EXHIBIT 10.3
ITT INDUSTRIES, INC.
2003 EQUITY INCENTIVE PLAN
FORM OF NON-QUALIFIED STOCK OPTION AWARD AGREEMENT
THIS AGREEMENT (the "Agreement"), effective as of the day of
, 200 , by and between ITT Industries, Inc. (the "Company") and
(the "Optionee"), WITNESSETH:
WHEREAS, the Optionee is now employed by the Company or an Affiliate (as
defined in the Plan) as an employee, and in recognition of the Optionee's valued
services, the Company, through the Compensation and Personnel Committee of its
Board of Directors (the "Committee"), desires to provide an opportunity for the
Optionee to acquire or enlarge stock ownership in the Company pursuant to the
provisions of the Company's 2003 Equity Incentive Plan (the "Plan");
NOW, THEREFORE, in consideration of the terms and conditions set forth in
this Agreement and pursuant to the provisions of the Plan, a copy of which is
attached hereto and incorporated herein as part of this Agreement, and any
administrative rules and regulations related to the Plan as may be adopted by
the Committee, the parties hereto hereby agree as follows:
1. GRANT OF OPTIONS. In accordance with, and subject to, the terms
and conditions of the Plan and this Agreement, the Company hereby confirms
the grant on to the Optionee of the option to purchase from the
Company all or any part of an aggregate of XXXX shares of common stock of
the Company (the "Option"), at the purchase price of $ per share (the
"Option Price" or "Exercise Price"). The Option shall be a Nonqualified
Stock Option.
2. TERMS AND CONDITIONS. It is understood and agreed that the Option
is subject to the following terms and conditions:
(a) EXPIRATION DATE. The Option shall expire on , or, if
the Optionee's employment terminates before that date, on the date
specified in subsection (e) below.
(b) EXERCISE OF OPTION. The Option may not be exercised until it
has become vested.
(c) VESTING. Subject to subsections 2(a) and 2(e), the Option
shall vest in full upon the first to occur of the following events:
(i) when the closing price of Company common stock on the New
York Stock Exchange Composite Transactions has remained at or above
$ (125% of the Exercise Price) per share for ten (10) consecutive
trading days;
(ii) [Date];
(iii) termination of the Optionee's employment due to death; or
(iv) an Acceleration Event (as defined in the Plan).
(d) PAYMENT OF EXERCISE PRICE AND TAX WITHHOLDING. Permissible
methods for payment of the Exercise Price and for satisfaction of tax
withholding obligations upon exercise of the Option shall be as
described in Sections 6.6 and Article 14 of the Plan, or, if the Plan is
amended, successor provisions. In addition to the methods of exercise
permitted by Section 6.6 of the Plan, the Optionee may exercise the
Option by way of a broker-assisted cashless exercise in a manner
consistent with the Federal Reserve Board's Regulation T, unless the
Committee determines that such exercise method is prohibited by law.
(e) EFFECT OF TERMINATION OF EMPLOYMENT.
If the Optionee's employment terminates before , 200 the
Option shall expire on the date set forth below, as applicable:
Death. If the Optionee's employment is terminated as a result
of the Optionee's death, the Option shall expire on the earlier of
, 200 or the date three years after the termination of the
Optionee's employment due to death.
Retirement or Disability. If the Optionee's employment is
terminated as a result of the Optionee's Retirement (as defined
below) or Disability (as defined below), the Option shall expire on
, 200 , and, if not vested at the time of such Retirement
or Disability, shall remain subject to the original vesting
provisions of the grant as contained in Section 2(c) hereof until
such expiration date.
Voluntary Termination; Cause. If the Optionee's employment is
terminated by the Optionee for any reason other than Retirement (as
defined below), Disability (as defined below), or death, or by the
Company (or an Affiliate, as the case may be) for cause (as
determined by the Committee), the vested and unvested portions of the
Option shall expire on the date of the termination of the Optionee's
employment.
Other Termination by the Company. If the Option is vested and
the Optionee's employment is terminated by the Company (or an
Affiliate, as the case may be) for other than cause (as determined by
the Committee), and not because of the Optionee's Retirement (as
defined below), Disability (as defined below), or death, the Option
shall expire on the earlier of , 200 or the date three
months after the termination of the Optionee's employment (for
purposes of this Section 2(e)(iv), employment shall include any
period in which severance is paid in the form of salary
continuation). If the Option is not vested on the date the Optionee's
employment terminates, the Option shall be forfeited immediately in
full on the date of termination of employment, and the Option shall
not thereafter be exercisable.
Notwithstanding the foregoing, if an Optionee's employment is
terminated on or after an Acceleration Event (A) by the Company (or an
Affiliate, as the case may be) for other than cause (as defined by the
Committee), and not because of the Optionee's Retirement (as defined
below), Disability (as defined below), or death, or (B) by the Optionee
because the Optionee in good faith believed that as a result of such
Acceleration Event he or she was unable effectively to discharge his or
her present duties or the duties of the position the Optionee occupied
just prior to the occurrence of such Acceleration Event, the Option
shall in no event expire before the earlier of the date that is 7 months
after the Acceleration Event or , 200 .
RETIREMENT. For purposes of this Agreement, the term "Retirement"
shall mean the termination of the Optionee's employment if, at the time
of such termination, the Optionee is eligible to commence receipt of
retirement benefits under a traditional formula defined benefit pension
plan maintained by the Company or an Affiliate (or would be eligible to
receive such benefits if he or she were a participant in such a
traditional formula defined benefit pension plan).
DISABILITY. For purposes of this Agreement, the term "Disability"
shall mean the complete and permanent inability of the Optionee to
perform all of his or her duties under the terms of his or her
employment, as determined by the Committee upon the basis of such
evidence, including independent medical reports and data, as the
Committee deems appropriate or necessary.
(f) COMPLIANCE WITH LAWS AND REGULATIONS. The Option shall not be
exercised at any time when its exercise or the delivery of shares
hereunder would be in violation of any law, rule, or regulation that the
Company may find to be valid and applicable.
(g) OPTIONEE BOUND BY PLAN AND RULES. Optionee hereby acknowledges
receipt of a copy of the Plan and agrees to be bound by the terms and
provisions thereof. Optionee agrees to be bound by any rules and
regulations for administering the Plan as may be adopted by the
Committee during the life of the Option. Terms used herein and not
otherwise defined shall be as defined in the Plan.
This Agreement is issued, and the Option evidenced hereby is granted, in
White Plains, New York, and shall be governed and construed in accordance with
the laws of the State of New York.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its Chairman, President and Chief Executive Officer, or a Vice President, as
of the day of , 200 .
Agreed to: ITT INDUSTRIES, INC.
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Optionee
Dated: ------------------------------ Dated:
Enclosures
