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EXHIBIT 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, is entered into as of this 25th day of May,
1999 by and between Textron Inc. (the "Company"), a Delaware corporation having
its principal office at 00 Xxxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000
and Xxxx X. Xxxxxx (the "Executive").
W I T N E S S E T H:
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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 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
President and Chief Operating Officer 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
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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 the 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.
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 $600,000. 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 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 seventy percent 70% 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
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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.
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.
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
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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.
(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
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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.
(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, reporting lines or a material reduction
(other than temporarily while Disabled or otherwise
incapacitated) in his 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
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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.
(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, 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, 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
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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).
(c) Payment of the premium for COBRA continuation health coverage
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.
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 judgement against the Executive.
(b) Any amounts payable and benefits or additional rights provided
pursuant to
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Section 6.3 or Section 8.1 beyond and 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.
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, 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
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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 earlier of
the Change in Control or the Qualifying Termination 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
earlier of the Change in Control or the Qualifying Termination
(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 earlier, the Qualifying
Termination) 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
(or, if earlier, the Qualifying Termination), 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 Amended and Restated
Supplemental
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Executive Retirement Plan for Textron Inc. Key Executives and
the Supplemental Benefits Plan 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), compensation and service credits
shall be added).
(h) Three (3) times the amount of the maximum Company contribution
or match to any defined contribution type plan in which the
Executive participates.
(i) A lump-sum cash payment of the product of (i) the Interest
Factor (as determined in the next sentence) multiplied by (ii)
the Executive's entire account balance under the Deferred
Income Plan (or any replacement therefor), plus an additional
amount equal to three (3) times the match which the Company
made for the Executive to such plan for the fiscal year ending
immediately prior to the earlier of the Change in Control or
the Qualifying Termination. The "Interest Factor" shall be
equal to one (1) plus three (3) times the rate of earnings of
the Executive's account under such plan for the fiscal year
ending immediately prior to his termination.
(j) Immediate full vesting of any outstanding stock options,
performance share units and other equity awards (and lapse of
any forfeiture provisions) to the extent permitted under the
plan or grant, or if full vesting is not permitted with regard
to stock options, 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 on such unvested options on the date of termination
(or, if later, the date of the Change in Control).
(k) Outplacement services at a level commensurate with the
Executive's position, including use of an executive office and
secretary, for a period of one (1) year commencing on the date
of termination but in no event extending beyond the date on
which the Executive commences other full time employment.
(l) Continuation of participation for three (3) additional years
in the Company's programs with regard to tax preparation
assistance and financial planning assistance, club dues and
automobile (but based on the automobile then being used and no
new one), in accordance with the Company's programs in effect
at the time of the Change in Control.
For purposes of this Section 8, a Qualifying Termination shall mean any
termination of the Executive's employment (i) by the Company without Cause, or
(ii) by the Executive for Good Reason.
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8.2 DEFINITION OF "CHANGE IN CONTROL." A Change in Control of the
Company shall be deemed to have occurred as of the first day any one or more of
the following conditions shall have been satisfied:
(a) Any "person" or "group" (within the meaning of Section 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) other than the Company, any
trustee or other fiduciary holding Company common stock under
an employee benefit plan of the Company or a related company,
or any corporation which is owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of the Company's common stock,
is or becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act) of more than thirty percent (30%) of
the then outstanding voting stock;
(b) During any period of two (2) consecutive years, individuals
who at the beginning of such period constitute the Board and
any new director whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote
of at least two-thirds of the directors then still in office
who either were directors at the beginning of the two year
period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at
least a majority of the Board;
(c) The consummation of a merger or consolidation of the Company
with any other corporation, other than a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or being
converted into voting securities of the surviving entity) more
than fifty percent (50%) of the combined voting securities of
the Company or such surviving entity outstanding immediately
after such merger or consolidation; or
(d) The approval of the stockholders of the Company of a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of its assets.
8.3 EXCISE TAX EQUALIZATION PAYMENT. In the event that the Executive
becomes entitled to payments and/or benefits which would constitute "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, the provisions
of Exhibit A will apply.
9. NONCOMPETITION, CONFIDENTIALITY AND NONDISPARAGEMENT
9.1 AGREEMENT NOT TO COMPETE.
(a) The Executive agrees that for a period of two (2) years after
the termination of
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the Executive's employment, the Executive will not engage in
Competition with the Company with the Listed Companies,
provided that after the Executive's termination of employment
the Listed Companies shall be limited to those effectively
listed at the time of his termination and still on such list
at the time of any alleged activity of the Executive,
including, but not limited to, (i) soliciting customers,
business or orders for, or selling any products and services
in, Competition with the Company for such Listed Companies or
(ii) diverting, enticing, or otherwise taking away customers,
business or orders of the Company, or attempting to do so, in
either case in Competition with the Company for such Listed
Companies.
(b) The Executive agrees that if, while he is receiving severance
pay from the Company pursuant to Section 6.3(b), the
Executive: (i) violates (a) above, or (ii) otherwise engages
in Competition in the Restricted Territory, whether or not
with the Listed Companies, Section 9.6(b) hereof shall apply.
(c) The Executive agrees that the restrictions contained in this
Section 9 are necessary for the protection of the business and
goodwill of the Company because of the trade secrets within
the Executive's knowledge and are considered by the Executive
to be reasonable for such purpose.
9.2 DEFINITIONS.
(a) "Competition" shall mean engaging in, as an employee,
director, partner, principal, shareholder, consultant,
advisor, independent contractor or similar capacity, with (a)
the Listed Companies or (b) in any business, activity or
conduct which directly competes with the business of the
Company, provided that, with regard to the period after
termination of the Executive's employment, Section 9.1(b)(ii)
shall only apply to business lines in which the Company is
engaged both at the time of termination of employment and at
the time of the determination and which during the last fiscal
year ending prior to the date of such termination represented
at least five percent (5%) of the Company's revenues (the
"Prohibited Lines"). Notwithstanding anything else in this
Section 9, Competition shall not include: (A) (i) holding five
percent (5%) or less of an interest in the equity or debt of
any publicly traded company, (ii) engaging in any activity
with the prior written approval of the Chief Executive Officer
or the O&C Committee, (iii) the practice of law in a law firm
that represents entities in Competition with the Company,
provided that the Executive does not personally represent such
entities, or (iv) the employment by, or provision of services
to, an investment banking firm or consulting firm that
provides services to entities that are in Competition with the
Company provided that the Executive does not personally
represent or provide services to such entities that are Listed
Companies or otherwise with regard to businesses in
Competition with the Prohibited Lines,
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or (B) with regard to Section 9.1(b)(ii), (i) being employed
by, or consulting for, a non-Competitive division or business
unit of an entity which is in Competition with the Company
(and participating in such entity's employee equity plans),
(ii) being employed by, or consulting for, an entity which had
annual revenues in the last fiscal year prior to the Executive
being employed by, or consulting for, the entity generated
through business lines in Competition with the Prohibited
Lines of the Company that do not exceed five percent (5%) of
such entity's total annual revenues, provided that revenues
within the Executive's area of responsibility or authority are
not more than ten percent (10%) composed of the revenues from
the businesses in Competition with the Prohibited Lines, or
(iii) any activities conducted after a Change in Control of
the Company.
(b) The Restricted Territory shall mean any geographic area in
which the Company with regard to the Prohibited Lines did more
than nominal business.
(c) Listed Companies shall mean those entities which are within
the "peer group" established by the Company for the
performance graphs in its proxy statement pursuant to Item
402(l) of Regulation S-K under the Exchange Act and which are
in a list of no more than five (5) entities established by the
Company from time to time and available from the Chief Human
Resources Officer, provided that the addition of any entity to
the list shall not be effective until sixty (60) days after it
is so listed.
(d) For purposes of this Section 9, "Company" shall mean the
Company and its subsidiaries and affiliates.
9.3 AGREEMENT NOT TO ENGAGE IN CERTAIN SOLICITATION. The
Executive agrees that the Executive will not, during the Executive's employment
with the Company or during the two (2) year period thereafter, directly or
indirectly, solicit or induce, or attempt to solicit or induce, any non-clerical
employee(s), sales representative(s), agent(s), or consultant(s) of the Company
to terminate such person's employment, representation or other association with
the Company for the purpose of affiliating with any entity with which the
Executive is associated ("Solicitation").
9.4 CONFIDENTIAL INFORMATION.
(a) The Executive specifically acknowledges that any trade secrets
or confidential business and technical information of the
Company or its vendors, suppliers or customers, whether
reduced to writing, maintained on any form of electronic
media, or maintained in mind or memory and whether compiled by
the Executive or the Company (collectively, "Confidential
Information"), derives independent economic value from not
being readily known to or ascertainable by proper means by
others; that reasonable efforts have been made by the Company
to
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maintain the secrecy of such information; that such
information is the sole property of the Company or its
vendors, suppliers, or customers and that any retention, use
or disclosure of such information by the Executive during the
Employment Term (except in the course of performing duties and
obligations of employment with the Company) or any time after
termination thereof, shall constitute misappropriation of the
trade secrets of the Company or its vendors, suppliers, or
customers, provided that Confidential Information shall not
include: (i) information that is at the time of disclosure
public knowledge or generally known within the industry, (ii)
information deemed in good faith by the Executive, while
employed by the Company, desirable to disclose in the course
of performing the Executive's duties, (iii) information the
disclosure of which the Executive in good xxxxx xxxxx
necessary in defense of the Executive's rights provided such
disclosure by the Executive is limited to only disclose as
necessary for such purpose, or (iv) information disclosed by
the Executive to comply with a court, or other lawful
compulsory, order compelling him to do so, provided the
Executive gives the Company prompt notice of the receipt of
such order and the disclosure by the Executive is limited to
only disclosure necessary for such purpose.
(b) The Executive acknowledges that the Company from time to time
may have agreements with other persons or with the United
States Government, or agencies thereof, that impose
obligations or restrictions on the Company regarding
inventions made during the course of work under such
agreements or regarding the confidential nature of such work.
If the Executive's duties hereunder will require disclosures
to be made to him subject to such obligations and
restrictions, the Executive agrees to be bound by them.
9.5 SCOPE OF RESTRICTIONS. If, at the time of enforcement of
this Section 9, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and that
the court shall be allowed to revise the restrictions contained herein to cover
the maximum period, scope and area permitted by law.
9.6 REMEDIES.
(a) In the event of a material breach or threatened material
breach of Section 9.1(a), Section 9.3, Section 9.4 or Section
9.10, the Company, in addition to its other remedies at law or
in equity, shall be entitled to injunctive or other equitable
relief in order to enforce or prevent any violations of the
provisions of this Section 9. Except as specifically provided
with regard to Listed Companies, the Company agrees that it
will not assert to enjoin or otherwise limit the Executive's
activities based on an argument of inevitable disclosure of
confidential
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information.
(b) In the event Section 9.1(b) applies, the Company may
immediately cease payment to the Executive of all future
amounts due under Sections 6.3(a) or (b) as well as otherwise
specifically provided in any other plan, grant or program.
(c) Upon written request of the Executive, the Company shall
within thirty (30) days notify the Executive in writing
whether or not in good faith it believes any proposed
activities would be in Competition and, if it so determines or
does not reply within thirty (30) days, it shall be deemed to
waive any right to treat such activities as Competition unless
the facts are otherwise than as presented by the Executive or
there is a change thereafter in such activities. The Executive
shall promptly provide the Company with such information as it
may reasonably request to evaluate whether or not such
activities are in Competition.
9.7 UNIFORMITY. In no event shall any definitions of
Competition or Solicitation (or a similar provision) as it applies to the
Executive with regard to any plan of program or grant of the Company be
interpreted to be any broader than as set forth in this Section 9.
9.8 DELIVERY OF DOCUMENTS. Upon termination of this Agreement
or at any other time upon request by the Company, the Executive shall promptly
deliver to the Company all records, files, memoranda, notes, designs, data,
reports, price lists, customer lists, drawings, plans, computer programs,
software, software documentation, sketches, laboratory and research notebooks
and other documents (and all copies or reproductions of such materials in his
possession or control) belonging to the Company. Notwithstanding the foregoing,
the Executive may retain his rolodex and similar phone directories
(collectively, the "Rolodex") to the extent the Rolodex does not contain
information other than name, address, telephone number and similar information,
provided that, at the request of the Company, the Executive shall provide the
Company with a copy of the Rolodex.
9.9 NONDISPARAGEMENT.
(a) During the Employment Term and thereafter, the Executive shall
not with willful intent to damage economically or as to
reputation or vindictively disparage the Company, its
subsidiaries or their respective past or present officers,
directors or employees (the "Protected Group"), provided that
the foregoing shall not apply to (i) actions or statements
taken or made by the Executive while employed by the Company
in good faith as fulfilling the Executive's duties with the
Company or otherwise at the request of the Company, (ii)
truthful statements made in compliance with legal process or
governmental inquiry, (iii) as the Executive in good xxxxx
xxxxx necessary to rebut any untrue or misleading public
statements made about him or any other member of the Protected
Group, (iv) statements made in good faith by the Executive to
rebut untrue or misleading statements
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made about him or any other member of the Protected Group by
any member of the Protected Group, and (v) normal commercial
puffery in a competitive business situation. No member of the
Protected Group shall be a third party beneficiary of this
Section 9.9(a).
(b) During the Employment Term and thereafter, neither the Company
officially nor any then member of the Executive Leadership
Team (or the equivalent) of the Company, as such term is
currently used within the Company, shall with willful intent
to damage the Executive economically or as to reputation or
otherwise vindictively disparage the Executive, provided the
foregoing shall not apply to (i) actions or statements taken
or made in good faith within the Company in fulfilling duties
with the Company, (ii) truthful statements made in compliance
with legal process, governmental inquiry or as required by
legal filing or disclosure requirements, (iii) as in good
faith deemed necessary to rebut any untrue or misleading
statements by the Executive as to any member of the Protected
Group, or (iv) normal commercial puffery in a competitive
business situation.
(c) In the event of a material breach or threatened material
breach of clauses (a) or (b) above, the Company or the
Executive, as the case may be, in addition to its or the
Executive's other remedies at law or in equity, shall be
entitled to injunctive or other equitable relief in order to
enforce or prevent any violations of this Section 9.9.
9.10 POOLING OF INTERESTS. If the Company is involved in any
proposed business combination that is contemplated to be accounted for as a
pooling of interests, the Executive agrees to cooperate with the reasonable
requests of the Company with regard to the exercise of stock options, the sale
of Company stock or other matters that could affect the ability of the
combination to be accounted for as a pooling of interests.
100 LIABILITY INSURANCE
The Company shall cover the Executive under directors and
officers liability insurance both during and, while potential liability exists,
after the Employment Term in the same amount and to the same extent, if any, as
the Company covers its other officers and directors.
110 ASSIGNMENT
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11.1 ASSIGNMENT BY THE COMPANY. This Agreement may and shall
be assigned or transferred to, and shall be binding upon and shall inure to the
benefit of, any successor of the Company, and any such successor shall be deemed
substituted for all purposes of the "Company" under the terms of this Agreement.
As used in this Agreement, the term "successor" shall mean any person, firm,
corporation or business entity which at any time, whether by merger, purchase,
or otherwise, acquires all or substantially all of the assets of the Company.
Notwithstanding such assignment, the Company shall remain, with such successor,
jointly and severally liable for all its obligations hereunder. Except as herein
provided, this Agreement may not otherwise be assigned by the Company.
11.2 ASSIGNMENT BY THE EXECUTIVE. This Agreement is not
assignable by the Executive. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors, and
administrators, successors, heirs, distributees, devisees, and legatees. If the
Executive should die while any amounts payable to the Executive hereunder remain
outstanding, all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, in the absence of such designee, to the
Executive's estate.
120 LEGAL REMEDIES
12.1 PAYMENT OF LEGAL FEES. The Company shall pay the
Executive's reasonable legal fees and costs associated with entering into this
Agreement. To the fullest extent permitted by law, the Company shall promptly
pay upon submission of statements all legal and other professional fees, costs
of litigation, prejudgment interest, and other expenses incurred in connection
with any dispute arising hereunder; provided, however, the Company shall be
reimbursed by the Executive for (i) the fees and expenses advanced in the event
the Executive's claim is in a material manner in bad faith or frivolous and the
arbitrator or court, as applicable, determines that the reimbursement of such
fees and expenses is appropriate, or (ii) to the extent that the arbitrator or
court, as appropriate, determines that such legal and other professional fees
are clearly and demonstrably unreasonable.
12.2 ARBITRATION. All disputes and controversies arising under
or in connection with this Agreement, other than the seeking of injunctive or
other equitable relief pursuant to Section 9 hereof, shall be settled by
arbitration conducted before a panel of three (3) arbitrators sitting in New
York City, New York, or such other location agreed by the parties hereto, in
accordance with the rules for expedited resolution of commercial disputes of the
American Arbitration Association then in effect. The determination of the
majority of the arbitrators shall be final and binding on the parties. Judgment
may be entered on the award of the arbitrator in any court having proper
jurisdiction. All expenses of such arbitration, including the fees and expenses
of the counsel of the Executive, shall be borne by the Company and the Executive
shall be entitled to reimbursement of his expenses as provided in Section 12.1
hereof.
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12.3 NOTICE. Any notices, requests, demands, or other
communications provided for by this Agreement shall be sufficient if in writing
and if delivered personally, sent by telecopier, sent by an overnight service or
sent by registered or certified mail. Notice to the Executive not delivered
personally (or by telecopy where the Executive is known to be) shall be sent to
the last address on the books of the Company, and notice to the Company not
delivered personally (or by telecopy to the known personal telecopy of the
person it is being sent to) shall be sent to it at its principal office. All
notices to the Company shall be delivered to the Chief Executive Officer with a
copy to the [senior legal officer]. Delivery shall be deemed to occur on the
earlier of actual receipt or tender and rejection by the intended recipient.
[12.4 CONTINUED PAYMENTS. In the event after a Change in
Control either party files for arbitration to resolve any dispute as to whether
a termination is for Cause or Good Reason, until such dispute is determined by
the arbitrators, the Executive shall continue to be treated economically and
benefit wise in the manner asserted by him in the arbitration effective as of
the date of the filing of the arbitration, subject to the Executive promptly
refunding any amounts paid to him, paying the cost of any benefits provided to
him and paying to the Company the profits in any stock option or other equity
awards exercised or otherwise realized by him during the pendency of the
arbitration which he is ultimately held not to be entitled to; provided the
arbitrators may terminate such payments and benefits in the event that they
determine at any point that the Executive is intentionally delaying conclusion
of the arbitration.]
130 MISCELLANEOUS
13.1 ENTIRE AGREEMENT. This Agreement, except to the extent
specifically provided otherwise herein, supersedes any prior agreements or
understandings, oral or written, between the parties hereto or between the
Executive and the Company, with respect to the subject matter hereof and
constitutes the entire Agreement of the parties with respect to the subject
matter hereof. To the extent any severance plan or program of the Company that
would apply to the Executive is more generous to the Executive than the
provisions hereof, the Executive shall be entitled to any additional payments or
benefits which are not duplicative, but shall otherwise not be eligible for such
plan or program.
13.2 MODIFICATION. This Agreement shall not be varied,
altered, modified, canceled, changed, or in any way amended, nor any provision
hereof waived, except by mutual agreement of the parties in a written instrument
executed by the parties hereto or their legal representatives.
13.3 SEVERABILITY. In the event that any provision or portion
of this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect.
13.4 COUNTERPARTS. This Agreement may be executed in two (2)
or more counterparts, each of which shall be deemed to be an original, but all
of which together will
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constitute one and the same Agreement.
13.5 TAX WITHHOLDING. The Company may withhold from any
benefits payable under this Agreement all federal, state, city, or other taxes
as may be required pursuant to any law or governmental regulation or ruling.
13.6 BENEFICIARIES. The Executive may designate one or more
persons or entities as the primary and/or contingent beneficiaries of any
amounts to be received under this Agreement. Such designation must be in the
form of a signed writing acceptable to the Board or the Board's designee. The
Executive may make or change such designation at any time.
13.7 REPRESENTATION. The Executive represents that the
Executive's employment by the Company and the performance by the Executive of
his obligations under this Agreement do not, and shall not, breach any agreement
that obligates him to keep in confidence any trade secrets or confidential or
proprietary information of his or of any other party, to write or consult to any
other party or to refrain from competing, directly or indirectly, with the
business of any other party. The Executive shall not disclose to the Company,
and the Company shall not request that the Executive disclose, any trade secrets
or confidential or proprietary information of any other party.
140 GOVERNING LAW
The provisions of this Agreement shall be construed and enforced in
accordance with the laws of the state of Delaware, without regard to any
otherwise applicable principles of conflicts of laws.
IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement, as of the day and year first above written.
----------------------------------
TEXTRON INC.
By:-------------------------------
Name:
Title:
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EXHIBIT A
---------
PARACHUTE GROSS UP
------------------
(a) In the event that the Executive shall become entitled to payments
and/or benefits provided by this Agreement or any other amounts in the "nature
of compensation" (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with the Company, any person whose actions result
in a change of ownership or effective control covered by Section 280G(b)(2) of
the Code or any person affiliated with the Company or such person) as a result
of such change in ownership or effective control (collectively the "Company
Payments"), and such Company Payments will be subject to the tax (the "Excise
Tax") imposed by Section 4999 of the Code (and any similar tax that may
hereafter be imposed by any taxing authority) the Company shall pay to the
Executive at the time specified in subsection (d) below an additional amount
(the "Gross-up Payment") such that the net amount retained by the Executive,
after deduction of any Excise Tax on the Company Payments and any U.S. federal,
state, and for local income or payroll tax upon the Gross-up Payment provided
for by this paragraph (a), but before deduction for any U.S. federal, state, and
local income or payroll tax on the Company Payments, shall be equal to the
Company Payments.
(b) For purposes of determining whether any of the Company Payments
and Gross-up Payments (collectively the "Total Payments") will be subject to the
Excise Tax and the amount of such Excise Tax, (x) the Total Payments shall be
treated as "parachute payments" within the meaning of Section 280G(b)(2) of the
Code, and all "parachute payments" in excess of the "base amount" (as defined
under Code Section 280G(b)(3) of the Code) shall be treated as subject to the
Excise Tax, unless and except to the extent that, in the opinion of the
Company's independent certified public accountants appointed prior to any change
in ownership (as defined under Code Section 280G(b)(2)) or tax counsel selected
by such accountants (the "Accountants") such Total Payments (in whole or in
part) either do not constitute "parachute payments," represent reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4) of the Code in excess of the "base amount" or are otherwise not
subject to the Excise Tax, and (y) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Accountants in accordance
with the principles of Section 280G of the Code.
(c) For purposes of determining the amount of the Gross-up Payment,
the Executive shall be deemed to pay U.S. federal income taxes at the highest
marginal rate of U.S. federal income taxation in the calendar year in which the
Gross-up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Executive's residence
for the calendar year in which the Company Payment is to be made, net of the
maximum reduction in U.S. federal income taxes which could be obtained from
deduction of such state and local taxes if paid in such year. In the event that
the Excise Tax is subsequently determined by the Accountants to be less than the
amount taken into account hereunder at the time the Gross-up Payment is made,
the Executive shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the prior Gross-up
Payment attributable to such reduction (plus the portion of the Gross-up
21
Payment attributable to the Excise Tax and U.S. federal, state and local income
tax imposed on the portion of the Gross-up Payment being repaid by the Executive
if such repayment results in a reduction in Excise Tax or a U.S. federal, state
and local income tax deduction), plus interest on the amount of such repayment
at the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the
foregoing, in the event any portion of the Gross-up Payment to be refunded to
the Company has been paid to any U.S. federal, state and local tax authority,
repayment thereof (and related amounts) shall not be required until actual
refund or credit of such portion has been made to the Executive, and interest
payable to the Company shall not exceed the interest received or credited to the
Executive by such tax authority for the period it held such portion. The
Executive and the Company shall mutually agree upon the course of action to be
pursued (and the method of allocating the expense thereof) if the Executive's
claim for refund or credit is denied.
In the event that the Excise Tax is later determined by the Accountant
or the Internal Revenue Service to exceed the amount taken into account
hereunder at the time the Gross-up Payment is made (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-up Payment), the Company shall make an additional Gross-up Payment in
respect of such excess (plus any interest or penalties payable with respect to
such excess) at the time that the amount of such excess is finally determined.
(d) The Gross-up Payment or portion thereof provided for in subsection
(c) above shall be paid not later than the thirtieth (30th) day following an
event occurring which subjects the Executive to the Excise Tax; provided,
however, that if the amount of such Gross-up Payment or portion thereof cannot
be finally determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined in good faith by the
Accountant, of the minimum amount of such payments and shall pay the remainder
of such payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code), subject to further payments pursuant to subsection
(c) hereof, as soon as the amount thereof can reasonably be determined, but in
no event later than the ninetieth day after the occurrence of the event
subjecting the Executive to the Excise Tax. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive, payable on
the fifth day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).
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(e) In the event of any controversy with the Internal Revenue Service
(or other taxing authority) with regard to the Excise Tax, the Executive shall
permit the Company to control issues related to the Excise Tax (at its expense),
provided that such issues do not potentially materially adversely affect the
Executive, but the Executive shall control any other issues. In the event the
issues are interrelated, the Executive and the Company shall in good faith
cooperate so as not to jeopardize resolution of either issue, but if the parties
cannot agree the Executive shall make the final determination with regard to the
issues. In the event of any conference with any taxing authority as to the
Excise Tax or associated income taxes, the Executive shall permit the
representative of the Company to accompany the Executive, and the Executive and
the Executive's representative shall cooperate with the Company and its
representative.
(f) The Company shall be responsible for all charges of the
Accountant.
(g) The Company and the Executive shall promptly deliver to each other
copies of any written communications, and summaries of any verbal
communications, with any taxing authority regarding the Excise Tax covered by
this Exhibit A.
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Attachment A
Xxxx X. Xxxxxx
Restricted Stock Awards
June 1, 1999
"DISABILITY"
------------
"Disability" shall mean, for purposes of this award, 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
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 a
good faith by the Executive (or his representatives) and Textron.
"CAUSE"
-------
"Cause" shall mean: (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 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; or (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); 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 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.
"GOOD REASON"
-------------
"Good Reason" shall mean, 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, reporting lines or a material reduction (other than temporarily while
Disabled or otherwise incapacitated) in his 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 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.
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Attachment A
Page 2
"CHANGE IN CONTROL"
-------------------
A "Change in Control" of the Company shall be deemed to have occurred as of the
first day any one or more of the following conditions shall have been satisfied:
(a) Any "person" or "group" (within the meaning of Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) other than the Company, any trustee or other
fiduciary holding Company common stock under an employee benefit
plan of the Company or a related company, or any corporation which
is owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership
of the Company's common stock, is or becomes the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act) of more than
thirty percent (30%) of the then outstanding voting stock;
(b) During any period of two (2) consecutive years, individuals who at
the beginning of such period constitute the Board and any new
director whose election by the Board or nomination for election by
the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were
directors at the beginning of the two year period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority of the
Board;
(c) The consummation of a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or being converted into voting securities of
the surviving entity) more than fifty percent (50%) of the
combined voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or
(d) The approval of the stockholders of the Company of a plan of
complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of its
assets.
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EXHIBIT B
Xxxx X. Xxxxxx
Restricted Stock Awards
June 1, 1999
The Board of Directors approved an award of 120,000 shares of restricted stock
to Xxxx X. Xxxxxx (the "Executive") under the 1999 Long-Term Incentive Plan.
These awards replace the 48,000 share equivalents retention awards previously
awarded. The terms of the awards are as follows:
* The Executive will be granted restricted shares of Textron common stock
provided he is still employed by Textron in accordance with the following
schedule and EPS from continuing operations increases at an average annual
growth rate of 8% or more over the vesting period using 1998 EPS of $2.68
as the base amount.
RESTRICTED SHARES VESTING DATES
----------------- ----------------
30,000 October 25, 2000 (58th birthday)
30,000 October 25, 2004 (62nd birthday)
15,000 October 25, 2005 (63rd birthday)
15,000 October 25, 2006 (64th birthday)
30,000 October 25, 2007 (65th birthday)
* Textron shall retain the certificates representing the shares of restricted
stock in its possession until such time as all restrictions applicable to
such shares have lapsed.
* Except as otherwise provided herein, the Executive shall not be entitled to
receive the restricted shares if the EPS performance objective for the
respective shares is not achieved or if his employment with Textron ends
for any reason prior to the respective vesting date, provided that if the
Executive's employment ends prior to such date because of his death,
"Disability" (Attachment A), his involuntary termination by Textron without
"Cause" (Attachment A) or by the Executive for "Good Reason" (Attachment
A), the shares shall immediately become fully vested. In the event of such
termination, the shares shall be issued within 30 days following
termination of employment.
* Notwithstanding the above, all unvested shares shall immediately vest upon
a "Change in Control" (Attachment A).
* Effective June 1, 1999 dividends shall be credited to the Executive and
such dividends are to be accounted for as if reinvested in actual Textron
common stock. Such dividends will vest immediately but payment will be
deferred until the earlier of the restricted shares vest date or
termination of employment.
* The number of restricted shares awarded to the Executive hereunder shall be
proportionately adjusted for any increase or decrease in the number of
issued shares of Textron common stock resulting from a stock split, stock
dividend or any other increase or decrease in such share effective without
receipt of consideration by Textron.
* With respect to withholding required upon the lapse of restrictions on the
restricted stock, the Executive may elect, subject to the approval of the
Board, to satisfy the withholding requirement, in whole or in part, by
having Textron withhold shares having a fair market value on the date the
tax is to be determined equal to the minimum statutory total tax which
could be imposed on the transaction. Such election shall be irrevocable,
made in writing, signed by the Executive, and shall be subject to any
restrictions or limitations that the Board in its sole discretion, deems
appropriate.
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Xxxx X. Xxxxxx Date
26
November 1998
EXHIBIT C
Xxxx X. Xxxxxx
Special Pension Arrangement
The provisions of the Executive Supplemental Retirement Plan provide for the
following vesting schedule:
AGE AT RETIREMENT % OF BENEFIT
----------------- ------------
65 100
64 90
63 80
62 70
61 60
60 50
Less than 60 0
The O & C Committee has the authority to use its discretion to provide an
enhanced benefit.
There is full vesting upon a change in control of Textron Inc. The O & C
Committee approved a modification to the definition of change in control to
include the sale of a segment.
Special Arrangement
The following special pension arrangement was approved by the O & C Committee to
amend the Executive Supplemental Retirement Plan vesting schedule:
If Xxxx X. Xxxxxx (the "Executive") is involuntarily terminated other
than for "cause" (as defined in Attachment A) before age 60, the
Executive will receive a pension benefit equal to 25% of the full
benefit (12 1/2% of eligible compensation) under the Executive
Supplemental Retirement Plan.
In such instance, the benefit will be calculated as follows:
* 1996 Compensation will be excluded from the average pay calculation
* 1997 will be the first year included in the average pay calculation
* Average pay will be the greater of:
(1) Eligible compensation for each full and partial calendar year
divided by the number of full and partial years, or
(2) Eligible compensation for each full calendar year divided by
the number of full calendar years.
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Xxxx X. Xxxxxx Date
