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June 13, 1995
Mr. D. Xxxxxx Xxxxx
Dear Xxxxxx:
This employment agreement (the "Agreement") is intended to
create mutual obligations, and your voluntary acceptance signifies both ITT
Industries, Inc. ("Industries") and your commitment to carry out its
obligations until its expiration. The Agreement will confirm your employment
with Industries in accordance with the following terms and conditions:
1. EMPLOYMENT AND ASSIGNMENT; DILIGENT AND FAITHFUL PERFORMANCE
OF DUTIES. Industries agrees to employ you as Chairman and Chief Executive
Officer of ITT Industries. In consideration of employment by Industries, you
agree to discharge faithfully, diligently, and to the best of your ability, the
responsibilities of these offices.
2. TERM OF AGREEMENT. This Agreement will become effective on
January 1, 1996 [or Distribution Date] and will terminate on December 31, 1999
unless terminated earlier in accordance with the terms of this Agreement.
3. BASE SALARY, INCENTIVE BONUS AND BENEFITS.
(a) BASE SALARY. Your base salary under
this Agreement will be [ ] per year. Your base
salary will be subject to review by Industries from
time to time for consideration of possible increases
based on your performance and other relevant
circumstances. Periodic increases, once granted,
will not be subject to revocation and your base
salary thereafter will be deemed to include such
increases. Your base salary will be payable in
accordance with the customary payroll practices of
Industries
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but, in no event, less frequently than monthly.
(b) OTHER COMPENSATION AND BENEFITS.
Subject to review and approval by Industries, you
will be eligible for consideration for possible
awards under Industries' executive incentive bonus
program or any other executive incentive compensation
plan. You will also continue to be entitled to
participate in the benefit programs of Industries or
its subsidiaries for which you are now eligible or
for which you may become eligible in accordance with
their provisions during the term of this Agreement.
Industries shall pay or reimburse you for all
reasonable travel and other expenses incurred in
connection with the performance of your duties and
responsibilities in accordance with such procedures
as Industries may from time to time establish.
4. TERMINATION BY INDUSTRIES FOR CAUSE. Industries shall have
the right to terminate your employment only for cause, which is limited to
action by you involving willfull malfeasance or gross negligence or your
failure to act involving material nonfeasance that would tend to have a
materially adverse effect on Industries. If your employment is terminated for
cause, this Agreement will terminate and Industries will have no further
obligations under this Agreement.
5. DISCONTINUANCE OF THE REQUIREMENT TO PROVIDE FULL TIME
SERVICES.
If Industries notifies you that it no longer requires your full-time
services as Chairman and Chief Executive Officer and you have complied with the
terms and conditions of this Agreement, you will receive the following:
(a) BASE SALARY AND INCENTIVE BONUS.
In lieu of any further compensation, you will receive
in equal monthly installments, (i) for the first
twelve months commencing with the first day of the
month succeeding the month in which you cease to hold
the offices described above (A) an amount equal to
the annual salary as determined in
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Paragraph 3 hereof ("salary continuation") and (B) an
amount equivalent to 75% of one-third of the
aggregate amount of the bonuses received by you with
respect to each of the three calendar years
immediately preceding such event (it being understood
that for this purpose the bonus with respect to any
year is the bonus presently awarded in the first
quarter of the succeeding year) and (ii) for each
succeeding twelve months remaining in the term of
this Agreement, (A) an amount equivalent to the
annual salary as determined in Paragraph 3 hereof and
(B) an amount equivalent to 50% of one-third of the
aggregate amount of the bonuses received by you with
respect to each of the three calendar years
immediately preceding such event (it being understood
that for this purpose the bonus with respect to any
year is the bonus presently awarded in the first
quarter of the succeeding year). Notwithstanding the
above, payments shall continue until the earlier of
(i) the expiration of this Agreement or (ii) in
accordance with 5(e) below. Upon your acceptance of
other full-time employment, the balance remaining of
such aggregate amount may, at Industries' discretion,
be paid to you in a lump sum.
(b) OTHER COMPENSATION AND BENEFITS. As
long as you are receiving salary continuation, you
will continue to be eligible for ongoing
participation in Industries' employee medical,
dental, and life insurance benefits programs, the ITT
Industries Salaried Retirement Plan, the ITT
Industries Excess Plan, if applicable, the ITT
Industries Investment and Savings Plan and any other
applicable retirement or savings plan as well as the
exercise of outstanding stock options in accordance
with the terms of the applicable stock option plan.
If, for any reason at any time, Industries is unable
to treat you as being or having been a salaried
employee of Industries under any benefits program or
plan specifically enumerated in this Agreement (or
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any successors to such plans), including the
Industries' employee medical, dental and life
insurance benefit programs, and the ITT Industries
Salaried Retirement Plan, the ITT Industries Excess
Plan, if applicable, and the ITT Industries
Investment and Savings Plan, during the period that
you are receiving salary continuation, and, if, as a
result thereof you receive no benefits or reduced
benefits under such plans, Industries shall provide
such benefits by (i) direct payment to you of the
amounts you would have received from such plans had
you continued to be eligible or (ii) at Industries
option, making available equivalent benefit programs
from other sources.
(c) ITEMS OF COMPENSATION AND BENEFITS
FOR WHICH YOU WILL NOT BE ELIGIBLE DURING SALARY
CONTINUATION. During a period of salary continuation
as described in this Paragraph 5(a), you will not be
entitled to any compensation not specified in this
Agreement, and you will not be eligible to participate
in any (i) bonus program, (ii) Industries long term or
short term disability plans, (iii) insurance plan
primarily covering business travel, (iv) special
programs providing incentive for employees who
voluntarily terminate their employment, (v) tax or
financial advisory services, (vi) new awards under any
stock option or stock related plans for executives,
(vii) new or revised executive compensation programs
that may be introduced by Industries after Industries
has advised you that it no longer requires your
full-time services and (viii) any other benefit or
perquisite not specifically enumerated in this
Agreement.
(d) AVAILABILITY IF INDUSTRIES NO LONGER
REQUIRES YOUR FULL-TIME SERVICES. If Industries has
advised you that it no longer requires your full-time
services pursuant to this Paragraph 5 but you are
continuing to receive salary continuation, you must
continue to be available to render to Industries
reasonable assistance, consistent
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with the level of your prior position with Industries,
at times and locations that are mutually acceptable.
In requesting such services, Industries shall take
into account any other commitments which you may have.
(e) DISQUALIFYING CONDUCT. If during
the period you are receiving Salary Continuation, you
(i) engage in any activity which is inimical to the
best interests of Industries; (ii) disparage
Industries; (iii) fail to comply with any Industries'
Covenant Against Disclosure and Assignment of Rights
to Intellectual Property; (iv) without Industries'
prior consent, induce any employees of Industries to
leave employment; (v) without Industries' prior
consent, engage in, become affiliated with, or become
employed by any business competitive with Industries;
or (vi) fail to comply with applicable provisions of
the Industries' Code of Conduct or applicable
Industries' Corporate Policies or any applicable
Industries' Subsidiary Code or policies, then
Industries will have no further obligation to provide
salary continuation. Also, for a one year period
after salary continuation is no longer provided under
this Agreement you will not, without Industries'
prior consent, induce any employees of Industries to
leave employment.
(f) TERMINATION ALLOWANCE UNDER A
SEVERANCE PLAN OR POLICY. If you would otherwise
ordinarily receive a termination allowance under an
Industries' severance plan or termination allowance
policy exceeding the amount of base salary remaining
under the Agreement at the time of notice by
Industries of its intent to terminate your full-time
employment, Industries will pay you a termination
allowance in accordance with the terms of the
Industries' severance plan or termination allowance
policy, in lieu of salary continuation under this
Agreement. In no case will both termination
allowance and amounts under this Agreement (whether
lump sum or salary continuation) be paid.
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6. ASSIGNMENT. This Agreement is not assignable by you and is
not assignable by Industries except to a subsidiary of Industries provided,
notwithstanding such assignment, Industries shall remain liable for the
performance of all obligations hereunder. This Agreement shall be binding on
all successors and assignees of Industries.
7. OTHER AGREEMENTS. Any prior agreement relating to the
Assignment of Inventions and Covenant Against Disclosure, and any written
agreements not in conflict herewith shall remain in full force and effect.
8. NOTICES. Notices to Industries under this Agreement shall be
in writing and delivered to [TITLE - ADDRESS] and notices to you shall be in
writing and delivered in person or by mail to your office or to your home
address on file with Industries.
9. SEVERABILITY. If, for any reason, any one or more of the
provisions or part of a provision contained in this Agreement shall be held to
be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part of
a provision of this Agreement not held so invalid, illegal or unenforceable,
and each other provision or part of a provision shall to the full extent
consistent with law remain in full force and effect.
10. HEADINGS OF NO EFFECT. The paragraph headings contained in
this Agreement are included solely for convenience of reference and shall not
in any way affect the meaning or interpretation of any of the provisions of
this Agreement.
11. AMENDMENT. This Agreement cannot be amended, modified or
supplemented except by a subsequent written agreement between you and
Industries.
12. ENTIRE AGREEMENT AND CHOICE OF LAW. This Agreement contains
the entire agreement between you and Industries with respect to employment and
services by you and supersedes any and all prior understandings, agreements or
correspondence between you and Industries with respect to employment and
services. This Agreement will be governed by and construed in accordance with
the laws of the State of New York.
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13. ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration administered by the American Arbitration Association under its
Commercial Arbitration Rules, and judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
Please execute and return to me the enclosed copy of this Agreement to
signify your agreement.
Yours very truly,
ITT Industries, Inc.
By
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Agreed to and accepted:
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D. Xxxxxx Xxxxx
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