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AMENDED
AND RESTATED
EMPLOYMENT
AGREEMENT
THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT, is entered into as
of the 26th day of February, 2008, by and between Textron
Inc. (the "Company"), a Delaware corporation having
its principal office at 40 Westminster Street, Providence,
Rhode Island 02903 and Theodore R. French (the
"Executive").
W
I T N E S S E T H:
WHEREAS,
the Company desires to employ the Executive and the Executive
is willing to be employed by the Company; and
WHEREAS,
the Company and the Executive desire to set forth the terms
and conditions of such employment.
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 employ the Executive and the
Executive hereby accepts employment, in accordance with the
terms and conditions set forth herein, for a term (the
"Employment Term") commencing on December 21, 2000 (the
"Effective Date") and terminating, unless otherwise terminated
earlier in accordance with Section 5 hereof, on the third
anniversary of the Effective Date, 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 Chief Financial Officer of the
Company or in such higher capacity as agreed by the Company
and the Executive, and shall be a member of the Management
Committee and the Executive Leadership Team or any successor
body thereto ("ELT"). 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
2 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 and organizational structure of the
Company. 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, provided that these activities
do not materially interfere with the performance of his duties
hereunder or create a potential business conflict or the
appearance thereof.
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.
The
Executive may perform his duties hereunder, when practical, at
his office in Illinois or at such other location where
Executive may reside in the future, provided the performance
of his duties at a location other than the Company's
headquarters does not materially interfere with Executive's
performance of duties hereunder, as determined in good faith
by the Chief Executive Officer.
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
$550,000. 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 therefore at a level commensurate with his
position, provided, however, that the minimum annual target award
payable upon the achievement of reasonably attainable objective
performance goals shall be at least sixty percent (60%) of Base
Salary, with a maximum payment of two hundred percent (200%) of
Executive's target. Executive shall receive a guaranteed
minimum 2001 annual bonus of $330,000, payable in 2002 in
accordance with the provisions of the Company's annual incentive
compensation plan. For (a) 2001 and (b) each year
thereafter, if members of the Management Committee are eligible
therefore, the Executive will have the opportunity to earn an
additional cash bonus under the Textron Quality Management ("TQM")
bonus program of up to fifty percent (50%) of his annual target
incentive.
3.3
Hiring
Bonus. The Company shall pay the Executive a hiring
bonus of $100,000 within five (5) days after the Effective
Date.
3.4
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 therefore
including the following awards:
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(a)
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Options. On
the Effective Date the Company shall grant the Executive stock
options under the Textron Long-Term Incentive Plan (the "Long-Term
Incentive Plan") to purchase seventy thousand (70,000) shares of
the Company's common stock at an exercise price equal to fair
market value at the time of grant (the "Stock
Options"). Fifty percent (50%) of the Stock Options
shall vest on the one year anniversary of the Effective Date and
the remainder shall vest on the second anniversary of the Effective
Date, provided in each case the Executive is then employed by the
Company. The Stock Options shall terminate on the tenth
anniversary of the date of grant. The Stock Options will
be granted pursuant to Non-Qualified Stock Option Award Agreements
or Incentive Stock Option Award Agreements, as applicable and in
each case shall be in all respects subject to the provisions of
such agreements and the Company's Long-Term Incentive Plan except
as otherwise expressly provided for herein.
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(b)
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Performance
Share Units. The Company shall grant the Executive
performance share units ("PSUs") under the Company's Long-Term
Incentive Plan as follows: six thousand (6,000) PSUs for a one (1)
year award period ending December, 2001; seven thousand (7,000)
PSUs for a two (2) year award period ending December, 2002; and
fifteen thousand (15,000) PSUs for a three (3) year award period
ending December, 2003. Commencing with award periods
ending in 2002, Executive shall also have the opportunity to earn
up to an additional one hundred percent (100%) of the value of the
PSUs upon achieving outstanding performance under a special
long-term incentive program (the "Special PSU
Program").
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(c)
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Restricted
Stock. On the Effective Date the Company shall grant the
Executive one hundred thousand (100,000) shares of the Company's
common stock (which shall be dividend bearing), subject to the
following vesting schedule: twenty thousand (20,000) shares shall
vest annually commencing January 1, 2002 and each anniversary
thereafter provided Executive is then employed by the Company (the
"Restricted Stock").
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3.5
Employee
Benefits. (a) 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 the Key Executive Benefits Program
(including the Deferred Income Plan, the Spillover Pension Plan,
the Spillover Savings Plan, the Survivor Benefit Plan, an executive
automobile, club membership and financial planning and tax
preparation), the Company's savings and pension plan and medical
and life insurance.
(b) The
Executive shall also participate in the Supplemental
Retirement Plan for Textron, Inc. Key Executives
(the "SERP"). Under the SERP as in effect on the
Effective Date, the Executive shall be entitled to receive a
single life annuity upon his retirement from the Company at
or after his reaching age sixty-five (65) equal to fifty
percent (50%) of his highest consecutive five (5) year
average compensation. A reduced benefit is
available if the Executive retires from the Company at or
after age sixty (60) and prior to age 65. The cash
value of the PSUs actually paid under the Long-Term Incentive
Plan (but not under the Special PSU Program) shall be treated
as compensation in the year paid for purposes of calculating
the Executive's SERP benefit. The SERP benefit
shall be reduced by any amounts payable to Executive under
any other Company or prior employer defined benefit pension
arrangement.
3.6
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.
3.7
Perquisites. To
the extent legally permissible, the Company shall not treat
perquisites provided to the Executive as income to the
Executive. The Executive shall also be entitled to the
following special perquisites (the "Special
Perquisites"):
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(a)
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Use
of Company Aircraft. The Company shall make good faith
efforts to provide the Executive upon his reasonable request with
use of a Company aircraft for the following travel: (i) commuting
to and from the Executive's primary residence and the Company's
headquarters or other facilities, (ii) business travel to perform
the Executive's duties hereunder and (iii) personal travel with the
Executive's immediate family, provided, however, that, the
Executive must accompany his family unless the Executive's absence
is otherwise approved by the Chief Executive Officer. If
the Company aircraft is unavailable, the Company shall pay the cost
of first-class commercial airline tickets for the
Executive. To the extent any expenses under (i) above
result in imputed income to the Executive, the Company shall fully
gross-up reimbursement to the Executive such that the Executive has
no after tax cost for such aircraft travel. All other
personal travel will be charged to the Executive as imputed income
in accordance with the Company's standard operating
procedures. Personal travel not described in clause (i)
or clause (iii) of this Section 3.7(a) (for example, travel for
non-business reasons by persons other than the Executive and his
immediate family) shall be in accordance with the Company’s
policy for use of Company aircraft. The parties
recognize that in light of the Executive's position the use of the
Company aircraft for personal and family travel is desirable for
security reasons.
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(b)
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Living
Expenses. The Company shall pay the Executive's living
expenses in Providence, Rhode Island, through December 31,
2001. The expenses must be approved by the Chief
Executive Officer (which approval shall not be unreasonably
withheld) and are limited to reasonable costs commensurate with
those expenses customarily associated with a member of the
ELT. To the extent the Company's payment of such living
expenses result in imputed income to the Executive, the Company
shall fully gross-up the Executive such that the Executive has no
after tax cost.
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(c)
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Relocation. The
Company shall pay the Executive's one (1) time relocation costs,
provided that the Company and Executive mutually agree, in good
faith, that such relocation will allow the Executive to more
efficiently and effectively perform his duties
hereunder. The payment of such relocation expenses shall
be made in accordance with the Company's relocation policy for
comparable executive level expenditures and shall include a home
purchase program and full gross-up for all taxes related to the
relocation expenses regardless of whether any such expenses qualify
for tax deductibility.
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3.8
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
senior executive employees generally, provided, however, the right
to change such plans, programs or perquisites shall not in any way
limit Executive's right to claim a Good Reason termination pursuant
to Section 5(f)(v) as a result of any such
change. Notwithstanding the foregoing, the Company shall
not terminate, decrease or alter the Special Perquisites provided
in Section 3.7(a) through (c) without Executive's prior written
consent.
4.
Expenses
Upon
submission of appropriate documentation, in accordance with
its policies in effect from time to time, the Company shall
pay for all ordinary and necessary expenses, in a reasonable
amount, which the Executive incurs during the Employment Term
in performing his duties under this Agreement including
travel, entertainment, and professional dues and
subscriptions. To the extent that any reimbursement
under this paragraph would be includable in the
Executive’s gross income for federal income tax
purposes, the Executive shall submit the necessary
documentation and shall receive the reimbursement no later
than March 15 of the year following the year in which the
expense is incurred.
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:
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(a)
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Automatically
on the date of the Executive's death.
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(b)
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Except
as provided in the following sentence, 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. If the Executive’s Disability
results in a “separation from service” within the
meaning of Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”) (for example, because there is no
reasonable expectation that the Executive will return to perform
services for the Company, or because the permitted time period
under Section 409A for a bona fide leave of absence expires), and
if the Employment Term has not terminated pursuant to the preceding
sentence on or before the date of the Executive’s separation
from service, the Employment Term shall terminate automatically
when the separation from service occurs, without any requirement
for written notice by the Company. The term "Disability"
shall mean, for purposes of this Agreement, the inability of the
Executive, due to any medically determinable physical or mental
impairment, 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, as long as the Executive’s
employment has not been terminated pursuant to this paragraph, 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.
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(c)
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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).
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(d)
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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 ten (10) 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 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.
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(e)
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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 his termination date.
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(f)
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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 (other
than temporarily while Disabled or otherwise incapacitated) of
duties materially inconsistent with the Executive's then position,
authorities, duties, responsibilities, and status (including
offices, titles, and reporting requirements); (ii) any material
reduction in the Executive's then title, position, reporting lines
or a material reduction (other than temporarily while Disabled or
otherwise incapacitated) in his then status, authority, duties or
responsibilities (it being acknowledged by the parties that a
material reduction will occur in the event of a transaction in
which the Company is acquired directly or indirectly by another
entity in such manner that the Company is no longer a "reporting
company" under the Securities Exchange Act of 1934 based on its
common stock being publicly traded, unless Executive becomes Chief
Financial Officer of the ultimate parent entity) or, if then a
director of the Company, failure to be nominated or reelected as a
director of the Company or removal as such, provided, however, that
it is not intended hereby that any incidental reallocation or
reassignment of personnel or minor changes in the areas reporting
to the Executive (so long as such changes are not core functions of
Executive's responsibilities) shall constitute Good Reason for the
Executive's resignation unless the cumulative result of such
actions is to so modify the Executive's role so as to make it
materially different from such role immediately prior to such
actions; (iii) relocation (A) 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 (B) 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, in the case of clause (B),
if the Executive at the time of such relocation is not located at
the principal office of the Company, 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;
(iv) a reduction by the Company in the Executive's Base Salary; (v)
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 that in either case has
a disproportionate adverse aggregate impact on the Executive as
compared to other similarly situated executives; (vi) Executive's
voluntary termination of employment for any reason during the
thirty (30) day period following the one (1) year anniversary of a
Change in Control; (vii) 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 (viii) any other material breach by the Company of
this Agreement.
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(g)
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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
the effective date specified in the Executive’s
notice). 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.
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To the extent that any
payment would be made or any benefit would be provided under
this Agreement as a result of the Executive’s
termination of employment under paragraph (b), (c), (d), (e),
(f), or (g) of this Section 5, the payment or benefit shall
be provided only if the Executive has also incurred a
“separation from service” within the meaning of
Section 409A of the Code; and any timing requirements
associated with the payment or benefit (such as, for example,
a requirement that a payment be delayed for six months
following the Executive’s termination) shall be applied
in relation to the date on which the “separation from
service” occurs for purposes of Section
409A. The preceding sentence shall apply solely to
determine the timing of payments under the Agreement in
compliance with Section 409A. The Agreement is not
intended, and shall not be construed, to require that the
Executive incur a “separation from service”
within the meaning of Section 409A before the Executive or
the Company shall have grounds to terminate the
Executive’s employment under paragraph (b), (c), (d),
(e), (f), or (g) of this Section 5.
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, 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, (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") and
(iv) a pro-rata portion of the annual incentive compensation for
the year of Executive's termination calculated as follows: the
product of the Executive's annual bonus for the calendar year of
the Executive’s termination, multiplied by a fraction, the
numerator of which is the number of days of the current fiscal year
during which Executive was employed by the Company, and the
denominator of which is 365, provided, however, Executive shall
only receive such pro-rata bonus if other senior executives
remaining employed by the Company through the end of such year
receive an annual bonus with respect to such year, and only to the
extent that the applicable corporate performance goals are achieved
(a "Pro Rata Bonus"). In addition, Executive shall be
fully vested in the Stock Options and the Restricted Stock (the
"Special Vesting") and the Company shall pay the COBRA premiums for
eighteen (18) months (or if earlier, until termination of
Executive's health care continuation coverage under the
Company’s group health plans pursuant to sections 601 through
608 of the Employee Retirement Income Security Act of 1974, as
amended ("COBRA Coverage")). The Accrued Obligations
described in clauses (i) and (ii), above, shall be paid on the
first regular payroll date after the Executive’s termination
(or, if earlier, 45 days after the Executive’s
termination). The Pro Rata Bonus shall be paid in a lump
sum on March 1 of the calendar year following the date of the
Executive’s termination.
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, to
any Accrued Obligations and the following:
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(a)
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The
product of the Executive's prior year bonus multiplied by a
fraction, the numerator of which is the number of days of the
current fiscal year during which Executive was employed by the
Company, and the denominator of which is 365 (provided, however,
Executive shall only receive such pro-rata bonus if other senior
executives remaining employed by the Company through the end of
such year receive an annual bonus with respect to such year), paid
in a lump sum on March 1 of the calendar year following the date of
the Executive’s termination.
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(c)
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COBRA
Coverage (as described in Section 6.1) for Executive and his
dependents.
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(d)
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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.
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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:
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(a)
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A
Pro Rata Bonus, paid in a lump sum on March 1 of the calendar year
following the date of the Executive’s
termination.
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(b)
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An
amount equal to two (2) 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
“Final Annual Compensation”). An amount
equal to one and one half (1½) times the Final Annual
Compensation shall be paid in a lump sum on the first regular
payroll date after the end of the six-month period following the
Executive’s termination. An amount equal to the
remaining one half (½) times the Final Annual Compensation
shall be calculated as equal monthly installments payable over a
period of two (2) years; provided, however, that the monthly
installments for the first six months following the
Executive’s termination shall be paid in a lump sum, without
interest, on the first regular payroll date after the end of the
six-month period, and the remaining monthly installments shall
commence on the first regular payroll date after the end of the
sixth month following the Executive’s termination and shall
be paid for the remainder of the two (2) year period.
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(c)
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To
the extent eligible at such time or, if the Executive would be
eligible with credit for an additional two (2) years of age and
service credit, coverage under applicable retiree health and
retiree life insurance plans for the Executive and (in the case of
retiree health coverage) his dependents. If the
Executive is eligible for retiree life insurance coverage only
because of the additional age and service credit, the Executive
shall pay the full cost of purchasing the coverage (under the
Company’s group insurance policy, or under an individual
policy if coverage under the Company’s policy is not
available), and the Company shall reimburse the Executive for the
cost (before tax) of the coverage. The Company shall
reimburse the cost of coverage for the first six months following
the Executive’s termination in a lump sum, without interest,
on the first regular payroll date after the end of the six-month
period, and the Company shall reimburse the cost monthly
thereafter. If not eligible for continued health
coverage under the retiree health plan, Executive and his
dependents shall receive COBRA Coverage as described above in
Section 6.1.
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(d)
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To
the extent eligible on the date of termination, continued
participation, at no additional cost (before tax) to the Executive
than the Executive would have as an employee, in the
Company’s Survivor Benefit Plan for Textron Key Executives,
accidental death and dismemberment insurance coverage, and
dependent life insurance coverage until two (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. The Company
shall also reimburse the Executive for the cost (before tax) of
purchasing (under the Company’s group insurance policy, or
under an individual policy if coverage under the Company’s
policy is not available), for the continuation period described in
the preceding sentence, the level of Company-paid term life
insurance coverage and long-term disability insurance coverage that
the Executive received on the date of termination. The
Company shall reimburse the cost of coverage for the first six
months following the Executive’s termination in a lump sum,
without interest, on the first regular payroll date after the end
of the six-month period, and the Company shall reimburse the cost
monthly thereafter for the remainder of the continuation
period.
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(e)
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Immediate
full vesting of the Stock Options, the Restricted Stock and any
outstanding stock options or other equity award that would vest
within two (2) years after such termination of employment as if the
Executive had continued employment for such two (2) year
period. Payment when it would otherwise be paid in
accordance with the 1994 Long-Term Incentive Plan or any successor
plan of any amount due with regard to performance share units
outstanding on the date of termination. For purposes of
calculating the foregoing amounts, all discretionary performance
targets relating to the Executive's individual performance will be
deemed to be fully achieved and the actual level of achievement of
all financial performance targets will be determined as if the
Executive continued to be employed through the end of the
applicable measuring period. In addition, to the extent
the Stock Options or any other options are exercisable for less
than two and three-quarters (2-3/4) years after the Executive's
termination, the Executive also shall receive a cash payment equal
to the estimated cash value of such options for the lesser of two
and three-quarters (2-3/4) years or the remainder of the respective
terms of such options (calculated in accordance with the same
Black-Scholes methodology used for the Company's then latest
audited financial statements or, if not so used, for internal
valuation of the last stock option grants made by the Company prior
to the termination). The Black-Scholes payment shall be
made in a lump sum, without interest, on the first regular payroll
date after the end of the six-month period following the
Executive’s termination. The terms of the
Executive's outstanding options are deemed to be modified to the
extent required by this Section 6.3(e).
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(f)
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Immediate
full vesting of the Executive's accounts under the Deferred Income
Plan.
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(g)
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To
the extent that with regard to any particular item, the Executive
would receive better treatment under the applicable Company plan or
program, such better treatment shall apply.
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(h)
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If
the Executive dies after the Executive’s termination of
employment and before the end of the six-month period following the
Executive’s termination, any payment provided under this
Section 6.3 that would have been made (in the case of a lump-sum
payment) or that would have commenced (in the case of a periodic
payment) on the first regular payroll date after the end of the
six-month period shall instead be made or commence on the first
regular payroll date following the Executive’s death,
provided that the Executive’s beneficiary is otherwise
entitled to receive the payment under this Section
6.3. To the extent that any payment under this Section
6.3 is made “on the first regular payroll date”
following a date or event, the regular payroll date shall be
determined based on the Company’s payroll cycle applicable to
the Executive at the time of his separation from service (within
the meaning of Section 409A of the Code), without regard to any
change in the payroll cycle that becomes effective after the
Executive’s separation from service.
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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.
6.5
Coordination
With Other Plans. The rules set forth in this Section
6.5 shall apply to all amounts provided under the
Agreement.
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(a)
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To
the extent that the Executive’s Base Salary, annual incentive
compensation, or other amounts payable under this Agreement are
subject to a valid deferral election (or are deferred pursuant to a
plan provision) that had become irrevocable at the time of the
Executive’s termination of employment, the deferred amounts
shall be paid in accordance with the terms of the deferred
compensation arrangement. Any amount payable under this
Agreement that would be regarded as a substitute for an amount that
was deferred as provided in the preceding sentence (for example, a
payment made in lieu of deferred annual incentive compensation)
also shall be paid in accordance with the terms of the deferred
compensation arrangement. This Section 6.5(a) is
intended, and shall be applied, solely to prevent the
Executive’s deferral election or an automatic deferral
provision from being revocable to the extent that its revocation
would violate Section 409A of the Code.
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(b)
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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, and this Agreement shall be applied in a manner
consistent with that intent. To the extent that a
duplicative benefit is provided under this Agreement and under
another employee benefit plan, policy, or program of the Company,
the following rules shall apply:
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(i)
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Any
benefit provided under a retirement plan that is tax-qualified
under Section 401(a) of the Code shall be paid exclusively as
provided under the tax-qualified retirement plan, and the
duplicative benefit provided under this Agreement shall be reduced
by the value of the tax-qualified retirement benefit.
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(ii)
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Any
benefit provided under a disability pay plan, death benefit plan,
bona fide vacation pay plan, or other plan or policy that is
excluded from the definition of “nonqualified deferred
compensation” under Treasury Regulations
§ 1.409A-1(a)(5) shall be paid exclusively as provided
under the plan or policy, and the duplicative benefit provided
under this Agreement shall be reduced by the value of the benefit
provided under the plan or policy.
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(iii)
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To
the extent that a provision of this Agreement makes specific
reference to another plan or program of the Company and states that
the terms of the other plan or program shall govern with respect to
the calculation, payment, or timing of payment of a particular
benefit, that benefit shall be paid as provided in the other plan
or program, as stated in this Agreement.
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(iv)
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In
all other circumstances in which any payment or benefit under this
Agreement duplicates a payment or benefit provided under another
employee benefit plan, policy, or program of the Company, or to the
extent that the payment or benefit under this Agreement is or could
be subject to offset by the benefit under another employee benefit
plan, policy, or program of the Company, the duplicative benefit
shall be paid exclusively as provided in this Agreement, and the
duplicative benefit provided under the other employee benefit plan,
policy, or program shall be reduced by the value of the benefit
provided under this Agreement.
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(v)
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The
benefit coordination provisions in this Section 6.5(b) are
intended, and shall be applied, to ensure that the payments made to
the Executive are exempt from, or comply with, Section 409A of the
Code, and that the coordination of benefits between this Agreement
and the other employee benefit plans, policies, or programs in
which the Executive participates will not result in any
acceleration or re-deferral of deferred compensation that would
violate Section 409A of the Code.
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6.6
The
Executive’s right under this Section 6 to receive any
payments in installments shall be treated as a right to a series of
separate payments for purposes of Section 409A of the Code, as
provided in
Treas. Reg. § 1.409A-2(b)(2)(iii).
7.
No
Mitigation/No Offset/Release
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(a)
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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, or defense. The preceding
sentence shall not limit the Company’s right to enforce the
forfeiture provision in Section 9.6(c).
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(b)
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Any
amounts payable and benefits or additional rights provided pursuant
to Section 6.2, 6.3 or Section 8.2 beyond Accrued Obligations and
amounts or rights due u
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