Exhibit 10.3
AMENDED AND
RESTATED
EMPLOYMENT
AGREEMENT
THIS AMENDED AND RESTATED 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 Terrence
O'Donnell residing at 5133 Yuma Street, N.W., Washington, DC 20016
(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 March
10, 2000 (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 such continued employment, in
accordance with the terms and conditions set forth herein, for a
term (the "Employment Term") that commenced on March 10, 2000 (the
"Effective Date") and terminating, unless otherwise terminated
earlier in accordance with Section 5 hereof, on the next
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
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 and General Counsel of the Company or in
such higher capacity as agreed by the Company and the Executive.
The Executive shall also serve as a member of the Management
Committee (or any equivalent committee or group as may replace the
Management Committee from time to time). 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 his 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. Except
as provided in the next succeeding sentence, the Executive shall
devote substantially all of his business time, attention and
energies to the performance of his duties hereunder, provided the
foregoing will not prevent the Executive from participating in
charitable, community or industry affairs, from managing his and
his 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 or as a partner in the law firm of Williams &
Connolly LLP, provided in each case that these activities do not
materially interfere with the performance of his duties hereunder
or create a potential business conflict or the appearance thereof.
In particular, Executive (a) may continue to serve as a
part-time partner at Williams & Connolly LLP, and (b) may
serve on the board of directors of each of (i) The Gerald R.
Ford Foundation, (ii) the Air Force Academy Falcon Foundation,
(iii) IGI, Inc. and (iv) ePlus, Inc., in each case retaining any
compensation or emoluments therefrom.
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 an initial base salary (the "Base Salary")
at a rate of $425,000.00. 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 by
the O&C Committee (or as otherwise designated by the Board) 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 his position, provided that the minimum
annual target award payable upon the achievement of reasonably
attainable objective performance goals shall be at least 55% 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.
3.4 Employee Benefits . The
Executive shall, to the extent eligible, be entitled to participate
at a level commensurate with his 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 his duties hereunder.
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.
3.8 Special Provisions . The
Company shall provide to the Executive the special provisions set
forth on Amended and Restated Exhibit B hereto, which
Amended and Restated Exhibit B is incorporated herein.
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
his 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 his 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 his 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 him to perform his 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. In no event shall compensation cease by reason of a
termination for Disability prior to that date on which the
Executive shall commence his eligibility for payments pursuant to
the Company's disability benefits program.
(c) Immediately upon written notice
by the Company to the Executive of a termination due to his
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 his 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 his 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 his 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
his duties under Section 2 hereof or his 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 his position, provided that with respect to such
vicarious liability 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 he
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
membership on the Management Committee or its equivalent) or
reporting lines or a material reduction (other than temporarily
while Disabled or otherwise incapacitated) in his then status,
authorities, duties or responsibilities (or, should the Company be
reorganized such that it becomes a subsidiary or controlled party
of any other entity, the Executive's not holding authorities,
duties, responsibilities, status, offices, titles or reporting
lines in such parent or controlling party at least commensurate
with those held by him at the Company immediately prior to such
reorganization) 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 his then
location but shall not cover a relocation to the principal office
prior to a Change in Control; (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
determination of his SERP benefits made by the last sentence of
Section 3.4 and the last sentence of Section 4(a) of Amended and
Restated Exhibit B attached hereto.
(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.
Section 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 his 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").
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 (but subject to the last sentence of
such Section 5(b)), to any Accrued Obligations.
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 his 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 of the Prorated Portion
(as determined in the next sentence) of the earned annual incentive
compensation award for the fiscal year in which the Executive's
termination occurs, payable promptly after the end of such fiscal
year. "Prorated Portion" shall be determined by multiplying such
amount by a fraction, the numerator of which is the number of days
during the fiscal year of termination that the Executive is
employed by the Company, and the denominator of which is, 365.
(b) Continued payment off payroll
for two years (in approximately equal monthly installments) of an
amount equal to two times the sum of (i) the Executive's Base
Salary and (ii) the higher of (x) the Executive's target incentive
compensation established for the fiscal year in which the
Executive's termination occurs or (y) a multiple thereof equal to
the product of such target amount and the multiple of target earned
by the Executive for the prior fiscal year (whether or not
deferred) (the sum of (i) and (ii) being hereinafter referred to as
the "Final Annual Compensation").
(c) Payment of the premium for
COBRA continuation health coverage (whether under the Company's
health plans or those of Williams & Connolly LLP, but in no
event at a premium rate higher than the premiums payable under
COBRA to the Company for the continuation of such health care
coverage as the Executive had in effect with respect to himself and
his family immediately prior to his termination) for the Executive
and the Executive's dependents until the earliest of (i) eighteen
(18) months after such termination, (ii) until no longer eligible
for COBRA continuation benefit coverage or (iii) the Executive
commences other substantially full-time employment.
(d) Payment, within thirty (30)
business days following such termination, of a lump sum amount
equal to the present discounted value of any "Credit Date Payments"
(as described in Section 9 of Amended and Restated
Exhibit B ) then remaining unpaid, with the amount of each such
unpaid Credit Date Payment being discounted back to the date of
payment under this Section 6.3(d) at a discount rate of
5.65% per annum.
6.4 Termination by the Company for
Cause or Termination by the Executive without Good Reason. If
the Executive is terminated by the Company for Cause or the
Executive terminates his employment without Good Reason, the
Executive shall be entitled to receive all Accrued Obligations.
Section 7. No Mitigation/No Offset/Release
(a) In the event of any termination
of employment hereunder, the Executive shall be under no obligation
to seek other employment and there shall be no offset against any
amounts due the Executive under this Agreement on account of any
remuneration attributable to any subsequent employment that the
Executive may obtain. The amounts payable hereunder shall not be
subject to setoff, counterclaim, recoupment, defense or other right
which the Company may have against the Executive or others, except
as specifically set forth in Section 9 hereof or upon obtaining by
the Company of a final unappealable judgment against the
Executive.
(b) Any amounts payable and
benefits or additional rights provided pursuant to Section 6.3 or
Section 8.1 beyond any Accrued Obligations and beyond the sum of
any amounts due (without execution of a release) under the Company
severance program then in effect, or, if greater, three (3) months
Base Salary as severance, shall only be payable if the Executive
delivers to the Company a release of all claims of the Executive
(other than those specifically payable or providable hereunder on
or upon the applicable type of termination and any rights of
indemnification under the Company's organizational documents) with
regard to the Company, its subsidiaries and related entities and
their respective past or present officers, directors and employees
in such form as reasonably requested by the Company.
(c) Upon any termination of
employment, upon the request of the Company, the Executive shall
deliver to the Company a resignation from all offices and
directorships and fiduciary positions of the Executive in which the
Executive is serving with, or at the request of, the Company or its
subsidiaries, affiliates or benefit plans.
(d) The amounts and benefits
provided under Sections 6 and 8 hereof are intended to be inclusive
and not duplicative of the amounts and benefits due under the
Company's employee benefit plans and programs to the extent they
are duplicative.
(e) The intent of the parties is
that all payments hereunder shall be in accordance with Section
409A of the Internal Revenue Code ("Section 409A") and this
Agreement shall be interpreted accordingly. The parties shall
modify this Agreement as necessary to assure such compliance. To
the extent that the Executive is a "Specified Employee," within the
meaning of Section 409A, any payments paid as a result of
separation from service (within the meaning of Section 409A), other
than upon death, shall not be paid until the earlier of six (6)
months after such separation from service and Executive's death
(the "Delay Period") and all payments that otherwise become due
during such Delay Period shall be promptly paid in a lump sum after
it has expired. Furthermore in such situation, to the extent
required by Section 409A, the Executive shall pay the premiums of
all benefits to be provided during the Delay Period and shall
promptly after the end of the Delay Period be reimbursed by the
Company therefor.
8. Change in Control
8.1 Employment Termination in
Connection with a Change in Control. In the event of a
Qualifying Termination (as defined below) during the period
commencing one-hundred eighty (180) days prior to the effective
date of a Change in Control and terminating on the second
anniversary of the effective date of a Change in Control (the
"Change in Control Protection Period"), then in lieu of the
benefits provided to the Executive under Section 6.3 of this
Agreement, but subject to Section 7(e), the Company shall pay the
Executive the following amounts within (except as otherwise
provided) thirty (30) business days of the Qualifying Termination
(or, if later, the effective date of the Change in Control; in
which case any amounts or benefits previously paid pursuant to
Section 6 shall be setoff against those under this Section 8) and
provide the following benefits:
(a) Any Accrued Obligations.
(b) A lump-sum cash payment equal
to three (3) times the highest rate of the Executive's Base Salary
rate in effect at any time up to and including the date of the
Executive's termination.
(c) A lump-sum cash payment equal
to the Prorated Portion of the greater of: (i) the Executive's
target annual incentive compensation award established for the
fiscal year during which the Executive's award termination occurs,
or (ii) the Executive's earned annual incentive award for the
fiscal year prior to the fiscal year in which the Change in Control
occurs (whether or not deferred).
(d) A lump-sum cash payment equal
to three (3) times the greater of: (i) the Executive's highest
annual incentive compensation earned over the three (3) fiscal
years ending prior to the Change in Control (whether or not
deferred); or (ii) the Executive's target incentive compensation
established for the fiscal year in which the Executive's date of
termination occurs.
(e) To the extent the Executive is
eligible, was eligible prior or after the Change in Control or if
the Executive would be eligible with credit for an additional three
(3) years of age and service credit, coverage under all applicable
retiree health and other retiree welfare plans for the Executive
and the Executive's eligible dependents (including an adjustment to
the extent necessary to put the Executive on the same after tax
basis as if the Executive had been eligible for such coverage).
(f) To the extent eligible prior or
after the Change in Control, continued participation, (coordinated
with (e) above to the extent duplicative), at no additional after
tax cost to the Executive than the Executive would have as an
employee, in all welfare plans, until three (3) 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 similar or
improved benefit 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 him than he would have had if the benefits were
provided to him as an employee.
(g) A lump-sum cash payment of the
actuarial present value equivalent (as determined in accordance
with the most favorable (to the Executive) overall actuarial
assumptions and subsidies in any of the Company's tax-qualified or
nonqualified type defined benefit pension plans in which the
Executive then participates) of the accrued benefits accrued by the
Executive as of the date of termination under the terms of any
nonqualified defined benefit type retirement plan, including but
not limited to, the SERP and the SBP, and assuming the benefit was
fully vested without regard to any minimum age or service
requirements. For this purpose, such benefits shall be calculated
under the assumption that the Executive's employment continued
following the date of termination for three (3) full years (i.e.,
three (3) additional years of age (including, but not limited to,
for purposes of determining the actuarial present value but not the
commencement date for calculation of benefits (all of which shall
be deemed to commence on the date of termination)), compensation
(the Executive's "Then Compensation Level") and service credits
shall be added). "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 Exe
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