion, deems appropriate,
    or the Company may select Performance Measure (1) above as
    compared to various stock market indices. The Committee also has
    the authority to provide for accelerated vesting of any Award
    based on the achievement of performance goals pursuant to the
    Performance Measures specified in this Article 9.

 

    The Committee may provide in any such Award that any evaluation
    of performance may include or exclude any of the following
    events that occurs during a Performance Period: (a) asset
    write-downs, (b) litigation or claim judgments or
    settlements, (c) the effect of changes in tax laws,
    accounting principles, or other laws or provisions affecting
    reported results, (d) any reorganization and restructuring
    programs, (e) extraordinary nonrecurring items as described
    in Accounting Principles Board Opinion No. 30
    and/or in
    management’s discussion and analysis of financial condition
    and results of operations appearing in the Company’s annual
    report to shareholders for the applicable year,
    (f) acquisitions or divestitures, and (g) foreign
    exchange gains and losses. To the extent such inclusions or
    exclusions affect Awards to Covered Employees, they shall be
    prescribed in a form that meets the requirements of Code
    Section 162(m) for deductibility.

 

    Awards that are designed to qualify as Performance-Based
    Compensation, and that are held by Covered Employees, may not be
    adjusted upward. The Committee shall retain the discretion to
    adjust such Awards downward.

 

    In the event that applicable tax
    and/or
    securities laws change to permit Committee discretion to alter
    the governing Performance Measures without obtaining shareholder
    approval of such changes, the Committee shall have sole
    discretion to make such changes without obtaining shareholder
    approval.

 

    Article 10.

    

 

    Beneficiary
    Designation
    

 

    Each Participant under the Plan may, from time to time, name any
    beneficiary or beneficiaries (who may be named contingently or
    successively) to whom any benefit under the Plan is to be paid
    in case of his or her death before he or she receives any or all
    of such benefit. Each such designation shall revoke all prior
    designations by the same Participant, shall be in a form
    prescribed by the Committee, and will be effective only when
    filed by the

    

    10

 

    Participant in writing with the Company during the
    Participant’s lifetime. In the absence of any such
    designation, benefits remaining unpaid at the Participant’s
    death shall be paid to the Participant’s estate.

 

    Article 11.

    

 

    Rights of
    Participants
    

 

    11.1  Employment.  Nothing in the
    Plan or an Award Agreement shall interfere with or limit in any
    way the right of the Company
    and/or its
    Affiliates to terminate any Participant’s employment or
    service on the Board at any time or for any reason not
    prohibited by law, nor confer upon any Participant any right to
    continue his or her employment or service as a director for any
    specified period of time.

 

    Neither an Award nor any benefits arising under this Plan shall
    constitute an employment contract with the Company and,
    accordingly, subject to Article 3 and Section 13.1,
    this Plan and the benefits hereunder may be terminated at any
    time in the sole and exclusive discretion of the Committee
    without giving rise to any liability on the part of the Company,
    its Affiliates,
    and/or its
    Subsidiaries.

 

    11.2  Participation.  No individual
    shall have the right to be selected to receive an Award under
    this Plan, or, having been so selected, to be selected to
    receive a future Award.

 

    11.3  Rights as a
    Shareholder.  Except as otherwise provided in
    Section 8 of the Plan or in an Award Agreement, a
    Participant shall have none of the rights of a shareholder with
    respect to Shares covered by any Award until the Participant
    becomes the record holder of such Shares.

 

    Article 12.

    

 

    Acceleration
    Event
    

 

    The Compensation Committee shall specify in each
    Participant’s Award Agreement the treatment of outstanding
    Awards upon an Acceleration Event.

 

    Article 13.

    

 

    Amendment,
    Modification, Suspension, and Termination
    

 

    13.1  Amendment, Modification, Suspension, and
    Termination.  Subject to Section 13.3, the
    Committee may, at any time and from time to time, alter, amend,
    modify, suspend, or terminate the Plan and any Award Agreement
    in whole or in part; provided, however, that,
    except for a change or adjustment made pursuant to
    Section 4.2, no Option Price of an outstanding Option or
    Grant Price of an outstanding SAR shall be reduced (whether
    through amendment, cancellation or replacement Awards with other
    Awards or other payments of cash or property) without
    shareholder approval.

 

    13.2  Adjustment of Awards Upon the Occurrence of
    Certain Unusual or Nonrecurring Events.  The
    Committee may make adjustments in the terms and conditions of,
    and the criteria included in, Awards in recognition of unusual
    or nonrecurring events (including, without limitation, the
    events described in Section 4.2 hereof) affecting the
    Company or the financial statements of the Company or of changes
    in applicable laws, regulations, or accounting principles,
    whenever the Committee determines that such adjustments are
    appropriate in order to prevent unintended dilution or
    enlargement of the benefits or potential benefits intended to be
    made available under the Plan. The determination of the
    Committee as to the foregoing adjustments, if any, shall be
    conclusive and binding on Participants under the Plan.

 

    13.3  Awards Previously
    Granted.  Notwithstanding any other provision of
    the Plan to the contrary, no termination, amendment, suspension,
    or modification of the Plan or an Award Agreement shall
    adversely affect in any material way any Award previously
    granted under the Plan, without the written consent of the
    Participant holding such Award.

    

    11

 

    Article 14.

    

 

    Withholding
    

 

    14.1  Tax Withholding.  The Company
    shall have the power and the right to deduct or withhold, or
    require a Participant to remit to the Company, the minimum
    statutory amount to satisfy federal, state, and local taxes,
    domestic or foreign, required by law or regulation to be
    withheld with respect to any taxable event arising as a result
    of this Plan.

 

    14.2  Share Withholding.  With
    respect to withholding required upon the exercise of Options, or
    SARs, upon the lapse of restrictions on Restricted Stock and
    Restricted Stock Units, or any other taxable event arising as a
    result of Awards granted hereunder, Participants may elect,
    subject to the approval of the Committee, to satisfy the
    withholding requirement, in whole or in part, by having the
    Company withhold Shares having a Fair Market Value on the date
    the tax is to be determined equal to the minimum statutory total
    tax that could be imposed on the transaction. All such elections
    shall be irrevocable, made in writing, and signed by the
    Participant, and shall be subject to any restrictions or
    limitations that the Committee, in its sole discretion, deems
    appropriate.

 

    Article 15.

    

 

    Successors
    

 

    All obligations of the Company under the Plan with respect to
    Awards granted hereunder shall be binding on any successor to
    the Company, whether the existence of such successor is the
    result of a direct or indirect purchase, merger, consolidation,
    or otherwise, of all or substantially all of the business
    and/or
    assets of the Company.

 

    Article 16.

    

 

    General
    Provisions
    

 

    16.1  Forfeiture Events.  The
    Committee may specify in an Award Agreement that the
    Participant’s rights, payments, and benefits with respect
    to an Award shall be subject to reduction, cancellation,
    forfeiture, or recoupment upon the occurrence of certain
    specified events, in addition to any otherwise applicable
    vesting or performance conditions of an Award. Such events shall
    include, but shall not be limited to, termination of employment
    for cause, violation of material Company
    and/or
    Affiliate policies, breach of noncompetition, confidentiality,
    or other restrictive covenants that may apply to the
    Participant, or other conduct by the Participant that is
    detrimental to the business or reputation of the Company
    and/or its
    Affiliates.

 

    16.2  Legend.  The certificates for
    Shares may include any legend which the Committee deems
    appropriate to reflect any restrictions on transfer of such
    Shares.

 

    16.3  Gender and Number.  Except
    where otherwise indicated by the context, any masculine term
    used herein also shall include the feminine, the plural shall
    include the singular, and the singular shall include the plural.

 

    16.4  Severability.  In the event any
    provision of the Plan shall be held illegal or invalid for any
    reason, the illegality or invalidity shall not affect the
    remaining parts of the Plan, and the Plan shall be construed and
    enforced as if the illegal or invalid provision had not been
    included.

 

    16.5  Requirements of Law.  The
    granting of Awards and the issuance of Shares under the Plan
    shall be subject to all applicable laws, rules, and regulations,
    and to such approvals by any governmental agencies or national
    securities exchanges as may be required.

 

    16.6  Securities Law
    Compliance.  With respect to Insiders,
    transactions under this Plan are intended to comply with all
    applicable conditions of
    Rule 16b-3
    or its successor under the Exchange Act. To the extent any
    provision of the Plan or action by the Committee fails to so
    comply, it shall be deemed null and void, to the extent
    permitted by law and deemed advisable by the Committee.

 

    16.7  Registration and Listing.  The
    Company may use reasonable endeavors to register Shares allotted
    pursuant to the exercise of an Award with the United States
    Securities and Exchange Commission or to effect

    

    12

 

    compliance with the registration, qualification, and listing
    requirements of any national securities laws, stock exchange, or
    automated quotation system.

 

    16.8  Delivery of Title.  The Company
    shall have no obligation to issue or deliver evidence of title
    for Shares issued under the Plan prior to:

 

    (a) Obtaining any approvals from governmental agencies that
    the Company determines are necessary or advisable; and

 

    (b) Completion of any registration or other qualification
    of the Shares under any applicable national or foreign law or
    ruling of any governmental body that the Company determines to
    be necessary or advisable.

 

    16.9  Inability to Obtain
    Authority.  The inability of the Company to obtain
    authority from any regulatory body having jurisdiction, which
    authority is deemed by the Company’s counsel to be
    necessary to the lawful issuance and sale of any Shares
    hereunder, shall relieve the Company of any liability in respect
    of the failure to issue or sell such Shares as to which such
    requisite authority shall not have been obtained.

 

    16.10  Employees Based Outside of the United
    States.  Notwithstanding any provision of the Plan
    to the contrary, in order to comply with the laws in other
    countries in which the Company and its Affiliates operate or
    have Employees or Directors, the Committee, in its sole
    discretion, shall have the power and authority to:

 

    (a) Determine which Affiliates shall be covered by the Plan;

 

    (b) Determine which Employees
    and/or
    Directors outside the United States are eligible to participate
    in the Plan;

 

    (c) Modify the administrative terms and conditions of any
    Award granted to Employees
    and/or
    Directors outside the United States to comply with applicable
    foreign laws;

 

    (d) Establish subplans and modify exercise procedures and
    other terms and procedures, to the extent such actions may be
    necessary or advisable. Any subplans and modifications to Plan
    terms and procedures established under this Section 16.10
    by the Committee shall be attached to this Plan document as
    appendices; and

 

    (e) Take any action, before or after an Award is made, that
    it deems advisable to obtain approval or comply with any
    necessary local government regulatory exemptions or approvals.

 

    Notwithstanding the above, the Committee may not take any
    actions hereunder, and no Awards shall be granted, that would
    violate the Exchange Act, the Code, any securities law, or
    governing statute or any other applicable law.

 

    16.11  Uncertificated Shares.  To the
    extent that the Plan provides for issuance of certificates to
    reflect the transfer of Shares, the transfer of such Shares may
    be effected on a noncertificated basis, to the extent not
    prohibited by applicable law or the rules of any stock exchange.

 

    16.12  Unfunded Plan.  Participants
    shall have no right, title, or interest whatsoever in or to any
    investments that the Company may make to aid it in meeting its
    obligations under the Plan. Nothing contained in the Plan, and
    no action taken pursuant to its provisions, shall create or be
    construed to create a trust of any kind, or a fiduciary
    relationship between the Company and any Participant,
    beneficiary, legal representative, or any other person. To the
    extent that any person acquires a right to receive payments from
    the Company under the Plan, such right shall be no greater than
    the right of an unsecured general creditor of the Company. All
    payments to be made hereunder shall be paid from the general
    funds of the Company and no special or separate fund shall be
    established and no segregation of assets shall be made to assure
    payment of such amounts except as expressly set forth in the
    Plan. The Plan is not subject to ERISA.

 

    16.13  No Fractional Shares.  No
    fractional Shares shall be issued or delivered pursuant to the
    Plan or any Award. The Committee shall determine whether cash,
    Awards, or other property shall be issued or paid in lieu of
    fractional Shares or whether such fractional Shares or any
    rights thereto shall be forfeited or otherwise eliminated.

    

    13

 

    16.14  Retirement and Welfare
    Plans.  The value of compensation paid under this
    Plan will not be included as “compensation” for
    purposes of computing the benefits payable to any participant
    under the Company’s retirement plans (both qualified and
    non-qualified) or welfare benefit plans unless such other plan
    expressly provides that such compensation shall be taken into
    account in computing a participant’s benefit.

 

    16.15  Governing Law.  The Plan and
    each Award Agreement shall be governed by the laws of the State
    of New York, excluding any conflicts or choice of law rule or
    principle that might otherwise refer construction or
    interpretation of the Plan to the substantive law of another
    jurisdiction. Unless otherwise provided in the Award Agreement,
    recipients of an Award under the Plan are deemed to submit to
    the exclusive jurisdiction and venue of the federal or state
    courts of New York, to resolve any and all issues that may arise
    out of or relate to the Plan or any related Award Agreement.

 

    16.16  Plan Approval.  This Plan
    shall become effective upon adoption of the Plan by the Board or
    shareholder approval of such Plan, whichever occurs first.

    

    14EX-10.6

    Exhibit 10.6

 

    ITT
    CORPORATION 1997 LONG-TERM INCENTIVE PLAN

    (amended and restated as of February 15, 2008)

 

		
	
    1.  
	
    ESTABLISHMENT
    AND PURPOSE

 

    1.1  Establishment of the Plan.  ITT
    Corporation, an Indiana corporation, hereby establishes an
    incentive compensation plan to be known as the “ITT
    Corporation 1997 Long-Term Incentive Plan” (the
    “Plan”), as set forth in this document. The Plan first
    became effective as of January 1, 1997, and was previously
    knows as the “ITT Industries 1997 Long-Term Incentive
    Plan.” The Plan was amended and restated as of
    February 15, 2008, subject to shareholder approval. The
    Plan shall remain in effect until terminated by the Board.

 

    1.2  Purposes.  The purposes of the
    Plan are to promote the achievement of long-term objectives of
    the Company by tying Key Employees’ long-term incentive
    opportunities to preestablished goals; to attract and retain Key
    Employees of outstanding competence, and to encourage teamwork
    among them; and to reward performance based on the successful
    achievement of the preestablished objectives. Awards will be
    made, at the discretion of the Committee, to Key Employees
    (including officers and Directors who are also employees) whose
    responsibilities and decisions directly affect the performance
    of any Participating Company. It is intended that, if desired,
    compensation payable under the Plan will qualify as
    “performance-based compensation,” within the meaning
    of Section 162(m) of the Code and regulations promulgated
    thereunder.

 

		
	
    2.  
	
    DEFINITIONS

 

    Whenever used in the Plan, the following terms shall have the
    meanings set forth below:

 

    (a) An “Acceleration Event” shall be deemed to
    have occurred if the conditions set forth in any one or more of
    the following paragraphs shall have been satisfied:

 

    (i) a report on Schedule 13D shall be filed with the
    Securities and Exchange Commission pursuant to Section 13(d) of
    the Exchange Act disclosing that any person (within the meaning
    of Section 13(d) of the Exchange Act), other than the
    Company or a Subsidiary or any employee benefit plan sponsored
    by the Company or a Subsidiary, 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 Exchange Act), other than the Company or a Subsidiary, or
    any employee benefit plan sponsored by the Company or a
    Subsidiary, 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, 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 Exchange Act in the case of rights to acquire Stock);

 

    (iii) the stockholders of the Company shall approve

 

    (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;

    

    1

 

    (iv) there shall have been a change in a majority of the
    members of the Board 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 where directors at the beginning of such
    12-month
    period; or

 

    (v) any person (within the meaning of Section 13(d) of
    the Exchange Act) (other than the Company or a Subsidiary or any
    employee benefit plan (or related trust) sponsored by the
    Company or a Subsidiary) becomes the Beneficial Owner of twenty
    percent (20%) or more of the Stock.

 

    (b) “Award” means an award granted to a
    Key Employee in accordance with the provisions of the Plan and
    approved by the Committee.

 

    (c) “Award Agreement” means the written
    agreement evidencing an Award granted to a Key Employee under
    the Plan and approved by the Committee.

 

    (d) “Beneficial Owner” shall have the
    meaning ascribed to such term in
    Rule 13d-3
    of the general rules and regulations under the Exchange Act.

 

    (e) “Board of Directors” or
    “Board” means the Board of Directors of the Company.

 

    (f) “Code” means the Internal Revenue Code
    of 1986, as now in effect or as hereafter amended. (All
    citations to sections of the Code are to such sections as they
    may from time to time be amended or renumbered.)

 

    (g) “Committee” means the Compensation and
    Personnel Committee of the Board or such other committee as may
    be designated by the Board to administer the Plan, all of whose
    members shall be “Non-Employee Directors” under the
    Exchange Act and “Outside Directors” under
    Section 162(m) of the Code.

 

    (h) “Company” means ITT Corporation, an
    Indiana corporation, and its successors and assigns.

 

    (i) “Director” means an individual who is
    a member of the Board.

 

    (j) “Disability” means the complete
    permanent inability of a Key Employee to perform all of his or
    her duties under the terms of his or her employment with any
    Participating Company, as determined by the Committee upon the
    basis of such evidence, including independent medical reports
    and data, as the Committee deems appropriate or necessary.

 

    (k) “Effective Date” means the date this
    Plan becomes effective, as set forth in Section 1.1 herein.

 

    (l) “Exchange Act” means the Securities
    Exchange Act of 1934, as amended from time to time, or any
    successor act thereto.

 

    (m) “Key Employee” means an employee
    (including any officer or Director who is also an employee) of
    any Participating Company whose responsibilities and decisions,
    in the judgment of the Committee, directly affect the
    performance of the Company and its Subsidiaries.

 

    (n) “Participant” means an employee of a
    Participating Company who is a Key Employee and who has received
    an Award under the Plan.

 

    (o) “Participating Company” means the
    Company or any Subsidiary or other affiliate of the Company or
    any corporation which at the time of award qualifies as a
    “subsidiary” of the Company under Section 425(f)
    of the Code.

 

    (p) “Performance Goal” means one or more
    Performance Measures expressed as an objective formula to be
    used in calculating the amount payable, if any, with respect to
    a designated Award and shall be established by the Committee
    within the first ninety (90) days of the applicable
    Performance Period. A Performance Goal may provide for various
    levels of payout depending upon the degree to which the
    Performance Goal has been achieved.

    

    2

 

    (q) “Performance Measure” means one or
    more financial or other objectives determined by the Committee
    as provided in Section 3.4 herein.

 

    (r) “Performance Period” means the period
    determined by the Committee, which shall be in excess of one
    year, during which the Performance Goal shall be achieved.

 

    (s) “Retirement” means eligibility to
    receive immediate retirement benefits under a Participating
    Company tax-qualified defined benefit pension plan.

 

    (t) “Subsidiary” means any corporation in
    which the Company owns directly or indirectly through its
    Subsidiaries at least a majority of the total combined voting
    power of all classes of stock, or any other entity (including,
    but not limited to, partnerships and joint ventures) in which
    the Company or its Subsidiaries own at least a majority of the
    combined equity thereof.

 

		
	
    3.  
	
    ADMINISTRATION

 

    3.1  The Committee.  The Plan shall
    be administered by the Committee, the members of which shall
    serve at the pleasure of the Board.

 

    3.2  Authority of the
    Committee.  Subject to the provisions herein, the
    Committee shall have full power to select the Key Employees to
    whom Awards are granted; to determine the size and frequency of
    Awards (which need not be the same for each Participant); to
    determine the terms and conditions of each Award; to establish
    Performance Measures, Performance Goals and Performance Periods
    (which need not be the same for each Participant); to set forth
    guidelines governing the amounts of Awards; to revise the
    amounts of Awards
    and/or the
    Performance Measures
    and/or
    Performance Goals during a Performance Period to the extent
    necessary to preserve the intent thereof, and to the extent
    necessary to prevent dilution of Participants’ rights; to
    construe and interpret the Plan and any agreement or instrument
    entered into under the Plan; to establish, amend, rescind, or
    waive rules and regulations for the Plan’s administration;
    and, subject to the provisions of Article 9 herein, to
    amend, modify,
    and/or
    terminate the Plan. Further, the Committee shall have the full
    power to make all other determinations which may be necessary or
    advisable for the administration of the Plan, to the extent
    consistent with the provisions of the Plan.

 

    As permitted by law, the Committee may delegate its authority
    and responsibilities; provided, however, that the Committee may
    not delegate certain of its responsibilities hereunder where
    such delegation may jeopardize compliance with Section 16
    of the Exchange Act or Section 162(m) of the Code, and all
    rules and regulations thereunder.

 

    3.3  Decisions Binding.  All
    determinations and decisions made by the Committee pursuant to
    the provisions of the Plan shall be final, conclusive, and
    binding on all persons, including the Company, its shareholders,
    employees, Participants, and their estates and beneficiaries.

 

    3.4  Performance Goals and
    Measures.  Performance Goals shall be based on one
    or more Performance Measures as established by the Committee,
    which may include financial measures with respect to the Company
    and its Subsidiaries or with respect to a Participating Company.
    Performance Measures may include factors such as the attainment
    of certain target levels of or changes in (i) economic
    value added; (ii) after-tax profits; (iii) operational
    cash flow; (iv) debt or other similar financial
    obligations; (v) earnings; (vi) revenues;
    (vii) net income; (viii) return on capital;
    (ix) shareholders’ equity; (x) return on
    shareholders’ equity; and (xi) total shareholder
    return (measured as a change in the market price of the common
    stock of the Company plus dividend yield) relative to one or
    more indices such as the S&P 500 or the S&P
    Industrials. In addition to these Performance Measures, Awards
    that are not intended to qualify as performance-based
    compensation for purposes of Section 162(m) of the Code may
    be based on such additional or other criteria as the Committee
    may determine.

 

		
	
    4.  
	
    ELIGIBILITY
    AND PARTICIPATION

 

    4.1  Eligibility and
    Participation.  Eligibility shall be limited to
    Key Employees. Participation shall be at the discretion of the
    Committee.

    

    3

 

		
	
    5.  
	
    AWARDS

 

    5.1  Award Timing and Frequency.  The
    Committee shall have complete discretion in determining the
    number and frequency of Awards to each Participant.
    Participation in the Plan shall begin on the first day of each
    Performance Period. However, the Committee, at its sole
    discretion, may grant an Award to a Key Employee during any
    Performance Period. In such cases, the Participant’s degree
    of participation for such Performance Period may be pro rated,
    based on whatever method the Committee shall determine.

 

    5.2  Award Value.  Each Award shall
    have an initial value that is established by the Committee at
    the time of Award. The maximum payment that may be made with
    respect to Awards to any Participant in any one calendar year
    shall be $10,000,000; provided, however, that this limitation
    shall not apply with respect to any Award that is paid in a
    calendar year prior to the year it would ordinarily be paid
    because of an Acceleration Event or other transaction or event
    that provides for accelerated payment of Awards.

 

    5.3  Achieving Award Value.  The
    Committee shall establish Performance Goals to be achieved
    during the Performance Period and the various percentage
    payouts, if any, for each Award which are dependent upon the
    degree to which the Performance Goals have been achieved, all as
    shall be referred to in the individual Award Agreement.

 

    5.4  Certification of Performance
    Targets.  After the end of each Performance
    Period, and prior to the payment for such Performance Period,
    the Committee must certify in writing the degree to which the
    Performance Goals and Performance Measures for the Performance
    Period were achieved. The Committee shall calculate the amount
    of each Participant’s Award for such Performance Period
    based upon the Performance Measures and Performance Goals for
    each Participant. In establishing Performance Targets and
    Performance Measures and in calculating the degree of
    achievement thereof, the Committee may ignore extraordinary
    items, property transactions, changes in accounting standards
    and losses or gains arising from discontinued operations. The
    Committee shall have no authority or discretion to increase the
    amount of any Participant’s Award as so determined, but it
    may reduce the amount or totally eliminate any Award if it
    determines in its absolute and sole discretion that such action
    is appropriate in order to reflect the Participant’s
    performance or unanticipated factors during the Performance
    Period.

 

    5.5  Form and Timing of Payment of
    Awards.  Payment with respect to earned Awards
    shall be made as soon as practicable following the close of the
    applicable Performance Period. Payment shall be made solely in
    the form of cash.

 

    5.6  Funding of Awards.  Awards need
    not be funded during the Performance Period. Any obligation of
    the Company to make payments with respect to Awards shall be a
    general obligation of the Company with Participants to whom
    payment of an Award may have been earned and due being general
    creditors of the Company.

 

    5.7  Award Agreements.  Each Award
    shall be evidenced by an Award Agreement, which shall be
    approved by the Committee, signed by an officer of the Company
    and by the Participant, and contain or refer to the terms and
    conditions that apply to the Award, which shall include, but
    shall not be limited to, the amount of the Award, the
    Performance Measures, the Performance Goals, the levels of
    payout dependent upon the degree to which the Performance Goals
    have been achieved, and the length of the Performance Period.
    The terms and conditions need not be the same for each
    Participant, or for each Performance Period.

 

		
	
    6.  
	
    TERMINATION
    OF EMPLOYMENT

 

    6.1  Termination of Employment Due to Death,
    Disability, or Retirement.  In the event a
    Participant’s employment is terminated by reason of death,
    Disability or Retirement, the Participant may be entitled to a
    pro rata payment with respect to Awards in accordance with such
    rules and regulations as the Committee shall adopt.

 

    6.2  Termination for Reasons Other than Death,
    Disability, or Retirement.  In the event a
    Participant’s employment is terminated for reasons other
    than death, Disability, or Retirement, and other than that
    brought about by an Acceleration Event, all rights to any Awards
    shall be forfeited, unless the Committee determines otherwise.

    

    4

 

		
	
    7.  
	
    ACCELERATION
    EVENT

 

    Upon the occurrence of an Acceleration Event, the Performance
    Goals attainable under all outstanding Awards shall be deemed to
    have been fully earned at the maximum achievement level and
    shall be paid out in cash upon the effective date of the
    Acceleration Event.

 

    Subject to Article 9 herein, prior to the effective date of
    an Acceleration Event, the Committee shall have the authority to
    make any modifications to outstanding Awards as it determines to
    be necessary to provide Participants with an appropriate payout
    with respect to their Awards.

 

		
	
    8.  
	
    BENEFICIARY
    DESIGNATION

 

    8.1  Designation of
    Beneficiary.  Each Participant may file with the
    Participating Company a written designation of one or more
    persons as the beneficiary who shall be entitled to receive
    payout, if any, with respect to the Award upon his or her death.
    The Participant may from time to time revoke or change his or
    her beneficiary designation without the consent of any prior
    beneficiary by filing a new designation with the Participating
    Company. The last such designation received by the Participating
    Company shall be controlling; provided however, that no
    designation, or change or revocation thereof, shall be effective
    unless received by the Participating Company prior to the
    Participant’s death, and in no event shall it be effective
    as of a date prior to such receipt.

 

    8.2  Death of Beneficiary.  In the
    event that all the beneficiaries named by a Participant pursuant
    to Section 8.1 herein predecease the Participant, any
    amounts that would have been paid to the Participant or the
    Participant’s beneficiaries under the Plan shall be paid to
    the Participant’s estate.

 

		
	
    9.  
	
    AMENDMENT,
    MODIFICATION, AND TERMINATION

 

    9.1  Amendment, Modification, and
    Termination.  The Board may terminate, amend, or
    modify the Plan.

 

    9.2  Awards Previously Granted.  No
    termination, amendment, or modification of the Plan shall in any
    manner adversely affect any outstanding Award, without the
    written consent of the Participant holding such Award.

 

		
	
    10.  
	
    MISCELLANEOUS
    PROVISIONS

 

    10.1  Employment.  Nothing in the
    Plan shall interfere with or limit in any way the right of the
    Company to terminate any Participant’s employment at any
    time, nor confer upon any Participant any right to continue in
    the employ of the Company or any of its Subsidiaries.

 

    10.2  Nontransferability.  No Award
    may be sold, transferred, pledged, assigned, or otherwise
    alienated or hypothecated, other than by will or by the laws of
    descent and distribution.

 

    10.3  Rights to Common Stock.  Awards
    do not give Participants any right whatsoever with respect to
    shares of the Company’s common stock.

 

    10.4  Costs of the Plan.  All costs
    of the Plan including, but not limited to, payout of Awards and
    administrative expenses, shall be incurred as general
    obligations of the Company.

 

    10.5  Tax Withholding.  The Company
    shall have the right to require Participants to remit to the
    Company an amount sufficient to satisfy applicable Federal,
    state, foreign and local withholding tax requirements, or to
    deduct from all payments under the Plan amounts sufficient to
    satisfy all such requirements.

 

    10.6  Successors.  All obligations of
    the Company under the Plan with respect to payout of Awards
    shall be binding on any successor to the Company, whether the
    existence of such successor is the result of a direct or
    indirect purchase, merger, consolidation, or other acquisition
    of all or substantially all of the business or assets of the
    Company.

 

    10.7  Indemnification.  Each person
    who is or shall have been a member of the Committee or the Board
    shall be indemnified and held harmless by the Company against
    and from any loss, cost, liability, or expense that may be
    imposed upon or reasonably incurred by him or her in connection
    with or resulting from any claim, action, suit, or proceeding to
    which he or she may be a party or in which he or she may be
    involved by reason of any action taken or

    

    5

 

    failure to act under the Plan and against and from any and all
    amounts paid by him or her in settlement thereof, with the
    Company’s approval, or paid by him or her in satisfaction
    of any judgment in any such action, suit, or proceeding against
    him or her, provided he or she shall give the Company an
    opportunity, at its own expense, to handle and defend the same
    before he or she undertakes to handle and defend it on his or
    her own behalf. The foregoing right of indemnification shall not
    be exclusive of any other rights of indemnification to which
    such persons may be entitled under the Company’s Articles
    of Incorporation, By-laws, insurance or other agreement or
    otherwise.

 

    10.8  Notice.  Any notice or filing
    required or permitted to be given to the Company under the Plan
    shall be sufficient if in writing and hand delivered, or sent by
    registered or certified mail to the Secretary of the Company.
    Notice to the Secretary of the Company, if mailed, shall be
    addressed to the principal executive offices of the Company.
    Notice mailed to a Participant shall be at such address as is
    given in the records of the Company. Notices shall be deemed
    given as of the date of delivery or, if delivery is made by
    mail, as of the date shown on the postmark on the receipt for
    registration or certification.

 

    10.9  Severability.  In the event
    that any provision of the Plan shall be held illegal or invalid
    for any reason, the illegality or invalidity shall not affect
    the remaining parts of the Plan, and the Plan shall be construed
    and enforced as if the illegal or invalid provision had not been
    included.

 

    10.10  Requirements of Law.  The
    granting and payout of Awards shall be subject to all applicable
    laws, rules, and regulations and to such approvals by any
    governmental agencies or national securities exchanges as may be
    required.

 

    10.11  Governing Law.  To the extent
    not preempted by Federal law, the Plan, and all agreements
    hereunder, shall be construed in accordance with and governed by
    the laws of the State of New York.

    

    6

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