Exhibit 10.1
AMENDED AND
RESTATED
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT, is entered into as of this 4th day of May, 2006 by and
between Textron Inc. (the "Company"), a Delaware corporation having
its principal office at 40 Westminster Street, Providence, Rhode
Island 02903 and Mary L. Howell residing at 4605 Rock Spring Road,
Arlington, Virginia 22207 (the "Executive").
W I T N E S S E T
H :
WHEREAS, the
Executive is presently employed by the Company;
WHEREAS, the Company
desires to continue to employ the Executive and the Executive is
willing to continue to be employed by the Company;
WHEREAS, the Company
and the Executive entered into an employment agreement as of July
23, 1998 (the "Employment Agreement"); and
WHEREAS, the Company
and the Executive desire to set forth the terms and conditions of
such continued employment in this Amended and Restated Employment
Agreement (the "Agreement").
NOW THEREFORE, in
consideration of the foregoing and of the mutual covenants and
agreements of the parties set forth in this Agreement, and of other
good and valuable consideration, the adequacy and receipt of which
is acknowledged, the parties hereto agree as follows:
1. Term of Employment
The Company hereby
agrees to continue to employ the Executive and the Executive hereby
accepts continued employment, in accordance with the terms and
conditions set forth herein, for a term (the "Employment Term")
commencing on the date hereof (the "Effective Date") and
terminating, unless otherwise terminated earlier in accordance with
Section 5 hereof, on the third anniversary of the Effective Date
(the "Original Employment Term"), provided that the Employment Term
shall be automatically extended, subject to earlier termination as
provided in Section 5 hereof, for successive additional one (1)
year periods (the "Additional Terms"), unless, at least ninety (90)
days prior to the end of the Original Employment Term or the then
Additional Term, the Company or the Executive has notified the
other in writing that the Employment Term shall terminate at the
end of the then current term.
2. Position and Responsibilities
During the Employment
Term, the Executive shall serve as the Executive Vice President -
Government and International of the Company or in such higher
capacity as agreed by the Company and the Executive. The Executive
shall report exclusively to the Chief Executive Officer and the
Board of Directors of the Company (the "Board"). The Executive
shall, to the extent appointed or elected, serve on the Board as a
director and as a member of any committee of the Board, in each
case, without additional compensation. The Executive shall, to the
extent appointed or elected, serve as a director or as a member of
any committee of the board (or the equivalent bodies in a
non-corporate subsidiary or affiliate) of any of the Company's
subsidiaries or affiliates and as an officer or employee (in a
capacity commensurate with her position with the Company) of any
such subsidiaries or affiliates, in all cases, without additional
compensation or benefits and any compensation paid to the
Executive, or benefits provided to the Executive, in such
capacities shall be a credit with regard to the amounts due
hereunder from the Company. The Executive shall have duties,
authorities and responsibilities generally commensurate with the
duties, authorities and responsibilities of persons in similar
capacities in similarly sized companies subject to the By-laws of
the Company and the organizational structure of the Company. The
Executive shall devote substantially all of her business time,
attention and energies to the performance of her duties hereunder,
provided the foregoing will not prevent the Executive from
participating in charitable, community or industry affairs, from
managing her and her family's personal passive investments, and
(with the consent of the Chief Executive Officer or the
Organization and Compensation Committee (or its successor) of the
Board (the "O&C Committee"), which consent will not be
unreasonably withheld, conditioned or delayed) serving on the board
of directors of other companies, provided that these activities do
not materially interfere with the performance of her duties
hereunder or create a potential business conflict or the appearance
thereof. The Company has consented to the Executive's services on
the boards of directors, if any, on which the Executive currently
serves, which boards the Executive has disclosed in writing to the
O&C Committee. The Executive may retain any compensation or
benefits received as a result of consented to service as a director
of entities not related to the Company.
3. Compensation and Benefits
During the Employment
Term, the Company shall pay and provide the Executive the
following:
3.1 Base Salary. The Company shall pay the Executive a base
salary (the "Base Salary") in an amount which shall be established
from time to time by the O&C Committee (or as otherwise
designated by the Board), provided, however, that such base salary
rate shall not be less than her current rate of base salary. Base
Salary shall be paid to the Executive in accordance with the
Company's normal payroll practices for executives. Base Salary
shall be reviewed at least annually to ascertain whether, in the
judgment of the reviewing committee, such Base Salary should be
increased. If so increased, Base Salary shall not be thereafter
decreased and shall thereafter, as increased, be the Base Salary
hereunder.
3.2 Annual Bonus. The Company shall provide the Executive with
the opportunity to earn an annual cash bonus under the Company's
current annual incentive compensation plan for executives or a
replacement plan therefor at a level commensurate with her
position, provided that the minimum annual target award payable
upon the achievement of reasonably attainable objective performance
goals shall be at least fifty percent (50%) of Base Salary.
3.3 Long-Term Incentives. The Company shall provide the
Executive the opportunity to earn long-term incentive awards under
the current equity and cash based plans and programs or
replacements therefor at a level commensurate with the current
aggregate opportunity being provided to the Executive.
3.4 Employee Benefits. The Executive shall, to the extent
eligible, be entitled to participate at a level commensurate with
her position in all employee benefit welfare and retirement plans
and programs, as well as equity plans, generally provided by the
Company to its senior executives in accordance with the terms
thereof as in effect from time to time. Such plans and programs
currently include, without limitation, the Amended and Restated
Supplemental Retirement Plan for Textron Inc. Key Executives (the
"SERP"), the 1994 Long-Term Incentive Plan, the Key Executive
Program (including the Deferred Income Plan, the Supplemental
Benefits Plan (the "SBP") and the Survivor Benefit Plan), group
term life insurance plan, comprehensive health, major medical,
vision and dental insurance plans and short-term and long-term
disability plans. Notwithstanding anything in the SERP, Performance
Share Units granted after 2005 shall not be considered when
determining the benefit under the SERP.
3.5 Vacation. The Executive shall be entitled to paid vacation
in accordance with the standard written policies of the Company
with regard to vacations of executives, but in no event less than
four (4) weeks per calendar year.
3.6 Perquisites. The Company shall provide to the Executive, at
the Company's cost, all perquisites to which other senior
executives of the Company are generally entitled to receive and
such other perquisites which are suitable to the character of the
Executive's position with the Company and adequate for the
performance of her duties hereunder but not less than the level
being provided on the date hereof except as otherwise required
because of changes in law. To the extent legally permissible, the
Company shall not treat such amounts as income to the
Executive.
3.7 Right to Change Plans. The Company shall not be obligated by
reason of this Section 3 to institute, maintain, or refrain from
changing, amending, or discontinuing any benefit plan, program, or
perquisite, so long as such changes are similarly applicable to
executive employees generally and provided that the benefits or
additional credit specifically as set forth in Section 3.8 below
shall not be diminished.
4. Expenses
Upon submission of
appropriate documentation, in accordance with its policies in
effect from time to time, the Company shall pay, or reimburse, the
Executive for all ordinary and necessary expenses, in a reasonable
amount, which the Executive incurs in performing her duties under
this Agreement including, but not limited to, travel,
entertainment, professional dues and subscriptions, and all dues,
fees, and expenses associated with membership in various
professional, business, and civic associations and societies in
which the Executive participates in accordance with the Company's
policies in effect from time to time.
5. Termination of Employment
The Executive's
employment with the Company (including but not limited to any
subsidiary or affiliate or the Company) and the Employment Term
shall terminate upon the occurrence of the first of the following
events:
(a) Automatically on the date of the
Executive's death.
(b) Upon thirty (30) days' written notice by
the Company to the Executive of a termination due to Disability,
provided such notice is delivered during the period of Disability.
The term "Disability" shall mean, for purposes of this Agreement,
the inability of the Executive, due to injury, illness, disease or
bodily or mental infirmity, to engage in the performance of her
material duties of employment with the Company as contemplated by
Section 2 herein for a period of more than one hundred eighty (180)
consecutive days or for a period that is reasonably expected to
exist for a period of more than one hundred eighty (180)
consecutive days, provided that interim returns to work of less
than ten (10) consecutive business days in duration shall not be
deemed to interfere with a determination of consecutive absent days
if the reason for absence before and after the interim return are
the same. The existence or non-existence of a Disability shall be
determined by a physician agreed upon in good faith by the
Executive (or her representatives) and the Company. It is expressly
understood that the Disability of the Executive for a period of one
hundred eighty (180) consecutive days or less shall not constitute
a failure by her to perform her duties hereunder and shall not be
deemed a breach or default and the Executive shall receive full
compensation for any such period of Disability or for any other
temporary illness or incapacity during the term of this
Agreement.
(c) Immediately upon written notice by
the Company to the Executive of a termination due to her retirement
at or after the Executive's attainment of age sixty-five (65).
(d) Immediately upon written notice by
the Company to the Executive of a termination for Cause, provided
such notice is given within ninety (90) days after the discovery by
the Board or the Chief Executive Officer of the Cause event and has
been approved by the O&C Committee at a meeting at which the
Executive and her counsel had the right to appear and address such
meeting after receiving at least five (5) business days written
notice of the meeting and reasonable detail of the facts and
circumstances claimed to provide a basis for such termination. The
term "Cause" shall mean, for purposes of this Agreement: (i) an act
or acts of willful misrepresentation, fraud or willful dishonesty
(other than good faith expense account disputes) by the Executive
which in any case is intended to result in her or another person or
entity's substantial personal enrichment at the expense of the
Company; (ii) any willful misconduct by the Executive with regard
to the Company, its business, assets or employees that has, or was
intended to have, a material adverse impact (economic or otherwise)
on the Company; (iii) any material, willful and knowing
violation by the Executive of (x) the Company's Business
Conduct Guidelines, or (y) any of her fiduciary duties to the
Company which in either case has, or was intended to have, a
material adverse impact (economic or otherwise) on the Company;
(iv) the willful or reckless behavior of the Executive with regard
to a matter of a material nature which has a material adverse
impact (economic or otherwise) on the Company; (v) the Executive's
willful failure to attempt to perform her duties under Section 2
hereof or her willful failure to attempt to follow the legal
written direction of the Board, which in either case is not
remedied within ten (10) days after receipt by the Executive of a
written notice from the Company specifying the details thereof;
(vi) the Executive's conviction of, or pleading nolo
contendere or guilty to, a felony (other than (x) a traffic
infraction or (y) vicarious liability solely as a result of her
position provided the Executive did not have actual knowledge of
the actions or inactions creating the violation of the law or the
Executive relied in good faith on the advice of counsel with regard
to the legality of such action or inaction (or the advice of other
specifically qualified professionals as to the appropriate or
proper action or inaction to take with regard to matters which are
not matters of legal interpretation)); or (vii) any other material
breach by the Executive of this Agreement that is not cured by the
Executive within twenty (20) days after receipt by the Executive of
a written notice from the Company of such breach specifying the
details thereof. No action or inaction should be deemed willful if
not demonstrably willful and if taken or not taken by the Executive
in good faith as not being adverse to the best interests of the
Company. Reference in this paragraph (d) to the Company shall also
include direct and indirect subsidiaries of the Company, and
materiality and material adverse impact shall be measured based on
the action or inaction and the impact upon, and not the size of,
the Company taken as a whole, provided that after a Change in
Control, the size of the Company, taken as a whole, shall be a
relevant factor in determining materiality and material adverse
impact.
(e) Upon written notice by the Company
to the Executive of an involuntary termination without Cause. A
notice by the Company of non-renewal of the Employment Term
pursuant to Section 1 above shall be deemed an involuntary
termination of the Executive by the Company without Cause as of the
end of the Employment Term, but the Executive may terminate at any
time after the receipt of such notice and shall be treated as if
she was terminated without Cause as of such date.
(f) Upon twenty (20) days' written
notice by the Executive to the Company of a termination for Good
Reason (which notice sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for such termination)
unless the Good Reason event is cured within such twenty (20) day
period. The term "Good Reason" shall mean, for purposes of this
Agreement, without the Executive's express written consent, the
occurrence of any one or more of the following: (i) the assignment
to the Executive of duties materially inconsistent with the
Executive's then authorities, duties, responsibilities, and status
(including offices, titles, and reporting requirements), or any
reduction in the Executive's then title, position (including but
not limited to as a member of the Management Committee or any
functional replacement therefor), reporting lines or a material
reduction (other than temporarily while Disabled or otherwise
incapacitated) in her then status, authorities, duties, or
responsibilities or, if then a director of the Company, failure to
be nominated or reelected as a director of the Company or removal
as such; (ii) relocation of the Executive from the principal office
of the Company (excluding reasonable travel on the Company's
business to an extent substantially consistent with the Executive's
business obligations) or relocation of the principal office of the
Company to a location which is at least fifty (50) miles from the
Company's current headquarters, provided, however, if the Executive
at the time of the relocation is not located at the principal
office, such relocation provision shall apply based on her then
location; (iii) a reduction by the Company in the Executive's Base
Salary; (iv) a reduction in the Executive's aggregate level of
participation in any of the Company's short and/or long-term
incentive compensation plans, or employee benefit or retirement
plans, policies, practices, or arrangements in which the Executive
participated as of the Effective Date, or, after a Change in
Control, participated immediately prior to the Change in Control;
(v) the failure of the Company to obtain and deliver to the
Executive a satisfactory written agreement from any successor to
the Company to assume and agree to perform this Agreement; or (vi)
any other material breach by the Company of this Agreement. The
Executive waives as a Good Reason event the change in the SERP made
by the last sentence of Section 3.4 hereof.
(g) Upon written notice by the Executive
to the Company of the Executive's voluntary termination of
employment without Good Reason (which the Company may, in its sole
discretion, make effective earlier than any notice date). A notice
by the Executive of non-renewal of the Employment Term pursuant to
Section 1 above shall be deemed a voluntary termination by the
Executive without Good Reason as of the end of the Employment
Term.
6. Consequences
of a Termination of Employment
6.1 Termination Due to Death or
Retirement. If the Employment Term ends on account of the
Executive's termination due to death pursuant to Section 5(a) above
or retirement pursuant to Section 5(c) above, the Executive (or the
Executive's surviving spouse, or other beneficiary as so designated
by the Executive during her lifetime, or to the Executive's estate,
as appropriate) shall be entitled, in lieu of any other payments or
benefits, subject to Section 7(e), to (i) payment promptly of any
unpaid Base Salary, unpaid annual incentive compensation (for the
preceding fiscal year) and any accrued vacation, (ii) reimbursement
for any unreimbursed business expenses incurred prior to the date
of termination, and (iii) any amounts, benefits or fringes due
under any equity, benefit or fringe plan, grant or program in
accordance with the terms of said plan, grant or program but
without duplication (collectively, the "Accrued Obligations"). In
addition, in the event the termination is as a result of
Executive's death, the early retirement factor under Section 2.03
of the SERP shall be one hundred percent (100%) and the age
requirement in Section 2.05 of the SERP shall not apply and a death
benefit shall be paid in accordance with such Section in all
instances.
6.2 Termination Due To Disability. If
the Employment Term ends as a result of Disability pursuant to
Section 5(b) above, the Executive shall be entitled, in lieu of any
other payments or benefits, subject to Section 7(b) and Section
7(e) hereof, to any Accrued Obligations and the following:
(a) Payment, during January of the
calendar year following the date of the Executive's termination, of
an amount equal to three hundred percent (300%) of the Executive's
target annual incentive compensation award established for the
fiscal year during which the Executive's termination occurs (the
"Termination Year Target Bonus").
(b) Continued monthly payment for two
and one half (2 1/2) years of an amount equal to the Executive's
monthly Base Salary rate reduced by any disability benefits
received by the Executive under the Company's long term disability
plan for the corresponding period.
(c) Payments and benefits as set forth
in Section 6.3(c)-(j) hereof.
(d) The Executive shall be deemed to
have satisfied the definition of "total disability" under the 1994
Long-Term Incentive Plan or the equivalent definition under any
successor plan thereto.
(e) The Executive's early retirement
factor under Section 2.03 of the Company's SERP shall be one
hundred percent (100%) (i.e. providing a fifty percent (50%) of
Final Average Compensation benefit) under the Company's SERP,
provided that the benefits payable under the SERP that are in
excess of the benefits that the Executive would receive thereunder
without such increased early retirement factor shall not commence
to be paid until two and one half (2 1/2) years after the date of
the termination of employment.
6.3 Involuntary Termination by the
Company Without Cause or Termination by the Executive for Good
Reason. If the Executive is involuntarily terminated by the Company
without Cause in accordance with Section 5(e) above or the
Executive terminates her employment for Good Reason in accordance
with Section 5(f) above, the Executive shall be entitled, in lieu
of any other payments or benefits, subject to Section 7(b) hereof,
to any Accrued Obligations and the following:
(a) Payment, during January of the
calendar year following the date of the Executive's termination, of
an amount equal to the Executive's Termination Year Target Bonus
multiplied by a fraction, the numerator of which is the number of
days during the fiscal year of the Executive's termination that the
Executive was employed by the Company and the denominator is three
hundred sixty-five (365), provided that in no event shall such
payment exceed fifty percent (50%) of the Termination Year Target
Bonus.
(b) Continued payment off payroll for
two and one-half (2 1/2) years (in approximately equal monthly
installments) of an amount equal to two and one-half (2 1/2) times
the sum of: (i) the Executive's Base Salary, and (ii) the greater
of: (x) the Termination Year Target Bonus, or (y) the Executive's
highest annual incentive compensation award earned during the last
three (3) fiscal years ending prior to the fiscal year of
termination (whether or not deferred) (the sum of (i) and (ii)
being hereinafter referred to as "Final Annual Compensation").
(c) To the extent eligible at such time
or, if the Executive would be eligible with credit for an
additional two and one half (2 1/2) years of age and service
credit, coverage under all applicable retiree health and other
retiree welfare plans for the Executive and her dependents
(including, if she is only eligible because of the extra age and
service credit, an adjustment, to the extent necessary, to put the
Executive in the same after-tax position as if she had been
eligible for such coverage) and, if not eligible for continued
health coverage under the retiree health plan, payment of the
Executive's and Executive's eligible dependents' COBRA continuation
health coverage premiums for the Company's health insurance plan
that generally applies to senior executives for the two and
one-half (2 1/2) year period following the date of termination or,
if earlier, until the Executive and Executive's dependents cease to
be eligible for such coverage, provided that, if COBRA coverage
cannot be provided for the full period, any excess period shall be
covered under (d) below (and further provided that, if such
premiums are taxable to the Executive, an adjustment such that the
Executive has no after tax cost for the providing of such COBRA
coverage).
(d) To the extent eligible on the date
of termination, continued participation, at no additional after tax
cost to the Executive than the Executive would have as an employee,
in all welfare plans (other than medical plans covered under (c)
above), until two and one-half (2 1/2) years after the date of
termination; provided, however, that in the event the Executive
obtains other employment that offers substantially similar or
improved benefits, as to any particular welfare plan, such
continuation of coverage by the Company for such benefits under
such plan shall immediately cease. To the extent such coverage
cannot be provided under the Company's welfare benefit plans
without jeopardizing the tax status of such plans, for underwriting
reasons or because of the tax impact on the Executive, the Company
shall pay the Executive an amount such that the Executive can
purchase such benefits separately at no greater after tax cost to
the Executive than the Executive would have had if the benefits
were provided to the Executive as an employee.
(e) Two and one-half (2 1/2) additional
years of service (including age as if such service was completed)
and compensation credit (at the Executive's "Then Compensation
Level") for benefit purposes under any defined benefit type
retirement plan, including but not limited to the SERP and the SBP
if then in effect, and, if the Executive is not eligible to receive
benefits under any such plan on the date of termination, two and
one-half (2 1/2) additional years of age for determining
eligibility to receive such benefits, provided that benefits under
any such plan will not commence until the Executive actually
attains the required distribution age under the plan or the
Executive's spouse qualifies for death benefits under such plan and
further provided that, with regard to any plan qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), the additional amounts may be provided on a
nonqualified plan basis. In addition, and notwithstanding the
foregoing, with regard to the SERP the Executive's early retirement
factor under Section 2.03 shall be one hundred percent (100%) (i.e.
providing a fifty percent (50%) of Final Average Compensation
benefit) upon such termination of employment, provided that the
benefits payable under the SERP that are in excess of the benefits
that would be received thereunder without the increased early
retirement factor provided for in this sentence shall not commence
to be paid until two and one-half (2 1/2) years after such
termination of employment and all benefits under the SERP (which
have not yet then commenced to be paid) shall be paid at such time
notwithstanding the proviso in the prior sentence. "Then
Compensation Level" shall mean an annual rate of compensation equal
to the sum of (i) Final Annual Compensation and (ii) the
performance units and performance share units earned with respect
to the measurement periods ending at or about the end of the fiscal
year immediately preceding the year of termination (to the extent
recognized in the definition of "Compensation" under the applicable
plan; in the case of the SERP as provided in Section 3.4 above such
that no amounts deemed earned in respect of performance share units
in 2008 (i.e. any grant after the 2005 grant) or later years shall
be included in Compensation for purposes of the SERP); provided,
however, that with respect to the year of termination, in lieu of
utilization of the amount in clause (ii) above, the Executive will
be deemed to have received in the year of termination the full
amount of performance units and performance share units earned with
regard to the measuring periods ending on or about the end of the
fiscal year immediately preceding the year of termination (whether
or not such amount is actually paid to the Executive prior to the
date of termination); provided, further, that, other than as set
forth in the immediately preceding proviso, the amounts described
in clause (ii) above shall be included in "Compensation" under the
plans referred to in this Section 6.3(e) in lieu of any amounts
actually paid to the Executive in respect of performance units and
performance share units in the year of termination and
thereafter.
(f) Payment promptly after termination
of two and one-half (2 1/2) times the amount of the maximum Company
annual contribution or match to any defined contribution type plan
in which the Executive participates.
(g) Immediate full vesting of any
outstanding stock options that would vest within two and one half
(2 1/2) years after such termination of employment as if the
Executive had continued employment for such two and one half (2
1/2) year period, to the extent permitted under the plan or grant,
or if such vesting is not permitted, a cash payment equal to the
difference between the fair market value of the shares covered by
the unvested options and the exercise price of such unvested
options (the "Spread") on the date of termination, and, in both
cases, to the extent such options are exercisable for less than two
and three quarters (2 3/4) years after termination (or, if less,
the remainder of the respective terms), a cash payment equal to the
Black-Scholes (based on the same methodology used for the Company's
then latest distributed proxy statement or, if not so used, for
internal valuation of the last stock option grants made by the
Company prior to the termination) future value of such options for
the lesser of two and three quarters (2 3/4) years or the remainder
of such terms (any such payments shall be made promptly after such
termination). The terms of the Executive's outstanding options are
deemed to be modified to the extent required by this Section 6.3
(g).
(h) Payment when it would otherwise be
paid in accordance with the 1994 Long-Term Incentive Plan of any
amount due with regard to performance share units outstanding on
the date of termination to the extent permitted under such plan,
plus, outsid
