[Exhibit 88]
SECOND AMENDMENT TO
EMPLOYMENT AND CONSULTING AGREEMENT
DATED AS OF DECEMBER 19, 1995
BETWEEN ITT DESTINATIONS, INC. AND
XXXX X. XXXXXXX
WHEREAS, ITT CORPORATION, a Nevada corporation (formerly
known as ITT Destinations, Inc.) (the "Company"), entered into an
employment and consulting agreement with Xxxx X. Xxxxxxx (the
"Executive") dated as of December 19, 1995 and amended as of February
11, 1997 (the "Agreement"); and
WHEREAS, the Company and Executive desire to further amend
the Agreement in certain respects and to have this Second Amendment
replace the First Amendment in its entirety;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein set forth and for other consideration herein
described, the parties hereto agree as follows:
1. Paragraph 12 of the Agreement is hereby amended by adding the
following at the end thereof:
"Following a Change in Control of the Company (as defined
herein), Executive shall have the right
to terminate for good reason (as defined herein). For purposes hereof,
(A) "Good Reason" shall mean:
(i) without the 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 promptly after
receipt of notice thereof given by the Executive, (A) a
failure to pay or a reduction in the Executive's annual base
salary as described in paragraph 3 hereof or any bonus or
incentive compensation opportunities or any reduction in any
material compensation or benefits arrangement provided to
the Executive or in which the Executive participates, (B)
the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including
status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by
paragraphs 2, 6, and 8 hereof, (C) any other action by the
Company or any of its affiliates which results in a
diminution in Executive's position, authority, duties or
responsibili ties, or (D) any failure by the Company to
comply with any of the provisions of paragraph 5 hereof;
(ii) without the Executive's express written consent,
the Company's requiring the Executive's work location to be
other than within twenty-five (25) miles of New York City,
New York;
(iii) any failure by the Company to obtain an express
written assumption of the Agreement by any successor to the
Company.
For purposes hereof, a determination by the Executive that
he has "Good Reason" hereunder shall be final and binding on
the parties hereto absent a showing of bad faith on the
Executive's part.
and (B) "Change in Control" of the Company shall mean the
occurrence of:
(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 of more of
the outstanding common stock, no par value of the Company
("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
fifteen percent 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 stockholders of the Company shall approve (A)
any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or
pursuant to which shares of Stock of the Company would be
converted into cash, securities or other property, other
than a merger of the Company in which holders of Stock of
the Company immediately prior to the merger have the same
proportionate ownership of common stock of the surviving
corporation 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; or
(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
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 were directors at the
beginning of such 12-month period."
Notwithstanding the foregoing, any spin-off of all or a portion
of the assets or operations of the Company or any subsidiary
which has been approved by a majority of the directors serving on
the Board as of the date hereof, or by directors approved by the
vote of two-thirds of the directors then still in office who were
directors as of the date hereof, shall not be deemed a "Change in
Control"."
2. Paragraph 13 of the Agreement is hereby amended by adding
the following paragraph (c) at the end thereof:
"(c) Notwithstanding the foregoing, if, within two
years following a Change in Control, the Executive's
employment with the Company is involuntarily terminated
other than for cause or is terminated by the Executive for
Good Reason, then ITT will pay the Executive in a lump sum
within five days following Executive's date of termination
of employment, the following: (i) all amounts owing under
paragraph 13(a) hereof (as if the Board of Directors had
determined not to elect the Executive to the offices
described in paragraph 2 hereof), without reduction for
future payment, (ii) all amounts owing under paragraph 13(b)
hereof (as if the Executive served as Chairman and Chief
Executive until October 31, 2000 and was not nominated as a
non-management director), without reduction
for future payment, and (iii) the value of the benefit
provided for in paragraph 7 hereof, computed without
reduction for future payment. For purposes of this paragraph
13(c), the amounts under clauses (i), (ii) and (iii) above
shall be determined as provided in paragraph 14(d) hereof.
The foregoing provisions of this paragraph 13(c) shall
be subject to paragraph 14 hereof."
3. A new paragraph 14 is added to the Agreement, to read as
follows: "14. Golden Parachute Tax Matters
(a) Certain Additional Payments by the Company. (i) Anything
in this Agreement to the contrary notwithstanding, if it shall be
determined that any payment or distribution to or for the benefit of
the Executive (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise
(the "Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code", and
such excise tax, the "Excise Tax"), then the Executive shall be
entitled to receive from the Company an additional payment (the
"Gross-Up Payment") in an amount such that the net amount of Payment
and Gross-Up Payment retained by the Executive, after the calculation
and deduction of all Excise Taxes (including any interest or penalties
imposed with respect to such taxes) on the Payment and all federal,
state and local income tax, employment tax and Excise Tax (including
any interest or penalties imposed with respect to such taxes) on the
Gross-Up Payment provided for in this Section, shall be equal to the
Payment.
(ii) Subject to the provisions of paragraph 14(a)(iii),
all determinations required to be made under this paragraph
14(a), including whether and when the Gross-Up Payment is
required and the amount of
such Gross-Up Payment, and the assumptions to be utilized in
arriving at such determinations shall be made by a
nationally recognized certified public accounting firm as
may be designated by the Executive (the "Accounting Firm")
which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the
receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the
Company. All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment shall
be paid by the Company to the Executive within five days of
the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of uncertainty in
the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder,
it is possible that the Gross- Up Payment made will have
been an amount less than the Company should have paid
pursuant to this paragraph 14(a)(ii) (the "Underpayment").
In the event that the Company exhausts its remedies pursuant
to paragraph 14(a)(iii) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting
Firm shall determine the amount of the Underpayment and any
such Underpayment shall be promptly paid by the Company to
or for the benefit of Executive.
(iii) The Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon
as practicable after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to
be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which
he or she gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes,
interest and/or penalties, with respect to such claim is
due). If the Company notifies the Executive in writing prior
to the
expiration of such period that it desires to contest such
claim, the Executive shall:
(A) give the Company any information reasonably
requested by the Company relating to such claim,
(B) take such action in connection with contesting
such claim as the Company shall reasonably request in
writing from time to time, including, without
limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the
Company,
(C) cooperate with the Company in good faith in
order to effectively contest such claim, and
(D) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify the Executive for and hold the
Executive harmless from, on an after-tax basis, any Excise
Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation
and payment of all related costs and expenses. Without
limiting the foregoing provisions of this paragraph
14(a)(iii), the Company shall control all proceedings taken
in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole
option, either direct the Executive to pay the tax claimed
and xxx for a refund or contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a
court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however,
that if the Company directs the Executive to pay such claim
and xxx for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis,
and shall indemnify the Executive for and hold the Executive
harmless from, on an after-tax basis, any Excise Tax or
income tax
(including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further
provided that any extension of the statute of limitations
relating to the payment of taxes for the taxable year of the
Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest
shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall
be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any
other taxing authority.
(iv) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to paragraph
14(a)(iii), Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of paragraph
14(a)(iii)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Company pursuant
to paragraph 14(a)(iii), a determination is made that the
Executive shall not be entitled to any refund with respect
to such claim and the Company does not notify the Executive
in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall
offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
(b) For purposes of the calculations required to be made
under paragraphs 13 and 14, the parties agree that, absent any
changes made following the date of execution of this First
Amendment to Executive's compensation arrangements or to the
Company's benefit plans, programs, policies or arrangements, the
determinations to be made hereunder by tax counsel and the
Accounting Firm shall be made on a basis consistent with the
calculations set forth in Exhibit A hereto which have been
prepared by the Company concurrently with the execution of this
First Amendment."
4. Paragraph 20 of the Agreement is hereby amended in
its entirety, to read as follows:
"20. Settlement of Disputes; Arbitration. If any dispute
arises between the Executive and the Company as to the validity,
enforceability and/or interpretation of any right or benefit afforded
by this Agreement, at the Executive's option, any other agreement or
policy notwithstanding, such dispute shall be resolved by binding
arbitration proceedings in accordance with the rules of the American
Arbitration Association. The arbitrators shall presume that the rights
and/or benefits afforded by this Agreement which are in dispute are
valid and enforceable and that the Executive is entitled to such
rights and/or benefits. The Company shall be precluded from asserting
that such rights and/or benefits are not valid, binding and
enforceable and shall stipulate before such arbitrators that the
Company is bound by all the provisions of this Agreement. The burden
of overcoming by clear and convincing evidence the presumption that
the Executive is entitled to such rights and/or benefits shall be on
the Company. The results of any arbitration shall be conclusive on
both parties and shall not be subject to judicial interference or
review on any ground whatsoever, including without limitation any
claim that the Company was wrongfully induced to enter into this
Agreement to arbitrate such a dispute.
The Company shall pay the cost of any arbitration
proceedings under this Agreement. The Executive shall be entitled
(within two business days of requesting such advance) to an advance of
the actual legal fees and expenses incurred by the Executive in
connection with such proceedings and the Executive shall be obligated
to reimburse the Company for such fees and expenses in connection with
such arbitration proceedings only if it is finally and specifically
determined by the arbitrators that the Executive's position in
initiating the arbitration was frivolous and completely without merit.
The arbitrators shall have discretion to award punitive damages to the
Executive if it is found that the Company's actions or failures to act
which led to the Executive submitting a dispute to arbitration and/or
the Company's actions or failures to act during the pendency of the
arbitration proceeding make such an award appropriate in the
circumstances.
In the event the Executive is required to defend in any
legal action or other proceeding the validity or enforceability of any
right or benefit afforded by this Agreement, the Company will pay any
and all actual legal fees and expenses incurred by the Executive
regardless of the outcome of such action and, if
requested by the Executive, shall (within two business days of such
request) advance such fees and expenses to the Executive. The Company
shall be precluded from asserting in any judicial or other proceeding
commenced with respect to any right or benefit afforded by this
Agreement that such rights and benefits are not valid, binding and
enforceable and shall stipulate in any such proceeding that the
Company is bound by all the provisions of this Agreement."
5. All references to "ITT" in the Agreement shall be
deemed to refer to the Company.
6. Except as hereinabove provided, the Agreement is hereby
ratified and confirmed and shall continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Second
Amendment to the Agreement as of the [14th] day of [August], 1997.
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Xxxx X. Xxxxxxx
ITT CORPORATION
By:
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Xxxxx X. Xxxxxx
Senior Vice President