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EXHIBIT 10.18B
FIRST AMENDMENT
FIRST AMENDMENT (the "First Amendment"), dated as of the 21st day of
December, 2000, to the Employment Agreement dated as of the 23rd day of July,
1998, by and between Stephen L. Key ("Key") and Textron, Inc. (the "Company")
(the "Original Employment Agreement" and, as amended by this First Amendment,
the "Employment Agreement").
W I T N E S S E T H:
WHEREAS, Key and the Company entered into the Original Employment Agreement
pursuant to which Key served the Company as, among other things, Executive Vice
President ("EVP") and Chief Financial Officer ("CFO");
WHEREAS, Key has indicated to the Company his desire to retire from
employment with the Company, and the Company wishes to accommodate Key's desire;
and
WHEREAS, the Company appointed a new CFO effective as of December 22, 2000
(the "CFO Transition Date");
WHEREAS, Key is willing to remain employed by the Company as EVP and CFO
until the CFO Transition Date and, at the Company's option, as EVP of the
Company ("Transition Position") until January 31, 2001 (the "Normal Termination
Date");
WHEREAS, Key and the Company desire to amend the Original Employment
Agreement: (a) to provide Key with certain additional severance benefits so as
to encourage his retention as EVP and CFO until the CFO Transition Date, his
retention in a Transition Position until the Normal Termination Date and his
continuing retention in a Transition Position beyond the
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Normal Transition Date should a Contingent Event (as defined in Exhibit A to the
Employment Agreement) occur, and (b) to document Key's waiver of certain rights,
if any, arising with respect to Key's employment to the date hereof.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in the Original Employment
Agreement and this First Amendment, and of other good and valuable
consideration, the adequacy and receipt of which is acknowledged, the parties
hereto agree as follows:
1. All terms used herein, except as otherwise specifically defined
herein, shall have the same meaning as in the Original Employment Agreement. For
purposes of the First Amendment and the Employment Agreement the term "Good
Reason" shall mean only an event of the type described in such definition in
Section 5(f) of the Original Employment Agreement that occurs from and after the
date hereof and shall not include any such event occurring prior to the date
hereof, each of which such earlier events, if any, are hereby waived by Key as
the basis for any termination pursuant to Section 5(f) of the Employment
Agreement. The term "Agreement" as used in the Employment Agreement shall have
the same meaning as "Employment Agreement."
2. Exhibit A to the Employment Agreement is amended to read as follows:
"1. Pursuant to a letter dated March 21, 1995 (the "Letter"), the
Executive is entitled to the cash equivalent of 20,000 shares of the
Company's common stock (40,000 shares post split) following his retirement
provided he retires from the Company at or after age 60. The number of
shares shall be proportionally adjusted for any increase or decrease in the
number of issued shares of the Company's common stock resulting from a
stock split, stock dividend or any other increase or decrease in such
shares effected without receipt of consideration by the Company. The cash
equivalent will be based on the average of the composite closing price (as
reported on the New York Stock Exchange consolidated tape) of the Company's
common stock for the ten (10) trading days (November 14, 2000 through
November 28, 2000 ($52.25)) immediately preceding the "Trigger Date"
(November 29, 2000) or the ten (10) trading day period starting February
13, 2001 and
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ending February 27, 2001, whichever provides the Executive with the greater
amount, and payment shall be made after the end of the second measuring
period, and FURTHER PROVIDED that, in the event of a Change in Control, if
a Qualified Termination occurs within the protected period under Section 8
of the Employment Agreement, the price, if higher, shall be the highest
closing price per share of the Company's common stock (as reported on the
New York Stock Exchange consolidated tape) during the 30 day period ending
on the date of such Change in Control.
2. Notwithstanding the foregoing age 60 requirement, the payment
provided for in Section 1 of this EXHIBIT A shall vest upon the effective
date of the Executive's termination of employment at any age after the date
hereof as a result of: (a) death (pursuant to Section 5(a) of the
Employment Agreement), (b) Disability (pursuant to Section 5(b) of the
Employment Agreement), (c) a termination of Executive's employment by the
Company without Cause (pursuant to Section 5(e) of the Employment
Agreement), (d) a resignation by the Executive for Good Reason (pursuant to
Section 5(f) of the Employment Agreement), or (e) any termination by
Executive (whether or not for Good Reason) after January 31, 2001 (the
"Normal Termination Date"), PROVIDED, HOWEVER, that if a vacancy occurs in
the CFO position ("Contingent Event") on or prior to the Normal Termination
Date, the term "the earlier of (i) June 1, 2001, and (ii) the appointment
of a new CFO" shall be substituted for "January 31, 2001" in this CLAUSE
(e). Once vested, such payment shall be paid out in a lump sum as provided
for in Section 1 of this EXHIBIT A.
3. Upon a Change in Control the Executive's right to the cash
payment contemplated in Section 1 of this EXHIBIT A shall immediately vest,
but such payment shall not be made until the earlier of (a) a termination
of the Executive's employment thereafter for a reason contemplated by
Section 2 of this EXHIBIT A or (b) a Qualifying Termination within the
protected period provided for in Section 8 of the Employment Agreement.
4. The foregoing award shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, garnishment, execution or levy of any kind, and any attempt to
do so shall not be recognized."
3. Section 6 of the Employment Agreement is amended by the addition of a
new Section 6.5 at the end thereof to read as follows:
"6.5 SPECIAL TERMINATION RULES. (a) In the event Section 6.3 or
Section 8.1 of this Employment Agreement becomes applicable to Executive,
for purposes of the SERP and any other pension or welfare benefit plan of
the Company, the Executive shall be deemed to have satisfied all age and
service requirements for the benefit, shall be treated as if he was the
greatest of his actual age, the minimum required age
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for such benefit or his "Deemed Age" (as defined below) and had service
equal to the greater of his actual service or the minimum required service
for each such benefit, and shall, if Section 8.1 is applicable, be entitled
to immediately commence benefits thereunder, or if Section 6.3 is
applicable, be entitled to commence benefits thereunder at the earlier of
(x) when he otherwise would under the terms of the applicable plan be
entitled to commence such benefit, or (y) upon the ceasing of the payment
of the amounts payable pursuant to Section 6.3(b). Executive's "Deemed Age"
shall be 62 plus one month for each month that Key remains employed as CFO
after January 31, 2001. In the event this provision applies, Section 6.3(e)
of this Agreement shall only apply with regard to the SERP to the extent
the amount of added service and age by virtue of this provision is less
than two and one-half (2 1/2) years. Application of this provision shall
not affect application of Section 8.1(g).
"(b) In the event that Executive voluntarily terminates his employment
for any reason effective on or after January 31, 2001 (PROVIDED, HOWEVER,
that should a Contingent Event occur on or prior to such date, the term
"the earlier of (i) June 1, 2001, and (ii) the appointment of a new CFO"
shall be substituted for "January 31, 2001" in this subsection), Executive
shall be treated as if he terminated his employment for Good Reason, except
that, if such termination would not be covered by Section 8.1, instead of
being entitled to any amount under Section 6.3(b): (y) Executive shall be
entitled to immediately commence retirement benefits pursuant to Section
6.3(e), being treated as if he was the greater of the Deemed Age or the
Executive's actual age, and the Company shall immediately prior to the
termination date contribute to the Executive's stock unit account under the
Company's Deferred Income Plan, without a company matching contribution,
the amount of $720,000, and in addition, if the Executive dies during the
thirty (30) month period following his termination, the Company shall
promptly pay to Executive's estate or designated beneficiary an amount
equal to $22,576.00 times thirty (30) less the number of months between
Executive's date of termination and his death.
"(c) If any benefit or equity plans or grant specifically provides for
benefits or rights in the discretion of the Chief Executive Officer, the
Senior Human Resources Officer or the Board of Directors (or a committee
thereof), such consent shall be deemed given in the event Section 6.3,
including as provided under clause (b) above, or Section 8.1 of the
Employment Agreement becomes applicable becomes applicable at any time
after the date of the First Amendment hereto.
"(d) In the event that Section 6.3, including as provided under clause
(b) above, or Section 8.1 of the Employment Agreement becomes applicable at
any time after the date of the First Amendment hereto, the Executive shall
be treated as if he qualifies as a `retiree' for all benefit plans to the
extent such status would provide him on a benefit by benefit basis with
greater rights than he otherwise would have. The parties acknowledge and
agree that (i) any reference in this Employment Agreement to "welfare
plans" is not intended to include a reference to any long-term disability
plan offered to retirees, and (ii) disability coverage is not being
provided to the Executive in the event that Section 6.3, including as
provided under clause (b) above, or Section 8.1 of the Employment Agreement
becomes applicable.
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4. The Executive agrees that, during the one (1) year period following
any termination of his employment with the Company, the Executive will consult
with and provide information to the Company from time to time upon the Company's
reasonable request with respect to any matter(s) or proceeding(s) arising
thereafter that relate in a material way to the Executive's duties or
responsibilities while employed by the Company or as to which the Executive may
have knowledge or insight as a result of his prior employment by the Company.
The Company will give the Executive reasonable notice of any such request and
shall use commercially reasonable means to avoid any such request's unduly
interfering with the Executive's other activities. The Company will reimburse
the Executive for any out of pocket expenses incurred in connection with
rendering such assistance and shall accord to the Executive in connection with
such activities such indemnification and exculpation protections as would be
accorded him if he were doing so as an officer of the Company.
5. As amended herein, the Employment Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the Executive and the Company have executed this First
Amendment as of the day and year first above written.
/s/ Stephen L. Key
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Stephen L. Key
TEXTRON INC.
By /s/ John D. Butler
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John D. Butler
Executive Vice President Administration
& Chief Human Resources Officer
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