[ x ]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
05-0315468
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer [
ü
]
|
Accelerated filer [
]
|
Non-accelerated filer [
]
|
Smaller reporting company [
]
|
Page
|
||||
PART I.
|
FINANCIAL INFORMATION
|
|||
Item 1.
|
||||
3
|
||||
4
|
||||
5
|
||||
Basis of Presentation
|
7
|
|||
Special Charges
|
7
|
|||
Share-based Compensation
|
9
|
|||
Retirement Plans
|
10
|
|||
Discontinued Operations
|
10
|
|||
Comprehensive Income
|
11
|
|||
Income Tax Expense (Benefit)
|
11
|
|||
Earnings per Share
|
11
|
|||
Accounts Receivable and Finance Receivables
|
12
|
|||
Inventories
|
13
|
|||
Debt
|
13
|
|||
Guarantees and Indemnifications
|
13
|
|||
Commitments and Contingencies
|
14
|
|||
Fair Values of Assets and Liabilities
|
14
|
|||
Derivatives
|
17
|
|||
Segment Information
|
19
|
|||
Item 1A.
|
20
|
|||
Item 2.
|
21
|
|||
Item 3.
|
29
|
|||
Item 4.
|
30
|
|||
PART II.
|
OTHER INFORMATION
|
|||
Item 1.
|
30
|
|||
Item 5.
|
31
|
|||
Item 6.
|
32
|
|||
33
|
Three Months Ended
|
||||||||
April 3,
2010
|
April 4,
2009
|
|||||||
Revenues
|
||||||||
Manufacturing revenues
|
$ | 2,134 | $ | 2,404 | ||||
Finance revenues
|
76 | 122 | ||||||
Total revenues
|
2,210 | 2,526 | ||||||
Costs, expenses and other
|
||||||||
Cost of sales
|
1,776 | 1,999 | ||||||
Selling and administrative expense
|
287 | 346 | ||||||
Provision for losses on finance receivables
|
55 | 76 | ||||||
Interest expense
|
71 | 83 | ||||||
Interest income
|
(2 | ) | (1 | ) | ||||
Gain on sale of assets
|
— | (50 | ) | |||||
Special charges
|
12 | 32 | ||||||
Total costs, expenses and other
|
2,199 | 2,485 | ||||||
Income from continuing operations before income taxes
|
11 | 41 | ||||||
Income tax expense (benefit)
|
15 | (2 | ) | |||||
Income (loss) from continuing operations
|
(4 | ) | 43 | |||||
Income (loss) from discontinued operations, net of income taxes
|
(4 | ) | 43 | |||||
Net income (loss)
|
$ | (8 | ) | $ | 86 | |||
Basic earnings per share
|
||||||||
Continuing operations
|
$ | (0.01 | ) | $ | 0.18 | |||
Discontinued operations
|
(0.02 | ) | 0.17 | |||||
Basic earnings per share
|
$ | (0.03 | ) | $ | 0.35 | |||
Diluted earnings per share
|
||||||||
Continuing operations
|
$ | (0.01 | ) | $ | 0.18 | |||
Discontinued operations
|
(0.02 | ) | 0.17 | |||||
Diluted earnings per share
|
$ | (0.03 | ) | $ | 0.35 | |||
Dividends per share
|
||||||||
Common stock
|
$ | 0.02 | $ | 0.02 |
April 3,
2010
|
January 2,
2010
|
|||||||
Assets
|
||||||||
Manufacturing group
|
||||||||
Cash and equivalents
|
$ | 1,430 | $ | 1,748 | ||||
Accounts receivable, net
|
959 | 894 | ||||||
Inventories
|
2,475 | 2,273 | ||||||
Other current assets
|
1,155 | 985 | ||||||
Total current assets
|
6,019 | 5,900 | ||||||
Property, plant and equipment, less accumulated
depreciation and amortization of $2,693 and $2,666
|
1,940 | 1,968 | ||||||
Goodwill
|
1,612 | 1,622 | ||||||
Other assets
|
1,893 | 1,938 | ||||||
Total Manufacturing group assets
|
11,464 | 11,428 | ||||||
Finance group
|
||||||||
Cash and equivalents
|
79 | 144 | ||||||
Finance receivables held for investment, net
|
5,200 | 5,865 | ||||||
Finance receivables held for sale
|
721 | 819 | ||||||
Other assets
|
646 | 684 | ||||||
Total Finance group assets
|
6,646 | 7,512 | ||||||
Total assets
|
$ | 18,110 | $ | 18,940 | ||||
Liabilities and shareholders’ equity
|
||||||||
Liabilities
|
||||||||
Manufacturing group
|
||||||||
Current portion of long-term debt
|
$ | 124 | $ | 134 | ||||
Accounts payable
|
747 | 569 | ||||||
Accrued liabilities
|
1,848 | 2,039 | ||||||
Total current liabilities
|
2,719 | 2,742 | ||||||
Other liabilities
|
3,257 | 3,253 | ||||||
Long-term debt
|
3,422 | 3,450 | ||||||
Total Manufacturing group liabilities
|
9,398 | 9,445 | ||||||
Finance group
|
||||||||
Other liabilities
|
955 | 866 | ||||||
Deferred income taxes
|
105 | 136 | ||||||
Debt
|
4,811 | 5,667 | ||||||
Total Finance group liabilities
|
5,871 | 6,669 | ||||||
Total liabilities
|
15,269 | 16,114 | ||||||
Shareholders’ equity
|
||||||||
Common stock
|
35 | 35 | ||||||
Capital surplus
|
1,355 | 1,369 | ||||||
Retained earnings
|
2,960 | 2,973 | ||||||
Accumulated other comprehensive loss
|
(1,313 | ) | (1,321 | ) | ||||
3,037 | 3,056 | |||||||
Less cost of treasury shares
|
196 | 230 | ||||||
Total shareholders’ equity
|
2,841 | 2,826 | ||||||
Total liabilities and shareholders’ equity
|
$ | 18,110 | $ | 18,940 | ||||
Common shares outstanding
(in thousands)
|
273,230 | 272,272 |
Consolidated
|
||||||||
2010
|
2009
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$ | (8 | ) | $ | 86 | |||
Income (loss) from discontinued operations
|
(4 | ) | 43 | |||||
Income (loss) from continuing operations
|
(4 | ) | 43 | |||||
Adjustments to reconcile income (loss) from continuing operations to net cash
|
||||||||
provided by (used in) operating activities:
|
||||||||
Dividends received from Finance group
|
— | — | ||||||
Capital contributions paid to Finance group
|
— | — | ||||||
Non-cash items:
|
||||||||
Depreciation and amortization
|
90 | 96 | ||||||
Provision for losses on finance receivables held for investment
|
55 | 76 | ||||||
Portfolio losses on finance receivables
|
28 | 10 | ||||||
Other, net
|
31 | 26 | ||||||
Deferred income taxes
|
(13 | ) | (113 | ) | ||||
Changes in assets and liabilities:
|
||||||||
Accounts receivable, net
|
(76 | ) | 41 | |||||
Inventories
|
(211 | ) | (248 | ) | ||||
Other assets
|
45 | (17 | ) | |||||
Accounts payable
|
184 | (97 | ) | |||||
Accrued and other liabilities
|
(297 | ) | (11 | ) | ||||
Captive finance receivables, net
|
78 | 39 | ||||||
Other operating activities, net
|
1 | (6 | ) | |||||
Net cash provided by (used in) operating activities of continuing operations
|
(89 | ) | (161 | ) | ||||
Net cash provided by (used in) operating activities of discontinued operations
|
1 | (8 | ) | |||||
Net cash provided by (used in) operating activities
|
(88 | ) | (169 | ) | ||||
Cash flows from investing activities:
|
||||||||
Finance receivables originated or purchased
|
(145 | ) | (1,205 | ) | ||||
Finance receivables repaid
|
501 | 1,354 | ||||||
Proceeds on receivables sales, including securitizations
|
277 | 59 | ||||||
Capital expenditures
|
(38 | ) | (69 | ) | ||||
Proceeds from sale of repossessed assets and properties
|
32 | 68 | ||||||
Other investing activities, net
|
12 | 13 | ||||||
Net cash provided by (used in) investing activities of continuing operations
|
639 | 220 | ||||||
Net cash provided by investing activities of discontinued operations
|
— | 302 | ||||||
Net cash provided by (used in) investing activities
|
639 | 522 | ||||||
Cash flows from financing activities:
|
||||||||
Decrease in short-term debt
|
— | (1,612 | ) | |||||
Proceeds from long-term lines of credit
|
— | 2,970 | ||||||
Proceeds from issuance of long-term debt
|
20 | 16 | ||||||
Principal payments on long-term debt
|
(936 | ) | (578 | ) | ||||
Intergroup financing
|
— | — | ||||||
Capital contribution paid to Finance group under Support Agreement
|
— | — | ||||||
Capital contribution paid to Cessna Export Finance Corporation
|
— | — | ||||||
Dividends paid
|
(5 | ) | (5 | ) | ||||
Net cash provided by (used in) financing activities of continuing operations
|
(921 | ) | 791 | |||||
Effect of exchange rate changes on cash and equivalents
|
(13 | ) | — | |||||
Net increase (decrease) in cash and equivalents
|
(383 | ) | 1,144 | |||||
Cash and equivalents at beginning of period
|
1,892 | 547 | ||||||
Cash and equivalents at end of period
|
$ | 1,509 | $ | 1,691 |
Manufacturing Group
|
Finance Group
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Cash flows from operating activities:
|
||||||||||||||||
Net income (loss)
|
$ | 31 | $ | 139 | $ | (39 | ) | $ | (53 | ) | ||||||
Income (loss) from discontinued operations
|
(4 | ) | 43 | — | — | |||||||||||
Income (loss) from continuing operations
|
35 | 96 | (39 | ) | (53 | ) | ||||||||||
Adjustments to reconcile income (loss) from continuing operations to
|
||||||||||||||||
net cash provided by (used in) operating activities:
|
||||||||||||||||
Dividends received from Finance group
|
125 | 84 | — | — | ||||||||||||
Capital contributions paid to Finance group
|
(75 | ) | — | — | — | |||||||||||
Non-cash items:
|
||||||||||||||||
Depreciation and amortization
|
82 | 88 | 8 | 8 | ||||||||||||
Provision for losses on finance receivables held for investment
|
— | — | 55 | 76 | ||||||||||||
Portfolio losses on finance receivables
|
— | — | 28 | 10 | ||||||||||||
Other, net
|
27 | 26 | 4 | — | ||||||||||||
Deferred income taxes
|
16 | 8 | (29 | ) | (121 | ) | ||||||||||
Changes in assets and liabilities:
|
||||||||||||||||
Accounts receivable, net
|
(76 | ) | 41 | — | — | |||||||||||
Inventories
|
(207 | ) | (245 | ) | — | — | ||||||||||
Other assets
|
46 | (29 | ) | (4 | ) | 9 | ||||||||||
Accounts payable
|
184 | (97 | ) | — | — | |||||||||||
Accrued and other liabilities
|
(224 | ) | (100 | ) | (73 | ) | 89 | |||||||||
Captive finance receivables, net
|
— | — | — | — | ||||||||||||
Other operating activities, net
|
1 | (6 | ) | — | — | |||||||||||
Net cash provided by (used in) operating activities of continuing operations
|
(66 | ) | (134 | ) | (50 | ) | 18 | |||||||||
Net cash provided by (used in) operating activities of discontinued operations
|
1 | (8 | ) | — | — | |||||||||||
Net cash provided by (used in) operating activities
|
(65 | ) | (142 | ) | (50 | ) | 18 | |||||||||
Cash flows from investing activities:
|
||||||||||||||||
Finance receivables originated or purchased
|
— | — | (226 | ) | (1,325 | ) | ||||||||||
Finance receivables repaid
|
— | — | 660 | 1,513 | ||||||||||||
Proceeds on receivables sales, including securitizations
|
— | — | 277 | 59 | ||||||||||||
Capital expenditures
|
(38 | ) | (69 | ) | — | — | ||||||||||
Proceeds from sale of repossessed assets and properties
|
— | — | 32 | 68 | ||||||||||||
Other investing activities, net
|
(37 | ) | (20 | ) | 28 | 12 | ||||||||||
Net cash provided by (used in) investing activities of continuing operations
|
(75 | ) | (89 | ) | 771 | 327 | ||||||||||
Net cash provided by investing activities of discontinued operations
|
— | 302 | — | — | ||||||||||||
Net cash provided by (used in) investing activities
|
(75 | ) | 213 | 771 | 327 | |||||||||||
Cash flows from financing activities:
|
||||||||||||||||
Decrease in short-term debt
|
— | (869 | ) | (743 | ) | |||||||||||
Proceeds from long-term lines of credit
|
— | 1,230 | — | 1,740 | ||||||||||||
Proceeds from issuance of long-term debt
|
— | — | 20 | 16 | ||||||||||||
Principal payments on long-term debt
|
(11 | ) | (35 | ) | (925 | ) | (543 | ) | ||||||||
Intergroup financing
|
(150 | ) | 133 | 150 | (112 | ) | ||||||||||
Capital contributions paid to Finance group under Support Agreement
|
— | — | 75 | — | ||||||||||||
Capital contributions paid to Cessna Export Finance Corporation
|
— | — | 20 | — | ||||||||||||
Dividends paid
|
(5 | ) | (5 | ) | (125 | ) | (84 | ) | ||||||||
Net cash provided by (used in) financing activities of continuing operations
|
(166 | ) | 454 | (785 | ) | 274 | ||||||||||
Effect of exchange rate changes on cash and equivalents
|
(12 | ) | (2 | ) | (1 | ) | 2 | |||||||||
Net increase (decrease) in cash and equivalents
|
(318 | ) | 523 | (65 | ) | 621 | ||||||||||
Cash and equivalents at beginning of period
|
1,748 | 531 | 144 | 16 | ||||||||||||
Cash and equivalents at end of period
|
$ | 1,430 | $ | 1,054 | $ | 79 | $ | 637 |
(In millions)
|
Severance
Costs
|
Contract
Terminations
|
Total
|
|||||||||
Three Months Ended April 3, 2010
|
||||||||||||
Cessna
|
$ | 8 | $ | 2 | $ | 10 | ||||||
Bell
|
1 | — | 1 | |||||||||
Finance
|
3 | — | 3 | |||||||||
Corporate
|
(2 | ) | — | (2 | ) | |||||||
$ | 10 | $ | 2 | $ | 12 | |||||||
Three Months Ended April 4, 2009
|
||||||||||||
Cessna
|
$ | 26 | $ | — | $ | 26 | ||||||
Industrial
|
1 | — | 1 | |||||||||
Finance
|
2 | 1 | 3 | |||||||||
Corporate
|
2 | — | 2 | |||||||||
$ | 31 | $ | 1 | $ | 32 |
(In millions)
|
Severance
Costs
|
Curtailment Charges, Net
|
Asset Impairments
|
Contract
Terminations and Other
|
Total
|
|||||||||||||||
Cessna
|
$ | 93 | $ | 26 | $ | 54 | $ | 9 | $ | 182 | ||||||||||
Industrial
|
22 | (4 | ) | 9 | 3 | 30 | ||||||||||||||
Bell
|
10 | — | — | — | 10 | |||||||||||||||
Textron Systems
|
6 | 2 | — | 1 | 9 | |||||||||||||||
Finance
|
29 | 1 | 11 | 2 | 43 | |||||||||||||||
Corporate
|
38 | — | — | 1 | 39 | |||||||||||||||
$ | 198 | $ | 25 | $ | 74 | $ | 16 | $ | 313 |
(In millions)
|
Severance
Costs
|
Contract
Terminations
|
Total
|
|||||||||
Balance at January 2, 2010
|
$ | 48 | $ | 3 | $ | 51 | ||||||
Provisions
|
12 | 2 | 14 | |||||||||
Reversals
|
(2 | ) | — | (2 | ) | |||||||
Cash paid
|
(20 | ) | — | (20 | ) | |||||||
Balance at April 3, 2010
|
$ | 38 | $ | 5 | $ | 43 |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
Compensation expense (income)
|
$ | 23 | $ | — | ||||
Hedge expense (income)
|
(2 | ) | 12 | |||||
Income tax expense (benefit)
|
(9 | ) | — | |||||
Total net compensation cost included in net income
|
$ | 12 | $ | 12 |
Three Months Ended
|
||||||||
April 3,
2010
|
April 4,
2009
|
|||||||
Dividend yield
|
0.4 | % | 1.4 | % | ||||
Expected volatility
|
37.0 | % | 50.0 | % | ||||
Risk-free interest rate
|
2.6 | % | 2.0 | % | ||||
Expected lives (
In years
)
|
5.5 | 5.0 |
Number of
Options
(In thousands)
|
Weighted-
Average
Exercise
Price
|
Weighted-
Average
Remaining
Contractual
Life
(In years)
|
||||||||||
Outstanding at beginning of period
|
8,545 | $ | 35.67 | 6 | ||||||||
Granted
|
967 | 20.21 | ||||||||||
Exercised
|
(59 | ) | 19.48 | |||||||||
Canceled, expired or forfeited
|
(155 | ) | 37.57 | |||||||||
Outstanding at end of period
|
9,298 | $ | 34.13 | 6 | ||||||||
Exercisable at end of period
|
7,147 | $ | 36.65 | 5 |
(Shares in thousands)
|
Number of
Shares
|
Weighted-
Average
Grant
Date Fair
Value
|
||||||
Outstanding at beginning of period, nonvested
|
1,290 | $ | 46.02 | |||||
Vested
|
(316 | ) | 40.41 | |||||
Forfeited
|
(29 | ) | 46.44 | |||||
Outstanding at end of period, nonvested
|
945 | $ | 47.88 |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
Subject only to service conditions:
|
||||||||
Value of shares, options or units vested
|
$ | 36 | $ | 34 | ||||
Intrinsic value of cash awards paid
|
8 | — | ||||||
Subject to performance vesting conditions:
|
||||||||
Intrinsic value of cash awards paid
|
5 | 9 | ||||||
Intrinsic value of amounts paid under Deferred Income Plan
|
8 | — |
Pension Benefits
|
Postretirement Benefits
Other Than Pensions
|
|||||||||||||||
(In millions)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Service cost
|
$ | 31 | $ | 33 | $ | 2 | $ | 2 | ||||||||
Interest cost
|
79 | 76 | 8 | 9 | ||||||||||||
Expected return on plan assets
|
(92 | ) | (97 | ) | — | — | ||||||||||
Amortization of prior service cost (credit)
|
4 | 5 | (1 | ) | (1 | ) | ||||||||||
Amortization of net loss
|
9 | 6 | 3 | 2 | ||||||||||||
Net periodic benefit cost
|
$ | 31 | $ | 23 | $ | 12 | $ | 12 |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
Net income (loss)
|
$ | (8 | ) | $ | 86 | |||
Other comprehensive income (loss):
|
||||||||
Recognition of prior service cost and unrealized
losses on pension and postretirement benefits
|
10 | 7 | ||||||
Deferred gains (losses) on hedge contracts
|
7 | (10 | ) | |||||
Foreign currency translation and other
|
(9 | ) | 2 | |||||
Comprehensive income
|
$ | — | $ | 85 |
Three Months Ended
|
||||||||
(In thousands)
|
April 3,
2010
|
April 4,
2009
|
||||||
Basic weighted-average shares outstanding
|
273,174 | 243,988 | ||||||
Dilutive effect of convertible preferred shares, stock options
and restricted stock units
|
— | 968 | ||||||
Diluted weighted-average shares outstanding
|
273,174 | 244,956 |
(In millions)
|
April 3,
2010
|
January 2,
2010
|
||||||
Accounts receivable - Commercial
|
$ | 525 | $ | 470 | ||||
Accounts receivable - U.S. Government contracts
|
456 | 447 | ||||||
Gross accounts receivable
|
981 | 917 | ||||||
Allowance for doubtful accounts
|
(22 | ) | (23 | ) | ||||
Accounts receivable, net
|
$ | 959 | $ | 894 | ||||
Finance receivables held for investment
|
$ | 5,565 | $ | 6,206 | ||||
Allowance for loan losses
|
(365 | ) | (341 | ) | ||||
Finance receivables held for investment, net
|
$ | 5,200 | $ | 5,865 |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
Reserve at the beginning of period
|
$ | 341 | $ | 191 | ||||
Provision for losses
|
55 | 76 | ||||||
Net charge-offs
|
(31 | ) | (47 | ) | ||||
Reserve at the end of period
|
$ | 365 | $ | 220 |
(In millions)
|
April 3,
2010
|
January 2,
2010
|
||||||
Impaired nonaccrual finance receivables
|
$ | 966 | $ | 984 | ||||
Impaired accrual finance receivables
|
158 | 217 | ||||||
Total impaired finance receivables
|
1,124 | 1,201 | ||||||
Less: Impaired finance receivables without identified reserve requirements
|
347 | 362 | ||||||
Impaired nonaccrual finance receivables with identified reserve requirements
|
$ | 777 | $ | 839 | ||||
Allowance for losses on impaired nonaccrual finance receivables
|
$ | 174 | $ | 153 |
(In millions)
|
April 3,
2010
|
January 2,
2010
|
||||||
Finished goods
|
$ | 843 | $ | 735 | ||||
Work in process
|
2,121 | 1,861 | ||||||
Raw materials
|
567 | 613 | ||||||
3,531 | 3,209 | |||||||
Progress/milestone payments
|
(1,056 | ) | (936 | ) | ||||
$ | 2,475 | $ | 2,273 |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
Accrual at the beginning of period
|
$ | 263 | $ | 278 | ||||
Provision
|
38 | 40 | ||||||
Settlements
|
(58 | ) | (63 | ) | ||||
Adjustments to prior accrual estimates
|
(3 | ) | 1 | |||||
Accrual at the end of period
|
$ | 240 | $ | 256 |
(In millions)
|
Borrowing Group
|
April 3,
2010
|
January 2,
2010
|
||||||
Assets
|
|||||||||
Foreign currency exchange contracts
|
Manufacturing
|
$ | 65 | $ | 57 | ||||
Derivative financial instruments
|
Finance
|
60 | 61 | ||||||
Total assets
|
$ | 125 | $ | 118 | |||||
Liabilities
|
|||||||||
Foreign currency exchange contracts
|
Manufacturing
|
$ | 5 | $ | 5 | ||||
Derivative financial instruments
|
Finance
|
3 | 16 | ||||||
Total liabilities
|
$ | 8 | $ | 21 |
(In millions)
|
Balance at
April 3,
2010
|
Gain
(Loss)
|
||||||
Finance receivables held for sale
|
$ | 598 | $ | (10 | ) | |||
Impaired finance receivables
|
510 | (46 | ) | |||||
Other assets
|
67 | (18 | ) |
Impaired Finance Receivables
- Finance receivable impairment is measured by comparing the expected future cash flows discounted at the finance receivable’s effective interest rate, or the fair value of the collateral if the receivable is collateral dependent, with its carrying amount. If the carrying amount is higher, we establish a reserve based on this difference. This evaluation is inherently subjective as it requires estimates, including the amount and timing of future cash flows expected to be received on impaired finance receivables and the underlying collateral that may differ from actual results. Impaired nonaccrual finance receivables are included in the table above since the measurement of required reserves on our impaired finance receivables is significantly dependent on the fair value of the underlying collateral. Fair values of collateral are determined based on the use of appraisals, industry pricing guides, input from market participants, our recent experience selling similar assets or internally developed discounted cash flow models. In the first quarter of 2009, fair value measurements recorded on impaired finance receivables resulted in a $32 million charge to provision for loan losses and primarily were related to initial fair value adjustments.
|
April 3, 2010
|
January 2, 2010
|
|||||||||||||||
(In millions)
|
Carrying Value
|
Estimated
Fair Value
|
Carrying Value
|
Estimated
Fair Value
|
||||||||||||
Manufacturing group:
|
||||||||||||||||
Debt, excluding leases
|
$ | (3,430 | ) | $ | (3,845 | ) | $ | (3,474 | ) | $ | (3,762 | ) | ||||
Finance group:
|
||||||||||||||||
Finance receivables held for investment, excluding leases
|
4,685 | 4,313 | 5,159 | 4,703 | ||||||||||||
Retained interest in securitizations
|
— | — | 6 | 6 | ||||||||||||
Investment in other marketable securities
|
63 | 57 | 68 | 55 | ||||||||||||
Debt
|
(4,811 | ) | (4,640 | ) | (5,667 | ) | (5,439 | ) |
Notional Amount
|
Asset (Liability)
|
||||||||||||||||
(In millions)
|
Borrowing Group
|
April 3,
2010
|
January 2, 2010
|
April 3,
2010
|
January 2, 2010
|
||||||||||||
Assets
|
|||||||||||||||||
Interest rate exchange contracts*
|
Finance
|
$ | 1,305 | $ | 1,333 | $ | 40 | $ | 43 | ||||||||
Cross-currency interest rate exchange contracts
|
Finance
|
140 | 161 | 19 | 18 | ||||||||||||
Foreign currency exchange contracts
|
Manufacturing
|
629 | 696 | 54 | 54 | ||||||||||||
Total in other current or other assets
|
$ | 2,074 | $ | 2,190 | $ | 113 | $ | 115 | |||||||||
Liabilities
|
|||||||||||||||||
Interest rate exchange contracts*
|
Finance
|
$ | 32 | $ | 32 | $ | (3 | ) | $ | (3 | ) | ||||||
Foreign currency exchange contracts
|
Manufacturing
|
49 | 80 | (4 | ) | (5 | ) | ||||||||||
Total in accrued or other liabilities
|
$ | 81 | $ | 112 | $ | (7 | ) | $ | (8 | ) |
(In millions)
|
Gain (Loss) Location
|
2010
|
2009
|
||||||
Interest rate exchange contracts
|
Interest expense
|
$ | 10 | $ | 4 | ||||
Interest rate exchange contracts
|
Finance charges
|
(4 | ) | (2 | ) |
Notional Amount
|
Asset (Liability)
|
||||||||||||||||
(In millions)
|
Borrowing Group
|
April 3,
2010
|
January 2, 2010
|
April 3,
2010
|
January 2, 2010
|
||||||||||||
Foreign currency exchange contracts
|
Finance
|
$ | 258 | $ | 531 | $ | 1 | $ | (13 | ) | |||||||
Foreign currency exchange contracts
|
Manufacturing
|
124 | 224 | 10 | 3 | ||||||||||||
Total
|
$ | 382 | $ | 755 | $ | 11 | $ | (10 | ) |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
REVENUES
|
||||||||
Manufacturing Group
|
||||||||
Cessna
|
$ | 433 | $ | 769 | ||||
Bell
|
618 | 742 | ||||||
Textron Systems
|
458 | 418 | ||||||
Industrial
|
625 | 475 | ||||||
2,134 | 2,404 | |||||||
Finance Group
|
76 | 122 | ||||||
Total revenues
|
$ | 2,210 | $ | 2,526 | ||||
SEGMENT OPERATING PROFIT
|
||||||||
Manufacturing Group
|
||||||||
Cessna
(a)
|
$ | (24 | ) | $ | 90 | |||
Bell
|
74 | 69 | ||||||
Textron Systems
|
55 | 52 | ||||||
Industrial
|
49 | (9 | ) | |||||
154 | 202 | |||||||
Finance Group
|
(58 | ) | (66 | ) | ||||
Segment profit
|
96 | 136 | ||||||
Special charges
|
(12 | ) | (32 | ) | ||||
Corporate expenses and other, net
|
(37 | ) | (35 | ) | ||||
Interest expense, net for Manufacturing group
|
(36 | ) | (28 | ) | ||||
Income from continuing operations before income taxes
|
$ | 11 | $ | 41 |
(a)
|
During the first quarter of 2009, we sold the assets of CESCOM, Cessna’s aircraft maintenance tracking service line, resulting in a pre-tax gain of $50 million.
|
Item 1A
.
|
RISK FACTORS
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
(In millions)
|
April 3,
2010
|
January 2,
2010
|
||||||
Bell
|
$ | 6,853 | $ | 6,903 | ||||
Textron Systems
|
1,442 | 1,664 | ||||||
Cessna
|
4,073 | 4,893 |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
Revenues
|
$ | 433 | $ | 769 | ||||
Segment profit
|
(24 | ) | 90 |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
Revenues
|
$ | 618 | $ | 742 | ||||
Segment profit
|
74 | 69 |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
Revenues
|
$ | 458 | $ | 418 | ||||
Segment profit
|
55 | 52 |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
Revenues
|
$ | 625 | $ | 475 | ||||
Segment profit (loss)
|
49 | (9 | ) |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
Revenues
|
$ | 76 | $ | 122 | ||||
Segment loss
|
(58 | ) | (66 | ) |
(In millions)
|
Revenues
|
Segment
Profit
|
||||||
Lower average finance receivables of $1.5 billion
|
$ | (26 | ) | $ | (11 | ) | ||
Increase in valuation allowance on held for sale portfolio
|
(10 | ) | (10 | ) | ||||
Suspended earnings on nonaccrual finance receivables
|
(8 | ) | (8 | ) | ||||
Decrease in the provision for loan losses
|
— | 21 | ||||||
Lower selling and administrative expenses
|
— | 12 |
(Dollars in millions)
|
April 3, 2010
|
January 2,
2010
|
||||||
Nonaccrual finance receivables
|
$ | 1,032 | $ | 1,040 | ||||
Allowance for losses
|
$ | 365 | $ | 341 | ||||
Ratio of nonaccrual finance receivables to finance receivables held for investment
|
18.54 | % | 16.75 | % | ||||
Ratio of allowance for losses to nonaccrual finance receivables
|
35.34 | % | 32.79 | % | ||||
Ratio of allowance for losses to finance receivables held for investment
|
6.55 | % | 5.49 | % | ||||
60+ days contractual delinquency as a percentage of finance receivables
|
9.33 | % | 9.23 | % | ||||
Operating assets received in satisfaction of troubled loans and leases
|
$ | 115 | $ | 112 | ||||
Repossessed assets and properties
|
$ | 110 | $ | 119 |
(Dollars in millions)
|
April 3, 2010
|
January 2,
2010
|
Manufacturing group
|
||||||||
Cash and equivalents
|
$ | 1,430 | $ | 1,748 | ||||
Total debt
|
$ | 3,546 | $ | 3,584 | ||||
Total equity
|
$ | 2,841 | $ | 2,826 | ||||
Total capital (debt plus equity)
|
$ | 6,387 | $ | 6,410 | ||||
Net debt to capital (net of cash and cash equivalents)
|
42.7 | % | 39.4 | % | ||||
Gross debt to capital
|
55.5 | % | 55.9 | % | ||||
Finance group
|
||||||||
Cash and cash equivalents
|
$ | 79 | $ | 144 | ||||
Securitized off-balance sheet debt
|
$ | — | $ | 31 | ||||
Total debt on-balance sheet
|
$ | 4,811 | $ | 5,667 |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
Net cash used in operating activities of continuing operations – GAAP
|
$ | (66 | ) | $ | (134 | ) | ||
Less: Dividends received from the Finance group
|
(125 | ) | (84 | ) | ||||
Plus: Capital contributions paid to Finance group
|
75 | — | ||||||
Less: Capital expenditures
|
(38 | ) | (69 | ) | ||||
Plus: Proceeds on sale of property, plant and equipment
|
1 | 1 | ||||||
Manufacturing free cash flow – Non-GAAP
|
$ | (153 | ) | $ | (286 | ) |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
Operating activities
|
$ | (66 | ) | $ | (134 | ) | ||
Investing activities
|
(75 | ) | (89 | ) | ||||
Financing activities
|
(166 | ) | 454 |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
Dividends paid by TFC to Textron Inc.
|
$ | 125 | $ | 84 | ||||
Capital contributions paid to TFC under Support Agreement
|
(75 | ) | — |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
Operating activities
|
$ | (50 | ) | $ | 18 | |||
Investing activities
|
771 | 327 | ||||||
Financing activities
|
(785 | ) | 274 |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
Reclassifications from investing activities:
|
||||||||
Finance receivable originations for Manufacturing group inventory sales
|
$ | (81 | ) | $ | (120 | ) | ||
Cash received from customers, sale of receivables and securitizations
|
159 | 159 | ||||||
Capital contributions made to Cessna Export Finance Corp.
|
(20 | ) | — | |||||
Other
|
(1 | ) | — | |||||
Total reclassifications from investing activities
|
57 | 39 | ||||||
Reclassifications from financing activities:
|
||||||||
Capital contribution paid by Manufacturing group to Finance group
|
75 | — | ||||||
Dividends received by Manufacturing group from Finance group
|
(125 | ) | (84 | ) | ||||
Capital contributions made to Cessna Export Finance Corp.
|
20 | — | ||||||
Total reclassifications from financing activities
|
(30 | ) | (84 | ) | ||||
Total reclassifications and adjustments to cash flow from operating activities
|
$ | 27 | $ | (45 | ) |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
Operating activities
|
$ | (89 | ) | $ | (161 | ) | ||
Investing activities
|
639 | 220 | ||||||
Financing activities
|
(921 | ) | 791 |
Three Months Ended
|
||||||||
(In millions)
|
April 3,
2010
|
April 4,
2009
|
||||||
Operating activities
|
$ | 1 | $ | (8 | ) | |||
Investing activities
|
— | 302 |
Item 3
.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4
.
|
CONTROLS AND PROCEDURES
|
Item 1.
|
1.
|
The following persons were elected to serve as directors in Class II for three year terms expiring in 2013 and received the votes listed:
|
For
|
Against
|
Abstain
|
Broker Non-Vote
|
|||||||||||||
Kathleen M. Bader
|
199,051,891.722 | 8,688,338.006 | 2,150,282.631 | 28,708,906 | ||||||||||||
R. Kerry Clark
|
166,650,540.287 | 36,733,492.218 | 6,506,476.854 | 28,708,909 | ||||||||||||
Ivor J. Evans
|
166,044,542.577 | 37,161,722.344 | 6,684,245.438 | 28,708,908 | ||||||||||||
Lord Powell of Bayswater KCMG
|
158,609,957.863 | 44,622,459.140 | 6,658,090.356 | 28,708,911 | ||||||||||||
James L. Ziemer
|
199,577,421.441 | 8,255,875.871 | 2,057,214.047 | 28,708,907 |
2.
|
The amendments to our Amended and Restated 2007 Long-Term Incentive Plan, as amended (the “2007 Plan”), and our 1999 Long-Term Incentive Plan, as amended and restated, to allow for a one-time stock option exchange program for employees other than executive officers were approved by the following vote:
|
For
|
Against
|
Abstain
|
Broker Non-Vote
|
|||||||||||
181,062,416.003 | 26,540,877.792 | 2,287,212.564 | 28,708,912 |
·
|
The definition of “change of control” in the 2007 Plan was amended to require consummation of a transaction, rather than just shareholder approval of a transaction, for a change of control to occur;
|
·
|
The 2007 Plan has been amended to clarify that no future option exchange for cash may be conducted without shareholder approval; and
|
·
|
The 2007 Plan has been amended to prohibit amendments that (i) increase benefits to participants, (ii) increase the number of shares reserved under the plan or (iii) modify the requirements for participation in the plan, without, in any such case, receiving shareholder approval of such amendment.
|
3.
|
The amendment to our Restated Certificate of Incorporation to phase out the classification of the Board of Directors and to provide instead for the annual election of directors, to reflect the current number of directors and to restate the par value of preferred stock to $.01 par value, was approved by the following vote:
|
For
|
Against
|
Abstain
|
Broker Non-Vote
|
|||||||||||
230,645,209.444 | 6,154,224.352 | 1,799,984.563 | 0 |
4.
|
The appointment of Ernst & Young LLP by the Audit Committee as Textron's independent registered public accounting firm for 2010 was ratified by the following vote:
|
For
|
Against
|
Abstain
|
Broker Non-Vote
|
|||||||||||
233,548,265.772 | 3,502,952.730 | 1,548,199.857 | 0 |
101
|
The following materials from Textron Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended April 3, 2010, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows and (iv) Notes to the Consolidated Financial Statements, tagged as blocks of text.
|
TEXTRON INC.
|
|||
Date:
|
April 30, 2010
|
/s/Richard L. Yates
|
|
Richard L. Yates
Senior Vice President and Corporate Controller
(principal accounting officer)
|
3.1
|
Restated Certificate of Incorporation of Textron Inc., as filed with the Secretary of State of Delaware on April 29, 2010
|
3.2
|
Amended and Restated By-Laws of Textron Inc.
|
10.1
|
Textron Inc. Short-Term Incentive Plan (As amended and restated effective January 3, 2010)
|
10.2
|
Deferred Income Plan for Textron Executives, Effective January 3, 2010, including Appendix A, Provisions of the Deferred Income Plan for Textron Key Executives (As in effect before January 1, 2008)
|
10.3
|
Textron Spillover Savings Plan, Effective January 3, 2010, including Appendix A, Defined Contribution Provisions of the Supplemental Benefits Plan for Textron Key Executives (As in effect before January 1, 2008)
|
10.4
|
Textron Spillover Pension Plan, As Amended and Restated Effective January 3, 2010, including Appendix A (as amended and restated effective January 3, 2010), Defined Benefit Provisions of the Supplemental Benefits Plan for Textron Key Executives (As in effect before January 1, 2007)
|
10.5
|
Supplemental Retirement Plan for Textron Key Executives, As Amended and Restated Effective January 3, 2010, including Appendix A, Provisions of the Supplemental Retirement Plan for Textron Key Executives (As in effect before January 1, 2008)
|
10.6
|
Survivor Benefit Plan for Textron Key Executives (As amended and restated effective January 3, 2010)
|
12.1
|
Computation of ratio of income to fixed charges of Textron Inc. Manufacturing Group
|
12.2
|
Computation of ratio of income to fixed charges of Textron Inc. including all majority-owned subsidiaries
|
31.1
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101
|
The following materials from Textron Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended April 3, 2010, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows and (iv) Notes to the Consolidated Financial Statements, tagged as blocks of text.
|
(a)
|
For
any Participant who is eligible to participate in the Plan on the first
day of the performance period, the performance period shall include at
least 12 consecutive months;
|
(b)
|
Performance
goals shall be established no later than 90 days after the beginning of
the performance period, and at a time when it is not substantially certain
that the performance goals will be met. Performance goals may
not be adjusted after the first 90 days of the performance period, except
that the Committee may, consistent with Section 409A, make adjustments it
deems necessary to reflect corporate events, such as recapitalizations or
mergers, that would otherwise affect the performance goals;
and
|
(c)
|
No
Final Award shall be paid unless the pre-established performance goals are
satisfied.
|
DEFERRED
INCOME PLAN
FOR
TEXTRON EXECUTIVES
____________________
Effective
January 3, 2010
|
Introduction
|
1
|
||||
Article
I - Definitions
|
2
|
||||
1.01
|
“Account”
|
2
|
|||
1.02
|
“Beneficiary”
|
2
|
|||
1.03
|
“Board”
|
2
|
|||
1.04
|
“Change
in Control”
|
2
|
|||
1.05
|
“Deferred
Income”
|
3
|
|||
1.06
|
“Eligible
Individual”
|
4
|
|||
1.07
|
“Executive
Plan”
|
4
|
|||
1.08
|
“Interest”
|
4
|
|||
1.09
|
“IRC”
|
4
|
|||
1.1
|
“Key
Executive Plan”
|
4
|
|||
1.11
|
“Participant”
|
4
|
|||
1.12
|
“Plan”
|
4
|
|||
1.13
|
“Schedule
A Participant”
|
4
|
|||
1.14
|
“Schedule
B Participant”
|
4
|
|||
1.15
|
“Separation
From Service”
|
5
|
|||
1.16
|
“Textron”
|
5
|
|||
1.17
|
“Textron
Company”
|
5
|
|||
1.18
|
“Total
Disability”
|
5
|
Deferred Income Plan
for Textron Executives
Effective January 3,
2010
|
Table of
Contents
Page
i
|
1.19
|
“Unforeseeable
Emergency”
|
5
|
|||
Article
II - Enrollment and Deferrals
|
5
|
||||
2.01
|
Initial
Enrollment
|
5
|
|||
2.02
|
Deferral
Election
|
6
|
|||
2.03
|
Deferral
Election Requirements
|
7
|
|||
2.04
|
Non-Elective
Deferred Compensation
|
8
|
|||
2.05
|
Changes
in Deferral Elections
|
9
|
|||
Article
III - Investment Accounts
|
9
|
||||
3.01
|
Investment
Accounts
|
9
|
|||
3.02
|
Moody’s
Account
|
10
|
|||
3.03
|
Stock
Unit Account
|
10
|
|||
3.04
|
Monthly
Adjustments
|
10
|
|||
3.05
|
Transfers
and Distributions From Stock Unit Account
|
11
|
|||
Article
IV - Vesting
|
11
|
||||
4.01
|
Elective
Deferred Income and Automatic Deferred Income
|
11
|
|||
4.02
|
Discretionary
Deferred Income
|
11
|
|||
4.03
|
Textron
Company Contribution
|
11
|
|||
4.04
|
Change
in Control
|
12
|
|||
4.05
|
Vesting
Under Employment Contract.
|
12
|
|||
4.06
|
Forfeiture
of Non-Vested Amounts
|
12
|
|||
Article
V - Payments to Participants
|
12
|
||||
5.01
|
Separation
From Service
|
12
|
|||
5.02
|
Total
Disability
|
12
|
|||
5.03
|
Form
of Payment
|
12
|
|||
5.04
|
Distribution
Elections
|
13
|
5.05
|
Automatic
Lump Sum Payments
|
14
|
|||
5.06
|
Administrative
Adjustments in Payment Date
|
14
|
|||
5.07
|
Distribution
Upon Unforeseeable Emergency
|
14
|
|||
5.08
|
Distribution
Upon Change in Control
|
15
|
|||
5.09
|
Distributions
Before July 25, 2007
|
15
|
|||
Article
VI - Payments to Beneficiaries
|
15
|
||||
6.01
|
Designating
a Beneficiary
|
15
|
|||
6.02
|
Default
Beneficiary
|
15
|
|||
6.03
|
Beneficiary
Who Is Not Legally Competent
|
15
|
|||
6.04
|
Distributions
Upon Death
|
16
|
|||
Article
VII - Unfunded Plan
|
16
|
||||
7.01
|
No
Plan Assets
|
16
|
|||
7.02
|
Top-Hat
Plan Status
|
16
|
|||
Article
VIII - Plan Administration
|
16
|
||||
8.01
|
Plan
Administrator’s Powers
|
16
|
|||
8.02
|
Delegation
of Administrative Authority
|
17
|
|||
8.03
|
Tax
Withholding
|
17
|
|||
8.04
|
Use
of Third Parties to Assist with Plan Administration
|
17
|
|||
8.05
|
Proof
of Right to Receive Benefits
|
17
|
|||
8.06
|
Claims
Procedure
|
17
|
|||
8.07
|
Enforcement
Following a Change in Control
|
18
|
|||
Article
IX - Amendment and Termination
|
19
|
||||
9.01
|
Amendment
|
19
|
|||
9.02
|
Delegation
of Amendment Authority
|
19
|
|||
9.03
|
Termination
|
19
|
Deferred Income Plan
for Textron Executives
Effective January 3,
2010
|
Table of
Contents
Page
iii
|
9.04
|
Distributions
Upon Plan Termination
|
19
|
|||
Article
X - Miscellaneous
|
20
|
||||
10.01
|
Use
of Masculine or Feminine Pronouns
|
20
|
|||
10.02
|
Transferability
of Plan Benefits
|
20
|
|||
10.03
|
Section
409A Compliance
|
21
|
|||
10.04
|
Controlling
State Law
|
21
|
|||
10.05
|
No
Right to Employment
|
21
|
|||
10.06
|
Additional
Conditions Imposed
|
21
|
Deferred Income Plan
for Textron Executives
Effective January 3,
2010
|
Table of
Contents
Page
iv
|
Deferred Income Plan
for Textron Executives
Effective January 3,
2010
|
Page
1
|
1.01
|
“Account”
means the bookkeeping entry used to record deferred income and earnings
credited to a Participant under the Plan. A Participant’s
Account may be divided into sub-accounts, as determined by Textron, to
track earnings on different hypothetical investment funds. All
amounts credited to the Account shall be unfunded obligations of Textron:
no assets shall be set aside or contributed to the Plan for the
Participant’s benefit. A Participant’s Account does not include
deferred income that was earned and vested (within the meaning of IRC
Section 409A) before January 1, 2005, and any subsequent increase that is
permitted to be included in such amount under IRC Section
409A. These amounts are calculated and paid solely as provided
in Appendix A and Appendix B, as
applicable.
|
1.02
|
“Beneficiary”
means the person or persons entitled under this Plan to receive Plan
benefits after a Participant’s death. A Participant’s estate
may also be the Participant’s
Beneficiary.
|
1.03
|
“Board”
means the Board of Directors of
Textron.
|
1.04
|
“Change
in Control” means, for any Participant who was not an employee of a
Textron Company on December 31,
2007:
|
(a)
|
any
“person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the “Act”) and of IRC
Section 409A) other than Textron, any trustee or other fiduciary holding
Textron common stock under an employee benefit plan of Textron or a
related company, or any corporation which is owned, directly or
indirectly, by the stockholders of Textron in substantially similar
proportions as their ownership of Textron common
stock
|
(1)
|
becomes
(other than by acquisition from Textron or a related company) the
“beneficial owner” (as defined in Rule 13d-3 under the Act) of stock of
Textron that, together with other stock held by such person or group,
possesses more than 50% of the combined voting power of Textron’s
then-outstanding voting stock, or
|
(2)
|
acquires
(or has acquired during the 12-month period ending on the date of the most
recent acquisition by such person) beneficial ownership of stock of
Textron possessing more than 30% of the combined voting power of Textron's
then-outstanding stock, or
|
(3)
|
acquires
(or has acquired during the 12-month period ending on the date of the most
recent acquisition by such person) all
or
|
|
substantially
all of the total gross fair market value of all of the assets of Textron
immediately prior to such acquisition or acquisitions (where gross fair
market value is determined without regard to any associated liabilities);
or
|
(b)
|
a
merger or consolidation of Textron with any other corporation occurs,
other than a merger or consolidation that would result in the voting
securities of Textron outstanding immediately before the merger or
consolidation continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity) 50% or
more of the combined voting power of the voting securities of Textron or
such surviving entity outstanding immediately after such merger or
consolidation, or
|
(c)
|
during
any 12-month period, a majority of the members of the Board is replaced by
directors whose appointment or election is not endorsed by a majority of
the members of the Board of Directors before the date of their appointment
or election.
|
1.05
|
“Deferred
Income” means any elective or non-elective deferred compensation credited
to a Participant’s Account under this Plan. A Participant’s
Deferred Income may consist of some or all of the following
amounts:
|
A.
|
Automatic Deferred
Income
: A non-elective deferral of a performance share
unit payout into a Schedule A Participant’s Stock Unit Account to meet
required stock ownership levels established under the Stock Ownership
Guideline Program for Textron
Executives.
|
B.
|
Discretionary Deferred
Income
: A non-elective contribution made at Textron’s
discretion to the Moody’s Account of a Schedule A or Schedule B
Participant.
|
C.
|
Elective Deferred
Income
: A deferral of eligible compensation made at the
election of a Schedule A or Schedule B Participant and credited to the
Moody’s Account, or (in the case of a Schedule A Participant) credited to
the Stock Unit Account at the Participant’s
direction.
|
D.
|
Textron Company
Contribution
: A matching contribution allocated to a
Schedule A Participant’s Stock Unit Account equal to 10% of any Elective
Deferred Income the Schedule A Participant allocates to the Stock Unit
Account.
|
1.06
|
“Eligible
Individual” means a management or highly compensated employee of a Textron
Company (a) who is a United States citizen or resident, (b) who is in a
position designated by Textron as Band 1 or who is selected by Textron to
participate in the Plan, and (c) whose annual base salary exceeds the
indexed dollar limit in effect for the current year under IRC Section
414(q)(1)(B)(i).
|
1.07
|
“Executive
Plan” means the Textron Inc. Deferred Income Plan for Executives, as in
effect before January 1, 2008. The provisions of the Executive
Plan are included in this Plan as Appendix
B.
|
1.08
|
“Interest”
means interest computed under Article III of this
Plan.
|
1.09
|
“IRC”
means the Internal Revenue Code of 1986, as amended. References
to any section of the Internal Revenue Code shall include any final
regulations interpreting that
section.
|
1.10
|
“Key
Executive Plan” means the Deferred Income Plan for Textron Key Executives,
as in effect before January 1, 2008. The provisions of the Key
Executive Plan are included in this Plan as Appendix
A.
|
1.11
|
“Participant”
means a current Schedule A or Schedule B Participant, or a former
Participant whose Account has not been forfeited or fully
distributed.
|
1.12
|
“Plan”
means this Deferred Income Plan for Textron Executives, as amended and
restated from time to time.
|
1.13
|
“Schedule
A Participant” means an Eligible Individual who is participating in the
Plan pursuant to Article II, and who is in a position designated by
Textron as a Band 1 position before the beginning of the calendar
year.
|
1.14
|
“Schedule
B Participant” means an Eligible Individual who is participating in the
Plan pursuant to Article II, and who is either (a) an individual selected
by Textron to participate in the Plan who is not in a Band 1 position
before the beginning of
|
|
the
calendar year, or (b) an employee of a Textron Company who is not
currently in an eligible position, but who made a deferral election under
the Key Executive Plan or the Executive Plan in
2006.
|
1.15
|
“Separation
From Service” means a Participant’s termination of employment with all
Textron Companies, other than by reason of death or Total Disability, that
qualifies as a “separation from service” for purposes of IRC Section
409A.
|
1.16
|
“Textron”
means Textron Inc., a Delaware corporation, and any successor of Textron
Inc.
|
1.17
|
“Textron
Company” means Textron or any company controlled by or under common
control with Textron within the meaning of IRC Section 414(b) or
(c).
|
1.18
|
“Total
Disability” means physical or mental incapacity of a Participant who is
employed by a Textron Company on the disability date, if the incapacity
(a) enables the Participant to receive disability benefits under the
Federal Social Security Act, and (b) also qualifies as a “disability” for
purposes of IRC Section
409A(a)(2)(C).
|
1.19
|
“Unforeseeable
Emergency” means a severe financial hardship (within the meaning of IRC
Section 409A) resulting from any of the
following:
|
(a)
|
an
illness or accident of the Participant or the Participant’s spouse,
beneficiary, or dependent;
|
(b)
|
loss
of the Participant’s property due to casualty (including the need to
rebuild a home following damage to a home not otherwise covered by
insurance, for example, as a result of natural disaster);
or
|
(c)
|
other
similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant which are not covered by
insurance and cannot reasonably be relieved by the liquidation of the
Participant's assets (other than assets deferred
hereunder).
|
2.01
|
Initial
Enrollment
. An Eligible Individual shall complete the
enrollment process established by Textron in order to become a Participant
in the Plan. The enrollment material shall designate the time
and form of distribution for the Participant’s Account, designate the
amount of Elective Deferred Income the Participant chooses to contribute
and (if applicable) the portion allocated to each investment fund, and
identify the Participant’s
Beneficiary.
|
(a)
|
If
the Eligible Individual was not previously eligible to participate in any
other account-based elective deferred compensation arrangement of a
Textron Company that is aggregated with this Plan pursuant to
IRC
|
|
Section
409A, he may enroll in the Plan within thirty (30) days after he first
becomes an Eligible Individual. If the Eligible Individual does
not complete his enrollment within the initial 30-day period, his
enrollment shall not become effective until the beginning of the next
calendar year.
|
(b)
|
If
an Eligible Individual was previously eligible to participate in any other
account-based elective deferred compensation arrangement of a Textron
Company that is aggregated with this Plan pursuant to IRC Section 409A, he
may enroll in the Plan at a time designated by Textron, but not later than
December 31 of the year in which he first becomes an Eligible Individual,
and his enrollment shall not become effective until the beginning of the
next calendar year.
|
(c)
|
If an employee or former employee is not identified in Textron’s
records as a Participant as of December 31, 2008, the individual shall not
be a Participant, and shall not be entitled to receive any benefit under
the Plan, unless the individual either (i) becomes a Participant after
2008 pursuant to Section 2.01, or (ii) is designated by the Board (or by
its designee) as a Participant after 2008.
|
2.02
|
Deferral
Election
. Subject to the requirements set forth in
Section 2.03, a Participant may elect to defer the following
amounts under the Plan:
|
(a)
|
Schedule A
Participants
: A Schedule A Participant may elect to
defer up to 80% of annual incentive compensation under an annual incentive
compensation plan sponsored by Textron; up to 80% of any cash distribution
(other than a dividend, dividend equivalent, or distribution upon exercise
of an option or stock appreciation right) under a shareholder-approved
long term incentive plan of Textron; and up to 80% of any other form of
compensation irrevocably designated in writing by Textron, before the
election deadline for the calendar year in which the compensation is
earned, as being eligible for deferral under the Plan. In
addition, a Schedule A Participant may elect to defer up to 80% of base
salary in his initial year of participation in the Plan, and may elect to
defer up to 25% of base salary in any subsequent year of
participation.
|
(b)
|
Schedule B
Participants
: A Schedule B Participant may elect to
defer up to 80% of annual incentive compensation under an annual incentive
compensation plan sponsored by Textron, and up to 80% of any cash
distribution (other than a distribution upon exercise of an option or
stock appreciation right) under a shareholder-approved long term incentive
plan of Textron. In addition, a Schedule B Participant may
elect to defer up to 80% of any other cash bonus under a cash bonus
program that is irrevocably designated in writing by the CEO, before the
election deadline for the calendar year in which the bonus is earned, as
being eligible for deferral under the
Plan.
|
(c)
|
No Deferral of Gain
Under Stock Rights
. In no event may a Participant defer
cash or stock payable upon exercise of a stock option or stock
appreciation right.
|
2.03
|
Deferral Election
Requirements
. Any deferral election under the Plan shall
be subject to the following
requirements:
|
(a)
|
Initial Deferral
Election
. Except in the case of a timely election to
defer “performance-based compensation” pursuant to subsection (b), below,
a Participant’s initial deferral election under Section 2.01(a) shall
apply only to compensation paid for services to be performed after the
election is made. Except as provided in subsection (b), for a
bonus or other compensation earned over a specified performance period
that commenced before the date of the election, the total compensation
shall be multiplied by the ratio of the number of days remaining in the
performance period after the election to the total number of days in the
performance period, and the resulting portion of the compensation shall be
eligible for deferral pursuant to the Participant’s initial deferral
election.
|
(b)
|
Election
Deadlines
. All deferral elections shall be made at a
time and in a form designated by Textron. Except as provided in
Section 2.05, a deferral election shall become irrevocable at the election
deadline established by Textron.
|
(1)
|
General Election
Deadline
. Textron may establish deadlines that are
permissible under IRC Section 409A for any type of compensation that is
eligible for deferral under the Plan. If no other deadline
applies, the deadline for a deferral election shall be not later than
December 31 of the year preceding the year for which the services are
performed for which the right to the compensation
arises.
|
(2)
|
Performance-Based
Compensation
. The deadline for any election to defer
compensation that is “performance-based compensation” within the meaning
of IRC Section 409A shall be not later than six months before the end of
the performance period, provided that the Participant performs services
continuously from the later of the beginning of the performance period or
the date when the performance criteria are established through the date
when the election is made, and provided further that the compensation has
not become readily ascertainable at the time of the
election.
|
(3)
|
Forfeitable
Rights
. If a Participant has a legally binding right to
a payment in a subsequent year, and the Participant must perform services
for at least 12 months in order to avoid forfeiture of the payment, the
election deadline shall not be later than the 30th
day
|
|
after
the Participant acquires a legally binding right to the payment, provided
that the election is made at least 12 months before the earliest date at
which the forfeiture condition could lapse for a reason other than death,
Total Disability, or Change in Control (and a deferral election made under
this paragraph shall not be effective if the forfeiture condition lapses
for death, Total Disability, or Change in Control less than 12 months
after the date of the election).
|
(c)
|
Minimum
Deferrals
. A Participant may not elect to defer an
amount less than $5,000 for any
year.
|
(d)
|
Change in
Participation Level
. A Participant’s status as a
Schedule A Participant or a Schedule B Participant shall be determined at
the deferral election deadline for any type of compensation. If
a Participant’s status changes, the Participant’s deferral election shall
not be affected by the change in status until the next deferral election
deadline.
|
(e)
|
Renewal of
Elections
. A Schedule A Participant’s election to defer
base salary under the Plan shall be effective only with respect to base
salary earned in the calendar year (or portion of a year, in case of an
initial deferral election) immediately following the election deadline,
and any other deferral election under the Plan shall be effective only
with respect to the particular bonus, award, or other compensation for
which the deferral election is made. The Participant must make
a new deferral election before the applicable deadline in order to defer
compensation earned in a subsequent period. A Participant who
fails to make a valid deferral election on or before the applicable
deadline shall be deemed to have elected not to defer any compensation to
which the deadline applies.
|
2.04
|
Non-Elective Deferred
Compensation
. In addition to any Elective Deferred
Income, a Participant’s Account may be credited with the following types
of non-elective Deferred Income:
|
(a)
|
Automatic Deferred
Income
. A Schedule A Participant’s performance share
unit payout shall automatically be deferred into the Participant’s Stock
Unit Account to the extent necessary to meet required stock ownership
levels established under the Executive Share Ownership
Policy. The amount of Automatic Deferred Income for any year
shall be based on the Schedule A Participant’s required ownership level
and actual or deemed stock ownership at the election deadline that would
apply under IRC Section 409A to an elective deferral of the Schedule A
Participant’s performance share units, and the amount of the Automatic
Deferred Income shall not be altered by any change after the election
deadline in the Schedule A Participant’s required ownership level or
actual or deemed stock ownership.
|
(b)
|
Discretionary Deferred
Income
. A Schedule A or Schedule B Participant may
receive additional contributions made at the discretion of the
Organization and Compensation Committee of the Board, for Schedule A
Participants who are executive officers of Textron, and at the discretion
of Textron, for all other Participants. The document
authorizing the discretionary contribution shall specify the vesting
schedule, if any, that applies to the discretionary
contribution. Any discretionary contribution shall be allocated
solely to a Participant’s Moody’s
Account.
|
(c)
|
Textron Company
Contribution
. A Schedule A Participant shall receive
matching contribution in the Participant’s Stock Unit Account equal to 10%
of any Elective Deferred Income the Schedule A Participant allocates
initially to the Stock Unit
Account.
|
2.05
|
Changes in Deferral
Elections
. A Participant may change his deferral
election prospectively by filing a new deferral election form before the
election deadline established by Textron in accordance with IRC Section
409A, or by failing to file a deferral election by the election deadline
(which will be deemed to be an election not to defer for the subsequent
period). A Participant’s deferral election shall be cancelled
automatically in the following circumstances, effective with the first
payroll period following the event that causes the cancellation, and the
Participant may not make a new deferral election before the next deferral
election deadline:
|
(a)
|
Financial
Hardship
. The Participant receives a distribution on
account of financial hardship of elective deferrals under the Textron
Savings Plan or any other IRC Section 401(k) plan maintained by a Textron
Company, or receives a distribution under this Plan on account of an
Unforeseeable Financial Emergency.
|
(b)
|
Total
Disability
. The Participant incurs a Total
Disability.
|
3.01
|
Investment
Accounts
. For recordkeeping purposes, Textron shall
maintain a Moody’s Account and (in the case of a Schedule A Participant) a
Stock Unit Account, as necessary, to credit hypothetical investment gains
and losses to a Participant’s Account. A Schedule A Participant
may direct the extent to which his Elective Deferred Income (other than
deferrals of base salary) is allocated initially to the Moody’s Account or
the Stock Unit Account. Any deferrals of base salary or
Discretionary Deferred Income of a Schedule A Participant shall be
allocated automatically to the Moody’s Account; any Automatic Deferred
Income or Textron Company Contribution of a Schedule A Participant shall
be allocated automatically to the Stock Unit Account. All
deferrals of a Schedule B Participant shall be allocated automatically to
the Moody’s Account.
|
3.02
|
Moody’s
Account
. The Moody’s Account shall earn interest at a
monthly interest rate that is one twelfth of the average for the calendar
month of the Moody’s Corporate Bond Yield Index as published by Moody’s
Investors Service, Inc. (or any successor thereto), or, if such monthly
yield is no longer published, a substantially similar average selected by
Textron. Interest shall be credited on the last day of each
calendar month on the average daily balance of the Moody’s Account during
the month.
|
3.03
|
Stock Unit
Account
.
|
(a)
|
The
Stock Unit Account shall consist of phantom shares of Textron common
stock. The number of stock units credited to a Schedule A
Participant’s Stock Unit Account as a result of the Automatic Deferred
Income or the deferral of annual incentive compensation or performance
share units shall be determined using the same methodology approved by the
Organization and Compensation Committee of the Board for payment of
performance share units. The number of stock units credited to
a Participant’s Stock Unit Account as a result of any other elective or
non-elective contribution in cash shall be determined by dividing the
amount of Deferred Income credited on the last day of a calendar month by
the average of the composite closing prices of Textron common stock, as
reported in
The Wall
Street Journal
for the month in which the credit is
made.
|
(b)
|
Textron
shall credit additional stock units to a Participant’s Stock Unit Account
to reflect dividend equivalents attributable to the stock units that were
credited to the Participant’s Stock Unit Account on the record
date. The number of additional stock units shall be determined
by dividing the dividend amount by the average of the composite closing
prices of Textron common stock, as reported in
The Wall Street Journal
for the month in which the record date
occurs.
|
(c)
|
The
number of stock units credited to a Participant’s Stock Unit Account shall
be adjusted, without receipt of any consideration by Textron, on account
of any stock split, stock dividend, or similar increase or decrease
affecting Textron common stock, as if the stock units were actual shares
of Textron common stock.
|
(d)
|
All
distributions from the Stock Unit Account shall be made in
cash. No Textron common stock shall be distributed from the
Plan in any circumstance.
|
3.04
|
Monthly
Adjustments
. A Participant’s Moody’s Account and Stock
Unit Account shall be adjusted on the last day of each calendar month to
reflect additional Deferred Income credited to the Account, distributions
from the Account, and investment gains or losses allocated to the
Account.
|
3.05
|
Transfers and
Distributions From Stock Unit Account
. A Participant who
has Separated From Service may elect to transfer all or part of his Stock
Unit Account in cash to his Moody’s Account. The Participant
may elect a transfer once each calendar month, in 5% increments (with a
minimum transfer of 10% of the Stock Unit Account), effective as of the
first calendar day of the month following the minimum notice of three
business days. The cash value transferred will be determined by
multiplying (a) the average of the composite closing prices of Textron
common stock, as reported in
The Wall Street
Journal,
for the ten trading days immediately following the month
in which the election to transfer was made, times (b) the number of whole
and fractional vested stock units credited to the Participant’s Stock Unit
Account on the last day of the calendar month preceding the transfer,
times (c) the percentage being transferred. The same
methodology shall be used to determine the amount of any cash distribution
from the Participant’s Stock Unit
Account.
|
4.01
|
Elective Deferred
Income and Automatic Deferred Income
. A Participant’s
Elective Deferred Income and Automatic Deferred Income shall always be
100% vested.
|
4.02
|
Discretionary Deferred
Income
. Except as provided in Section 4.04, a
Participant’s Discretionary Deferred Income shall vest according to the
schedule established when the Discretionary Deferred Income is credited to
the Participant’s Account.
|
4.03
|
Textron
Company Contribution
. Except as provided in Section 4.04, a
Participant’s Textron Company Contribution, and any dividend equivalents
associated with the Textron Company Contribution, shall vest as
follows
|
(a)
|
50%
of the Textron Company Contribution and associated dividend equivalents
shall vest on December 31 of the calendar year in which the Elective
Deferred Income would have been paid to the Participant if he had not made
a deferral election, but only if the Participant does not have a
Separation From Service before that December 31;
and
|
(b)
|
the
remaining 50% of the Textron Company Contribution and associated dividend
equivalents shall vest on the following December 31, but only if the
Participant does not have a Separation From Service before that December
31.
|
(c)
|
Any
Textron Company Contribution and associated dividend equivalents that have
not vested pursuant to subsections (a) and (b), above, shall become 100%
vested if the Participant’s employment with all Textron Companies ends as
a result of the Participant’s death or Total Disability, or the
Participant’s voluntary retirement after reaching one or more of
the
|
|
following
milestones: (i) age 55 with ten or more years of Textron service; (ii) age
60, or (iii) 20 or more years of Textron
service.
|
4.04
|
Change in
Control
. In the event of a Change in Control, a
Participant’s Account shall become 100% vested if the Participant is
employed by a Textron Company on the date of the Change in
Control.
|
4.05
|
Vesting Under
Employment Contract
. A Participant’s Account, and any
additional benefit the Participant is eligible to receive under Appendix A
or Appendix B, shall become 100% vested to the extent expressly provided
in a written employment contract between the Participant and
Textron.
|
4.06
|
Forfeiture of
Non-Vested Amounts
. Any portion of the Participant’s
Account that is not vested at the time of the Participant’s Separation
From Service shall be forfeited.
|
5.01
|
Separation From
Service
. Subject to Section 5.04(c)(2) (five-year delay
following change in form of payment), upon a Participant’s Separation From
Service, the distribution of the Participant’s Account shall commence (or,
in the case of a lump sum distribution, shall be made) on the later of (a)
the last business day of January following the calendar year of the
Participant’s Separation From Service, or (b) the last business day of the
seventh month following the Participant’s Separation From
Service.
|
5.02
|
Total
Disability
. The distribution of a Participant’s Account
upon Total Disability shall commence (or, in the case of a lump sum
distribution, shall be made) on the later of (a) the last business day of
January following the calendar year of the Participant’s Total Disability,
or (b) the business day that is at least 60 days after the date of the
Participant’s Total Disability.
|
5.03
|
Form of
Payment
. Subject to Section 5.05 (automatic lump-sum
distributions), below, the distribution of a Participant’s Account upon
Separation From Service or Total Disability shall be made in one or a
combination of the following forms:
|
(a)
|
A
lump sum.
|
(b)
|
Annual
installments over a period not exceeding 15 years (or, if less, the number
of whole years in the Participant’s remaining life expectancy, determined
as of the payment commencement date under the Single Life Table in Treas.
Reg. § 1.401(a)(9)-9, Q&A-1), calculated each year by dividing
the Participant’s unpaid account balance as of January 1 of that year by
the remaining number of unpaid installments. Installment
payments shall be made ratably from the Participant’s Moody’s Account and
Stock Unit Account.
|
5.04
|
Distribution
Elections
.
|
(a)
|
A
Participant may make a special election during 2007 to receive the
Participant’s Account under one or a combination of the distribution
options in Section 5.03. The Participant may not make a new
election under this paragraph if the election would accelerate payment of
the Participant’s benefit into the year of the new election, or if the new
election would postpone a distribution that otherwise would be made in
2007. An election under this paragraph shall be made in the
manner prescribed by the Plan Administrator, and the Plan Administrator
may impose conditions in addition to those described in this subsection
(a); but the election shall not be required to comply with the
requirements of subsection (c), below (concerning changes in payment
elections).
|
(b)
|
Any
Participant whose Account is first credited with Deferred Income after
2007 must make a distribution election at the time of the Participant’s
enrollment in the Plan. The Participant’s initial distribution
election, and any change in the Participant’s distribution election under
subsection (c), below, shall apply to the Participant’s entire Account,
including future Deferred Income credited to the Account. If
the Participant elects to receive part of his Account as a lump sum and
part in installments, the Participant must designate what portion of his
Account will be distributed in each form of payment. If a
Participant does not make a valid distribution election at the time of his
initial enrollment, the Participant shall be deemed to have elected a lump
sum payment of his entire Account.
|
(c)
|
After
2007, a Participant may change the form of payment he previously elected
for his Account once (but only once). The Participant’s new
payment election must satisfy the following
requirements:
|
(1)
|
the
new election must be made at least twelve months before the date when
payment of the Account would otherwise commence (and the new election
shall be ineffective if a subsequent event causes the original payment
date to fall within the 12-month
period);
|
(2)
|
the
new election must defer the date on which payment of the Account will
commence by at least five years from the commencement date applicable to
the Participant’s previous election;
and
|
(3)
|
the
new election may not require annual installments to be paid over a period
exceeding 10 years (or, if less, the number of whole years in the
Participant’s remaining life expectancy, determined
as
|
|
of
the payment commencement date under the Single Life Table in Treas. Reg.
§ 1.401(a)(9)-9, Q&A-1).
|
5.05
|
Automatic Lump Sum
Payments
.
|
(a)
|
Cash-Out of Small
Accounts
. If the value of a Participant’s Account at the
time of his Separation From Service or Total Disability is $100,000 or
less, the Participant’s Account shall be paid in a lump sum, even if the
Participant elected to receive
installments.
|
(b)
|
Participants Who
Terminate Before Retirement Eligibility
. A Participant
who first participated in the Plan after 2007 shall be paid in a lump sum
(even if the Participant elected to receive installments) if the
Participant’s Separation From Service or Total Disability occurs before
the earliest of the following dates: (1) the date on which the Participant
reaches at least age 55 and completes at least 10 years of service; (2)
the date on which the Participant reaches at least age 35 and completes at
least 20 years of service; and (3) the date on which the Participant
reaches age 60. In the case of a Participant who first
participated in the Plan before 2008, the automatic lump-sum distribution
described in the preceding sentence shall apply to Deferred Income that
was credited to a Participant’s Account while the Participant was a
Schedule B Participant, and any associated investment gains or losses, but
shall not apply to Deferred Income that was credited to a Participant’s
Account while the Participant was a Schedule A Participant, or to any
associated investment gains or
losses.
|
5.06
|
Administrative
Adjustments in Payment Date
. A payment is treated as
being made on the date when it is due under the Plan if the payment is
made on the due date specified by the Plan, or on a later date that is
either (a) in the same calendar year (for a payment whose specified
due date is on or before September 30), or (b) by the 15th day of the
third calendar month following the date specified by the Plan (for a
payment whose specified due date is on or after October 1). A
payment also is treated as being made on the date when it is due under the
Plan if the payment is made not more than 30 days before the due date
specified by the Plan, provided that the payment is not made earlier than
six months after the Participant’s Separation From Service. A
Participant may not, directly or indirectly, designate the taxable year of
a payment made in reliance on the administrative rules in this Section
5.06.
|
5.07
|
Distribution Upon
Unforeseeable Emergency
. If a Participant incurs a
severe financial hardship as a result of an Unforeseeable Emergency, the
Participant may request a distribution from his vested Account of an
amount that does not exceed the sum of (a) the amount necessary to satisfy
the emergency and (b) the amount necessary to pay taxes or penalties
reasonably anticipated as a result of the distribution. The
amount necessary to satisfy the emergency and to pay the related taxes or
penalties shall be determined after taking into account the
extent
|
|
to
which the financial hardship is or may be relieved through cancellation of
the Participant’s deferral election pursuant to Section 2.05(a); through
reimbursement or compensation by insurance or otherwise; or by liquidation
of the Participant's assets (to the extent the liquidation of such assets
would not itself cause severe financial hardship). Textron may,
in its sole discretion, grant or deny a request for a distribution upon an
Unforeseeable Emergency.
|
5.08
|
Distribution Upon
Change in Control
. Subject to the following sentence, if
a Change in Control also qualifies as a “change in control” under IRC
Section 409A, the Participant’s Account shall be paid in a lump sum in
cash on the first business day of the month following the Change in
Control. If a Participant’s Separation From Service occurred
before the Change in Control, the lump sum payment under this Section 5.08
shall not be made earlier than six months after the Participant’s
Separation From Service.
|
5.09
|
Distributions Before
January 1, 2008
. Distributions after 2004 and before the
effective date of the Plan were made in good faith compliance with IRC
Section 409A and Internal Revenue Service guidance interpreting IRC
Section 409A.
|
6.01
|
Designating a
Beneficiary
. A Participant may designate one or more
Beneficiaries to receive the Participant’s Account after his
death. The designation shall be made in writing on a form
provided by Textron, and shall be subject to any requirements or
conditions Textron imposes. The Participant may change the
Beneficiary designation at any time before the earlier of the
Participant’s death or the complete distribution of the Participant’s
Account. If a Participant’s Account is community property, any
designation of a Beneficiary shall be valid or effective only as permitted
under applicable law. Any valid Beneficiary designation, and
any valid change in a previous Beneficiary designation, shall become
effective when Textron receives and accepts the Beneficiary designation
form. The most recent valid Beneficiary designation in effect
at the time of the Participant’s death shall supersede any previous
Beneficiary designation.
|
6.02
|
Default
Beneficiary
. In the absence of an effective Beneficiary
designation, or if all persons so designated have predeceased the
Participant, the Participant’s Account shall be paid to the Participant’s
surviving spouse. If there is no surviving spouse, the
Participant’s Account shall be paid to the Participant’s natural and
adopted children and their descendants per stirpes or, if there are no
natural or adopted children or their descendants, to the Participant’s
estate.
|
6.03
|
Beneficiary Who Is Not
Legally Competent
. If a Participant’s Beneficiary is a
minor, a person who has been declared incompetent, or a person incapable
of handling the disposition of his property, Textron may pay the
Participant’s Account to the guardian, legal representative, or person
having the care and custody of such Beneficiary. Textron may
require proof of incompetency,
|
|
minority,
incapacity, or guardianship as it deems appropriate prior to distribution
of the Account. Such distribution shall completely discharge any Textron
Company from all liability with respect to such Beneficiary’s interest in
the Account.
|
6.04
|
Distributions Upon
Death
. If a Participant dies before his Account has been
fully distributed, any amount remaining in his Account at his death shall
be paid to his Beneficiary in a lump sum on the first business day of the
first month that begins at least ninety (90) days after the Participant’s
death. If a Beneficiary is receiving installment payments as of
December 31, 2007, any remaining installments due after 2007 shall be
aggregated and paid in a lump sum on the first business day of January
2008.
|
7.01
|
No Plan
Assets
. Benefits provided under this Plan are unfunded
obligations of Textron. Nothing contained in this Plan shall
require Textron to segregate any monies from its general funds, to create
any trust, to make any special deposits, or to purchase any policies of
insurance with respect to such obligations. If Textron elects
to purchase individual policies of insurance on one or more of the
Participants to help finance its obligations under this Plan, such
individual policies and the proceeds of the policies shall at all times
remain the sole property of Textron and neither the Participants whose
lives are insured not their Beneficiaries shall have any ownership rights
in such policies of insurance.
|
7.02
|
Top-Hat Plan
Status
. The Plan is maintained primarily for the purpose
of providing deferred compensation for a select group of management or
highly compensated employees within the meaning of Sections 201(2),
301(a)(3), and 401(a)(1) of the Employee Retirement Income Security Act of
1974, as amended (“ERISA”).
|
8.01
|
Plan Administrator’s
Powers
. Textron shall have all such powers as may be
necessary to carry out the provisions hereof. Textron may from
time to time establish rules for the administration of this Plan and the
transaction of its business. Subject to Section 8.06, any actions by
Textron shall be final, conclusive and binding on each Participant and all
persons claiming by, through or under any Participant. Textron
(and any person or persons to whom it delegates any of its authority as
plan administrator) shall have discretionary authority to determine
eligibility for Plan benefits, to construe the terms of the Plan, and to
determine all questions arising in the administration of the
Plan. The Board may exercise Textron’s authority as plan
administrator, and the authority to administer the Plan may be delegated
as provided in Section 8.02.
|
8.02
|
Delegation of
Administrative Authority
. The Board may, to the extent
permitted by applicable law, make a non-exclusive written delegation of
the authority to administer the Plan to a committee of the Board or to one
or more officers of Textron. The Board may, to the extent
permitted by applicable law, authorize a committee of the Board or officer
of Textron to make a further delegation of the authority to administer the
Plan.
|
8.03
|
Tax
Withholding
. Textron may withhold from benefits paid
under this Plan any taxes or other amounts required by law to be
withheld. Textron may deduct from the undistributed portion of
a Participant’s benefit any employment tax that Textron reasonably
determines to be due with respect to the benefit under the Federal
Insurance Contributions Act (FICA), and an amount sufficient to pay the
income tax withholding related to such FICA tax. Alternatively,
Textron may require the Participant or Beneficiary to remit to Textron or
its designee an amount sufficient to satisfy any applicable federal,
state, and local income and employment tax with respect to the
Participant’s benefit. The Participant or Beneficiary shall
remain responsible at all times for paying any federal, state, or local
income or employment tax with respect to any benefit under this
Plan. In no event shall Textron or any employee or agent of
Textron be liable for any interest or penalty that a Participant or
Beneficiary incurs by failing to make timely payments of
tax.
|
8.04
|
Use of Third Parties
to Assist with Plan Administration
. Textron may employ
or engage such agents, accountants, actuaries, counsel, other experts and
other persons as it deems necessary or desirable in connection with the
interpretation and administration of this Plan. Textron and its
committees, officers, directors and employees shall not be liable for any
action taken, suffered or omitted by them in good faith in reliance upon
the advice or opinion of any such agent, accountant, actuary, counsel or
other expert. All action so taken, suffered or omitted shall be
conclusive upon each of them and upon all other persons interested in this
Plan.
|
8.05
|
Proof of Right to
Receive Benefits
. Textron may require proof of death or
Total Disability of any Participant and evidence of the right of any
person to receive any Plan benefit.
|
8.06
|
Claims
Procedure
. A Participant or Beneficiary who believes
that he is being denied a benefit to which he is entitled under the Plan
(referred to in this Section 8.06 as a “Claimant”) may file a written
request with Textron setting forth the claim. Textron shall
consider and resolve the claim as set forth
below.
|
(a)
|
Time for
Response
. Upon receipt of a claim, Textron shall advise
the Claimant that a response will be forthcoming within 90
days. Textron may, however, extend the response period for up
to an additional 90 days for reasonable cause, and shall notify the
Claimant of the reason for the
|
|
extension
and the expected response date. Textron shall respond to the
claim within the specified period.
|
(b)
|
Denial
. If
the claim is denied in whole or part, Textron shall provide the Claimant
with a written decision, using language calculated to be understood by the
Claimant, setting forth (1) the specific reason or reasons for such
denial; (2) the specific reference to relevant provisions of this Plan on
which such denial is based; (3) a description of any additional material
or information necessary for the Claimant to perfect his claim and an
explanation why such material or such information is necessary; (4)
appropriate information as to the steps to be taken if the Claimant wishes
to submit the claim for review; (5) the time limits for requesting a
review of the claim; and (6) the Claimant’s right to bring an action for
benefits under Section 502(a) of
ERISA.
|
(c)
|
Request for
Review
. Within 60 days after the Claimant’s receipt of
the written decision denying the claim in whole or in part, the Claimant
may request in writing that Textron review the
determination. The Claimant or his duly authorized
representative may, but need not, review the relevant documents and submit
issues and comment in writing for consideration by Textron. If
the Claimant does not request a review of the initial determination within
such 60-day period, the Claimant shall be barred from challenging the
determination.
|
(d)
|
Review of Initial
Determination
. Within 60 days after Textron receives a
request for review, it will review the initial
determination. If special circumstances require that the 60-day
time period be extended, Textron will so notify the Claimant and will
render the decision as soon as possible, but no later than 120 days after
receipt of the request for review.
|
(e)
|
Decision on
Review
. All decisions on review shall be final and
binding with respect to all concerned parties. The decision on
review shall set forth, in a manner calculated to be understood by the
Claimant, (1) the specific reasons for the decision, shall including
references to the relevant Plan provisions upon which the decision is
based; (2) the Claimant’s right to receive, upon request and free of
charge, reasonable access to and copies of all documents, records, and
other information, relevant to his benefits; and (3) the Claimant’s right
to bring an action for benefits under Section 502(a) of
ERISA.
|
8.07
|
Enforcement Following
a Change in Control
. If, after a Change in Control, any
claim is made or any litigation is brought by a Participant or Beneficiary
to enforce or interpret any provision contained in this Plan, Textron and
the “person” or “group” described in Section 1.04 shall be liable, jointly
and severally, to reimburse the Participant or Beneficiary for the
Participant’s or Beneficiary’s reasonable attorney’s fees and costs
incurred during the Participant’s
or
|
Deferred Income Plan
for Textron Executives
Effective January 3,
2010
|
Page
18
|
|
Beneficiary’s
lifetime in pursuing any such claim or litigation, and to pay prejudgment
interest at the Prime Rate as quoted in the Money Rates section of
The Wall Street Journal
on any money award or judgment obtained by the Participant or Beneficiary,
payable at the same time as the underlying award or
judgment. Any reimbursement pursuant to the preceding sentence
shall be paid to the Participant no earlier than six months after the
Participant’s Separation From Service, and shall be paid to the
Participant or Beneficiary no later than the end of the calendar year
following the year in which the expense was incurred. The
reimbursement shall not be subject to liquidation or exchange for another
benefit, and the amount of reimbursable expense incurred in one year shall
not affect the amount of reimbursement available in another
year.
|
9.01
|
Amendment
. Subject
to paragraphs (a) and (b) below, the Board shall have the right to amend,
modify, or suspend this Plan at any time by written resolution or other
formal action reflected in writing.
|
(a)
|
No
amendment, modification, or suspension shall reduce the amount credited to
a Participant’s Account immediately before the effective date of the
amendment, modification, or
suspension.
|
(b)
|
Following
a Change in Control, no amendment, modification, or suspension shall be
made that directly or indirectly reduces any right or benefit provided
upon a Change in Control.
|
9.02
|
Delegation of
Amendment Authority
. The Board may, to the extent
permitted by applicable law, make a non-exclusive written delegation of
the authority to amend the Plan to a committee of the Board or to one or
more officers of Textron. The Board may, to the extent
permitted by applicable law, authorize a committee of the Board to make a
further delegation of the authority to amend the
Plan.
|
9.03
|
Termination
. The
Board shall have the right to terminate this Plan at any time before a
Change in Control by written resolution. No termination of the
Plan shall reduce a Participant’s Account immediately before the effective
date of the termination.
|
9.04
|
Distributions Upon Plan Termination . Upon the termination of the Plan by the Board with respect to all Participants, and termination of all arrangements sponsored by any Textron Company that would be aggregated with the Plan under IRC Section 409A, Textron shall have the right, in its sole discretion, and notwithstanding any elections made by the Participant, to pay the Participant’s vested Account in a lump sum, to the extent permitted under IRC Section 409A. All payments that may be made pursuant to this Section 9.04 shall be made no earlier than the thirteenth month and no later than the twenty-fourth month after the termination of the Plan. Textron may not accelerate payments pursuant to this |
Deferred Income Plan
for Textron Executives
Effective January 3,
2010
|
Page
19
|
|
Section
9.04 if the termination of the Plan is proximate to a downturn in
Textron’s financial health. If Textron exercises its discretion
to accelerate payments under this Section 9.04, it shall not adopt any new
arrangement that would have been aggregated with the Plan under IRC
Section 409A within three years following the date of the Plan’s
termination.
|
10.01
|
Use of Masculine or
Feminine Pronouns
. Unless a contrary or different
meaning is expressly provided, each use in this Plan of the masculine or
feminine gender shall include the other and each use of the singular
number shall include the plural.
|
10.02
|
Transferability of
Plan Benefits
.
|
(a)
|
Textron
shall recognize the right of an alternate payee named in a domestic
relations order to receive all or a portion of a Participant’s benefit
under the Plan, provided that (1) the domestic relations order would be a
“qualified domestic relations order” within the meaning of IRC Section
414(p) if IRC Section 414(p) were applicable to the Plan (except that the
order may require payment to be made to the alternate payee before the
Participant’s earliest retirement age), (2) the domestic relations order
does not purport to give the alternate payee any right to assets of any
Textron Company, (3) the domestic relations order does not purport to
allow the alternate payee to defer payments beyond the date when the
benefits assigned to the alternate payee would have been paid to the
Participant, and (4) the domestic relations order does not require the
Plan to make a payment to an alternate payee in any form other than a cash
lump sum.
|
(b)
|
Except
as provided in subsection (a) concerning domestic relations orders, no
amount payable at any time under this Plan shall be subject in any manner
to alienation, sale, transfer, assignment, pledge or encumbrance of any
kind to the extent that the assignment or other action would cause the
amount to be included in the Participant’s gross income or treated as a
distribution for federal income tax purposes. A Participant
may, with the written approval of Textron, make an assignment of a benefit
for estate planning or similar purposes if the assignment does not cause
the amount to be included in the Participant’s gross income or treated as
a distribution for federal income tax purposes. Any attempt to
alienate, sell, transfer, assign, pledge or otherwise encumber any such
benefit, whether presently or subsequently payable, shall be void unless
so approved. Except as required by law, no benefit payable
under this Plan shall in any manner be subject to garnishment, attachment,
execution or other legal process, or be liable for or subject to the debts
or liability of any Participant or
Beneficiary.
|
10.03
|
Section 409A
Compliance
. The Plan is intended to comply with IRC
Section 409A and should be interpreted accordingly. Any
distribution election that would not comply with IRC Section 409A is not
effective. To the extent that a provision of this Plan does not
comply with IRC Section 409A, such provision shall be void and without
effect. Textron does not warrant that the Plan will comply with
IRC Section 409A with respect to any Participant or with respect to any
payment, however. In no event shall any Textron Company; any
director, officer, or employee of a Textron Company (other than the
Participant); or any member of Textron be liable for any additional tax,
interest, or penalty incurred by a Participant or Beneficiary as a result
of the Plan’s failure to satisfy the requirements of IRC Section 409A, or
as a result of the Plan’s failure to satisfy any other requirements of
applicable tax laws.
|
10.04
|
Controlling State
Law
. This Plan shall be construed in accordance with the
laws of the State of Delaware.
|
10.05
|
No Right to
Employment
. Nothing contained in this Plan shall be
construed as a contract of employment between any Participant and any
Textron Company, or to suggest or create a right in any Participant of
continued employment at any Textron
Company.
|
10.06
|
Additional Conditions
Imposed
. Textron, the Chief Executive Officer and the
Chief Human Resources Officer may impose such other lawful terms and
conditions on participation in this Plan as deemed
desirable.
|
Deferred Income Plan
for Textron Executives
Effective January 3,
2010
|
Page
21
|
DEFERRED
INCOME PLAN
FOR
TEXTRON EXECUTIVES
____________________________
APPENDIX
A
____________________________
Provisions
of the
Deferred
Income Plan for
Textron
Key Executives
(As
in effect before January 1, 2008)
|
Introduction
|
1
|
||||
Article
I - Definitions
|
2
|
Article
II - Participation and Deferred Income
|
4
|
||||
Article
III - Participant's Accounts, Interest, and Earnings
|
5
|
||||
Article
IV - Benefits
|
8
|
||||
Article
V - Payments of Benefits
|
8
|
Article
VI - Beneficiaries
|
10
|
||||
Article
VII - Unfunded Plan
|
11
|
||||
Article
VIII - Plan Administration
|
11
|
||||
Article
IX - Miscellanous
|
12
|
Deferred Income Plan
for Textron Executives
Effective January 3,
2010
|
Table of Contents -
Appendix A
Page
i
|
A.
|
Key
Executive Protected Benefits
(Earned
and Vested Before 2005)
|
B.
|
Benefits
Subject To Section 409A
(Earned
or Vested From 2005 Through
2007)
|
Deferred Income Plan
for Textron Executives
Effective January 3,
2010
|
Appendix
A
Page
1
|
1.01
|
“Beneficiary”
means the person or persons entitled under this Plan to receive Plan
benefits after a Participant’s
death.
|
1.02
|
“Board”
means the Board of Directors of
Textron.
|
1.03
|
“Compensation”
means base salary, annual incentive compensation, cash distributions for
performance share units under a long term incentive compensation plan, and
any other item designated as Compensation under this Plan by
Textron.
|
1.04
|
“Deferral
Period” means for a Participant (1) any complete months remaining in the
calendar year in which she becomes a Key Executive, and (2) each
succeeding calendar year in which she is a Key
Executive.
|
1.05
|
“Deferred
Income” means any Compensation the receipt of which is deferred under this
Plan.
“Automatic
Deferred Income” means amounts in excess of 100% of a Participant’s Annual
Incentive Compensation Target, as defined in
Section
|
|
4.01(a)
of the Annual Incentive Compensation Plan for Textron Employees, in the
years following a Participant’s fifth full year of participation in this
Plan, but only if the Participant has not achieved or maintained
a
Minimum Stock
Ownership Level.
“Discretionary
Deferred Income” means additional contributions made at Textron’s
discretion to any account maintained for a Participant under this
Plan.
“Elective
Deferred Income” means amounts elected by the Participant to be deferred
under this Plan.
|
1.06
|
“Determination
Date” means the last day of each calendar
month.
|
1.07
|
“Fund
Election Agreement” means an agreement in a form prescribed by Textron, by
which a Participant elects the funds that will be used to determine
earnings on Deferred
Income.
|
1.08
|
“Interest”
means interest computed under Article III of this
Plan.
|
1.09
|
“Key
Executive” means an employee of a Textron Company who has been and
continues to be designated as a Key Executive under the Plan by Textron’s
Chief Executive Officer and Chief Human Resources
Officer.
|
1.10
|
“Participant”
means a Key Executive who is participating in this Plan pursuant to
Article II and, unless the context clearly indicates to the contrary, a
former Participant who is entitled to benefits under this
Plan.
|
1.11
|
“Participation
Agreement” means an agreement in a form prescribed by Textron, by which a
Participant elects to defer the receipt of Compensation pursuant to this
Plan.
|
1.12
|
“Plan”
means this Deferred Income Plan for Textron Key Executives, as amended and
restated from time to time.
|
1.13
|
“Stock
Ownership” means Textron shares obtained through open market purchases and
stock option exercises, shares in the Textron Savings Plan, stock units in
the Deferred Income Plan and in the Supplemental Benefits Plan; and any
other share or share equivalent approved by the Board as qualified stock
ownership.
|
|
“Minimum
Stock Ownership Level” means a dollar value of Textron shares that equals
or exceeds as of the end of the third quarter each
year:
|
|
Participant
CEO/COO
Other
TLT Members
Other
Corporate Officers
All
Other Key Executives
|
Minimum Stock Ownership Level
5 times base salary
3 times
base salary
2
times base salary
1
times base
salary
|
1.14
|
“Textron”
means Textron Inc., a Delaware corporation, and any successor of Textron
Inc.
|
1.15
|
“Textron
Company” means Textron or any company controlled by or under common
control with Textron.
|
1.16
|
“Textron
Employment” means employment with a Textron Company. Leaves of absence for
such periods and purposes as are approved by Textron and transfers of
employment within or between Textron Companies shall not be deemed
interruptions of Textron
Employment.
|
1.17
|
“Total
Disability” has the same meaning under this Plan as in the Textron Master
Retirement Plan with respect to any Participant at the date his Textron
Employment
ends.
|
2.01
|
A
Participant indicates his choices under this Plan for a Deferral Period by
filing a Participation Agreement and, if applicable, a Fund Election
agreement with Textron within the time specified by
Textron.
|
2.02
|
For
any complete calendar months remaining in the calendar year in which a
Participant becomes a Key Executive, she may defer up to 100% of her
Compensation otherwise payable during those months. For any subsequent
Deferral Period, a Participant may defer up to 25% of her base salary, and
up to 100% of her Compensation other than base salary, otherwise payable
during that period. (For purposes of this 25% limitation, “base salary”
includes any base salary the receipt of which by the Participant is
deferred under the Textron Savings Plan or this Plan.) A Participant may
not defer any Compensation which she has earned at the time she files her
Participation Agreement relating
thereto.
|
2.03
|
Textron
may, at a Participant’s request but in its sole discretion, suspend in
whole or in part a Participant’s commitment under any Participation
Agreement for such time as it may deem necessary upon a finding that the
Participant has suffered a severe financial
hardship.
|
2.04
|
If
at any time a Participant shall cease to be a Key Executive, his
Participation Agreements and Deferral Periods shall terminate at that time
and no further Deferred Income shall be withheld from his
Compensation.
|
2.05
|
No
Deferred Income, Interest or dividends shall be payable to a Participant
while he is employed by a Textron
Company.
|
2.06
|
Textron
shall withhold for taxes or other reasons as required by
law.
|
3.01
|
(a)
For
record-keeping purposes only, Textron shall maintain a Moody’s Account, a
Stock Unit Account and an Interest Account, as is necessary, for each
Participant who has Deferred Income under this Plan.
(b)
Textron may in
its sole discretion from time to time make additional contributions to any
account maintained for a Participant. These additional contributions, if
any, may be subject to a vesting schedule set by Textron.
(c)
The
existence of these accounts shall not require any segregation of
assets.
(d)
Amount
deferred as Elective Deferred Income and Automatic Deferred Income shall
always be 100% vested.
|
3.02
|
The
Moody’s Account shall reflect a Participant’s investment in an
interest-bearing account.
(a)
The
Moody’s Account shall be adjusted as of each Determination Date and shall
consist of (1) the balance of the Account as of the immediately preceding
Determination Date, (2) amounts of Deferred Income credited to the Account
in the intervening month, and (3) Interest earned since the immediately
preceding Determination Date based on one-twelfth of the applicable
interest rate(s) described in Sections 3.03 or 3.04 on the average daily
balance of the Account (or portion thereof) during the intervening month;
reduced by (4) any distributions from the account (or portion thereof)
during the intervening month.
(b)
The
interest rates applicable to the Moody’s Account shall be either the
Moody’s Rate or the Moody’s Plus
Rate.
|
3.03
|
The
Moody’s Rate shall be the average for the calendar month in which the
applicable Determination Date falls of the Moody’s Corporate Bond Yield
Index as published by Moody’s Investors Service, Inc. (or any successor
thereto), or, if such monthly yield is no longer published, a
substantially similar average selected by Textron. For
Participant deferrals made prior to 2002, the crediting rate shall not be
less than 8% per year.
|
3.04
|
(a)
The
Moody’s Plus Rate applicable on a Determination Date to any portion of the
Moody’s Account which is attributable to Deferred Income deferred before
1988 shall be the average described in Section 3.03, plus three percentage
points.
|
Deferred Income Plan
for Textron Executives
Effective January 3,
2010
|
Appendix
A
Page
5
|
|
The
crediting rate shall not be less than 11% per year for deferrals made
prior to 1988.
(b)
The
Moody’s Plus Rate applicable on a Determination Date to any portion of the
Moody’s Account which is attributable to deferrals from 1988 through 2001
shall be the average described in Section 3.03, plus two percentage
points. The crediting rate shall not be less than 10% per year for
deferrals made from 1988 through 2001.
(c)
For
deferrals made on or after January 1, 2002, the Rate on the Determination
Date shall be the Moody’s
Rate.
|
3.05
|
The
Stock Unit Account shall consist of stock units, which are phantom shares
of Textron Common Stock, accumulated and accounted for under this Plan for
the sole purpose of determining the cash amount of any distribution on
account of this portion of Deferred Income. Notwithstanding any
Plan provision to the contrary, 100% of Automatic Deferred Income shall be
deferred to the Stock Unit Account.
|
3.06
|
The
Stock Unit Account shall be adjusted as of each Determination Date and
shall consist of the stock units (1) in the account as of the immediately
preceding Determination Date, (2) credited under Section 3.07 and 3.08
during the intervening month, and (3) credited under Section 3.09 during
the intervening month.
|
3.07
|
(a)
To
the extent that a Participant puts Elective Deferred Income in the Stock
Unit Account, the amount initially credited to her Account shall equal
110% of such Compensation deferred on or after January 1,
2002.
(b) The
amount in excess of 100% of the Elective Deferred Income is the “Textron
Company Contribution.” A Participant’s right to receive the Textron
Company Contribution, as adjusted under Section 3.09, shall become
nonforfeitable according to this schedule:
(1) 50% on
December 31 of the calendar year in which that Elective Deferred Income
otherwise would have been paid to him, but only if his Textron Employment
continues on that December 31; and
(2) the
remaining 50% on the next December 31, but only if his Textron Employment
continues on that next December 31.
(c)
A
Participant’s right to receive her Textron Company Contribution shall be
nonforfeitable in the event her Textron employment ends because of
disability or
death.
|
Deferred Income Plan
for Textron Executives
Effective January 3,
2010
|
Appendix
A
Page
6
|
|
(d)
A
Participant’s right to receive her Textron Company Contribution shall
become nonforfeitable according to the above schedule if a Participant
ends employment when she is at least 55 with ten or more years of Textron
service, or is at least age 60, or has completed 20 or more years of
Textron
service.
|
3.08
|
With
respect to deferrals into this Plan of amounts from the Annual Incentive
Compensation Plan for Textron Employees and the Long Term Incentive Plan
for Textron Employees, Textron shall credit stock units to a Participant’s
Stock Unit Account, equal to the number of shares the deferred amount
could have purchased at the “Current Value” of a share of Textron Common
Stock. The Current Value is defined in Section 3.07 of the Long Term
Incentive Plan for Textron Employees. With respect to deferrals into this
Plan of any other amounts, each month Textron shall credit stock units to
a Participant’s Stock Unit Account equal in number to the number of shares
of Textron Common Stock that the deferred amount could have purchased at a
price per share equal to the average of the composite closing prices of
Textron Common Stock, as reported in
The Wall Street Journal
for the month the contribution is
credited.
|
3.09
|
From
time to time, Textron shall credit Stock Units to a Participant’s Stock
Unit Account equal in number to the number of shares of Textron Common
Stock that would have been allocated on account of dividends to the
Participant’s Stock Unit Account as of that date, based on the average of
the composite closing prices of Textron Common Stock, as reported in
The Wall Street Journal
for the month in which the date of record
occurs.
|
3.10
|
The
number of Stock Units credited to a Participant’s account under this
Article III shall be adjusted, without receipt of any consideration by
Textron, on account of any recapitalization, stock split, stock dividend
or similar increase or decrease affecting Textron Common Stock, as if the
Stock Units were actually shares of Textron Common
Stock.
|
3.11
|
The
Interest Account shall be established when the benefits relating to a
Participant’s Stock Unit Account become due to the Participant under
Article IV. A Participant who has terminated her Textron employment may,
once each calendar month, elect to transfer, in 5% increments (with a
minimum transfer of 10% of the Stock Unit Account), effective the first
calendar day of the month following the minimum notice of three business
days, any amount in her Stock Unit Account to her Interest
Account.
(a)
Any
transfer made shall be made in cash and shall be in an amount equal to the
product of (x) the Current Value of Textron Common Stock on the date as of
which the stock units are converted and transferred to the Interest
Account, times (y) the number of whole and fractional stock units which
are
nonforfeitable.
|
|
(b)
As used
in the Plan, the current value of a share of Textron Common Stock on any
date shall be the average of the composite closing prices, as reported in
The Wall Street
Journal
, for the first ten trading days of the effective
month.
(c)
Interest on
amounts in the Interest Account will be credited monthly at the Moody’s
rate. Stock units transferred related to deferrals made prior
to January 1, 2002, shall have a minimum rate of
8%.
|
4.01
|
If
a Key Executive’s Textron Employment ends other than by death or for less
than acceptable performance (1) at or after age 62, or (2) as a result of
Total Disability, the amount credited to his Moody’s Account at the
Moody’s Plus Rate, the amount in his Stock Unit Account which is then
nonforfeitable according to Section 3.07, and the amount in his Interest
Account, shall be distributed in accordance with Article
V.
|
4.02
|
If
a Participant’s Textron Employment ends because of death, the benefit
distributed pursuant to Article IV shall be the sum of the amount credited
to her Moody’s Account (computed at the Moody’s Plus Rate), and the amount
in her Stock Unit Account.
|
4.03
|
If
a Key Executive’s Textron Employment ends other than as described in
Section 4.01 or a Participant’s Textron Employment ends other than as
described in Section 4.02, the amount credited to his Moody’s Account
computed at the Moody’s Rate (unless the Chief Executive Officer and Chief
Human Resources Officer of Textron in their sole discretion approve
computation at the Moody’s Plus Rate), the amount in his Stock Unit
Account which is then nonforfeitable according to Section 3.07, and the
amount in his Interest Account, shall be distributed in accordance with
Article V.
|
4.04
|
In
the event of a Change in Control as defined in Section 9.03, the amount
credited to her Moody’s Account computed at the Moody’s Plus Rate, the
amount in her Stock Unit Account and the amount in her Interest Account
shall be distributed in accordance with Article
V.
|
4.05
|
Benefits
shall be payable to a Participant or Beneficiary under only one Section of
this Article IV.
|
5.01
|
Textron
shall choose in its sole discretion the methods in Section 5.02 by which
benefits payable under Article IV shall be distributed, after considering
any method of payment requested by the Participant or by the Beneficiaries
entitled to receive the benefits.
|
|
A
Participant who wishes to request a form of payment must file an election
to indicate her preferred form of payment; but all Participant elections
shall be subject to Textron’s discretion to change the elected form of
payment as provided in the preceding sentence. If the
Participant terminated before January 1, 2002, the Participant must file
the election by December 31, 2008; any other Participant must file the
election by December 31, 2007. Textron may impose conditions on
the new benefit election (including, but not limited to, a requirement
that the Participant elect the same form of payment for his pre-2005
Account under this Appendix A and his post-2004 account under the Deferred
Income Plan for Textron Executives). If the current value of a
Participant’s Deferred Income Plan Accounts is $100,000 or less at
termination, or if the Participant fails to request a form of payment
before the applicable deadline, such Participant’s accounts shall be paid
in a single sum.
|
5.02
|
After
benefits relating to a Participant’s Moody’s Account, his Stock Unit
Account and his Interest Account become payable under Article IV, Textron
shall distribute the benefits in accordance with any one of the following
methods:
(a)
Payment
in a single sum; or
(b)
Payment
in a number of annual installments, each payable as soon as practicable
after the end of each successive calendar year. The number of
installments shall not exceed the lesser of 15 or life expectancy of the
Participant. The annual installments shall be calculated each year by
dividing the unpaid amount of the benefits as of January 1 of that year by
the remaining number of unpaid installments; or
(c)
Payment
through a combination of the foregoing
methods.
|
5.03
|
(a)
For
Participants who terminate prior to January 1, 2002, Plan benefits payable
under Section 5.02 shall begin to be paid not later than February 15 of
the first calendar year which begins after the date on which (1) the final
payment of the Participant’s Compensation is scheduled to be made, or (2)
the Participant attains or would have attained age 65, whichever is later.
For Participants who terminate on or after January 1, 2002, Plan benefits
under Section 5.02(a) shall begin to be paid not later than February 15
following the year the Participant terminated, or sixty days after
termination of employment, whichever is later.
(b)
P
lan
benefits are paid from a Moody’s Account in accordance with Section
5.02(a) or 5.02(b), amounts (if any) described in Section 3.04 shall be
paid first from Section 3.04(c), next from pre-2002 deferrals in Section
3.03, next from Section 3.04(b), and lastly from Section
3.04(a).
|
5.04
|
Notwithstanding
any Plan provision to the contrary, the amount then credited to the
Moody’s Account, Stock Unit Account and Interest Account of each Key
Executive shall become due and payable immediately upon a Change in
Control as defined in Section 9.03.
|
5.05
|
Distributions
under this Article V shall be made on a pro-rata basis from each account
in which there is an amount.
|
6.01
|
A
Participant may designate one or more Beneficiaries to receive Plan
benefits payable on the Participant’s account after his death. A
Beneficiary may designate one or more Beneficiaries to receive any unpaid
Plan benefits to the extent this designation does not contravene any
designation filed by the deceased Participant through whom the Beneficiary
himself claims under this Plan. Beneficiaries shall be designated only
upon forms made available by or satisfactory to Textron, and filed by the
Participant or Beneficiary with Textron. Effective January 1,
2008, any payment to a Beneficiary shall be made in a lump
sum. If a Beneficiary is receiving installment payments as of
December 31, 2007, any remaining installments due after 2007 shall be
aggregated and paid in a lump sum on the first business day of January
2008.
|
6.02
|
At
any time prior to his death, a Participant or Beneficiary may change his
own designation of Beneficiary by filing a substitute designation of
Beneficiary with Textron.
|
6.03
|
In
the absence of an effective designation of Beneficiary, or if all persons
so designated shall have predeceased the Participant/Beneficiary or shall
have died before the complete distribution of Plan benefits, the balance
of Plan benefits shall be paid to the Participant/Beneficiary’s surviving
spouse or, if none, to the Participant/Beneficiary’s issue per stirpes or,
if no issue, to the executor or administrator of the
Participant/Beneficiary’s estate.
|
6.04
|
If
a Participant’s Compensation or a Plan benefit is community property, any
designation of Beneficiary shall be valid or effective only as permitted
under applicable law.
|
6.05
|
If
a Plan benefit is payable to a minor or person declared incompetent or to
a person incapable of handling the disposition of his property, Textron
may pay such Plan benefit to the guardian, legal representative or person
having the care and custody of such minor, incompetent or person. Textron
may require proof of incompetency, minority, incapacity or guardianship as
it deems appropriate prior to distribution of the Plan benefit. Such
distribution shall completely discharge any Textron Company from all
liability with respect to such
benefit.
|
7.01
|
Benefits
to be provided under this Plan are unfunded obligations of Textron.
Nothing contained in this Plan shall require Textron to segregate any
monies from its general funds, to create any trust, to make any special
deposits, or to purchase any policies of insurance with respect to such
obligations. If Textron elects to purchase individual policies of
insurance on one or more of the Participants to help finance its
obligations under this Plan, such individual policies and the proceeds
therefrom shall at all times remain the sole property of Textron and
neither the Participants whose lives are insured nor their Beneficiaries
shall have any ownership rights in such policies of
insurance.
|
7.02
|
This
Plan is maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated
employees within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1)
of the Employee Retirement Income Security Act of 1974, as
amended.
|
8.01
|
Textron
shall be the plan administrator of this Plan and shall be solely
responsible for its general administration and interpretation. Textron
shall have all such powers as may be necessary to carry out the provisions
hereof and may from time to time establish rules for the administration of
this Plan and the transaction of its business. Subject to Section 8.05,
any action by Textron shall be final, conclusive and binding on each
Participant and all persons claiming by, through or under any Participant.
Textron (and any person or persons to whom it delegates any of its
authority as plan administrator) shall have discretionary authority to
determine eligibility for Plan benefits, to construe the terms of the
Plan, and to determine all questions arising in the administration of the
Plan, and shall make all such determinations and interpretations in a
nondiscriminatory manner. The Board may exercise Textron’s
authority as plan administrator, and the authority to administer the Plan
may be delegated as provided in Section
8.02.
|
8.02
|
The
Board may, to the extent permitted by applicable law, make a non-exclusive
written delegation of the authority to administer the Plan to a committee
of the Board or to one or more officers of Textron. The Board
may, to the extent permitted by applicable law, authorize a committee of
the Board or officer of Textron to make a further delegation of the
authority to administer the Plan.
|
8.03
|
Textron
may employ or engage such agents, accountants, actuaries, counsel, other
experts and other persons as it deems necessary or desirable in connection
with the interpretation and administration of this Plan. Textron shall be
entitled to rely upon all certifications made by an accountant selected by
Textron. Textron and its committees, officers, directors and employees
shall not be liable for any action taken, suffered or omitted by them in
good faith in reliance upon the advice
or
|
8.04
|
Textron
may require proof of the death or Total Disability of any Participant,
former Participant or Beneficiary and evidence of the right of any person
to receive any Plan benefit.
|
8.05
|
Claims
under this Plan shall be filed in writing with Textron, and shall be
reviewed and resolved pursuant to the claims procedure in Section 8.06 of
the Deferred Income Plan for Textron
Executives.
|
8.06
|
Textron
shall withhold from benefits paid under this Plan any taxes or other
amounts required to be withheld by
law.
|
9.01
|
Unless
a contrary or different meaning is expressly provided, each use in this
Plan of the masculine or feminine gender shall include the other and each
use of the singular number shall include the
plural.
|
9.02
|
(a)
Textron
shall recognize the right of an alternate payee named in a domestic
relations order to receive all or a portion of a Participant’s benefit
under the Plan, provided that (1) the domestic relations order would be a
“qualified domestic relations order” within the meaning of IRC Section
414(p) if IRC Section 414(p) were applicable to the Plan (except that the
order may require payment to be made to the alternate payee before the
Participant’s earliest retirement age), (2) the domestic relations order
does not purport to give the alternate payee any right to assets of any
Textron Company, (3) the domestic relations order does not purport to
allow the alternate payee to defer payments beyond the date when the
benefits assigned to the alternate payee would have been paid to the
Participant, and (4) the domestic relations order does not require the
Plan to make a payment to an alternate payee in any form other than a cash
lump sum.
(b)
Except
as provided in subsection (a) concerning domestic relations orders, no
amount payable at any time under this Plan shall be subject in any manner
to alienation, sale, transfer, assignment, pledge or encumbrance of any
kind to the extent that the assignment or other action would cause the
amount to be included in the Participant’s gross income or treated as a
distribution for federal income tax purposes. A Participant
may, with the written approval of Textron, make an assignment of a benefit
for estate planning or similar purposes if the assignment does not cause
the amount to be included in the Participant’s gross income or treated as
a distribution for federal income tax purposes. Any attempt to
alienate, sell, transfer, assign, pledge or otherwise encumber any such
benefit,
whether
|
Deferred Income Plan
for Textron Executives
Effective January 3,
2010
|
Appendix
A
Page
12
|
|
presently
or subsequently payable, shall be void unless so
approved. Except as required by law, no benefit payable under
this Plan shall in any manner be subject to garnishment, attachment,
execution or other legal process, or be liable for or subject to the debts
or liability of any Participant or
Beneficiary.
|
9.03
|
Notwithstanding
any provision to the contrary, the Board or its designee shall have the
right to amend, modify, suspend or terminate this Plan at any time by
written ratification of such action; provided, however, that no amendment,
modification, suspension or termination:
(a)
Shall
reduce the amount credited to any Moody’s Account, Stock Unit Account or
Interest Account immediately before the effective date of the amendment,
modification, suspension or termination; or
(b)
Shall
be made to Article V or this Section 9.03 following a Change in
Control.
If
after a Change in Control any claim is made or any litigation is brought
by a Participant or Beneficiary to enforce or interpret any provision
contained in this Plan, Textron and the “person” or “group” described in
the next following sentence shall be liable, jointly and severally, to
indemnify the Participant or Beneficiary for the Participant’s or
Beneficiary’s reasonable attorney’s fees and disbursements incurred in any
such claim or litigation and for prejudgment interest as provided in
Section 8.07 of the Deferred Income Plan for Textron
Executives.
For
purposes of this Plan, a “Change in Control” shall occur if (i) any
“person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the “Act”)) other than
Textron, any trustee or other fiduciary holding Textron common stock under
an employee benefit plan of Textron or a related company, or any
corporation which is owned, directly or indirectly, by the stockholders of
Textron in substantially the same proportions as their ownership of
Textron common stock, is or becomes (other than by acquisition from
Textron or a related company) the “beneficial owner” (as defined in Rule
13d-3 under the Act) of more than 30% of the then outstanding voting stock
of Textron, or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board (and
any new director whose election by the Board or whose nomination for
election by Textron’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 such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a majority
thereof, or (iii) stockholders of Textron approve a merger or
consolidation of Textron with any other corporation, other than a merger
or consolidation which would result in the voting securities of Textron
outstanding immediately prior thereto continuing to represent (either by
|
Deferred Income Plan
for Textron Executives
Effective January 3,
2010
|
Appendix
A
Page
13
|
|
remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of the voting
securities of Textron or such surviving entity outstanding immediately
after such merger or consolidation, or (iv) the stockholders of Textron
approve a plan of complete liquidation of Textron or an agreement for the
sale or disposition by Textron of all or substantially all of Textron’s
assets.
|
9.04
|
The
Board may, to the extent permitted by applicable law, make a non-exclusive
written delegation of the authority to amend the Plan to a committee of
the Board or to one or more officers of Textron. The Board may,
to the extent permitted by applicable law, authorize a committee of the
Board to make a further delegation of the authority to amend the
Plan.
|
9.05
|
This
Plan shall be construed in accordance with the laws of the State of
Delaware.
|
9.06
|
Nothing
contained in this Plan shall be construed as a contract of employment
between any Participant and any Textron Company, or to suggest or create a
right in any Participant to be continued in employment as a Key Executive
or other employee of any Textron
Company.
|
9.07
|
Textron,
the Chief Executive Officer, and the Chief Human Resources Officer may
impose such other lawful terms and conditions on participation in this
Plan as deemed desirable.
|
Deferred Income Plan
for Textron Executives
Effective January 3,
2010
|
Appendix
A
Page
14
|
TEXTRON SPILLOVER SAVINGS PLAN
____________________
Effective January 3, 2010
|
Introduction
|
1
|
|||
Article I – Definitions
|
2
|
|||
1.01
|
Additional Retirement Contribution
|
2
|
||
1.02
|
Account
|
2
|
||
1.03
|
Beneficiary
|
2
|
||
1.04
|
Board
|
2
|
||
1.05
|
Change in Control
|
2
|
||
1.06
|
Compensation
|
4
|
||
1.07
|
ERISA
|
4
|
||
1.08
|
Executive Plan
|
4
|
||
1.09
|
IRC
|
4
|
||
1.1
|
Key Executive
|
4
|
||
1.11
|
Key Executive Plan
|
4
|
||
1.12
|
Participant
|
4
|
||
1.13
|
Plan
|
5
|
||
1.14
|
Plan Administrator
|
5
|
||
1.15
|
Qualified Savings Plan
|
5
|
||
1.16
|
Separation From Service
|
5
|
||
1.17
|
Supplemental Shares
|
5
|
||
1.18
|
Statutory Limit
|
5
|
||
1.19
|
Textron
|
5
|
||
1.2
|
Textron Company
|
5
|
||
1.21
|
Total Disability
|
5
|
||
Article II – Participation
|
5
|
|||
2.01
|
Eligibility
|
5
|
||
2.02
|
Period of Participation
|
6
|
||
Article III – Spillover Savings Benefit
|
6
|
|||
3.01
|
Supplemental Matching Contribution
|
6
|
||
3.02
|
Supplemental Retirement Contribution
|
7
|
Textron Spillover Savings Plan
Effective January 3, 2010
|
Table of Contents
Page i
|
Textron Spillover Savings Plan
Effective January 3, 2010
|
Table of Contents
Page ii
|
Textron Spillover Savings Plan
Effective January 3, 2010
|
Page 1
|
1.01
|
“Additional Retirement Contribution” means a contribution that is designated as an “Additional Retirement Contribution” under the Textron Savings Plan, and that is made to an employee who is not eligible to accrue a retirement benefit under a tax-qualified defined benefit plan that is part of the Textron Retirement Program.
|
1.02
|
“Account” means the bookkeeping entry used to record supplemental contributions and earnings credited to a Participant under the Plan. A Participant’s Account may include two sub-accounts, a Stock Unit Account and a Moody’s Account, to track earnings on different hypothetical investment funds. Any Supplemental Shares credited to a Participant’s Account on December 31, 2009, shall be credited to the Participant’s Stock Unit Account as of January 1, 2010. All amounts credited to the Account shall be unfunded obligations of Textron: no assets shall be set aside or contributed to the Plan for the Participant’s benefit. A Key Executive’s Account does not include supplemental savings benefits that were earned and vested (within the meaning of IRC Section 409A) before January 1, 2005, and any subsequent increase that is permitted to be included in such amounts under IRC Section 409A: these amounts are calculated and paid solely as provided in Appendix A.
|
1.03
|
“Beneficiary” means the person designated under the Plan (including any person who is automatically designated by the terms of the Plan) to receive any death benefit payable with respect to a Participant. A Participant’s trust or estate may also be the Participant’s Beneficiary.
|
1.04
|
“Board” means the Board of Directors of Textron.
|
1.05
|
“Change in Control” means, for any Participant who was not an employee of a Textron Company on December 31, 2007:
|
|
(a)
|
any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Act”) and of IRC Section 409A) other than Textron, any trustee or other fiduciary holding Textron common stock under an employee benefit plan of Textron or a related company, or any corporation which is owned, directly or indirectly, by the stockholders of Textron in substantially similar proportions as their ownership of Textron common stock
|
|
(1)
|
becomes (other than by acquisition from Textron or a related company) the “beneficial owner” (as defined in Rule 13d-3 under the Act) of stock of Textron that, together with other stock held by such person or group, possesses more than 50% of the combined voting power of Textron’s then-outstanding voting stock, or
|
|
(2)
|
acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person) beneficial ownership of stock of Textron possessing more than 30% of the combined voting power of Textron's then-outstanding stock, or
|
|
(3)
|
acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person) all or substantially all of the total gross fair market value of all of the assets of Textron immediately prior to such acquisition or acquisitions (where gross fair market value is determined without regard to any associated liabilities); or
|
|
(b)
|
a merger or consolidation of Textron with any other corporation occurs, other than a merger or consolidation that would result in the voting securities of Textron outstanding immediately before the merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) 50% or more of the combined voting power of the voting securities of Textron or such surviving entity outstanding immediately after such merger or consolidation, or
|
|
(c)
|
during any 12-month period, a majority of the members of the Board is replaced by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors before the date of their appointment or election.
|
1.06
|
“Compensation” means a Participant’s eligible annual compensation as defined in the Qualified Savings Plan in which he participates, and any annual compensation that would be eligible under the Qualified Savings Plan if the Participant’s deferral election under the Deferred Income Plan for Textron Executives were disregarded, but determined (in each case) without regard to the Statutory Limit.
|
1.07
|
“
ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
|
1.08
|
“Executive Plan” means the Textron Supplemental Benefits Plan for Executives, as in effect before January 1, 2007, and the Textron Supplemental Savings Plan for Executives, as in effect from January 1 through December 31, 2007.
|
1.09
|
“IRC” means the Internal Revenue Code of 1986, as amended. References to any section of the Internal Revenue Code shall include any final regulations interpreting that section.
|
1.10
|
“Key Executive” means an employee of a Textron Company who has been and continues to be designated as a Key Executive under the Plan by Textron’s Chief Executive Officer and Chief Human Resources Officer.
|
1.11
|
“Key Executive Plan” means the Supplemental Benefits Plan for Textron Key Executives, as in effect before January 1, 2007, and the Supplemental Savings Plan for Textron Key Executives, as in effect from January 1 through December 31, 2007. The defined contribution provisions of the Key Executive Plan are included in this Plan as Appendix A.
|
1.12
|
“Participant” means an employee of Textron who is eligible to participate in the Plan pursuant to Section 2.01 and whose participation has not been terminated as provided in Section 2.01.
|
1.13
|
“Plan” means this Textron Spillover Savings Plan, as amended and restated from time to time.
|
1.14
|
“Plan Administrator” means Textron or its designees, as described in Section 7.01.
|
1.15
|
“Qualified Savings Plan” means the Textron Savings Plan or another tax-qualified defined contribution plan maintained by a Textron Company that has been designated by the Management Committee of Textron as eligible for supplemental contributions under the Plan. Any Qualified Savings Plan other than the Textron Savings Plan shall be identified in an appendix to this Plan, and the appendix shall also set forth any special terms or conditions that apply to participants in the Qualified Savings Plan.
|
1.16
|
“Separation From Service” means a Participant’s termination of employment with all Textron Companies, other than by reason of death or Total Disability, that qualifies as a “separation from service” for purposes of IRC Section 409A.
|
1.17
|
“Supplemental Shares” means phantom shares of Textron common stock accumulated and accounted for under the Plan for the purpose of determining the cash value of distributions from a Participant’s Stock Unit Account.
|
1.18
|
“Statutory Limit” means the limit on eligible compensation under tax-qualified defined contribution plans imposed by IRC Section 401(a)(17) or the limit on annual additions imposed by IRC Section 415.
|
1.19
|
“Textron” means Textron Inc., a Delaware corporation, and any successor to Textron Inc.
|
1.20
|
“Textron Company” means Textron or any company controlled by or under common control with Textron within the meaning of IRC Section 414(b) or (c).
|
1.21
|
“Total Disability” means physical or mental incapacity of a Participant who is employed by a Textron Company on the disability date, if the incapacity (a) enables the Participant to receive disability benefits under the Federal Social Security Act, and (b) also qualifies as a “disability” for purposes of IRC Section 409A(a)(2)(C).
|
2.01
|
Eligibility
. An employee of a Textron Company who is a United States citizen or resident and who participates in a Qualified Savings Plan shall become a partici-
|
Textron Spillover Savings Plan
Effective January 3, 2010
|
Page 5
|
|
pant in the Plan when his matching contribution or Additional Retirement Contribution under the Qualified Savings Plan is limited by the Statutory Limit.
|
2.02
|
Period of Participation
. Except as provided in the following sentence, once an individual becomes a Participant under Section 2.01 above, the individual shall remain a Participant until the individual’s Account is fully distributed, or until the individual’s participation in the Plan is terminated by the Board (or by the Chief Executive Officer and the Chief Human Resources Officer) effective as of the following January 1. If an employee or former employee is not identified in Textron’s records as a Participant as of December 31, 2008, the individual shall not be a Participant, and shall not be entitled to receive any benefit under the Plan, unless the individual either (i) becomes a Participant after 2008 pursuant to Section 2.01, or (ii) is designated by the Board (or by the Chief Executive Officer and Chief Human Resources Officer) as a Participant after 2008.
|
3.01
|
Supplemental Matching Contribution
.
|
|
(a)
|
Amount of Contribution
. If a Participant contributes at least 10% of eligible compensation to the Textron Savings Plan during a calendar year, the Participant’s Stock Unit Account under the Plan shall be credited with a supplemental matching contribution equal to (1) 5% [i.e., 50% of 10%] of the Participant’s Compensation, reduced by (2) the Participant’s actual matching contribution for the calendar year under the Textron Savings Plan. If a Participant participates in a Qualified Savings Plan other than the Textron Savings Plan, the Participant shall receive a comparable supplemental matching contribution in an amount sufficient to restore the portion of the matching contribution lost because of the application of the Statutory Limit to eligible compensation under the Qualified Savings Plan. The Participant must be employed by a Textron Company on December 31 of the calendar year in order to receive a supplemental matching contribution for that calendar year.
|
|
(b)
|
Stock Unit Account
. The Stock Unit Account shall consist of Supplemental Shares. Textron shall credit the supplemental matching contribution to a Participant’s Stock Unit Account after the end of the calendar year for which the supplemental matching contribution is made, but not later than March 15 of the following year. The credit shall be made as a number of Supplemental Shares determined by dividing the amount of the supplemental matching contribution for the calendar year by the average of the composite closing prices of Textron common stock, as reported in
The Wall Street Journal
for each trading day in the calendar year for which the credit is made.
|
|
(c)
|
Crediting Dividend Equivalents and Other Adjustments
. Textron shall credit additional Supplemental Shares to a Participant’s Stock Unit Account in each calendar quarter to reflect the dividend equivalents attributable to the Supplemental Shares that were credited to the Participant’s Account on the record date. The number of additional Supplemental Shares shall be determined by dividing the dividend amount by the average of the composite closing prices of Textron common stock, as reported in
The Wall Street Journal
for the month in which the record date occurs. The number of Supplemental Shares credited to a Participant’s Stock Unit Account shall be adjusted, without receipt of any consideration by Textron, on account of any stock split, stock dividend, or similar increase or decrease affecting Textron common stock, as if the Supplemental Shares were actual shares of Textron common stock.
|
|
(d)
|
Converting Supplemental Shares to Cash
. All distributions from the Plan shall be made in cash. The cash value distributed will be determined by multiplying the current value of Textron common stock by the number of whole and fractional Supplemental Shares in the Participant’s Stock Unit Account as of the distribution date. The current value of a share of Textron common stock on the distribution date shall be the average of the composite closing prices, as reported in
The Wall Street Journal,
for the first ten trading days of the calendar month following the Participant’s Separation From Service, death, or Total Disability.
|
3.02
|
Supplemental Retirement Contribution
.
|
|
(a)
|
Amount of Contribution
. If a Participant receives an Additional Retirement Contribution under the Textron Savings Plan for a calendar year, and the Additional Retirement Contribution is limited by a Statutory Limit, the Participant’s Moody’s Account shall be credited with a supplemental retirement contribution for that calendar year. The supplemental retirement contribution shall be credited to the Participant’s Moody’s Account as of the same date on which the Additional Retirement Contribution is contributed to the Textron Savings Plan. The supplemental retirement contribution shall be equal to (1) the Additional Retirement Contribution that the Participant would have received for the calendar year if the Statutory Limits had not applied, reduced by (2) the Participant’s actual Additional Retirement Contribution under the Textron Savings Plan for the calendar year. The Participant must be employed by a Textron Company on December 31 of the calendar year in order to receive a supplemental retirement contribution for that calendar year.
|
|
(b)
|
Moody’s Account
. The Moody’s Account shall earn interest at a monthly interest rate that is one twelfth of the average for the calendar month of the
|
|
|
Moody’s Corporate Bond Yield Index as published by Moody’s Investors Service, Inc. (or any successor thereto), or, if such monthly yield is no longer published, a substantially similar average selected by Textron. Interest shall be credited on the last day of each calendar month on the average daily balance of the Moody’s Account during the month. A supplemental retirement contribution shall not begin to earn interest until it is credited to a Participant’s Moody’s Account.
|
4.01
|
Vesting Schedule
. Except as provided in Section 4.02, a Participant’s Stock Unit Account shall be vested to the same extent that the Participant’s matching contribution account under the Qualified Savings Plan is vested, and a Participant’s Moody’s Account shall be vested to the same extent that the Participant’s Additional Retirement Contribution Account under the Textron Savings Plan is vested. Any portion of the Participant’s Account that is not vested at the time of the Participant’s Separation From Service shall be forfeited.
|
4.02
|
Change in Control
. In the event of a Change in Control, a Participant’s Account shall become fully vested if the Participant is employed by a Textron Company on the date of the Change in Control.
|
5.01
|
Separation From Service
. A Participant’s Account shall be distributed in a lump sum in cash on the first business day of the seventh month following his Separation From Service (or in January 2009, if later).
|
5.02
|
Disability or Death
. If a Participant dies before his Account is distributed, the Participant’s Account shall be distributed in a lump sum in cash on the first business day of the first month that begins at least ninety (90) days after the Participant’s death. If a Participant suffers a Total Disability before his Account is distributed, the Participant’s Account shall be distributed in a lump sum in cash on the last business day of the month following his Total Disability. The Participant’s Beneficiary under the Plan shall be the same as the Participant’s beneficiary under the Qualified Savings Plan. If a Beneficiary is receiving installment payments as of December 31, 2007, any remaining installments due after 2007 shall be aggregated and paid in a lump sum on the first business day of January 2008.
|
5.03
|
Administrative Adjustments in Payment Date
. A payment is treated as being made on the date when it is due under the Plan if the payment is made on the due date specified by the Plan, or on a later date that is either (a) in the same calendar year (for a payment whose specified due date is on or before September 30), or (b) by the 15th day of the third calendar month following the date specified by the
|
Textron Spillover Savings Plan
Effective January 3, 2010
|
Page 8
|
|
Plan (for a payment whose specified due date is on or after October 1). A payment also is treated as being made on the date when it is due under the Plan if the payment is made not more than 30 days before the due date specified by the Plan, provided that the payment is not made earlier than six months after the Participant’s Separation From Service. A Participant may not, directly or indirectly, designate the taxable year of a payment made in reliance on the administrative rules in this Section 5.03.
|
5.04
|
Distribution Upon Change in Control
. Subject to the following sentence, if a Change in Control also qualifies as a “change in control” under IRC Section 409A, the Participant’s Account shall be paid in a lump sum in cash on the first business day of the month following the Change in Control. If a Participant’s Separation From Service occurred before the Change in Control, the lump sum payment under this Section 5.04 shall not be made earlier than six months after the Participant’s Separation From Service.
|
5.05
|
Distributions Before January 1, 2008
. Distributions after 2004 and before January 1, 2008, were made in good faith compliance with IRC Section 409A and Internal Revenue Service guidance interpreting IRC Section 409A.
|
6.01
|
No Plan Assets
. Benefits provided under this Plan are unfunded obligations of Textron. Nothing contained in this Plan shall require Textron to segregate any monies from its general funds, to create any trust, to make any special deposits, or to purchase any policies of insurance with respect to such obligations. If Textron elects to purchase individual policies of insurance on one or more of the Participants to help finance its obligations under this Plan, such individual policies and the proceeds of the policies shall at all times remain the sole property of Textron and neither the Participants whose lives are insured not their Beneficiaries shall have any ownership rights in such policies of insurance.
|
6.02
|
Top-Hat Plan Status
. The Plan is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
|
7.01
|
Plan Administrator’s Powers
. Textron shall have all such powers as may be necessary to carry out the provisions hereof. Textron may from time to time establish rules for the administration of this Plan and the transaction of its business. Subject to Section 7.06, any actions by Textron shall be final, conclusive and binding on each Participant and all persons claiming by, through or under any
|
Textron Spillover Savings Plan
Effective January 3, 2010
|
Page 9
|
|
Participant. Textron (and any person or persons to whom it delegates any of its authority as plan administrator) shall have discretionary authority to determine eligibility for Plan benefits, to construe the terms of the Plan, and to determine all questions arising in the administration of the Plan. The Board may exercise Textron’s authority as plan administrator, and the authority to administer the Plan may be delegated as provided in Section 7.02.
|
7.02
|
Delegation of Administrative Authority
. The Board may, to the extent permitted by applicable law, make a non-exclusive written delegation of the authority to administer the Plan to a committee of the Board or to one or more officers of Textron. The Board may, to the extent permitted by applicable law, authorize a committee of the Board or officer of Textron to make a further delegation of the authority to administer the Plan.
|
7.03
|
Tax Withholding
. Textron may withhold from benefits paid under this Plan any taxes or other amounts required by law to be withheld. Textron may deduct from the undistributed portion of a Participant’s benefit any employment tax that Textron reasonably determines to be due with respect to the benefit under the Federal Insurance Contributions Act (FICA), and an amount sufficient to pay the income tax withholding related to such FICA tax. Alternatively, Textron may require the Participant or Beneficiary to remit to Textron or its designee an amount sufficient to satisfy any applicable federal, state, and local income and employment tax with respect to the Participant’s benefit. The Participant or Beneficiary shall remain responsible at all times for paying any federal, state, or local income or employment tax with respect to any benefit under this Plan. In no event shall Textron or any employee or agent of Textron be liable for any interest or penalty that a Participant or Beneficiary incurs by failing to make timely payments of tax.
|
7.04
|
Use of Third Parties to Assist with Plan Administration
. Textron may employ or engage such agents, accountants, actuaries, counsel, other experts and other persons as it deems necessary or desirable in connection with the interpretation and administration of this Plan. Textron and its committees, officers, directors and employees shall not be liable for any action taken, suffered or omitted by them in good faith in reliance upon the advice or opinion of any such agent, accountant, actuary, counsel or other expert. All action so taken, suffered or omitted shall be conclusive upon each of them and upon all other persons interested in this Plan.
|
7.05
|
Proof of Right to Receive Benefits
. Textron may require proof of death or Total Disability of any Participant and evidence of the right of any person to receive any Plan benefit.
|
7.06
|
Claims Procedure
.
A Participant or Beneficiary
who believes that he is being denied a benefit to which he is entitled under the Plan (referred to in this Section
|
|
(a)
|
Time for Response
.
Upon receipt of a claim, Textron shall advise the Claimant that a response will be forthcoming within 90 days. Textron may, however, extend the response period for up to an additional 90 days for reasonable cause, and shall notify the Claimant of the reason for the extension and the expected response date. Textron shall respond to the claim within the specified period.
|
|
(b)
|
Denial
. If the claim is denied in whole or part, Textron shall provide the Claimant with a written decision, using language calculated to be understood by the Claimant, setting forth (1) the specific reason or reasons for such denial; (2) the specific reference to relevant provisions of this Plan on which such denial is based; (3) a description of any additional material or information necessary for the Claimant to perfect his claim and an explanation why such material or such information is necessary; (4) appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; (5) the time limits for requesting a review of the claim; and (6) the Claimant’s right to bring an action for benefits under Section 502(a) of ERISA.
|
|
(c)
|
Request for Review
. Within 60 days after the Claimant
’s
receipt of the written decision denying the claim in whole or in part, the Claimant may request in writing that Textron review the determination. The Claimant or his duly authorized representative may, but need not, review the relevant documents and submit issues and comment in writing for consideration by Textron. If the Claimant does not request a review of the initial determination within such 60-day period, the Claimant shall be barred from challenging the determination.
|
|
(d)
|
Review of Initial Determination
. Within 60 days after Textron receives a request for review, it will review the initial determination. If special circumstances require that the 60-day time period be extended, Textron will so notify the Claimant and will render the decision as soon as possible, but no later than 120 days after receipt of the request for review.
|
|
(e)
|
Decision on Review
.
All decisions on review shall be final and binding with respect to all concerned parties. The decision on review shall set forth, in a manner calculated to be understood by the Claimant, (1) the specific reasons for the decision, shall including references to the relevant Plan provisions upon which the decision is based; (2) the Claimant’s right to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information, relevant to his bene-
|
7.07
|
Enforcement Following a Change in Control
. If, after a Change in Control, any claim is made or any litigation is brought by a Participant or Beneficiary to enforce or interpret any provision contained in this Plan, Textron and the “person” or “group” described in Section 1.05 shall be liable, jointly and severally, to reimburse the Participant or Beneficiary for the Participant’s or Beneficiary’s reasonable attorney’s fees and costs incurred during the Participant’s or Beneficiary’s lifetime in pursuing any such claim or litigation, and to pay prejudgment interest at the Prime Rate as quoted in the Money Rates section of
The Wall Street Journal
on any money award or judgment obtained by the Participant or Beneficiary, payable at the same time as the underlying award or judgment. Any reimbursement pursuant to the preceding sentence shall be paid to the Participant no earlier than six months after the Participant’s Separation From Service, and shall be paid to the Participant or Beneficiary no later than the end of the calendar year following the year in which the expense was incurred. The reimbursement shall not be subject to liquidation or exchange for another benefit, and the amount of reimbursable expense incurred in one year shall not affect the amount of reimbursement available in another year.
|
8.01
|
Amendment
. Subject to subsections (a) and (b), below, the Board or its designee shall have the right to amend, modify, or suspend this Plan at any time by written resolution or other formal action reflected in writing.
|
|
(a)
|
No amendment, modification, or suspension shall reduce the amount credited to a Participant’s Account immediately before the effective date of the amendment, modification, or suspension.
|
|
(b)
|
Following a Change in Control, no amendment, modification, or suspension shall be made that directly or indirectly reduces any right or benefit provided upon a Change in Control.
|
8.02
|
Delegation of Amendment Authority
. The Board may, to the extent permitted by applicable law, make a non-exclusive written delegation of the authority to amend
|
8.03
|
Termination
. The Board or its designee shall have the right to terminate this Plan at any time before a Change in Control by written resolution. No termination of the Plan shall reduce a Participant’s Account immediately before the effective date of the termination.
|
8.04
|
Distributions Upon Plan Termination
. Upon the termination of the Plan by the Board with respect to all Participants, and termination of all arrangements sponsored by any Textron Company that would be aggregated with the Plan under IRC Section 409A, Textron shall have the right, in its sole discretion, and notwithstanding any elections made by the Participant, to pay the Participant’s vested Account in a lump sum, to the extent permitted under IRC Section 409A. All payments that may be made pursuant to this Section 8.04 shall be made no earlier than the thirteenth month and no later than the twenty-fourth month after the termination of the Plan. Textron may not accelerate payments pursuant to this Section 8.04 if the termination of the Plan is proximate to a downturn in Textron’s financial health. If Textron exercises its discretion to accelerate payments under this Section 8.04, it shall not adopt any new arrangement that would have been aggregated with the Plan under IRC Section 409A within three years following the date of the Plan’s termination.
|
9.01
|
Use of Masculine or Feminine Pronouns
. Unless a contrary or different meaning is expressly provided, each use in this Plan of the masculine or feminine gender shall include the other and each use of the singular number shall include the plural.
|
9.02
|
Transferability of Plan Benefits
.
|
|
(a)
|
Textron shall recognize the right of an alternate payee named in a domestic relations order to receive all or a portion of a Participant’s benefit under the Plan, provided that (1) the domestic relations order would be a “qualified domestic relations order” within the meaning of IRC Section 414(p) if IRC Section 414(p) were applicable to the Plan (except that the order may require payment to be made to the alternate payee before the Participant’s earliest retirement age), (2) the domestic relations order does not purport to give the alternate payee any right to assets of any Textron Company, (3) the domestic relations order does not purport to allow the alternate payee to defer payments beyond the date when the benefits assigned to the alternate payee would have been paid to the Participant, and
|
|
(b)
|
Except as provided in subsection (a) concerning domestic relations orders, no amount payable at any time under this Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge or encumbrance of any kind to the extent that the assignment or other action would cause the amount to be included in the Participant’s gross income or treated as a distribution for federal income tax purposes. A Participant may, with the written approval of Textron, make an assignment of a benefit for estate planning or similar purposes if the assignment does not cause the amount to be included in the Participant’s gross income or treated as a distribution for federal income tax purposes. Any attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any such benefit, whether presently or subsequently payable, shall be void unless so approved. Except as required by law, no benefit payable under this Plan shall in any manner be subject to garnishment, attachment, execution or other legal process, or be liable for or subject to the debts or liability of any Participant or Beneficiary.
|
9.03
|
Section 409A Compliance
. The Plan is intended to comply with IRC Section 409A and should be interpreted accordingly. Any distribution election that would not comply with IRC Section 409A is not effective. To the extent that a provision of this Plan does not comply with IRC Section 409A, such provision shall be void and without effect. Textron does not warrant that the Plan will comply with IRC Section 409A with respect to any Participant or with respect to any payment, however. In no event shall any Textron Company; any director, officer, or employee of a Textron Company (other than the Participant); or any member of Textron be liable for any additional tax, interest, or penalty incurred by a Participant or Beneficiary as a result of the Plan’s failure to satisfy the requirements of IRC Section 409A, or as a result of the Plan’s failure to satisfy any other requirements of applicable tax laws.
|
9.04
|
Controlling State Law
. This Plan shall be construed in accordance with the laws of the State of Delaware.
|
9.05
|
No Right to Employment
. Nothing contained in this Plan shall be construed as a contract of employment between any Participant and any Textron Company, or to suggest or create a right in any Participant of continued employment at any Textron Company.
|
9.06
|
Additional Conditions Imposed
. Textron, the Chief Executive Officer, and the Chief Human Resources Officer may impose such other lawful terms and conditions on participation in this Plan as deemed desirable.
|
TEXTRON SPILLOVER SAVINGS PLAN
____________________________
APPENDIX
A
____________________________
Defined Contribution Provisions
of the
Supplemental Benefits Plan for
Textron Key Executives
(As in effect before January 1, 2008)
|
Introduction
|
1
|
||||
Article I - Definitions
|
3
|
Article II - Participation
|
3
|
||||
Article III - Supplemental Savings Benefits
|
4
|
||||
Article IV - Supplemental Included Plan Benefits
|
5
|
||||
Article V - Unfunded Plan
|
5
|
Article VI - Plan Administration
|
5
|
||||
Article VII - Miscellanous
|
7
|
A.
|
Key Executive Plan
(As in Effect Before January 1, 2007)
|
B.
|
Supplemental Savings Plan for Textron Key Executives
(Effective January 1, 2007)
|
C.
|
Textron Spillover Savings Plan
(Effective January 1, 2008)
|
D.
|
Key Executive Protected Benefits
(Earned and Vested Before 2005)
|
E.
|
Benefits Subject To Section 409A
(Earned or Vested From 2005 Through 2007)
|
1.01
|
“Board” means the Board of Directors of Textron.
|
1.02
|
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
|
1.03
|
“Included Plan” means a Textron defined contribution plan specifically designated by the Board under Article IV.
|
1.04
|
“Key Executive” means an employee of a Textron Company who has been and continues to be designated as a Key Executive under the Plan by Textron’s Chief Executive Officer and Chief Human Resources Officer.
|
1.05
|
“Participant” means a Key Executive who is participating in this Plan pursuant to Article II and, unless the context clearly indicates to the contrary, a former Participant who is entitled to benefits under this Plan.
|
1.06
|
“Plan” means this Supplemental Savings Plan for Textron Key Executives, as amended and restated from time to time.
|
1.07
|
“Savings Plan” means the Textron Savings Plan, as amended and restated from time to time.
|
1.08
|
“Statutory Limit” means any limit on benefits under, or annual additions to, qualified plans imposed by Section 401(a)(17) or 415 of the Internal Revenue Codes of 1954 or 1986, as amended from time to time.
|
1.09
|
“Supplemental Shares” means phantom shares of Textron common stock accumulated and accounted for under this Plan for the purpose of determining the cash value of distributions and transfers from a Participant’s supplemental savings account.
|
1.10
|
“Textron” means Textron Inc., a Delaware corporation, and any successor of Textron Inc.
|
1.11
|
“Textron Company” means Textron or any company controlled by or under common control with Textron.
|
2.01
|
A Key Executive shall participate in this Plan if the annual additions to her accounts under the Savings Plan or any Included Plan are limited by one or more Statutory Limits.
|
3.01
|
Textron shall maintain a supplemental savings account and a fixed income account for each Participant who participates in the Savings Plan for making credits, payments, and transfers described in this Article.
|
3.02
|
A Participant who contributes at least 10% of eligible compensation to the Textron Savings Plan each month shall receive a supplemental savings credit. Textron shall, as of the end of each calendar month, credit Supplemental Shares to each supplemental savings account, equal to the lost employer contribution for the month divided by the average of the composite closing prices of Textron common stock, as reported in
The Wall Street Journal
for the month. The lost employer contribution for the month shall be equal to the Participant’s Savings Plan eligible compensation for the month times the Participant’s Savings Plan election percentage (not to exceed 10%) times 50%, less the employer contribution made to the Participant’s Savings Plan Account for the month.
|
3.03
|
Textron shall, in each calendar quarter, credit Supplemental Shares to a Participant’s supplemental savings account equal in number to the number of shares of Textron common stock that would have been allocated on account of dividends to the Participant’s supplemental savings account as of that date, based on the average of the composite closing prices of Textron common stock, as reported in
The Wall Street Journal
for the month in which the date of record occurs.
|
3.04
|
Amounts in the fixed income account shall earn interest at a monthly interest rate that is one twelfth of the average for the calendar month of the Moody’s Corporate Bond Yield Index as published by Moody’s Investors Service, Inc. (or any successor thereto), or, if such monthly yield is no longer published, a substantially similar average selected by Textron. Interest shall be credited on the last day of each calendar month on the average daily balance of the fixed income account during the month.
|
3.05
|
A Participant who has terminated her Textron employment may, once each calendar month, elect to transfer, in 5% increments (with a minimum transfer of 10% of the supplemental savings account), effective the first calendar day of the month following the minimum notice of three business days, any amount in her supplemental savings account to her fixed income account. The cash value transferred will be determined by multiplying the current value of Textron common stock by the number of whole and fractional Supplemental Shares in her supplemental savings account as of the end of the month in which the election is made times the percentage being transferred. If any portion of a Participant’s accounts under the Savings Plan shall be forfeited, a proportionate part of the Participant’s Supplemental Shares also shall be forfeited. The current value of a share of Textron common stock at the transfer date shall be the average of the composite closing prices, as reported in
The Wall Street Journal,
for the first ten trading days of the effective month.
|
3.06
|
The number of Supplemental Shares credited to a Participant’s account under this Article III shall be adjusted, without receipt of any consideration by Textron, on account of any stock split, stock dividend, or similar increase or decrease affecting Textron common stock, as if the Supplemental Shares were actual shares of Textron common stock.
|
4.01
|
The Board may cause this Plan to provide supplemental benefits on account of an Included Plan by adopting a Schedule to this Plan. The Schedule shall specify any special terms or conditions upon which the supplemental benefits shall be provided. Except as specifically provided in a Schedule, all of the terms and conditions of this Plan shall apply to the Included Plan.
|
5.01
|
Benefits to be provided under this Plan are unfunded obligations of Textron. Nothing contained in this Plan shall require Textron to segregate any monies from its general funds, to create any trust, to make any special deposits, or to purchase any policies of insurance with respect to such obligations. If Textron elects to purchase individual policies of insurance on one or more of the Participants to help finance its obligations under this Plan, such individual policies and the proceeds therefrom shall at all times remain the sole property of Textron and neither the Participants whose lives are insured nor their beneficiaries shall have any ownership rights in such policies of insurance.
|
5.02
|
This Plan is intended in part to provide benefits for a select group of management employees who are highly compensated, within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and in part to be an excess benefit plan, pursuant to Section 3(36) of ERISA.
|
5.03
|
No Participant shall be required or permitted to make contributions to this Plan.
|
6.01
|
Textron shall be the plan administrator of this Plan and shall be solely responsible for its general administration and interpretation. Textron shall have all such powers as may be necessary to carry out the provisions hereof. Textron may from time to time establish rules for the administration of this Plan and the transaction of its business. Subject to Section 6.06, any action by Textron shall be final, conclusive, and binding on each Participant and all persons claiming by, through or under any Participant. Textron (and any person or persons to whom it delegates any of its authority as plan administrator) shall have discretionary authority to determine eligibility for Plan benefits, to construe the terms of the Plan, and to determine all questions arising in the administration of the Plan, and shall make all such determinations and interpretations in a nondiscriminatory manner. The
|
Textron Spillover Savings Plan
Effective January 3, 2010
|
Appendix A
Page 5
|
|
Board may exercise Textron’s authority as plan administrator, and the authority to administer the Plan may be delegated as provided in Section 6.02.
|
6.02
|
The Board may, to the extent permitted by applicable law, make a non-exclusive written delegation of the authority to administer the Plan to a committee of the Board or to one or more officers of Textron. The Board may, to the extent permitted by applicable law, authorize a committee of the Board or officers of Textron to make a futher delegation of the authority to administer the Plan.
|
6.03
|
(a)
Except as provided in the following sentence, and in subsections (b), (c), and (d), below, the distribution of any account under Article III or Article IV shall be made at the same time, in the same manner, to the same persons and in the same proportions, as is made the payment or distribution under the related Savings Plan or Included Plan, or otherwise as determined by Textron in its sole discretion. However, if a Participant’s supplemental savings account contains 50 or fewer Supplemental Shares at termination, such Participant’s supplemental savings account shall be paid in a single sum. Textron may withhold from benefits and accounts under this Plan, any taxes or other amounts required by law to be withheld. Notwithstanding any provision to the contrary, no benefit shall be paid to any Participant while employed by Textron.
(b)
Each amount then credited to the accounts under Article III and Article IV shall become due and payable to the respective Participants and beneficiaries immediately upon a Change in Control as defined in Section 7.03.
(c)
Effective for payments commencing on or after January 1, 2008, Textron has exercised its discretion pursuant to subsection (a) to determine that all distributions shall be made or shall commence at the time of a Participant’s termination of employment (or in January 2009, if the Participant’s employment terminated before December 31, 2007) in one of the following forms of payment:
|
|
|
(i)
A cash lump sum.
|
|
|
(ii)
Annual installments in cash over a period not exceeding 15 years (or the Participant’s life expectancy, if less), calculated each year by dividing the Participant’s unpaid account balance as of January 1 of that year by the remaining number of unpaid installments. If a Participant dies while receiving installment payments, the remaining installments will be paid in a lump sum to the Participant’s designated beneficiary.
|
|
A Participant who wishes to request a form of payment must file an election in a form acceptable to Textron, before the election deadline described below, to indicate her preferred form of payment; but all Participant elections shall be subject to Textron’s discretion to change the elected form of payment. If a Participant’s supplemental savings
|
Textron Spillover Savings Plan
Effective January 3, 2010
|
Appendix A
Page 6
|
|
account contains 50 or fewer Supplemental Shares at termination, the Participant’s supplemental savings account shall be paid in a cash lump sum at the Participant’s termination of employment. If a Participant who is still employed by a Textron Company fails to request a form of payment before the end of 2008, such Participant’s account shall be paid in a lump sum in cash six months after the Participant’s termination of employment. If a Participant’s employment with all Textron Companies has terminated before December 31, 2007, and if the Participant fails to request a form of payment before the end of 2008, such Participant’s account shall be paid in a lump sum in cash in January 2009. |
|
(d)
Effective January 1, 2008, any payment to a beneficiary shall be made in a lump sum in the month following the Participant’s death (or in January 2008, if later). If a beneficiary is receiving installment payments as of December 31, 2007, any remaining installments due after 2007 shall be aggregated and paid in a lump sum in January 2008.
|
6.04
|
Textron may employ or engage such agents, accountants, actuaries, counsel, other experts and other persons as it deems necessary or desirable in connection with the interpretation and administration of this Plan. Textron shall be entitled to rely upon all certifications made by an accountant selected by Textron. Textron and its committees, officers, directors and employees shall not be liable for any action taken, suffered or omitted by them in good faith in reliance upon the advice or opinion of any such agent, accountant, actuary, counsel or other expert. All action so taken, suffered or omitted shall be conclusive upon each of them and upon all other persons interested in this Plan.
|
6.05
|
Textron may require proof of death or total disability of any Participant, former Participant or beneficiary and evidence of the right of any person to receive any Plan benefit.
|
6.06
|
Claims under this Plan shall be filed in writing with Textron, and shall be reviewed and resolved pursuant to the claims procedure in Section 7.06 of the Textron Spillover Savings Plan.
|
7.01
|
Unless a contrary or different meaning is expressly provided, each use in this Plan of the masculine or feminine gender shall include the other and each use of the singular number shall include the plural.
|
7.02
|
(a) Textron shall recognize the right of an alternate payee named in a domestic relations order to receive all or a portion of a Participant’s benefit under the Plan, provided that (1) the domestic relations order would be a “qualified domestic relations order” within the meaning of IRC Section 414(p) if IRC Section 414(p) were applicable to the Plan (except that the order may require payment to be made to the alternate payee before the Participant’s earliest retirement age), (2) the domestic relations order does not purport to give the alternate payee any right to assets of any Textron Company, (3) the domestic re- |
Textron Spillover Savings Plan
Effective January 3, 2010
|
Appendix A
Page 7
|
|
lations order does not purport to allow the alternate payee to defer payments beyond the date when the benefits assigned to the alternate payee would have been paid to the Participant, and (4) the domestic relations order does not require the Plan to make a payment to an alternate payee in any form other than a cash lump sum.
|
|
(b)
Except as provided in subsection (a) concerning domestic relations orders, no amount payable at any time under this Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge or encumbrance of any kind to the extent that the assignment or other action would cause the amount to be included in the Participant’s gross income or treated as a distribution for federal income tax purposes. A Participant may, with the written approval of Textron, make an assignment of a benefit for estate planning or similar purposes if the assignment does not cause the amount to be included in the Participant’s gross income or treated as a distribution for federal income tax purposes. Any attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any such benefit, whether presently or subsequently payable, shall be void unless so approved. Except as required by law, no benefit payable under this Plan shall in any manner be subject to garnishment, attachment, execution or other legal process, or be liable for or subject to the debts or liability of any Participant or beneficiary.
|
7.03
|
Notwithstanding any Plan provision to the contrary, the Board or its designee shall have the right to amend, modify, suspend or terminate this Plan at any time by written ratification of such action; provided, however, that no amendment, modification, suspension or termination:
|
|
(1)
|
shall reduce an amount credited to any supplemental account under Article III or Article IV of this Plan immediately before the effective date of the amendment, modification, suspension or termination; or
|
|
(2)
|
shall be made to Section 6.03 or 7.03 following a Change in Control.
|
|
If after a Change in Control any claim is made or any litigation is brought by a Participant or beneficiary to enforce or interpret any provision contained in this Plan, Textron and the “person” or “group” described in the next following sentence shall be liable, jointly and severally, to indemnify the Participant or beneficiary and to pay prejudgment interest on any recovery as provided in Section 7.07 of the Textron Spillover Savings Plan.
|
|
For purposes of this Plan, a “Change in Control” shall occur if (i) any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Act”)) other than Textron, any trustee or other fiduciary holding Textron common stock under an employee benefit plan of Textron or a related
|
Textron Spillover Savings Plan
Effective January 3, 2010
|
Appendix A
Page 8
|
|
company, or any corporation which is owned, directly or indirectly, by the stockholders of Textron in substantially the same proportions as their ownership of Textron common stock, is or becomes (other than by acquisition from Textron or a related company) the “beneficial owner” (as defined in Rule 13d-3 under the Act) of more than 30% of the then outstanding voting stock of Textron, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board (and any new director whose election by the Board or whose nomination for election by Textron’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 such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority thereof, or (iii) stockholders of Textron approve a merger or consolidation of Textron with any other corporation, other than a merger or consolidation which would result in the voting securities of Textron outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of Textron or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the stockholders of Textron approve a plan of complete liquidation of Textron or an agreement for the sale or disposition by Textron of all or substantially all of Textron’s assets.
|
7.04
|
The Board may, to the extent permitted by applicable law, make a non-exclusive written delegation of the authority to amend the Plan to a committee of the Board or to one or more officers of Textron. The Board may, to the extent permitted by applicable law, authorize a committee of the Board to make a further delegation of the authority to amend the Plan.
|
7.05
|
This Plan shall be construed in accordance with the laws of the State of Delaware.
|
7.06
|
Nothing contained in this Plan shall be construed as a contract of employment between any Participant and any Textron Company, or to suggest or create a right in any Participant to be continued in employment as a Key Executive or other employee of any Textron Company.
|
7.07
|
Textron, the Chief Executive Officer, and the Chief Human Resources Officer may impose such other lawful terms and conditions on participation in this Plan as deemed desirable.
|
TEXTRON SPILLOVER SAVINGS PLAN
____________________________
APPENDIX
A
____________________________
Market Square Profit Sharing Plan Schedule
(As in effect before January 1, 2008)
|
1.01
|
“Market Square Plan” means The Market Square Profit Sharing Plan, as amended and restated from time to time.
|
1.02
|
Textron shall maintain a stock unit account and a fixed income account for each participant for making credits, payments, and transfers described in this Schedule.
|
1.03
|
Textron shall, in each calendar quarter, credit Supplemental Shares to a Participant’s stock unit account equal in number to the number of shares of Textron common stock that would have been allocated on account of dividends to the Participant’s stock unit account as of that date, based on the average of the composite closing prices of Textron common stock, as reported in
The Wall Street Journal
for the month in which the date of record occurs.
|
1.04
|
Amounts in the fixed income account shall earn interest at a monthly interest rate that is the average for the calendar month of the Moody’s Corporate Bond Yield Index as published by Moody’s Investors Service, Inc. (or any successor thereto), or, if such monthly yield is no longer published, a substantially similar average selected by Textron. Interest shall be credited on the last day of each calendar month on the average daily balance of the fixed income account during the month.
|
1.05
|
A Participant who has terminated her Textron employment may, once each calendar month, elect to transfer, in 5% increments (with a minimum transfer of 10% of the stock unit account), effective the first calendar day of the month following the minimum notice of three business days, any amount in her stock unit account to her general fund account. The cash value transferred will be determined by multiplying the current value of Textron common stock by the number of whole and fractional Supplemental Shares in her stock unit account as of the end of the month in which the election is made times the percentage being transferred. The current value of a share of Textron common stock at the transfer date shall be the average of the composite closing prices, as reported in
The Wall Street Journal,
for the first ten trading days of the effective month.
|
1.06
|
The number of Supplemental Shares credited to a Participant’s account under this schedule shall be adjusted, without receipt of any consideration by Textron, on account of any stock split, stock dividend, or similar increase or decrease affecting Textron common stock, as if the Supplemental Shares were actually shares of Textron common stock.
|
1.07
|
Subject to Section 1.08, below, benefits shall become payable upon the Participant’s termination of Textron employment or such other time as determined by Textron in its sole discretion. Textron shall distribute the benefits in accordance with any one or a combination of the following methods after considering any method of payment requested by the Participant or by the beneficiaries entitled to receive the benefits:
|
|
|
(1)
Payment in a single sum.
|
|
|
(2)
Payment in a number of annual installments, each payable as soon as practicable after the end of each successive calendar year, over a period not exceeding the life expectancy of the payee or his primary beneficiary (whichever is greater) determined as of the date on which the benefits first became payable. The annual installments shall be calculated each year by dividing the unpaid amount of the benefits as of January 1 of that year by the remaining number of unpaid installments. Plan benefits payable under Section 1.07 shall begin to be paid not later than April 1 of the calendar year that begins after the date the Participant attains or would have attained age 70½.
|
1.08
|
Effective for payments commencing on or after January 1, 2008, Textron has exercised its discretion pursuant to Section 1.07 to determine that all distributions shall be made or shall commence at the time of a Participant’s termination of employment (or in January 2009, if later) in one of the following forms of payment:
|
|
|
(i)
A cash lump sum.
|
|
|
(ii)
Annual installments in cash over a period not exceeding 15 years (or the Participant’s life expectancy, if less), calculated each year by dividing the Participant’s unpaid account balance as of January 1 of that year by the remaining number of unpaid installments. If a Participant dies while receiving installment payments, the remaining installments will be paid in a lump sum to the Participant’s designated beneficiary.
|
|
A Participant who wishes to request a form of payment must file an election in a form acceptable to Textron, before the election deadline described below, to indicate her preferred form of payment; but all Participant elections shall be subject to Textron’s discretion to change the elected form of payment. If a Participant who is still employed by a Textron Company fails to request a form of payment before the end of 2008, such Participant’s account shall be paid in a lump sum in cash six months after the Participant’s termination of employment. If a Participant’s employment with all Textron Companies has terminated before December 31, 2008, and if the Participant fails to request a form of payment before the end of 2008, such Participant’s account shall be paid in a lump sum in cash in January 2009.
Effective January 1, 2008, any payment to a beneficiary shall be made in a lump sum in the month following the Participant’s death (or in January 2008, if later). If a beneficiary is receiving installment payments as of December 31, 2007, any remaining installments due after 2007 shall be aggregated and paid in a lump sum in January 2008.
|
Textron Spillover Savings Plan
Effective January 3, 2010
|
Appendix A (Market Square Schedule)
Page 2
|
TEXTRON SPILLOVER PENSION PLAN
____________________
As Amended and Restated
Effective January 3, 2010
|
Introduction
|
1
|
||
Article I – Definitions
|
2
|
||
1.01
|
Beneficiary
|
2
|
|
1.02
|
Board
|
2
|
|
1.03
|
Change in Control
|
2
|
|
1.04
|
Compensation
|
3
|
|
1.05
|
Compensation Base
|
4
|
|
1.06
|
ERISA
|
4
|
|
1.07
|
Executive Plan
|
4
|
|
1.08
|
Grandfathered Formula
|
4
|
|
1.09
|
Grandfathered Participant
|
4
|
|
1.10
|
IRC
|
4
|
|
1.11
|
Key Executive Plan
|
5
|
|
1.12
|
Participant
|
5
|
|
1.13
|
Pension Plan
|
5
|
|
1.14
|
Plan
|
5
|
|
1.15
|
Plan Administrator
|
5
|
|
1.16
|
Retirement Age
|
5
|
|
1.17
|
Separation From Service
|
5
|
|
1.18
|
Statutory Limit
|
5
|
|
1.19
|
Textron
|
5
|
|
1.20
|
Textron Company
|
5
|
|
1.21
|
Textron Retirement Program
|
5
|
|
1.22
|
Total Disability
|
5
|
|
Article II – Participation
|
6
|
||
2.01
|
Eligibility and Participation
|
6
|
|
2.02
|
Period of Participation
|
6
|
|
Article III – Spillover Pension Benefit Amounts
|
6
|
||
3.01
|
Retirement Benefits
|
6
|
|
3.02
|
Grandfathered Participants
|
6
|
|
3.03
|
Calculation of Benefits
|
7
|
|
3.04
|
Other Forms of Benefit
|
8
|
|
3.05
|
Benefit Upon Transfer of Liability
|
9
|
Texton Spillover Pension Plan
Amended and Restated January 3, 2010
|
Table of Contents
Page i
|
Article IV – Vesting
|
9
|
||
4.01
|
Vesting Schedule
|
9
|
|
4.02
|
Change in Control
|
9
|
|
Article V – Distribution of Benefits
|
9
|
||
5.01
|
Automatic Distributions
|
9
|
|
5.02
|
Spousal Consent
|
9
|
|
5.03
|
Time and Form of Distribution
|
10
|
|
5.04
|
Lump-sum Distribution
|
10
|
|
5.05
|
Six-Month Delay
|
11
|
|
5.06
|
Automatic Cash-Out
|
12
|
|
5.07
|
Disability Benefits
|
12
|
|
5.08
|
Payment of Death Benefits
|
12
|
|
5.09
|
Administrative Delay in Payment Date
|
13
|
|
5.10
|
Distribution Upon Change in Control
|
13
|
|
5.11
|
Change in Payment Election
|
14
|
|
5.12
|
Rehired Participants
|
15
|
|
Article VI – Unfunded Plan
|
16
|
||
6.01
|
No Plan Assets
|
16
|
|
6.02
|
Top-Hat Plan Status
|
16
|
|
Article VII – Plan Administration
|
16
|
||
7.01
|
Plan Administrator’s Powers
|
16
|
|
7.02
|
Delegation of Administrative Authority
|
17
|
|
7.03
|
Tax Withholding
|
17
|
|
7.04
|
Use of Third Parties to Assist with Plan Administration
|
17
|
|
7.05
|
Proof of Right to Receive Benefits
|
18
|
|
7.06
|
Claims Procedure
|
18
|
|
7.07
|
Enforcement Following a Change in Control
|
19
|
|
Article VIII – Amendment and Termination
|
19
|
||
8.01
|
Amendment
|
19
|
|
8.02
|
Delegation of Amendment Authority
|
20
|
|
8.03
|
Termination
|
20
|
|
8.04
|
Distributions Upon Plan Termination
|
20
|
Texton Spillover Pension Plan
Amended and Restated January 3, 2010
|
Table of Contents
Page ii
|
Article IX – Miscellaneous
|
20
|
||
9.01
|
Use of Masculine or Feminine Pronouns
|
20
|
|
9.02
|
Transferability of Plan Benefits
|
20
|
|
9.03
|
Section 409A Compliance
|
21
|
|
9.04
|
Controlling State Law
|
21
|
|
9.05
|
No Right to Employment
|
21
|
|
9.06
|
Additional Conditions Imposed
|
22
|
1.01
|
“Beneficiary” means the person designated under the Plan (including any person who is automatically designated by the terms of the Plan) to receive any death benefit or pre-pension survivor annuity, or survivor annuity payable with respect to a Participant. A Participant’s trust or estate may also be the Participant’s Beneficiary for a death benefit other than a life annuity.
|
1.02
|
“Board” means the Board of Directors of Textron.
|
1.03
|
“Change in Control” means, for any Participant who was not an employee of a Textron Company on December 31, 2007:
|
|
(a)
|
any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Act”) and of IRC Section 409A) other than Textron, any trustee or other fiduciary holding Textron common stock under an employee benefit plan of Textron or a related company, or any corporation which is owned, directly or indirectly, by the stockholders of Textron in substantially similar proportions as their ownership of Textron common stock
|
|
(1)
|
becomes (other than by acquisition from Textron or a related company) the “beneficial owner” (as defined in Rule 13d-3 under the Act) of stock of Textron that, together with other stock held by such person or group, possesses more than 50% of the combined voting power of Textron’s then-outstanding voting stock, or
|
|
(2)
|
acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person) beneficial ownership of stock of Textron possessing more than 30% of the combined voting power of Textron's then-outstanding stock, or
|
|
(3)
|
acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person) all or substantially all of the total gross fair market value of all of the assets of Textron immediately prior to such acquisition or acquisitions (where gross fair market value is determined without regard to any associated liabilities); or
|
|
(b)
|
a merger or consolidation of Textron with any other corporation occurs, other than a merger or consolidation that would result in the voting
|
Texton Spillover Pension Plan
Amended and Restated January 3, 2010
|
Page 2
|
|
|
securities of Textron outstanding immediately before the merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) 50% or more of the combined voting power of the voting securities of Textron or such surviving entity outstanding immediately after such merger or consolidation, or
|
|
(c)
|
during any 12-month period, a majority of the members of the Board is replaced by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors before the date of their appointment or election.
|
1.04
|
“Compensation” means a Participant’s annual compensation determined as follows:
|
|
(a)
|
For years after 2006, Compensation means eligible annual compensation as defined under the corresponding benefit formula in the Participant’s Pension Plan, without regard to the Statutory Limits, subject to the modifications described in this Section 1.04(a). For any executive who was first awarded performance share units before October 27, 1999, Compensation shall include payments made under performance share units (regardless of when the units are awarded); but Compensation shall not include amounts attributable to performance share units for any executive who was first awarded performance share units after October 26, 1999. Compensation shall include a Participant’s elective deferrals under the Deferred Income Plan for Textron Key Executives, the Textron Deferred Income Plan for Executives, and the Deferred Income Plan for Textron Executives (and, if applicable, shall also include the automatic deferral of
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a Participant’s performance shares, performance share units, or annual incentive bonus exceeding 100% of the target bonus), but only to the extent that these amounts would have been included in Compensation if they had not been deferred.
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(b)
|
For any individual who participated in the Key Executive Plan before 2007, Compensation for each year before 2007 shall be determined under Section 1.03 of Appendix A.
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|
(c)
|
For any individual who participated in the Executive Plan (but not in the Key Executive Plan) before 2007, Compensation for each year before 2007 shall be determined under Section 1.03 of Appendix B.
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|
(d)
|
If a year before 2007 is included in the Participant’s Compensation Base under the Plan, and the Participant did not participate in the Key Executive Plan or the Executive Plan before 2007, Compensation for that year shall be determined as provided in Section 1.04(a), above.
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1.05
|
“Compensation Base” means a Participant’s final average compensation, determined as provided in the Pension Plan, but substituting Compensation as defined in Section 1.04 of the Plan for the Participant’s annual compensation under the Pension Plan.
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1.06
|
“
ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
|
1.07
|
“Executive Plan” means the Textron Supplemental Benefits Plan for Executives, as in effect before January 1, 2007. The defined benefit provisions of the Executive Plan are included in this Plan as Appendix B.
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1.08
|
“Grandfathered Formula” means the benefit formula, early retirement eligibility provisions, and early retirement factors in effect under a Participant’s Pension Plan on December 31, 2006, as used to determine benefits earned after 2006.
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1.09
|
“Grandfathered Participant” means any employee who participated in either the Key Executive Plan or the Executive Plan as of December 31, 2006; who continued to participate in the Plan after 2006; and who did not satisfy the requirements (described in Section 3.02) to receive a grandfathered benefit under the Textron Retirement Program.
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1.10
|
“IRC” means the Internal Revenue Code of 1986, as amended. References to any section of the Internal Revenue Code shall include any final regulations interpreting that section.
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1.11
|
“Key Executive Plan” means the Supplemental Benefits Plan for Textron Key Executives, as in effect before January 1, 2007. The defined benefit provisions of the Key Executive Plan are included in this Plan as Appendix A.
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1.12
|
“Participant” means an employee of Textron who is eligible to participate in the Plan pursuant to Section 2.01 and whose participation has not been terminated as provided in Section 2.02.
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1.13
|
“Pension Plan” means a tax-qualified defined benefit plan that is part of the Textron Retirement Program, including (but not limited to) the Bell Helicopter Textron Retirement Plan (part of the Bell Helicopter Textron Master Retirement Plan), the Textron Pension Plan for Cessna Employees (Addendum F to the Textron Master Retirement Plan), and the Textron Pension Plan (Addendum A to the Textron Master Retirement Plan).
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1.14
|
“Plan” means this Textron Spillover Pension Plan, as amended and restated from time to time.
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1.15
|
“Plan Administrator” means Textron or its designees, as described in Section 7.01.
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1.16
|
“Retirement Age” means the age specified by the Participant for the commencement of benefits under this Plan, which may be age 55, 62, or 65.
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1.17
|
“Separation From Service” means a Participant’s termination of employment with all Textron Companies, other than by reason of death or Total Disability, that qualifies as a “separation from service” for purposes of IRC Section 409A.
|
1.18
|
“Statutory Limit” means any limit on benefits under tax-qualified defined benefit plans imposed by IRC Section 401(a)(17) or Section 415.
|
1.19
|
“Textron” means Textron Inc., a Delaware corporation, and any successor to Textron Inc.
|
1.20
|
“Textron Company” means Textron or any company controlled by or under common control with Textron within the meaning of IRC Section 414(b) or (c).
|
1.21
|
“Textron Retirement Program” means a floor-offset retirement arrangement consisting of a floor benefit provided under a Pension Plan and an offset benefit provided under the Textron Inc. Retirement Account Plan.
|
1.22
|
“Total Disability” means physical or mental incapacity of a Participant who is employed by a Textron Company on the disability date, if the incapacity
|
2.01
|
Eligibility and Participation
. An individual who is a participant in a Pension Plan shall become a Participant in the Plan upon either: (a) (1) being designated by Textron’s Chief Executive Officer and Chief Human Resources Officer as an eligible executive and (2) having compensation, as defined in the Pension Plan, that exceeds the limit of IRC Section 401(a)(17), or (b) participating in the Deferred Income Plan for Textron Executives. An individual shall not become a Participant in the Plan after December 31, 2009, unless the individual was a participant in a Pension Plan on December 31, 2009, and has not incurred a Separation from Service after that date and before becoming a Participant in the Plan.
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2.02
|
Period of Participation
. Except as provided in the following sentence, once an individual becomes a Participant under Section 2.01 above, the individual shall remain a Participant (even if his or her compensation, as defined in the Pension Plan, subsequently falls below the IRC Section 401(a)(17) limit) until the individual’s benefit under the Plan is fully distributed, or until the individual’s participation in the Plan is terminated by the Board (or by the Chief Executive Officer and the Chief Human Resources Officer) effective as of the following January 1. If an employee or former employee is not identified in Textron’s records as a Participant as of December 31, 2008, the individual shall not be a Participant, and shall not be entitled to receive any benefit under the Plan, unless the individual becomes a Participant after 2008 pursuant to Section 2.01.
|
3.01
|
Retirement Benefits
. The benefit payable under the Plan to a Participant who is not a Grandfathered Participant shall be (a) the benefit that would have been payable under the Pension Plan if the Statutory Limits were ignored and Compensation Base were determined as provided under Section 1.05, minus (b) the benefit that actually would be payable under the Pension Plan at the same time and in the same form. In addition to the benefit described in the preceding sentence, a Participant who is designated pursuant to Appendix C shall be eligible to receive a wrap-around pension benefit determined as provided in Appendix C, subject to the vesting requirements and other terms and conditions specified in Appendix C.
|
3.02
|
Grandfathered Participants
. Under the Textron Retirement Program, a new Pension Plan formula became effective on January 1, 2007. Any Participant who,
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Texton Spillover Pension Plan
Amended and Restated January 3, 2010
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Page 6
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as of January 1, 2007, was vested, and whose age and years of service combined were at least 55, was grandfathered in his or her prior Pension Plan formula, early retirement eligibility provisions, and early retirement factors. For service after 2006, a Participant who was grandfathered under the Textron Retirement Program will receive the greater of the benefit determined under the new Pension Plan formula and the benefit determined as if the Grandfathered Formula had remained in effect after 2006. Textron wishes to provide a comparable benefit under this Plan for certain Participants who participated in the Key Executive Plan or the Executive Plan on December 31, 2006, but who did not satisfy the requirements to be grandfathered under the Textron Retirement Program. Accordingly, the benefit payable under the Plan to any Participant who is a Grandfathered Participant as defined in Section 1.09 shall be (a) the greater of (i) the benefit determined under the Pension Plan formula applicable to the Participant and (ii) the benefit that would have accrued under the Pension Plan if the Grandfathered Formula had remained in effect after 2006, determined in each case without regard to the Statutory Limits and using Compensation Base as defined in Section 1.05, minus (b) the benefit that actually would be payable under the Pension Plan (without using the Grandfathered Formula) at the same time and in the same form.
|
3.03
|
Calculation of Benefits
. In determining benefits for any purpose under the Plan, and in determining benefits under the Pension Plan for purposes of calculating benefits under the Plan, the following rules shall apply:
|
|
(a)
|
All benefits shall be determined without taking into account any offset for the value of the Participant’s account under the Textron Inc. Retirement Account Plan.
|
|
(b)
|
If a benefit under the Plan commences before or after the Participant’s normal retirement age under the Pension Plan, the benefit under the Plan and under the Pension Plan shall be actuarially adjusted for early or late commencement as provided in the Pension Plan.
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(c)
|
When a benefit under the Plan is reduced by the corresponding benefit under the Pension Plan, the reduction shall be determined as if the Pension Plan benefit were commencing at the same time and were payable in the same form as the benefit under the Plan, regardless of whether the Participant has elected a different time or form of payment for the Pension Plan benefit.
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|
(d)
|
If it is necessary to determine the present value of a Participant’s benefit for purposes of Section 5.06 (concerning automatic cash-out of small benefits), the present value shall be based on (i) the Participant’s early retirement benefit, if the Participant is eligible for early retirement, (ii) the
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Amended and Restated January 3, 2010
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Plan benefit commencing at the Participant’s age 65, if the Participant is not eligible for early retirement or has suffered a Total Disability, or (iii) the survivor annuity or death benefit, if the Participant has died; provided, however, that clause (ii) shall apply in calculating the automatic cash-out under Section 5.06 for any Participant who was, as of December 31, 2008, a member of the Management Committee even if the Participant is eligible for early retirement. If it is necessary to determine the present value of a Participant’s benefit under any other provision of the Plan, the present value shall be based on the Plan benefit commencing at the Participant’s age 65 (or the Participant’s death, in the case of a survivor annuity or death benefit). In each case, present value shall be determined using the 1994 Group Annuity Reserving Table (unisex) based on a blend of 50% of the male mortality rates and 50% of the female mortality rates (if mortality is applicable in the calculation) and an interest rate of 7%.
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|
(e)
|
A Participant’s benefit determined under Section 3.01 or Section 3.02 shall be increased as provided in Section 5.04(c) if the Participant’s lump-sum ratio determined under that section exceeds 100%. If the Participant’s benefit is paid in a form other than a lump sum, the actuarial assumptions specified in subparagraph (d), above, shall be used to convert the enhanced value of the Participant’s benefit to an annuity at age 65; the assumptions specified subparagraph (b) and (c), above, and in Section 3.04, below, shall be used to convert the additional age-65 annuity to the actual form of payment. If the Participant dies before the Participant’s Separation From Service, the lump-sum ratio shall be determined at the time of the Participant’s death; if the lump-sum ratio is greater than 100%, the enhanced value of the Participant’s benefit shall be used to calculate any pre-pension survivor annuity or death benefit payable to the Participant’s Beneficiary.
|
|
(f)
|
Benefits earned before 2007 under the defined benefit portions of the Key Executive Plan or the Executive Plan shall be calculated solely as provided in Appendix A or Appendix B, whichever is applicable.
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3.04
|
Other Forms of Benefit
. Termination benefits, pre-retirement or post-retirement death benefits (including any death benefit and any surviving spouse benefit provided by a Textron Company at its sole cost through a Pension Plan), pre-pension survivor annuity benefits, post-pension survivor annuity benefits, disability benefits, and other optional forms of payment or ancillary benefits shall be based on the Participant’s benefit under the Plan, determined as provided in Section 3.01 or 3.02 and Section 3.03, and shall include any actuarial reduction, charge, survivor percentage, or other adjustment applicable to the corresponding form of payment under the Pension Plan.
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Amended and Restated January 3, 2010
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3.05
|
Benefit Upon Transfer of Liability
. In the event Textron transfers liability for a Participant’s benefit under a Pension Plan to another qualified plan, the Plan benefits under this Article III shall be determined as of the date of such transfer, unless otherwise determined by Textron in its sole discretion.
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4.01
|
Vesting Schedule
. Participants shall vest in the Plan in the same manner as is provided for under the Pension Plan.
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4.02
|
Change in Control
. In the event of a Change in Control, if a Participant is employed by a Textron Company on the date of the Change in Control, all benefits accrued by the Participant as of the date of the Change in Control shall become fully vested.
|
5.01
|
Automatic Distributions
. Unless a Participant elected a different time and form of payment before 2008 under Section 5.11(d), below, the Participant’s benefit shall commence as of the later of age 55 or the first day of the seventh month following Separation From Service, and shall be paid in the form of a single life annuity if the Participant is single when the distribution commences, or in the form of an actuarially equivalent joint and 50% surviving spouse annuity if the Participant is married when the distribution commences. The benefits of a Participant whose benefits vest after his Separation From Service shall commence on the later of the (1) the date that would have applied if his benefits had been vested at his Separation From Service, or (2) the first day of the month following the date on which his benefits vest. A Participant may change the automatic time or form of distribution to another time or form of distribution that is available under this Article V, subject to the spousal consent requirement in Section 5.02, below, and the rules governing changes in distribution elections in Section 5.11, below. A Participant shall be deemed to have elected the automatic time and form of distribution unless the Participant changes his payment election as provided in Article V.
|
5.02
|
Spousal Consent
. If a Participant is married when he or she makes a distribution election (including a change in a prior distribution election), the Participant must have the written consent of his or her spouse in order to elect any form of payment other than a joint and 50% surviving spouse annuity. If a Participant elects to receive a distribution in the form of an annuity, and the Participant marries or re-marries after the date of the distribution election, the Participant shall automatically receive an actuarially equivalent joint and 50% surviving spouse annuity unless his or her current spouse consents in writing to a different form of distribution. Except as provided in the two preceding sentences, if a
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Texton Spillover Pension Plan
Amended and Restated January 3, 2010
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Page 9
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Participant has designated a person other than his or her spouse as a Beneficiary, the Participant may change the Beneficiary designation without the consent of his or her spouse. A change in the Beneficiary designation alone (without a corresponding change in the time or form of distribution) shall not be subject to the requirements of Section 5.11(b).
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5.03
|
Time and Form of Distribution
. Subject to Section 5.01, a Participant may elect a time and form of distribution specified below for the portion of the Participant’s benefit under the Plan that is earned or vested after 2004 (including any portion of the Participant’s benefit that was earned or vested after 2004 under Appendix A or Appendix B). Any portion of the Participant’s benefit that was earned and vested before 2005 shall be calculated and paid solely as provided in Appendix A or Appendix B, whichever is applicable, and shall not be subject to this Article V.
|
|
(a)
|
A lump-sum distribution of the portion of the benefit determined under Section 5.04, payable on the first day of the seventh month following the Participant’s Separation From Service, with the remainder of the benefit (if any) payable as an annuity under subsection (c), below.
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|
(b)
|
A lump-sum distribution of the portion of the benefit determined under Section 5.04, payable on the later of (1) the first day of the seventh month following the Participant’s Separation From Service or (2) attainment of Retirement Age, with the remainder of the benefit (if any) payable as an annuity under subsection (c), below.
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|
(c)
|
A joint and 50% survivor annuity, a joint and 75% survivor annuity, a joint and 100% survivor annuity, a single life annuity, or any other actuarially-equivalent single life annuity or joint and survivor annuity that the Participant is eligible to elect under the Participant’s Pension Plan, commencing on the later of (1) the first day of the seventh month following the Participant’s Separation From Service or (2) attainment of Retirement Age.
|
|
A Participant’s benefit under the Plan will be paid pursuant to the most recent valid election in effect at the time of his Separation From Service (including an election the Participant is deemed to have made under the terms of the Plan), except as provided in Section 5.06 (automatic cash-out of small benefits), Section 5.07 (payments following Total Disability), Section 5.08 (payments following death), Section 5.09 (administrative adjustments), Section 5.10 (payments following a Change in Control), and Section 5.11(c) (distributions before 2008). |
5.0 4
|
Lump-sum Distribution
. A Participant may elect to receive a lump-sum distribution with respect to a portion of his benefit determined as follows:
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Texton Spillover Pension Plan
Amended and Restated January 3, 2010
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Page 10
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(a)
|
If the Participant is not a Grandfathered Participant, the Plan Administrator shall determine the ratio, as of the Participant’s Separation From Service, of (i) the value of the Participant’s account under the Retirement Account Plan to
(ii) the present value of the benefit the Participant earned under the Pension Plan after 2006 (without taking into account any offset for the value of the Participant’s account under the Retirement Account Plan).
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|
(b)
|
If the Participant is a Grandfathered Participant, the Plan Administrator shall determine the ratio in subsection (a), above, as if the Participant had satisfied the requirements to be grandfathered under the Textron Retirement Program, and had earned a benefit under the Pension Plan after 2006 equal to the greater of the Participant’s actual post-2006 Pension Plan benefit and the benefit determined as if the Grandfathered Formula had remained in effect after 2006. This paragraph shall apply solely for purposes of determining a Grandfathered Participant’s lump-sum ratio, and not for purposes of determining the amount of the Grandfathered Participant’s benefit under the Plan (except to the extent that the lump-sum ratio results in an enhancement of the Participant’s benefit under subsection (c)).
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|
(c)
|
The Plan Administrator shall apply the lump-sum ratio determined under subsection (a) or (b), whichever is applicable, to the present value (determined as of the date of the distribution) of the portion of the Participant’s benefit under the Plan that accrued after 2006. The percentage of the present value determined by the lump-sum ratio shall be payable in a lump sum, and (except as provided in the following sentence) the remaining portion of Participant’s benefit payable under this Article V shall be paid as an annuity. If the ratio determined under subsection (a) or (b) is greater than 100%, the present value of the Participant’s benefit under the Plan that accrued after 2006 shall be increased by a corresponding amount, and the Participant’s entire benefit under the Plan that was earned or vested after 2004 (including the enhancement) shall be payable in a lump sum; but no portion of the Participant’s benefit under the Plan that accrued before 2007 shall be enhanced by the lump-sum ratio.
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5.05
|
Six-Month Delay
. If a Participant’s benefit is paid as a result of the Participant’s Separation From Service, the benefit shall not commence or be paid under this Article V earlier than six months after the date of the Participant’s Separation From Service. A benefit paid as a result of the Participant’s Separation From Service shall be calculated as if it commenced or was paid on the first day of the month following the Separation From Service. Any payments that otherwise would have been made during the initial six-month period shall be paid in a lump
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Texton Spillover Pension Plan
Amended and Restated January 3, 2010
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Page 11
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sum, without interest, on the first day of the seventh month after the Participant’s Separation From Service.
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5.06
|
Automatic Cash-Out
. If the present value of the benefit earned or vested after 2004 (or the present value of the Beneficiary’s pre-pension survivor annuity earned or vested after 2004, in the case of the Participant’s death) is $150,000 or less at the earliest of the Participant’s Separation From Service, Total Disability, or death, then the Participant’s entire benefit earned or vested after 2004 (or the Beneficiary’s entire benefit earned or vested after 2004, in the case of the Participant’s death) shall be distributed in a single lump-sum payment (1) on the first day of the seventh month after the Participant’s Separation From Service, (2) on the first day of the month that is at least 30 days after the Participant’s Total Disability, or (3) on the first business day of the first month that begins at least 90 days after the Participant’s death (subject, however, to the following sentence). If a Participant’s Separation From Service or death occurs before 2008, and the Participant’s benefit has not commenced as provided in Section 5.11(c), the lump-sum payment described in the preceding sentence shall be made on the first business day of January in 2008; provided that no such lump-sum payment paid as a result of a Separation From Service will be made earlier than the first day of the seventh month after the Participant’s Separation From Service. A distribution under this Section 5.06 shall be made without regard to any payment election the Participant has made (or is deemed to have made) under Section 5.01 or Section 5.11.
|
5.07
|
Disability Benefits
. Except as provided in Section 5.06 (automatic cash-out of small benefits), if a Participant suffers a Total Disability, the Participant’s benefit under the Plan shall commence or be paid, in the form the Participant elected (or is deemed to have elected), on the first day of the month following the later of the Participant’s Total Disability or attainment of age 65.
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5.08
|
Payment of Death Benefits
.
|
|
(a)
|
If a Participant dies before his benefit under the Plan has commenced, and the Participant would be eligible for a pre-pension survivor annuity under the Pension Plan if he died before his benefit commencement date, the Participant’s Beneficiary shall receive an annuity for the life of the Beneficiary, commencing on the first business day of the month following the later of (i) 90 days after the Participant’s death or (ii) the date on which the Participant would have reached age 55 (subject to Section 5.06 concerning the automatic cash-out of small benefits). The Participant’s Beneficiary must be a person who would have been eligible to receive the corresponding pre-pension survivor annuity under the Pension Plan.
|
|
(b)
|
If a Participant dies before his benefit under the Plan has commenced, and the Participant would be eligible for a 60-month period certain death benefit under the Pension Plan if he died before his
benefit
commencement date, the Participant’s Beneficiary shall receive an amount equal to the present value of the corresponding monthly payments under the Plan, paid in a lump sum on the first business day of the first month that begins at least 90 days after the Participant’s death.
|
|
(c)
|
If a Participant dies less than 60 months after his benefit under the Plan has commenced, and the Participant would be eligible for a 60-month period certain death benefit under the Pension Plan if he died after his benefit commencement date, the Participant’s Beneficiary shall receive an amount equal to the present value of the corresponding monthly payments under the Plan for a number of months equal to 60 minus the number of monthly payments made to the Participant before his death, paid in a lump sum on the first business day of the first month that begins at least 90 days after the Participant’s death.
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|
(d)
|
The amount of any pre-pension survivor annuity or death benefit shall be determined as provided in Section 3.04. Any post-retirement death benefit under Section 5.08(c) shall be based solely on the portion of the Participant’s benefit that is payable as an annuity, and shall not include the value of any benefit the Participant has received as a lump sum.
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5.09
|
Administrative Adjustments in Payment Date
. A payment is treated as being made on the date when it is due under the Plan if the payment is made on the due date specified by the Plan, or on a later date that is either (a) in the same calendar year (for a payment whose specified due date is on or before September 30), or (b) by the 15th day of the third calendar month following the date specified by the Plan (for a payment whose specified due date is on or after October 1). A payment also is treated as being made on the date when it is due under the Plan if the payment is made not more than 30 days before the due date specified by the Plan, provided that the payment is not made earlier than six months after the Participant’s Separation From Service. A Participant may not, directly or indirectly, designate the taxable year of a payment made in reliance on the administrative rules in this Section 5.09.
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5.10
|
Distribution Upon Change in Control
. Subject to the following sentence, if a Change in Control also qualifies as a “change in control” under IRC Section 409A, the present value of all benefits earned or vested after 2004 shall be paid in a lump sum in cash on the first business day of the month following the Change in Control. If a Participant’s Separation From Service occurred before the Change in Control, the lump sum payment under this Section 5.10 shall not be made earlier than six months after the Participant’s Separation From Service.
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5.11
|
Change in Payment Election
. Any election of a time or form of payment under Article V, or any change in a prior election, is subject to the approval of the Plan Administrator. If a Participant changes the time or form of payment previously elected, the new election must apply to the Participant’s entire benefit under the Plan that is earned or vested after 2004, and must comply with the following rules:
|
|
(a)
|
Election Between Life Annuities
.
If another actuarially-equivalent life annuity (within the meaning of IRC Section 409A) is available to a Participant under Section 5.03(c), a Participant, at any time before the first annuity payment is made, may change his election from one life annuity to another actuarially-equivalent life annuity commencing at the same time.
|
|
(b)
|
Modification of Election
.
If a Participant wishes to change the form of payment for his benefit or to elect a different Retirement Age, and the new election does not satisfy the requirements of subsection (a) (concerning elections between life annuities) or the transition rules in subsection (d) (concerning elections before December 31, 2007), the Participant’s new payment election must satisfy the requirements of this subsection (b). A Participant may change his election under this subsection (b) only if the new election:
|
|
(1)
|
is made at least twelve months before the date when payment of the benefit would otherwise commence;
|
|
(2)
|
defers the date on which payment will commence by at least five years from the commencement date applicable to his previous election;
|
|
(3)
|
does not cause payments triggered by attainment of Retirement Age to commence at an age other than other than 55, 60, 62, 65, 67, or 70; and
|
|
(4)
|
does not cause payments triggered by Separation From Service to commence more than 5 years and seven months after Separation From Service.
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Texton Spillover Pension Plan
Amended and Restated January 3, 2010
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Page 14
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(c)
|
Distributions Before 2008
. If a Participant’s Pension Plan benefit commences before 2008, the Participant’s benefit under the Plan that was earned or vested after 2004 shall be paid at the same time and in the same form as the Participant’s Pension Plan benefit, as provided under the Key Executive Plan and the Executive Plan as in effect on October 3, 2004.
|
|
(d)
|
One-Time Election During 2007
.
If a Participant’s Pension Plan benefit does not commence before 2008, the Participant may make a special election during 2007 to receive the benefit that is earned or vested after 2004 under one of the distribution options in Section 5.03. The Participant may not make a new election under this subsection if the election would accelerate payment of the Participant’s benefit into the year of the new election. If the Participant’s Pension Plan benefit commences after the date of the new election, but before 2008, the new election shall be ineffective and the Participant’s benefit shall be paid as provided in subsection (c), above. An election under this subsection shall be made in the manner prescribed by the Plan Administrator, and the Plan Administrator may impose conditions in addition to those described in this subsection (d) (such as a requirement that a Participant who participates in more than one nonqualified defined benefit plan elect the same annuity form of payment under all plans); but the election shall not be required to comply with the requirements of subsection (b), above (concerning changes in payment elections) or Section 5.02 (concerning spousal consent). The Plan Administrator may also allow an employee who is not yet a Participant, but who might become a Participant in the future, to elect a distribution option under this subsection (d) for any benefit the employee might later earn under this Plan. An employee shall not have a right to receive any benefit under the Plan until he becomes a Participant, even if the employee has previously filed an election designating the time and form of payment for any benefit he might earn if he becomes eligible to participate in the Plan.
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5.12
|
Rehired Participants
. If a Participant has a Separation From Service and is later rehired by a Textron Company, the following rules shall apply:
|
|
(a)
|
If the Participant had not earned a vested benefit under the Plan at the time of his first Separation From Service, but the Participant returns to service with a Textron Company and earns a vested benefit after his return to service, the Participant’s benefit under the Plan shall be paid as provided in the Plan upon his death, Total Disability, or subsequent Separation From Service, ignoring (for purposes of determining the time and form of payment of his benefit) his first Separation From Service.
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|
(b)
|
If the Participant had earned a vested benefit under the Plan at the time of his first Separation From Service, the vested benefit that the Participant had earned at the time of his first Separation From Service shall be paid at the same time and in the same form that would have applied if the Participant had not returned to service. Any additional vested benefit that the Participant earns after his return to service shall be paid as provided in the Plan upon his death, Total Disability, or subsequent Separation From Service, ignoring (for purposes of determining the time and form of payment of his additional vested benefit) his first Separation From Service.
|
|
(c)
|
The break-in-service rules and other terms of the Pension Plan shall determine to what extent (if at all) any service or compensation the Participant had earned at the time of his first Separation From Service is forfeited or is taken into account in calculating the amount of the Participant’s benefit under the Plan after his return to service.
|
|
(d)
|
A Participant’s compensation and service after his rehire date shall be disregarded under this Plan for a Participant who separates from service at any time and who is rehired by a Textron Company after December 31, 2009, except to the extent such compensation or service is taken into account under the terms of the Pension Plan.
|
6.01
|
No Plan Assets
. Benefits provided under this Plan are unfunded obligations of Textron. Nothing contained in this Plan shall require Textron to segregate any monies from its general funds, to create any trust, to make any special deposits, or to purchase any policies of insurance with respect to such obligations. If Textron elects to purchase individual policies of insurance on one or more of the Participants to help finance its obligations under this Plan, such individual policies and the proceeds of the policies shall at all times remain the sole property of Textron and neither the Participants whose lives are insured not their Beneficiaries shall have any ownership rights in such policies of insurance.
|
6.02
|
Top-Hat Plan Status
. The Plan is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
|
7.01
|
Plan Administrator’s Powers
. Textron shall have all such powers as may be necessary to carry out the provisions hereof. Textron may from time to time
|
Texton Spillover Pension Plan
Amended and Restated January 3, 2010
|
Page 16
|
|
establish rules for the administration of this Plan and the transaction of its business. Subject to Section 7.06, any actions by Textron shall be final, conclusive and binding on each Participant and all persons claiming by, through or under any Participant. Textron (and any person or persons to whom it delegates any of its authority as plan administrator) shall have discretionary authority to determine eligibility for Plan benefits, to construe the terms of the Plan, and to determine all questions arising in the administration of the Plan. The Board may exercise Textron’s authority as plan administrator, and the authority to administer the Plan may be delegated as provided in Section 7.02.
|
7.02
|
Delegation of Administrative Authority
. The Board may, to the extent permitted by applicable law, make a non-exclusive written delegation of the authority to administer the Plan to a committee of the Board or to one or more officers of Textron. The Board may, to the extent permitted by applicable law, authorize a committee of the Board or officer of Textron to make a further delegation of the authority to administer the Plan.
|
7.03
|
Tax Withholding
. Textron may withhold from benefits paid under this Plan any taxes or other amounts required by law to be withheld. Textron may deduct from the undistributed portion of a Participant’s benefit any employment tax that Textron reasonably determines to be due with respect to the benefit under the Federal Insurance Contributions Act (FICA), and an amount sufficient to pay the income tax withholding related to such FICA tax. Alternatively, Textron may require the Participant or Beneficiary to remit to Textron or its designee an amount sufficient to satisfy any applicable federal, state, and local income and employment tax with respect to the Participant’s benefit. The Participant or Beneficiary shall remain responsible at all times for paying any federal, state, or local income or employment tax with respect to any benefit under this Plan. In no event shall Textron or any employee or agent of Textron be liable for any interest or penalty that a Participant or Beneficiary incurs by failing to make timely payments of tax.
|
7.04
|
Use of Third Parties to Assist with Plan Administration
. Textron may employ or engage such agents, accountants, actuaries, counsel, other experts and other persons as it deems necessary or desirable in connection with the interpretation and administration of this Plan. Textron and its committees, officers, directors and employees shall not be liable for any action taken, suffered or omitted by them in good faith in reliance upon the advice or opinion of any such agent, accountant, actuary, counsel or other expert. All action so taken, suffered or omitted shall be conclusive upon each of them and upon all other persons interested in this Plan.
|
7.05
|
Proof of Right to Receive Benefits
. Textron may require proof of death or Total Disability of any Participant, former Participant or Beneficiary and evidence of the right of any person to receive any Plan benefit.
|
7.06
|
Claims Procedure
.
A Participant or Beneficiary
who believes that he is being denied a benefit to which he is entitled under the Plan (referred to in this Section 7.06 as a “Claimant”) may file a written request with Textron setting forth the claim. Textron shall consider and resolve the claim as set forth below.
|
|
(a)
|
Time for Response
.
Upon receipt of a claim, Textron shall advise the Claimant that a response will be forthcoming within 90 days. Textron may, however, extend the response period for up to an additional 90 days for reasonable cause, and shall notify the Claimant of the reason for the extension and the expected response date. Textron shall respond to the claim within the specified period.
|
|
(b)
|
Denial
. If the claim is denied in whole or part, Textron shall provide the Claimant with a written decision, using language calculated to be understood by the Claimant, setting forth (1) the specific reason or reasons for such denial; (2) the specific reference to relevant provisions of this Plan on which such denial is based; (3) a description of any additional material or information necessary for the Claimant to perfect his claim and an explanation why such material or such information is necessary; (4) appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; (5) the time limits for requesting a review of the claim; and (6) the Claimant’s right to bring an action for benefits under Section 502(a) of ERISA.
|
|
(c)
|
Request for Review
. Within 60 days after the Claimant
’s
receipt of the written decision denying the claim in whole or in part, the Claimant may request in writing that Textron review the determination. The Claimant or his duly authorized representative may, but need not, review the relevant documents and submit issues and comment in writing for consideration by Textron. If the Claimant does not request a review of the initial determination within such 60-day period, the Claimant shall be barred from challenging the determination.
|
|
(d)
|
Review of Initial Determination
. Within 60 days after Textron receives a request for review, it will review the initial determination. If special circumstances require that the 60-day time period be extended, Textron will so notify the Claimant and will render the decision as soon as possible, but no later than 120 days after receipt of the request for review.
|
|
(e)
|
Decision on Review
.
All decisions on review shall be final and binding with respect to all concerned parties. The decision on review shall set
|
Texton Spillover Pension Plan
Amended and Restated January 3, 2010
|
Page 18
|
|
forth, in a manner calculated to be understood by the Claimant, (1) the specific reasons for the decision, shall including references to the relevant Plan provisions upon which the decision is based; (2) the Claimant’s right to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information, relevant to his benefits; and (3) the Claimant’s right to bring a civil action under Section 502(a) of ERISA.
|
7.01
|
Enforcement Following a Change in Control
. If, after a Change in Control, any claim is made or any litigation is brought by a Participant or Beneficiary to enforce or interpret any provision contained in this Plan, Textron and the “person” or “group” described in Section 1.03 shall be liable, jointly and severally, to reimburse the Participant or Beneficiary for the Participant’s or Beneficiary’s reasonable attorney’s fees and costs incurred during the Participant’s or Beneficiary’s lifetime in pursuing any such claim or litigation, and to pay prejudgment interest at the Prime Rate as quoted in the Money Rates section of
The Wall Street Journal
on any money award or judgment obtained by the Participant or Beneficiary, payable at the same time as the underlying award or judgment. Any reimbursement pursuant to the preceding sentence shall be paid to the Participant no earlier than six months after the Participant’s Separation From Service, and shall be paid to the Participant or Beneficiary no later than the end of the calendar year following the year in which the expense was incurred. The reimbursement shall not be subject to liquidation or exchange for another benefit, and the amount of reimbursable expense incurred in one year shall not affect the amount of reimbursement available in another year.
|
8.01
|
Amendment
. Subject to subsections (a) and (b), below, the Board or its designee shall have the right to amend, modify, or suspend this Plan at any time by written resolution or other formal action reflected in writing.
|
|
(a)
|
No amendment, modification, or suspension shall reduce a Participant’s accrued benefit as determined under Section 3.01 or Section 3.02 immediately before the effective date of the amendment, modification, or suspension.
|
|
(b)
|
Following a Change in Control, no amendment, modification, or suspension shall be made that directly or indirectly reduces any right or benefit provided upon a Change in Control.
|
|
An amendment to the Pension Plan that affects the benefits provided under this Plan shall not be deemed to be an amendment to this Plan, and shall not be subject to the restrictions in subsections (a) and (b), provided that the amendment to the
|
8.02
|
Delegation of Amendment Authority
. The Board may, to the extent permitted by applicable law, make a non-exclusive written delegation of the authority to amend the Plan to a committee of the Board or to one or more officers of Textron. The Board may, to the extent permitted by applicable law, authorize a committee of the Board to make a further delegation of the authority to amend the Plan.
|
8.03
|
Termination
. The Board or its designee shall have the right to terminate this Plan at any time before a Change in Control by written resolution. No termination of the Plan shall reduce a Participant’s accrued benefit as determined under Section 3.01 or Section 3.02 and Section 3.03 immediately before the effective date of the termination.
|
8.04
|
Distributions Upon Plan Termination
. Upon the termination of the Plan by the Board with respect to all Participants, and termination of all arrangements sponsored by any Textron Company that would be aggregated with the Plan under IRC Section 409A, Textron shall have the right, in its sole discretion, and notwithstanding any elections made by the Participant, to pay the Participant’s or Beneficiary’s vested benefit in a lump sum, to the extent permitted under IRC Section 409A. All payments that may be made pursuant to this Section 8.04 shall be made no earlier than the thirteenth month and no later than the twenty-fourth month after the termination of the Plan. Textron may not accelerate payments pursuant to this Section 8.04 if the termination of the Plan is proximate to a downturn in Textron’s financial health. If Textron exercises its discretion to accelerate payments under this Section 8.04, it shall not adopt any new arrangement that would have been aggregated with the Plan under IRC Section 409A within three years following the date of the Plan’s termination.
|
9.01
|
Use of Masculine or Feminine Pronouns
. Unless a contrary or different meaning is expressly provided, each use in this Plan of the masculine or feminine gender shall include the other and each use of the singular number shall include the plural.
|
9.02
|
Transferability of Plan Benefits
.
|
|
(a)
|
Textron shall recognize the right of an alternate payee named in a domestic relations order to receive all or a portion of a Participant’s benefit under the Plan, provided that (1) the domestic relations order would be a “qualified domestic relations order” within the meaning of IRC Section 414(p) of the Code if IRC Section 414(p) were applicable to the
|
Texton Spillover Pension Plan
Amended and Restated January 3, 2010
|
Page 20
|
|
|
Plan (except that the order may require payment to be made to the alternate payee before the Participant’s earliest retirement age), (2) the domestic relations order does not purport to give the alternate payee any right to assets of any Textron Company, and (3) the domestic relations order does not purport to allow the alternate payee to defer payments beyond the date when the benefits assigned to the alternate payee would have been paid to the Participant.
|
|
(b)
|
Except as provided in subsection (a) concerning domestic relations orders, no amount payable at any time under this Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge or encumbrance of any kind to the extent that the assignment or other action would cause the amount to be included in the Participant’s gross income or treated as a distribution for federal income tax purposes. A Participant may, with the written approval of Textron, make an assignment of a benefit for estate planning or similar purposes if the assignment does not cause the amount to be included in the Participant’s gross income or treated as a distribution for federal income tax purposes. Any attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any such benefit, whether presently or subsequently payable, shall be void unless so approved. Except as required by law, no benefit payable under this Plan shall in any manner be subject to garnishment, attachment, execution or other legal process, or be liable for or subject to the debts or liability of any Participant or Beneficiary.
|
9.03
|
Section 409A Compliance
. The Plan is intended to comply with IRC Section 409A and should be interpreted accordingly. Any distribution election that would not comply with IRC Section 409A is not effective. To the extent that a provision of this Plan does not comply with IRC Section 409A, such provision shall be void and without effect. Textron does not warrant that the Plan will comply with IRC Section 409A with respect to any Participant or with respect to any payment, however. In no event shall any Textron Company; any director, officer, or employee of a Textron Company (other than the Participant); or any member of Textron be liable for any additional tax, interest, or penalty incurred by a Participant or Beneficiary as a result of the Plan’s failure to satisfy the requirements of IRC Section 409A, or as a result of the Plan’s failure to satisfy any other requirements of applicable tax laws.
|
9.04
|
Controlling State Law
. This Plan shall be construed in accordance with the laws of the State of Delaware.
|
9.05
|
No Right to Employment
. Nothing contained in this Plan shall be construed as a contract of employment between any Participant and any Textron Company, or to
|
Texton Spillover Pension Plan
Amended and Restated January 3, 2010
|
Page 21
|
|
suggest or create a right in any Participant of continued employment at any Textron Company.
|
9.06
|
Additional Conditions Imposed
. Textron, the Chief Executive Officer, and the Chief Human Resources Officer may impose such other lawful terms and conditions on participation in this Plan as deemed desirable.
|
|
|
Texton Spillover Pension Plan
Amended and Restated January 3, 2010
|
Page 22
|
TEXTRON SPILLOVER PENSION PLAN
____________________________
APPENDIX
A
(as amended and restated
effective January 3, 2010)
____________________________
Defined Benefit Provisions
of the
Supplemental Benefits Plan for
Textron Key Executives
(As in effect before January 1, 2007)
|
Introduction
|
1
|
Article I—Definitions
|
2
|
Article II—Participation
|
4
|
Article III—Supplemental Pension Benefits
|
4
|
Article IV—Unfunded Plan
|
4
|
Article V—Plan Administration
|
5
|
Article VI—Miscellaneous
|
6
|
Texton Spillover Pension Plan
Amended and Restated January 3, 2010
|
Table of Contents (Appendix A)
Page i
|
|
Introduction
|
A.
|
Key Executive Plan
(As In Effect Before 2007)
|
B.
|
Textron Spillover Pension Plan
(Effective January 1, 2007)
|
C.
|
Key Executive Protected Benefits
(Earned and Vested Before 2005)
|
Texton Spillover Pension Plan
Amended and Restated January 3, 2010
|
Appendix A
Page 1
|
D.
|
Benefits Subject To Section 409A
(Earned or Vested From 2005 Through 2007)
|
1.01
|
“Board” means the Board of Directors of Textron.
|
1.02
|
“Compensation” means a Key Executive’s annual compensation determined as follows:
|
|
(a)
|
For years before 2006, except as provided in subsections (b) and (c), Compensation means base salary, accrued annual incentive compensation, performance units, and performance share units, whether or not deferred under the Deferred Income Plan for Textron Key Executives or the Textron Deferred Income Plan for Executives. For 2006, Compensation shall be determined as provided in the preceding sentence, modified (except as provided in subsection (c)) to include the greater of the Participant’s annual incentive compensation accrued in 2006 or the Participant’s annual incentive compensation paid in 2006.
|
|
(b)
|
For any Key Executive who is first awarded performance share units after October 26, 1999, performance share units shall not be included in Compensation.
|
|
(c)
|
For Key Executives who are members of the Textron Pension Plan for Cessna Employees (Addendum F to the Textron Master Retirement Plan), Compensation means “Final Average Monthly Salary” as defined in that plan. “Final Average Monthly Salary” shall include incentive compensation paid by Textron and shall exclude long-term incentive compensation and shall be calculated without regard to Statutory Limits or deferrals.
|
|
(d)
|
Compensation does not include any award under the Textron Quality Management Plan or the Supplemental Bonus Plan for Textron Financial Corporation Executives.
|
1.03
|
“Deferral Plans” means the Textron Deferred Income Plan for Textron Key Executives and the Textron Deferred Income Plan for Executives, as amended and restated from time to time.
|
1.04
|
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
|
1.05
|
“Key Executive” means an employee of a Textron Company who has been and continues to be designated as a Key Executive under the Plan by Textron’s Chief Executive Officer and Chief Human Resources Officer.
|
1.06
|
“Participant” means a Key Executive who is participating in this Plan pursuant to Article II and, unless the context clearly indicates to the contrary, a former Participant who is entitled to benefits under this Plan.
|
1.07
|
“Pension Plan” means the Bell Helicopter Textron Retirement Plan, the Textron Pension Plan for Cessna Employees, the Textron Master Retirement Plan, or an Included Plan that is a defined benefit plan.
|
1.08
|
“Plan” means this Supplemental Benefits Plan for Textron Key Executives, as amended and restated from time to time.
|
1.09
|
“Statutory Limit” means any limit on benefits under, or annual additions to, qualified plans imposed by Section 401(a)(17) or 415 of the Internal Revenue Codes of 1954 or 1986, as amended from time to time.
|
1.10
|
“Textron” means Textron Inc., a Delaware corporation, and any successor of
Textron Inc.
|
1.11
|
“Textron Company” means Textron or any company controlled by or under common control with Textron.
|
2.01
|
A Key Executive shall participate in this Plan if her benefits under a Pension Plan are limited by one or more Statutory Limits. In addition, a Key Executive shall participate in this Plan if her receipt of any compensation is deferred under the Deferral Plans.
|
3.01
|
Textron shall pay on account of each Participant who begins to receive payments under one or more of the Pension Plans the amount, if any, by which (1) the normal, early or vested retirement pension that would have been payable on the Participant’s account under the Pension Plans, using Compensation as defined in this Plan, exceeds (2) the normal, early or vested retirement pension calculated under the Pension Plans on the Participant’s account.
|
3.02
|
Textron shall pay to the beneficiary designated by the Participant under each Pension Plan the amount, if any, by which (1) the death benefit that would have been payable under that Pension Plan on the Participant’s account using Compensation as defined in this Plan exceeds (2) the death benefit which is actually payable under that Pension Plan on the Participant’s account. For the purposes of this Section, the term “death benefit” shall include any period certain death benefit and any surviving spouse benefit provided by a Textron Company at its sole cost through a Pension Plan.
|
3.03
|
In the event Textron transfers the liability of a Pension Plan on account of a Participant to another qualified plan, the supplemental pension or death benefits under Sections 3.01 and 3.02, respectively, shall be determined as of such transfer, unless otherwise decided by Textron in its sole discretion.
|
4.01
|
Benefits to be provided under this Plan are unfunded obligations of Textron. Nothing contained in this Plan shall require Textron to segregate any monies from its general funds, to create any trust, to make any special deposits, or to purchase any policies of insurance with respect to such obligations. If Textron elects to purchase individual policies of insurance on one or more of the Participants to help finance its obligations under this Plan, such individual policies and the proceeds therefrom shall at all times remain the sole property of Textron and neither the Participants whose lives are insured nor their beneficiaries shall have any ownership rights in such policies of insurance.
|
4.02
|
This Plan is intended in part to provide benefits for a select group of management employees who are highly compensated, within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA, and in part to be an excess benefit plan, pursuant to Section 3(36) of ERISA.
|
4.03
|
No Participant shall be required or permitted to make contributions to this Plan.
|
5.01
|
Textron shall be the plan administrator of this Plan and shall be solely responsible for its general administration and interpretation. Textron shall have all such powers as may be necessary to carry out the provisions hereof. Textron may from time to time establish rules for the administration of this Plan and the transaction of its business. Subject to Section 5.06, any action by Textron shall be final, conclusive, and binding on each Participant and all persons claiming by, through or under any Participant. Textron (and any person or persons to whom it delegates any of its authority as plan administrator) shall have discretionary authority to determine eligibility for Plan benefits, to construe the terms of the Plan, and to determine all questions arising in the administration of the Plan, and shall make all such determinations and interpretations in a nondiscriminatory manner. The Board may exercise Textron’s authority as plan administrator, and the authority to administer the Plan may be delegated as provided in Section 5.02.
|
5.02
|
The Board may, to the extent permitted by applicable law, make a non-exclusive written delegation of the authority to administer the Plan to a committee of the Board or to one or more officers of Textron. The Board may, to the extent permitted by applicable law, authorize a committee of the Board or officer of Textron to make a further delegation of the authority to administer the Plan.
|
5.03
|
(a)
|
Except as provided in subsections (b) and (c), below, the payment of any benefit under Article III shall be made at the same time, in the same manner, to the same persons and in the same proportions, as is made the payment or distribution under the related Pension Plan, or otherwise as determined by Textron in its sole discretion. Textron may withhold from benefits and accounts under this Plan, any taxes or other amounts required by law to be withheld. Except as provided in subsection (b), below, no benefit shall be paid to any Participant while employed by Textron.
|
|
(b)
|
Each benefit then computed under Article III shall become due and payable to the respective Participants and beneficiaries immediately upon a Change in Control as defined in Section 6.03. For purposes of Section 5.03, the present value of a benefit computed under Article III shall be based on the appropriate actuarial assumptions and factors set forth in the related Pension Plan and, if no interest rate assumption has been set forth for any purpose, an interest rate of six percent per year.
|
|
(c)
|
Effective for payments commencing on or after January 1, 2008, Textron has exercised its discretion pursuant to subsection (a) to determine that no distribution under the Plan shall commence or be paid earlier than six months after the date of the Participant’s separation from service. Any payments that otherwise would have been made during the six-month pe-
|
5.04
|
Textron may employ or engage such agents, accountants, actuaries, counsel, other experts and other persons as it deems necessary or desirable in connection with the interpretation and administration of this Plan. Textron shall be entitled to rely upon all certifications made by an accountant selected by Textron. Textron and its committees, officers, directors and employees shall not be liable for any action taken, suffered or omitted by them in good faith in reliance upon the advice or opinion of any such agent, accountant, actuary, counsel or other expert. All action so taken, suffered or omitted shall be conclusive upon each of them and upon all other persons interested in this Plan.
|
5.05
|
Textron may require proof of death or total disability of any Participant, former Participant or beneficiary and evidence of the right of any person to receive any Plan benefit.
|
5.06
|
Claims under this Plan shall be filed in writing with Textron, and shall be reviewed and resolved pursuant to the claims procedure in Section 7.06 of the Textron Spillover Pension Plan.
|
|
|
6.01
|
Unless a contrary or different meaning is expressly provided, each use in this Plan of the masculine or feminine gender shall include the other and each use of the singular number shall include the plural.
|
6.02
|
(a)
Textron shall recognize the right of an alternate payee named in a domestic relations order to receive all or a portion of a Participant’s benefit under the Plan, provided that (1) the domestic relations order would be a “qualified domestic relations order” within the meaning of IRC Section 414(p) if IRC Section 414(p) were applicable to the Plan (except that the order may require payment to be made to the alternate payee before the Participant’s earliest retirement age), (2) the domestic relations order does not purport to give the alternate payee any right to assets of any Textron Company, and (3) the domestic relations order does not purport to allow the alternate payee to defer payments beyond the date when the benefits assigned to the alternate payee would have been paid to the Participant.
|
|
(b)
Except as provided in subsection (a) concerning domestic relations orders, no amount payable at any time under this Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge or encumbrance of any kind to the extent that the assignment or other action would cause the amount to be included in the Participant’s gross income or treated as a distribution for federal income tax purposes. A Participant may, with the written approval of Textron, make an assignment of a benefit for estate planning or similar purposes if the assignment does not cause the amount to be included in the Participant’s gross income or treated as a distribution for federal income tax purposes. Any attempt to alienate,
|
Texton Spillover Pension Plan
Amended and Restated January 3, 2010
|
Appendix A
Page 6
|
|
sell, transfer, assign, pledge or otherwise encumber any such benefit, whether presently or subsequently payable, shall be void unless so approved. Except as required by law, no benefit payable under this Plan shall in any manner be subject to garnishment, attachment, execution or other legal process, or be liable for or subject to the debts or liability of any Participant or beneficiary.
|
6.03
|
Notwithstanding any Plan provision to the contrary, the Board or its designee shall have the right to amend, modify, suspend or terminate this Plan at any time by written ratification of such action; provided, however, that no amendment, modification, suspension or termination:
|
|
(1)
|
shall reduce an amount payable under Article III of this Plan immediately before the effective date of the amendment, modification, suspension or termination; or
|
|
(2)
|
shall be made to Section 5.03 or 6.03 following a Change in Control.
|
|
If after a Change in Control any claim is made or any litigation is brought by a Participant or beneficiary to enforce or interpret any provision contained in this Plan, Textron and the “person” or “group” described in the next following sentence shall be liable, jointly and severally, to indemnify the Participant or beneficiary and to pay prejudgment interest on any recovery as provided in Section 7.07 of the Textron Spillover Pension Plan.
|
|
For purposes of this Plan, a “Change in Control” shall occur if (i) any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Act”)) other than Textron, any trustee or other fiduciary holding Textron common stock under an employee benefit plan of Textron or a related company, or any corporation which is owned, directly or indirectly, by the stockholders of Textron in substantially the same proportions as their ownership of Textron common stock, is or becomes (other than by acquisition from Textron or a related company) the “beneficial owner” (as defined in Rule 13d-3 under the Act) of more than 30% of the then outstanding voting stock of Textron, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board (and any new director whose election by the Board or whose nomination for election by Textron’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 such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority thereof, or (iii) stockholders of Textron approve a merger or consolidation of Textron with any other corporation, other than a merger or consolidation which would result in the voting securities of Textron outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of Textron or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the stockholders of Textron approve a plan of complete liquidation of Textron
|
6.04
|
The Board may, to the extent permitted by applicable law, make a non-exclusive written delegation of the authority to amend the Plan to a committee of the Board or to one or more officers of Textron. The Board may, to the extent permitted by applicable law, authorize a committee of the Board to make a further delegation of the authority to amend the Plan.
|
6.05
|
This Plan shall be construed in accordance with the laws of the State of Delaware.
|
6.06
|
Nothing contained in this Plan shall be construed as a contract of employment between any Participant and any Textron Company, or to suggest or create a right in any Participant to be continued in employment as a Key Executive or other employee of any Textron Company.
|
6.07
|
Textron, the Chief Executive Officer, and the Chief Human Resources Officer may impose such other lawful terms and conditions on participation in this Plan as deemed desirable.
|
Texton Spillover Pension Plan
Amended and Restated January 3, 2010
|
Appendix A
Page 8
|
SUPPLEMENTAL RETIREMENT PLAN
FOR TEXTRON KEY EXECUTIVES
____________________
As Amended and Restated
Effective January 3, 2010
|
Introduction
|
1
|
||
Article I—Definitions
|
2
|
||
1.01
|
Average Compensation
|
2
|
|
1.02
|
Beneficiary
|
2
|
|
1.03
|
Board
|
2
|
|
1.04
|
Change in Control
|
2
|
|
1.05
|
Compensation
|
3
|
|
1.06
|
IRC
|
4
|
|
1.07
|
Key Executive
|
4
|
|
1.08
|
Normal Form of Benefit
|
4
|
|
1.09
|
Participant
|
4
|
|
1.10
|
Pension Plan
|
4
|
|
1.11
|
Plan
|
5
|
|
1.12
|
Separation From Service
|
5
|
|
1.13
|
Surviving Spouse
|
5
|
|
1.14
|
Textron
|
5
|
|
1.15
|
Textron Company
|
5
|
|
1.16
|
Total Disability
|
5
|
|
Article II—Benefit
|
5
|
||
2.01
|
Target Benefit
|
5
|
|
2.02
|
Reductions in Target Benefit
|
5
|
|
2.03
|
Early Retirement Factors
|
6
|
|
2.04
|
Payment of Benefits
|
7
|
|
2.05
|
Pre-Pension Surviving Spouse Annuity
|
9
|
|
2.06
|
Administrative Adjustments in Payment Date
|
9
|
|
2.07
|
Distribution Upon Change in Control
|
9
|
Supplemental Retirement Plan for Textron Key Executives
Amended and Restated January 3, 2010
|
Table of Contents
Page i
|
Article III—Unfunded Plan
|
10
|
||
3.01
|
No Plan Assets
|
10
|
|
3.02
|
Top-Hat Plan Status
|
10
|
|
3.03
|
No Contributions
|
10
|
|
Article IV—Plan Administration
|
10
|
||
4.01
|
Plan Administrator’s Powers
|
10
|
|
4.02
|
Delegation of Administrative Authority
|
11
|
|
4.03
|
Tax Withholding
|
11
|
|
4.04
|
Use of Third Parties to Assist with Plan Administration
|
11
|
|
4.05
|
Proof of Right to Receive Benefits
|
11
|
|
4.06
|
Claims Procedure
|
12
|
|
4.07
|
Enforcement Following a Change in Control
|
13
|
|
Article V—Amendment and Termination
|
13
|
||
5.01
|
Amendment
|
13
|
|
5.02
|
Delegation of Amendment Authority
|
14
|
|
5.03
|
Termination
|
14
|
|
5.04
|
Distributions Upon Plan Termination
|
14
|
|
Article VI—Miscellaneous
|
14
|
||
6.01
|
Use of Masculine or Feminine Pronouns
|
14
|
|
6.02
|
Transferability of Plan Benefits
|
14
|
|
6.03
|
Section 409A Compliance
|
15
|
|
6.04
|
Controlling State Law
|
15
|
|
6.05
|
No Right to Employment
|
15
|
|
6.06
|
Additional Conditions Imposed
|
16
|
1.01
|
“Average Compensation” means the average of a Participant’s Compensation during the five consecutive years in which the Compensation is highest, determined using the same averaging methodology that is used to determine “Compensation Base” in Addendum A of the Textron Master Retirement Plan.
|
1.02
|
“Beneficiary” means the person who is entitled under this Plan to receive a payment that would have been made to a Participant or Surviving Spouse during his or her lifetime, if the Participant or Surviving Spouse dies before the payment is made.
|
1.03
|
“Board” means the Board of Directors of Textron.
|
1.04
|
“Change in Control” means, for any Participant who was not an employee of a Textron Company on December 31, 2007:
|
|
(a)
|
any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Act”) and of IRC Section 409A) other than Textron, any trustee or other fiduciary holding Textron common stock under an employee benefit plan of Textron or a related company, or any corporation which is owned, directly or indirectly, by the stockholders of Textron in substantially similar proportions as their ownership of Textron common stock
|
|
(1)
|
becomes (other than by acquisition from Textron or a related company) the “beneficial owner” (as defined in Rule 13d-3 under the Act) of stock of Textron that, together with other stock held by such person or group, possesses more than 50% of the combined voting power of Textron’s then-outstanding voting stock, or
|
|
(2)
|
acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person) beneficial ownership of stock of Textron possessing more than 30% of the combined voting power of Textron's then-outstanding stock, or
|
|
(3)
|
acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person) all or substantially all of the total gross fair market value of all of the
|
|
(b)
|
a merger or consolidation of Textron with any other corporation occurs, other than a merger or consolidation that would result in the voting securities of Textron outstanding immediately before the merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) 50% or more of the combined voting power of the voting securities of Textron or such surviving entity outstanding immediately after such merger or consolidation, or
|
|
(c)
|
during any 12-month period, a majority of the members of the Board is replaced by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors before the date of their appointment or election.
|
|
Each of the events described above will be treated as a “Change in Control” only to the extent that it is a change in ownership, change in effective control, or change in the ownership of a substantial portion of Textron’s assets within the meaning of IRC Section 409A.
For any Participant who was an employee of a Textron Company on December 31, 2007, the definition set forth above in this Section 1.04 shall be used to determine whether an event is a “Change in Control” to the extent that the event would alter the time or form of payment of the Participant’s benefit. To the extent that the event would cause any change in the Participant’s rights under the Plan that does not affect the status of the Participant’s benefit under IRC Section 409A (including, but not limited to, the enhancement or accelerated vesting of the Participant’s benefit, or restrictions on amendments to the Plan), the definition set forth in Section 5.04 of Appendix A shall be used to determine whether the event is a “Change in Control.”
|
1.05
|
“Compensation” means a Participant’s annual compensation determined as follows:
|
|
(a)
|
For years after 2006, Compensation means eligible annual compensation as defined under the current benefit formula in the tax-qualified Pension Plan that covers the Participant, without regard to the statutory limits in IRC Section 401(a)(17) and IRC Section 415, subject to the modifications described in this Section 1.05(a). For any executive who was first awarded performance share units before October 27, 1999, Compensation shall include payments made under performance share units (regardless of when the units are awarded); but Compensation shall not include amounts
|
Supplemental Retirement Plan for Textron Key Executives
Amended and Restated January 3, 2010
|
Page 3
|
|
|
attributable to performance share units for any executive who was first awarded performance share units after October 26, 1999. Compensation shall include a Participant’s elective deferrals under the Deferred Income Plan for Textron Key Executives, the Textron Deferred Income Plan for Executives, and the Deferred Income Plan for Textron Executives (and, if applicable, shall also include the automatic deferral of a Participant’s performance share units or annual incentive bonus exceeding 100% of the target bonus), but only to the extent that these amounts would have been included in Compensation if they had not been deferred.
|
|
(b)
|
For any individual who participated in the Plan before 2007, Compensation for each year before 2007 shall be determined under Section 1.04 of Appendix A.
|
|
(c)
|
If a year before 2007 is included in the Participant’s Compensation Base under the Plan, and the Participant did not participate in the Plan before 2007, Compensation for that year shall be determined as provided in Section 1.05(a), above.
|
1.06
|
“IRC” means the Internal Revenue Code of 1986, as amended. References to any section of the Internal Revenue Code shall include any final regulations interpreting that section.
|
1.07
|
“Key Executive” means an employee of a Textron Company who has been and continues to be designated as a Key Executive by Textron’s Chief Executive Officer and Chief Human Resources Officer.
|
1.08
|
“Normal Form of Benefit” means (a) a single life annuity for the life of the Participant, in the case of a Key Executive who became a Participant on or after July 23, 1998, and (b) a joint and 50% survivor annuity, in the case of a Key Executive who became a Participant before July 23, 1998.
|
1.09
|
“Participant” means a Key Executive selected by Textron’s Chief Executive Officer (or, in the case of the Chief Executive Officer, selected by the Organization and Compensation Committee of the Board) for participation in this Plan.
|
1.10
|
“Pension Plan” means a tax-qualified or nonqualified defined benefit plan maintained by a Textron Company (including any predecessor plans, but excluding this Plan) in which the Key Executive has participated. “Pension Plan” includes, but is not limited to, the Bell Helicopter Textron Retirement Plan (part of the Bell Helicopter Textron Master Retirement Plan), the Textron Pension Plan (Addendum A to the Textron Master Retirement Plan), and the Textron Spillover Pension Plan.
|
1.11
|
“Plan” means this Supplemental Retirement Plan for Textron Key Executives, as amended and restated from time to time.
|
1.12
|
“Separation From Service” means a Participant’s termination of employment with all Textron Companies, other than by reason of death or Total Disability, that qualifies as a “separation from service” for purposes of IRC Section 409A.
|
1.13
|
“Surviving Spouse” means the person to whom a Participant is married (in a marriage recognized under federal law) on the day of the Participant’s death while active or on the dates of the Participant’s retirement and death.
|
1.14
|
“Textron” means Textron Inc., a Delaware corporation, and any successor of Textron Inc.
|
1.15
|
“Textron Company” means Textron or any company controlled by or under common control with Textron within the meaning of IRC Section 414(b) or (c).
|
1.16
|
“Total Disability” means physical or mental incapacity of a Participant who is employed by a Textron Company on the disability date, if the incapacity (a) enables the Participant to receive disability benefits under the Federal Social Security Act, and (b) also qualifies as a “disability” for purposes of IRC Section 409A(a)(2)(C).
|
2.01
|
Target Benefit
. Subject to Sections 2.02 and 2.03, the maximum benefit provided to a Participant who qualifies for benefits under this Plan is an annuity commencing upon Separation From Service or Total Disability equal to 50% of Average Compensation (the “Target Benefit”) less the offsets and adjusted by the Early Retirement Factors as set out below.
|
2.02
|
Reductions in Target Benefit
.
|
|
(a)
|
Prior Employers’ Plans
. The Target Benefit shall be reduced by the monthly amount of any tax-qualified or nonqualified defined benefit payable to the Participant as a single life annuity at age 65 from a plan or arrangement sponsored by a prior employer other than a Textron Company. The monthly benefit payable under a prior employer plan shall be converted, if necessary, to a single life annuity commencing at age 65, using the actuarial assumptions or factors specified in the prior employer plan (or, if no conversion basis is available from the prior employer, using comparable actuarial assumptions or factors from Addendum A of the Textron Master Retirement Plan). It shall be the obligation of each Participant to disclose to Textron, before the Participant’s Separation
|
|
|
|
|
|
|
|
|
From Service, any amounts that might be used under this section to reduce the benefits provided by this Plan. Such disclosure shall include information on annuity payments and lump-sum cash payments from other plans.
|
|
(b)
|
Early Retirement Factors.
The net Target Benefit after reduction for benefits provided under any prior employer plans shall then be multiplied by the Early Retirement Factor as set out in Section 2.03 below.
|
|
(c)
|
Pension Plans.
The product of the net Target Benefit times the Early Retirement Factor shall then be reduced by any and all amounts payable to the Participant upon Separation From Service or Total Disability under any qualified or nonqualified Pension Plan. For purposes of the preceding sentence, the calculation shall be performed assuming that all benefits under this Plan and under any qualified or nonqualified Pension Plan commence on the first day of the month following the Participant’s Separation From Service or Total Disability, even if the commencement of the benefit is delayed by the Participant’s election or by the terms of the plan. The reduction shall be based on a benefit under each Pension Plan that is payable in the same form as the Participant’s Normal Form of benefit under this Plan; and the benefit under each Pension Plan shall be converted to that form and, if applicable, reduced for early commencement based on the actuarial assumptions and factors used in the Pension Plan. In the case of any Pension Plan that is part of the Textron Retirement Program, which is a tax-qualified floor-offset arrangement, the reduction in the net Target Benefit under this Plan shall be determined without taking into account any offset in the Pension Plan benefit for the value of the Participant’s account under the Textron Inc. Retirement Account Plan.
|
2.03
|
Early Retirement Factors
. The Participant’s benefits under this Plan shall be based on the Participant’s age at Separation From Service, Total Disability, or death, in accordance with the following schedule:
|
Age at Retirement |
Early Retirement
Factors
|
65 | 100% |
64 | 90% |
63 | 80% |
62 | 70% |
61 | 60% |
60 | 50% |
Less Than 60 | 0% |
|
The Organization and Compensation Committee of the Board shall, in its sole discretion, have the authority to provide a Participant with an enhanced benefit pursuant to a separate written agreement.
|
2.04
|
Payment of Benefits
.
|
|
(a)
|
Benefit Commencement Date
. Any benefit to which a Participant is entitled under the Plan shall be paid in the Normal Form of Benefit, or in an actuarially equivalent life annuity elected by the Participant pursuant to subsection (e), below. The Participant’s benefit shall be calculated as if it commenced on the first day of the month following the Participant’s Separation From Service or Total Disability.
|
|
(b)
|
Six-Month Delay
. In the case of a benefit payable upon Separation From Service, the benefit shall commence on the first day of the seventh month following the Participant’s Separation From Service, and any monthly payments that would have been due during the intervening six months shall be paid in a lump sum, without interest, on the first day of the seventh month after the Participant’s Separation From Service. The Participant may designate a Beneficiary to receive the payments for the months before the Participant’s death in the event of the Participant’s death after Separation From Service and before the expiration of the six-month delay.
|
|
(c)
|
Disability Benefits
. In the case of a benefit payable upon Total Disability, the benefit shall commence on the first day of the month following the later of the Participant’s Total Disability or attainment of age 65.
|
|
(d)
|
Form of Payment
. Any form of benefit payable other than the Normal Form of Benefit shall be the actuarial equivalent of the Normal Form of Benefit, calculated using the actuarial assumptions and factors in the Textron Master Retirement Plan. For any individual who becomes a Participant after July 23, 1998, benefit payments under the Plan will be reduced if the Participant elects a 50%, 75%, or 100% joint and survivor benefit or joint and surviving spouse benefit. The joint and survivor factors are the same factors provided by Addendum A of the Textron Master Retirement Plan.
|
|
(e)
|
Payment Election
. A Participant who wishes to elect a form of payment other than the Normal Form of Benefit must complete and return a written distribution election form acceptable to Textron before the Participant’s Separation From Service or Total Disability. Subject to the spousal consent requirement in subsection (f), below, the Participant may elect any actuarially equivalent life annuity (within the meaning of IRC Section 409A) that is available under Addendum A of the Textron Master
|
|
(f)
|
Spousal Consent
. For any individual who becomes a Participant after July 23, 1998, if the Participant is married when he or she makes a distribution election (including a change in a prior distribution election), the Participant must have the written consent of his or her spouse in order to elect any form of payment other than a joint and 50% surviving spouse annuity. If the Participant marries or re-marries after the date of the distribution election, the Participant shall automatically receive an actuarially equivalent joint and 50% surviving spouse annuity unless his or her current spouse consents in writing to a different form of distribution.
|
|
(g)
|
Spillover Pension Plan
.
|
|
(i)
|
If a Participant in this Plan is entitled to receive a retirement benefit or pre-pension surviving spouse annuity under the Textron Spillover Pension Plan or any other nonqualified Pension Plan that would be subtracted from the Participant’s benefit under Section 2.02(c) of this Plan, the amount of the benefit shall be calculated under the Textron Spillover Pension Plan (or other nonqualified Pension Plan), but the benefit shall be paid exclusively at the time and in the form provided under this Plan, as if the other plan’s benefit were part of the Participant’s benefit under this Plan. The preceding sentence shall apply even if the Participant is not otherwise eligible to receive any retirement benefit or pre-pension surviving spouse annuity under this Plan (for example, because he retired before his benefit under this Plan vested or because his benefit under this Plan is fully offset by his Pension Plan benefits).
|
|
(ii)
|
If a Participant’s Separation From Service, Total Disability, or death occurs before the earliest date on which he would be entitled to a benefit under this Plan, his retirement benefit under the Textron Spillover Pension Plan or other nonqualified Pension Plan shall commence on the Participant’s earliest retirement date under this Plan, as if he had retired on that date. In the case of a Separation From Service, the retirement benefit under the Textron Spillover Pension Plan or other nonqualified Pension Plan shall be subject to the six-month delay in subsection (b). The retirement benefit under the Textron Spillover Pension Plan or other nonqualified Pension Plan shall be actuarially adjusted, using the actuarial assumptions and factors in the other plan, to reflect the actual commencement date under this Plan.
|
|
(iii)
|
If a Participant is entitled to a death benefit or other benefit under the Textron Spillover Pension Plan or other nonqualified Pension Plan that is not provided under this Plan and that would not in any circumstance be subtracted from the Participant’s benefit under Section 2.02(c) of this Plan, the benefit shall be paid as provided in the Textron Spillover Pension Plan or other nonqualified Pension Plan.
|
2.05
|
Pre-Pension Surviving Spouse Annuity
. If a Participant dies after age 60 and prior to benefit commencement under this Plan, the Participant’s Surviving Spouse will receive an annuity equal to the amount the spouse would have received if the Participant had requested a joint and 50% surviving spouse annuity and had retired the day before he died. The pre-pension surviving spouse annuity payable under this section shall commence on the first business day of the first month that begins at least 90 days after the Participant’s death.
|
2.06
|
Administrative Adjustments in Payment Date
. A payment is treated as being made on the date when it is due under the Plan if the payment is made on the due date specified by the Plan, or on a later date that is either (a) in the same calendar year (for a payment whose specified due date is on or before September 30), or (b) by the 15th day of the third calendar month following the date specified by the Plan (for a payment whose specified due date is on or after October 1). A payment also is treated as being made on the date when it is due under the Plan if the payment is made not more than 30 days before the due date specified by the Plan, provided that the payment is not made earlier than six months after the Participant’s Separation From Service. A Participant may not, directly or indirectly, designate the taxable year of a payment made in reliance on the administrative rules in this Section 2.06.
|
2.07
|
Distribution Upon Change in Control
.
|
|
(a)
|
Benefit Enhancement
. If the Participant’s Separation From Service, Total Disability, or death occurs after a Change in Control, the Participant shall, in lieu of the benefit payable under the preceding sections of this Article II, receive a benefit equal to the actuarial present value at Separation From Service, Total Disability, or death of the benefit the Participant would have received had the Participant terminated employment at age 65, based upon the Participant’s Average Compensation as of the date of Separation From Service, Total Disability, or death. The present value shall be determined using the 1994 Group Annuity Reserving Table (unisex) based on a blend of 50% of the male mortality rates and 50% of the female mortality rates and an interest rate of 7%. Any pre-pension surviving spouse annuity or pre-pension survivor annuity payable upon the Participant’s death after a Change in Control shall be based on the Participant’s enhanced benefit calculated under this subsection.
|
|
(b)
|
Distribution
. If the Participant’s Separation From Service, Total Disability, or death occurs within 24 months after the Change in Control, and if the Change in Control also qualifies as a “change in control” under IRC Section 409A, the enhanced benefit shall be paid in a lump sum. If the Participant’s Separation From Service, Total Disability, or death occurs more than 24 months after the Change in Control, or if the Change in Control does not qualify as a “change in control” under IRC Section 409A, the enhanced benefit shall be paid in the Normal Form or as an actuarially equivalent life annuity elected by the Participant. In either case, the enhanced benefit shall commence (or, in the case of a lump sum, shall be paid) on the applicable benefit commencement date specified in Section 2.04 or Section 2.05.
|
3.01
|
No Plan Assets
. Benefits to be provided under this Plan are unfunded obligations of Textron. Nothing contained in this Plan shall require Textron to segregate any monies from its general funds, to create any trust, to make any special deposits, or to purchase any policies of insurance with respect to such obligations. If Textron elects to purchase individual policies of insurance on one or more of the Participants to help finance its obligations under this Plan, such individual policies and the proceeds therefrom shall at all times remain the sole property of Textron and neither the Participants whose lives are insured nor their Surviving Spouses or Beneficiaries shall have any ownership rights in such policies of insurance.
|
3.02
|
Top-Hat Plan Status
. The Plan is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
|
3.03
|
No Contributions
. No Participant shall be required or permitted to make contributions to this Plan.
|
4.01
|
Plan Administrator’s Powers
. Textron shall have all such powers as may be necessary to carry out the provisions hereof. Textron may from time to time establish rules for the administration of this Plan and the transaction of its business. Subject to Section 4.06, any actions by Textron shall be final, conclusive and binding on each Participant and all persons claiming by, through or under any Participant. Textron (and any person or persons to whom it delegates any of its authority as plan administrator) shall have discretionary
|
Supplemental Retirement Plan for Textron Key Executives
Amended and Restated January 3, 2010
|
Page 10
|
|
authority to determine eligibility for Plan benefits, to construe the terms of the Plan, and to determine all questions arising in the administration of the Plan. The Board may exercise Textron’s authority as plan administrator, and the authority to administer the Plan may be delegated as provided in Section 4.02. The Organization and Compensation Committee of the Board shall render all decisions under this Plan (including participation, Plan benefits, and benefit distributions) affecting Textron’s Chief Executive Officer.
|
4.02
|
Delegation of Administrative Authority
. The Board may, to the extent permitted by applicable law, make a non-exclusive written delegation of the authority to administer the Plan to a committee of the Board or to one or more officers of Textron. The Board may, to the extent permitted by applicable law, authorize a committee of the Board or officer of Textron to make a further delegation of the authority to administer the Plan.
|
4.03
|
Tax Withholding
. Textron may withhold from benefits paid under this Plan any taxes or other amounts required by law to be withheld. Textron may deduct from the undistributed portion of a Participant’s benefit any employment tax that Textron reasonably determines to be due with respect to the benefit under the Federal Insurance Contributions Act (FICA), and an amount sufficient to pay the income tax withholding related to such FICA tax. Alternatively, Textron may require the Participant or Beneficiary to remit to Textron or its designee an amount sufficient to satisfy any applicable federal, state, and local income and employment tax with respect to the Participant’s benefit. The Participant or Beneficiary shall remain responsible at all times for paying any federal, state, or local income or employment tax with respect to any benefit under this Plan. In no event shall Textron or any employee or agent of Textron be liable for any interest or penalty that a Participant or Beneficiary incurs by failing to make timely payments of tax.
|
4.04
|
Use of Third Parties to Assist with Plan Administration
. Textron may employ or engage such agents, accountants, actuaries, counsel, other experts and other persons as it deems necessary or desirable in connection with the interpretation and administration of this Plan. Textron and its committees, officers, directors and employees shall not be liable for any action taken, suffered or omitted by them in good faith in reliance upon the advice or opinion of any such agent, accountant, actuary, counsel or other expert. All action so taken, suffered or omitted shall be conclusive upon each of them and upon all other persons interested in this Plan.
|
4.05
|
Proof of Right to Receive Benefits
. Textron may require proof of death or Total Disability of any Participant, former Participant, Surviving Spouse, or Beneficiary and evidence of the right of any person to receive any Plan benefit.
|
Supplemental Retirement Plan for Textron Key Executives
Amended and Restated January 3, 2010
|
Page 11
|
4.06
|
Claims Procedure
.
A Participant, Surviving Spouse, or Beneficiary
who believes that he is being denied a benefit to which he is entitled under the Plan (referred to in this Section 4.06 as a “Claimant”) may file a written request with Textron setting forth the claim. Textron (or the
Organization and Compensation Committee of the Board, in the case of a claim involving Textron’s Chief Executive Officer)
shall consider and resolve the claim as set forth below.
|
|
(a)
|
Time for Response
.
Upon receipt of a claim, Textron shall advise the Claimant that a response will be forthcoming within 90 days. Textron may, however, extend the response period for up to an additional 90 days for reasonable cause, and shall notify the Claimant of the reason for the extension and the expected response date. Textron shall respond to the claim within the specified period.
|
|
(b)
|
Denial
. If the claim is denied in whole or part, Textron shall provide the Claimant with a written decision, using language calculated to be understood by the Claimant, setting forth (1) the specific reason or reasons for such denial; (2) the specific reference to relevant provisions of this Plan on which such denial is based; (3) a description of any additional material or information necessary for the Claimant to perfect his claim and an explanation why such material or such information is necessary; (4) appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; (5) the time limits for requesting a review of the claim; and (6) the Claimant’s right to bring an action for benefits under Section 502(a) of ERISA.
|
|
(c)
|
Request
for Review
. Within 60 days after the Claimant’s receipt of the written decision denying the claim in whole or in part, the Claimant may request in writing that Textron review the determination. The Claimant or his duly authorized representative may, but need not, review the relevant documents and submit issues and comment in writing for consideration by Textron. If the Claimant does not request a review of the initial determination within such 60-day period, the Claimant shall be barred from challenging the determination.
|
|
(d)
|
Review of Initial Determination
.
Within 60 days after the Committee receives a request for review, it will review the initial determination. If special circumstances require that the 60-day time period be extended, the Committee will so notify the Claimant and will render the decision as soon as possible, but no later than 120 days after receipt of the request for review.
|
|
(e)
|
Decision on Review
.
All decisions on review shall be final and binding with respect to all concerned parties. The decision on review shall set forth, in a manner calculated to be understood by the Claimant, (1) the
|
|
|
specific reasons for the decision, shall including references to the relevant Plan provisions upon which the decision is based; (2) the Claimant’s right to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information, relevant to his benefits; and (3) the Claimant’s right to bring a civil action under Section 502(a) of ERISA.
|
4.07
|
Enforcement Following a Change in Control
. If, after a Change in Control, any claim is made or any litigation is brought by a Participant, Surviving Spouse, or Beneficiary to enforce or interpret any provision contained in this Plan, Textron and the “person” or “group” described in Section 1.04 shall be liable, jointly and severally, to reimburse the Participant, Surviving Spouse, or Beneficiary for the Participant’s, Surviving Spouse’s, or Beneficiary’s reasonable attorney’s fees and costs incurred during the Participant’s, Surviving Spouse’s, or Beneficiary’s lifetime in pursuing any such claim or litigation, and to pay prejudgment interest at the Prime Rate as quoted in the Money Rates section of
The Wall Street Journal
on any money award or judgment obtained by the Participant, Surviving Spouse, or Beneficiary, payable at the same time as the underlying award or judgment. Any reimbursement pursuant to the preceding sentence shall be paid to the Participant no earlier than six months after the Participant’s Separation From Service, and shall be paid to the Participant, Surviving Spouse, or Beneficiary no later than the end of the calendar year following the year in which the expense was incurred. The reimbursement shall not be subject to liquidation or exchange for another benefit, and the amount of reimbursable expense incurred in one year shall not affect the amount of reimbursement available in another year.
|
5.01
|
Amendment
. Subject to subsections (a) and (b), below, the Board shall have the right to amend, modify, or suspend this Plan at any time by written resolution or other formal acdtion reflected in writing.
|
|
(a)
|
No amendment, modification, or suspension shall reduce a Participant’s accrued benefit as determined under Article II immediately before the effective date of the amendment, modification, or suspension.
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|
(b)
|
Following a Change in Control, no amendment, modification, or suspension shall be made that directly or indirectly reduces any right or benefit provided upon a Change in Control.
|
|
An amendment to a Pension Plan that affects the benefits provided under this Plan shall not be deemed to be an amendment to this Plan, and shall not be subject to the restrictions in subsections (a) and (b), provided that the amendment to the
|
5.02
|
Delegation of Amendment Authority
. The Board may, to the extent permitted by applicable law, make a non-exclusive written delegation of the authority to amend the Plan to a committee of the Board or to one or more officers of Textron. The Board may, to the extent permitted by applicable law, authorize a committee of the Board to make a further delegation of the authority to amend the Plan.
|
5.03
|
Termination
. The Board shall have the right to terminate this Plan at any time before a Change in Control by written resolution. No termination of the Plan shall reduce a Participant’s accrued benefit as determined under Article II immediately before the effective date of the termination.
|
5.04
|
Distributions Upon Plan Termination
. Upon the termination of the Plan by the Board with respect to all Participants, and termination of all arrangements sponsored by any Textron Company that would be aggregated with the Plan under IRC Section 409A, Textron shall have the right, in its sole discretion, and notwithstanding any elections made by the Participant, to pay the Participant’s vested benefit in a lump sum, to the extent permitted under IRC Section 409A. All payments that may be made pursuant to this Section 5.04 shall be made no earlier than the thirteenth month and no later than the twenty-fourth month after the termination of the Plan. Textron may not accelerate payments pursuant to this Section 5.04 if the termination of the Plan is proximate to a downturn in Textron’s financial health. If Textron exercises its discretion to accelerate payments under this Section 5.04, it shall not adopt any new arrangement that would have been aggregated with the Plan under IRC Section 409A within three years following the date of the Plan’s termination.
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6.01
|
Use of Masculine or Feminine Pronouns
. Unless a contrary or different meaning is expressly provided, each use in this Plan of the masculine or feminine gender shall include the other and each use of the singular number shall include the plural.
|
6.02
|
Transferability of Plan Benefits
.
|
|
(a)
|
Textron shall recognize the right of an alternate payee named in a domestic relations order to receive all or a portion of a Participant’s benefit under the Plan, provided that (1) the domestic relations order would be a “qualified domestic relations order” within the meaning of IRC Section 414(p) of the Code if IRC Section 414(p) were applicable to the Plan (except that the order may require payment to be made to the alternate payee before the Participant’s earliest retirement age), (2) the
|
Supplemental Retirement Plan for Textron Key Executives
Amended and Restated January 3, 2010
|
Page 14
|
|
|
domestic relations order does not purport to give the alternate payee any right to assets of any Textron Company, and (3) the domestic relations order does not purport to allow the alternate payee to defer payments beyond the date when the benefits assigned to the alternate payee would have been paid to the Participant.
|
|
(b)
|
Except as provided in subsection (a) concerning domestic relations orders, no amount payable at any time under this Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge or encumbrance of any kind to the extent that the assignment or other action would cause the amount to be included in the Participant’s gross income or treated as a distribution for federal income tax purposes. A Participant may, with the written approval of Textron, make an assignment of a benefit for estate planning or similar purposes if the assignment does not cause the amount to be included in the Participant’s gross income or treated as a distribution for federal income tax purposes. Any attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any such benefit, whether presently or subsequently payable, shall be void unless so approved. Except as required by law, no benefit payable under this Plan shall in any manner be subject to garnishment, attachment, execution or other legal process, or be liable for or subject to the debts or liability of any Participant, Surviving Spouse, or Beneficiary.
|
6.03
|
Section 409A Compliance
. The Plan is intended to comply with IRC Section 409A and should be interpreted accordingly. Any distribution election that would not comply with IRC Section 409A is not effective. To the extent that a provision of this Plan does not comply with IRC Section 409A, such provision shall be void and without effect. Textron does not warrant that the Plan will comply with IRC Section 409A with respect to any Participant or with respect to any payment, however. In no event shall any Textron Company; any director, officer, or employee of a Textron Company (other than the Participant); or any member of Textron be liable for any additional tax, interest, or penalty incurred by a Participant or Beneficiary as a result of the Plan’s failure to satisfy the requirements of IRC Section 409A, or as a result of the Plan’s failure to satisfy any other requirements of applicable tax laws.
|
6.04
|
Controlling State Law
. This Plan shall be construed in accordance with the laws of the State of Delaware.
|
6.05
|
No Right to Employment
. Nothing contained in this Plan shall be construed as a contract of employment between any Participant and any Textron Company, or to suggest or create a right in any Participant of continued employment at any Textron Company.
|
6.06
|
Additional Conditions Imposed
. Textron (through the Organization and Compensation Committee of the Board), the Chief Executive Officer, and the Chief Human Resources Officer may impose such other lawful terms and conditions on participation in this Plan as deemed desirable.
|
Supplemental Retirement Plan for Textron Key Executives
Amended and Restated January 3, 2010
|
Page 16
|
SUPPLEMENTAL RETIREMENT PLAN
FOR TEXTRON KEY EXECUTIVES
____________________________
APPENDIX
A
____________________________
Provisions of the
Supplemental Retirement Plan
for Textron Key Executives
(As in effect before January 1, 2008)
|
Introduction
|
2
|
|
Article I—Definitions
|
3
|
|
1.01
|
Beneficiary
|
3
|
1.02
|
Board
|
3
|
1.03
|
Compensation
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3
|
1.04
|
Key Executive
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3
|
1.05
|
Normal Form of Benefit
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3
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1.06
|
Participant
|
3
|
1.07
|
Pension Plan
|
3
|
1.08
|
Plan
|
3
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1.09
|
Surviving Spouse
|
4
|
1.10
|
Textron
|
4
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1.11
|
Textron Company
|
4
|
Article II—Benefit
|
4
|
|
Article III—Unfunded Plan
|
5
|
|
Article IV—Plan Administration
|
6
|
|
Article V—Miscellaneous
|
7
|
A.
|
Key Executive Protected Benefits
(Earned and Vested Before 2005)
|
B.
|
Benefits Subject To Section 409A
(Earned or Vested From 2005 Through 2007)
|
1.01
|
“Beneficiary” means the person or persons entitled under this Plan to receive Plan benefits after a Participant’s death.
|
1.02
|
“Board” means the Board of Directors of Textron.
|
1.03
|
“Compensation” means base salary, accrued annual incentive compensation, performance units, and performance share units, whether or not deferred under the Deferred Income Plan for Textron Key Executives or Textron Deferred Income Plan for Executives. However, for any Key Executive who is first awarded performance share units after October 26, 1999, performance share units shall not be included in Compensation. Compensation does not include awards under the Supplemental Bonus Plan for Textron Financial Corporation Executives or the Textron Quality Management Plan. “Average Compensation” means the average of a Participant’s Compensation during the five consecutive years in which the Compensation is highest.
|
1.04
|
“Key Executive” means an employee of a Textron Company who has been and continues to be designated as a Key Executive by Textron’s Chief Executive Officer and Chief Human Resources Officer.
|
1.05
|
“Normal Form of Benefit” means a life annuity unless the Participant was designated a Participant in this Plan prior to July 23, 1998, in which case the Normal Form of Benefit shall be a Joint and 50% Survivor annuity.
|
1.06
|
“Participant” means a Key Executive selected by Textron’s Chief Executive Officer for participation in this Plan.
|
1.07
|
“Pension Plan” means the Bell Helicopter Textron Retirement Plan, the Textron Master Retirement Plan, or an included plan.
|
1.08
|
“Plan” means this Restated Supplemental Retirement Plan for Textron Key Executives, as amended and restated from time to time.
|
1.09
|
“Surviving Spouse” means a Participant’s spouse who is married to the Participant on the day of the Participant’s death while active or on the dates of the Participant’s retirement and death.
|
1.10
|
“Textron” means Textron Inc., a Delaware corporation, and any successor of Textron Inc.
|
1.11
|
“Textron Company” means Textron or any company controlled by or under common control with Textron.
|
2.01
|
Subject to Sections 2.02 and 2.03, the maximum benefit provided to Participants who qualify for benefits under this Plan is an annuity commencing upon retirement equal to 50% of Average Compensation (the “Target Benefit”) less the offsets and adjusted by the Early Retirement Factors as set out below.
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2.02
|
The Target Benefit shall be reduced by any nonqualified or qualified pension plan benefits payable at age 65 from a prior employer other than a Textron employer. The reduction for any prior employer plans shall be the actuarial equivalent of a life annuity. The net Target Benefit after reduction for any prior employer plans shall then be multiplied by the Early Retirement Factor as set out in Section 2.03 below. The product of the net Target Benefit times the Early Retirement Factor shall then be reduced by any and all amounts payable to the Participant at the time of retirement under any qualified or nonqualified Pension Plan. The reduction for all Pension Plans shall be a Normal Form of Benefit based on the tables in the Pension Plan. It shall be the obligation of each Participant to disclose to Textron any amounts that might be used under this section to reduce the benefits provided by this Plan. Such disclosure shall include information on annuity payments and lump-sum cash payments from other plans.
|
2.03
|
The Participant’s benefits under this Plan shall be based on the Participant’s age at retirement (including death or disability) in accordance with the following schedule:
|
2.04
|
The Normal Form of Benefit shall be a life annuity unless the Participant was designated a Participant in this Plan prior to July 23, 1998, in which case the Normal Form of Benefit shall be a Joint and 50% Survivor annuity. The payment of any benefit under Section 2.01 shall be paid in the Normal Form of Benefit or otherwise as determined by Textron’s Chief Executive Officer in his sole discretion after considering any form of payment requested by the Participant, Surviving Spouse, or other Beneficiary entitled to receive the benefits. Any form of benefit payable other than the Normal Form shall be the actuarial equivalent of the Normal Form using the factors in the Textron Master Retirement Plan. For any individual who becomes a Participant after July 23, 1998, their benefit payments will be reduced if they elect a 50% or a 100% Joint and Survivor Benefit. The Joint and Survivor factors are the same factors provided by the Textron Master Retirement Plan.
|
2.05
|
If a Participant dies after age 60 and prior to benefit commencement under this Plan, the Participant’s Surviving Spouse will receive an annuity equal to the amount the Spouse would have received assuming the Participant had requested a Joint and 50% Survivor annuity and retired the day before he died.
|
3.01
|
Benefits to be provided under this Plan are unfunded obligations of Textron. Nothing contained in this Plan shall require Textron to segregate any monies from its general funds, to create any trust, to make any special deposits, or to purchase any policies of insurance with respect to such obligations. If Textron elects to purchase individual policies of insurance on one or more of the Participants to help finance its obligations under this Plan, such individual policies and the proceeds therefrom shall at all times remain the sole property of Textron and neither the Participants whose lives are insured nor their Beneficiaries shall have any ownership rights in such policies of insurance.
|
3.02
|
The Plan is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
|
3.03
|
No Participant shall be required or permitted to make contributions to this Plan.
|
4.01
|
(a)
|
Textron shall be the plan administrator of this Plan and shall be solely responsible for its general administration and interpretation. Textron shall have all such powers as may be necessary to carry out the respective provisions hereof. Textron may from time to time establish rules for the administration of this Plan and the transaction of its business. Subject to Section 4.05, any action by Textron shall be final, conclusive, and binding on each Participant and all persons claiming by, through, or under any Participant. The Board may exercise Textron’s authority as plan administrator, and the authority to administer the Plan may be delegated as provided in Section 4.02.
|
|
(b)
|
Notwithstanding any provision in this Plan to the contrary, the Organization and Compensation Committee of the Board shall render all decisions under this Plan (including participation, Plan benefits, and benefit distributions) affecting Textron’s Chief Executive Officer.
|
|
(c)
|
Textron (and any person or persons to whom it delegates any of its authority as plan administrator) shall have discretionary authority to determine eligibility for Plan benefits, to construe the terms of the Plan, and to determine all questions arising in the administration of the Plan, and shall make all such determinations and interpretations in a nondiscriminatory manner.
|
|
(d)
|
Notwithstanding any provision to the contrary, no benefit shall be paid to any Participant while employed by Textron.
|
4.02
|
The Board may, to the extent permitted by applicable law, make a non-exclusive written delegation of the authority to administer the Plan to a committee of the Board or to one or more officers of Textron. The Board may, to the extent permitted by applicable law, authorize a committee of the Board or officer of Textron to make a further delegation of the authority to administer the Plan.
|
4.03
|
Textron may employ or engage such agents, accountants, actuaries, counsel, other experts, and other persons as it deems necessary or desirable in connection with the interpretation and administration of this Plan. Textron shall be entitled to rely upon all certifications made by an accountant selected by Textron. Textron and its committees, officers, directors, and employees shall not be liable for any action taken, suffered, or omitted by them in good faith in reliance upon the advice or opinion of any such agent, accountant, actuary, counsel, or other expert. All action so taken, suffered, or omitted shall be conclusive upon each of them and upon all other persons interested in this Plan.
|
4.04
|
Textron may require proof of death or total disability of any Participant, former Participant or beneficiary and evidence of the right of any person to receive any Plan benefit.
|
4.05
|
Claims under this Plan shall be filed in writing with Textron, and shall be reviewed and resolved pursuant to the claims procedure in Section 4.06 of the Supplemental Retirement Plan for Textron Key Executives.
|
4.06
|
Textron shall withhold from benefits paid under this Plan any taxes or other amounts required to be withheld by law.
|
5.01
|
Unless a contrary or different meaning is expressly provided, each use in this Plan of the masculine or feminine gender shall include the other and each use of the singular number shall include the plural.
|
5.02
|
(a)
|
Textron shall recognize the right of an alternate payee named in a domestic relations order to receive all or a portion of a Participant’s benefit under the Plan, provided that (1) the domestic relations order would be a “qualified domestic relations order” within the meaning of IRC Section 414(p) of the Code if IRC Section 414(p) were applicable to the Plan (except that the order may require payment to be made to the alternate payee before the Participant’s earliest retirement age), (2) the domestic relations order does not purport to give the alternate payee any right to assets of any Textron Company, and (3) the domestic relations order does not purport to allow the alternate payee to defer payments beyond the date when the benefits assigned to the alternate payee would have been paid to the Participant.
|
|
(b)
|
Except as provided in subsection (a) concerning domestic relations orders, no amount payable at any time under this Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge or encumbrance of any kind to the extent that the assignment or other action would cause the amount to be included in the Participant’s gross income or treated as a distribution for federal income tax purposes. A Participant may, with the written approval of Textron, make an assignment of a benefit for estate planning or similar purposes if the assignment does not cause the amount to be included in the Participant’s gross income or treated as a distribution for federal income tax purposes. Any attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any such benefit, whether presently or subsequently payable, shall be void unless so approved. Except as required by law, no benefit payable under this Plan shall in any manner be subject to garnishment, attachment, execution or other legal process, or be liable for or subject to the debts or liability of any Participant, Surviving Spouse, or Beneficiary.
|
5.03
|
Notwithstanding any Plan provision to the contrary, the Board shall have the right to amend, modify, suspend, or terminate this Plan at any time by written notification of such action; provided, however, that no amendment, modification, suspension, or termination:
|
|
(a)
|
Shall reduce an amount payable under Article II before the effective date of the amendment, modification, suspension or termination; or
|
|
(b)
|
Shall be made to Section 5.03 or 5.05 following a Change in Control.
|
5.04
|
The Board may, to the extent permitted by applicable law, make a non-exclusive written delegation of the authority to amend the Plan to a committee of the Board or to one or more officers of Textron. The Board may, to the extent permitted by applicable law, authorize a committee of the Board to make a further delegation of the authority to amend the Plan.
|
5.05
|
If after a Change in Control any claim is made or any litigation is brought by a Participant or beneficiary to enforce or interpret any provision contained in this Plan, Textron and the “person” or “group” described in the next following sentence shall be liable, jointly and severally, to indemnify the Participant or beneficiary for the Participant’s or beneficiary’s reasonable attorney’s fees and disbursements incurred in any such claim or litigation and for prejudgment interest at the Bankers Trust Company prime interest rate on any money award or judgment obtained by the Participant or beneficiary. In the event that the Participant retires or his employment otherwise terminates at any time after a “Change in Control” as defined below, the Participant shall, in lieu of the benefit payable under Article II, receive a benefit equal to the actuarial present value at termination of the benefit the Participant would have received had the Participant terminated employment at age 65, based upon the Participant’s Average Compensation as of the date of her termination. If the Participant terminates within 24 months after the Change in Control, such benefit shall be paid in a lump sum. If the Participant terminates more than 24 months after the Change in Control, then the Participant shall be paid in an annuity. Textron shall select the discount rate and mortality table to be used in determining the actuarial present values.
For purposes of this Plan, a “Change in Control” shall occur if (i) any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Act”)) other than Textron, any trustee or other fiduciary holding Textron common stock under an employee benefit plan of Textron or a related company, or any corporation which is owned, directly or indirectly, by the stockholders of Textron in substantially the same proportions as their ownership of Textron common stock, is or becomes (other than by acquisition from Textron or a related company) the “beneficial owner” (as defined in Rule 13d-3 under the Act) of more than 30% of the then outstanding voting stock of Textron, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board (and any new director whose election by the Board or whose nomination for election by Textron’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 such period or whose
|
|
election or nomination for election was previously so approved) cease for any reason to constitute a majority thereof, or (iii) stockholders of Textron approve a merger or consolidation of Textron with any other corporation, other than a merger or consolidation which would result in the voting securities of Textron outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of Textron or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the stockholders of Textron approve a plan of complete liquidation of Textron or an agreement for the sale or disposition by Textron of all or substantially all of Textron’s assets.
|
5.06
|
This Plan shall be construed in accordance with the laws of the State of Delaware.
|
5.07
|
Nothing contained in this Plan shall be construed as a contract of employment between any Participant and any Textron Company, or to suggest or create a right in any Participant to be continued in any capacity with, or as an employee of, any Textron Company.
|
Supplemental Retirement Plan for Textron Key Executives
Amended and Restated January 3, 2010
|
Appendix A
Page 9
|
1.01
|
“Base Salary” means the annual rate of base salary of a Participant from a Textron Company at the time of the Participant’s death or termination of Textron Employment, as applicable. “Base Salary” shall not include incentive payments, bonuses, supplemental unemployment benefits, contributions to any profit sharing or bonus plan, or expense reimbursements. Any Base Salary, the receipt of which by the Participant is deferred under the Textron Savings Plan or the Deferred Income Plan for Textron Key Executives, shall be Base Salary under this Plan. Textron shall determine whether a particular item of income constitutes Base Salary if a question arises.
|
1.02
|
“Beneficiary” means the person or persons entitled under this Plan to receive a Survivor Benefit after a Participant’s death.
|
1.03
|
“Board” means the Board of Directors of Textron.
|
1.04
|
“Key Executive” means an employee of a Textron Company who has been and continues to be designated as a Key Executive under the Plan by Textron’s Chief Executive Officer and Chief Human Resources Officer.
|
1.05
|
“Participant” means a present Key Executive or a former Key Executive who continues to be designated a Participant under the Plan by Textron’s Chief Executive Officer and Chief Human Resources Officer.
|
1.06
|
“Plan” means this Survivor Benefit Plan for Textron Key Executives, as amended and restated from time to time.
|
1.07
|
“Survivor Benefit” means a benefit payable under Article III of this Plan.
|
1.08
|
“Textron” means Textron, Inc., a Delaware corporation, and any successor of Textron Inc.
|
1.09
|
“Textron Company” means Textron or any company controlled by or under common control with Textron.
|
1.10
|
“Textron Employment” means employment with a Textron Company. Leaves of absence for such periods and purposes as are approved by Textron and transfers of employment within or between Textron Companies shall not be deemed interruptions of Textron Employment.
|
1.11
|
“Total Disability” has the same meaning under this Plan as in the Textron Master Retirement Plan with respect to any Participant at the date his Textron Employment ends.
|
3.01
|
If a Key Executive’s Textron Employment ends because of death, his Beneficiary shall receive a Survivor Benefit equal to three times the Key Executive’s Base Salary at the time of his death.
|
3.02
|
If a Participant’s Textron Employment ends (a) at or after age 62 (other than for less than acceptable performance), (b) as a result of Total Disability, or (c) under circumstances approved in writing for this specific purpose by the Chief Executive Officer and the Chief Human Resources Officer of Textron, or because of death while she is no longer a Key Executive, her Beneficiary shall receive upon her death a Survivor Benefit equal to two times the Participant’s Base Salary at the time her Textron Employment ended.
|
3.03
|
If a Participant’s Textron Employment ends other than as described in Sections 3.01 or 3.02, no Survivor Benefit shall be payable on his account.
|
4.01
|
Textron shall choose in its sole discretion the method described in Section 4.02 by which a Survivor Benefit payable under Article III shall be distributed, after considering any method of payment requested by the Participant or by the Beneficiary entitled to receive the benefit.
|
4.02
|
Subject to Section 4.03, below, as soon as practical after a Survivor Benefit becomes payable under Article III, Textron shall distribute the benefit in accordance with any one of the following methods:
|
|
(b)
|
Payment in a number of annual installments, each payable as soon as practical after the end of the each successive calendar year, over a period not exceeding ten years from the date on which the benefit first becomes payable. The annual installments shall be calculated in a manner which provides substantially equal installments or shall be calculated each year by dividing the unpaid amount of the benefit as of January 1 of that year by the remaining number of unpaid installments; or
|
|
Simple interest shall be credited on any unpaid balance of a Survivor Benefit based on an average of the monthly Moody’s Corporate Bond Yield Index as published by Moody’s Investors Service, Inc. (or any successor thereto), or, if such average is no longer published, a substantially similar average selected by Textron.
|
4.03
|
Effective for payments on or after January 1, 2008, Textron has exercised its discretion pursuant to Section 4.01 to determine that all Survivor Benefits shall be paid in a single sum as soon as practical after a Survivor Benefit becomes payable under Article III. If a Beneficiary is receiving installment payments as of July 25, 2007, the Plan shall pay the remaining installments in a single sum as soon as practical after January 1, 2008; and Textron may, in its sole discretion, direct the Plan to pay the remaining installments to the Beneficiary in a single sum before January 1, 2008.
|
4.04
|
(a)
|
Upon a Change in Control as defined in Section 8.03, Textron shall establish an irrevocable grantor trust, as described in Section 677 of the Internal Revenue Code (a “rabbi trust”), to accumulate assets that will assist Textron in meeting its obligations under the Plan. The rabbi trust shall have an independent trustee selected by Textron. The trust agreement with respect to the rabbi trust shall provide that the assets of the rabbi trust shall at all times be subject to the claims of Textron’s general creditors in the event of the bankruptcy or insolvency of Textron, but shall in all other circumstances be used solely to pay Survivor Benefits under the Plan and reasonable expenses of administering the rabbi trust until all Survivor Benefits have been paid in full.
|
|
(b)
|
Upon a Change in Control as defined in Section 8.03, Textron shall transfer assets to the rabbi trust described in Section 4.04(a). The assets shall consist of life insurance, cash, or a combination of life insurance and cash. The target value of the assets to be transferred shall equal the sum of the following: (a) two times each Participant’s Base Salary immediately before the Change in Control, if her Textron Employment had not ended before that date; and (b) two times each
|
|
|
Participant’s Base Salary at the time her Textron Employment ended, if she is then a former employee; and (c) the balance of the Survivor Benefit, calculated immediately before the Change in Control, if the Participant had died before the Change in Control.
|
5.01
|
A Participant may designate one or more Beneficiaries to receive a Survivor Benefit payable on the Participant’s death. A Beneficiary may designate one or more Beneficiaries to receive any unpaid balance of a Survivor Benefit, to the extent this designation does not contravene any designation filed by the deceased Participant through whom the Beneficiary himself claims under this Plan. Beneficiaries shall be designated only upon forms made available by or satisfactory to Textron and filed by the Participant or Beneficiary with Textron or its designee.
|
5.02
|
A Participant or Beneficiary may change her own designation of Beneficiary by filing a substitute designation of Beneficiary with Textron.
|
5.03
|
In the absence of an effective designation of Beneficiary, or if all persons so designated shall have predeceased the Participant/Beneficiary or shall have died before the complete distribution of Plan benefits, the balance of Plan benefits shall be paid to the Participant/ Beneficiary’s surviving spouse or, if none, to the Participant/Beneficiary’s issue per stirpes or, if no issue, to the executor or administrator of the Participant/Beneficiary’s estate.
|
5.04
|
If a Participant’s Base Salary or a Survivor Benefit is community property, any designation of Beneficiary shall be valid or effective only as permitted under applicable law.
|
5.05
|
If a Survivor Benefit is payable to a minor or person declared incompetent or to a person incapable of handling the disposition of his property, Textron may pay such Survivor Benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or person. Textron may require proof of incompetency, minority, incapacity or guardianship as it deems appropriate prior to distribution of the Survivor Benefit. Such distribution shall completely discharge any Textron Company from all liability with respect to such benefit.
|
6.01
|
Benefits to be provided under this Plan are unfunded obligations of Textron. Before a Change in Control occurs, nothing contained in this Plan shall require Textron to segregate any monies from its general funds, to create any trust, to make any special deposits, or to purchase any policies of insurance with respect to such obligations. If Textron elects to purchase individual policies of insurance on one or more of the Participants to help finance its obligations under this Plan, then such individual policies
|
|
and the proceeds therefrom shall at all times remain the sole property of Textron, and neither the Participants whose lives are insured nor their Beneficiaries shall have any ownership rights in such policies of insurance.
|
6.02
|
This Plan is intended to provide benefits for a select group of management employees who are highly compensated, pursuant to section 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended.
|
6.03
|
No Participant shall be required or permitted to make contributions to this Plan.
|
7.01
|
Textron shall be the plan administrator of this Plan and shall be solely responsible for its general administration and interpretation. Textron shall have all such powers as may be necessary to carry out the provisions hereof. Textron may from time to time establish rules for the administration of this Plan and the transaction of its business. Subject to Section 7.05, any action by Textron shall be final, conclusive and binding on each Participant and all persons claiming by, through or under any Participant. Textron (and any person or persons to whom it delegates any of its authority as plan administrator) shall have discretionary authority to determine eligibility for Plan benefits, to construe the terms of the Plan, and to determine all questions arising in the administration of the Plan, and shall make all such determinations and interpretations in a nondiscriminatory manner. The Board may exercise Textron’s authority as plan administrator, and the authority to administer the Plan may be delegated as provided in Section 7.02.
|
7.02
|
The Board may, to the extent permitted by applicable law, make a non-exclusive written delegation of the authority to administer the Plan to a committee of the Board or to one or more officers of Textron. The Board may, to the extent permitted by applicable law, authorize a committee of the Board or officer of Textron to make a further delegation of the authority to administer the Plan.
|
7.03
|
Textron may employ or engage such agents, accountants, actuaries, counsel, other experts and other persons as it deems necessary or desirable in connection with the interpretation and administration of this Plan. Textron shall be entitled to rely upon all certifications made by an accountant selected by Textron. Textron and its committees officers, directors and employees shall not be liable for any action taken, suffered or omitted by them in good faith in reliance upon the advice or opinion of any such agent, accountant, actuary, counsel or other expert. All action so taken, suffered or omitted shall be conclusive upon each of them and upon all other persons interested in this Plan.
|
7.04
|
Textron may require proof of the death or Total Disability of any Participant or Beneficiary and evidence of the right of any person to receive any Survivor Benefit.
|
7.05
|
A Beneficiary
who believes that he is being denied a benefit to which he is entitled under the Plan (referred to in this Section 7.05 as a “Claimant”) may file a written request with
|
|
Textron setting forth the claim. Textron shall consider and resolve the claim as set forth below.
|
|
(a)
|
Upon receipt of a claim, Textron shall advise the Claimant that a response will be forthcoming within 90 days. Textron may, however, extend the response period for up to an additional 90 days for reasonable cause, and shall notify the Claimant of the reason for the extension and the expected response date. Textron shall respond to the claim within the specified period.
|
|
(b)
|
If the claim is denied in whole or part, Textron shall provide the Claimant with a written decision, using language calculated to be understood by the Claimant, setting forth (1) the specific reason or reasons for such denial; (2) the specific reference to relevant provisions of this Plan on which such denial is based; (3) a description of any additional material or information necessary for the Claimant to perfect his claim and an explanation why such material or such information is necessary; (4) appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; (5) the time limits for requesting a review of the claim; and (6) the Claimant’s right to bring an action for benefits under Section 502 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
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(c)
|
Within 60 days after the Claimant’s receipt of the written decision denying the claim in whole or in part, the Claimant may request in writing that Textron review the determination. The Claimant or his duly authorized representative may, but need not, review the relevant documents and submit issues and comment in writing for consideration by Textron. If the Claimant does not request a review of the initial determination within such 60-day period, the Claimant shall be barred from challenging the determination.
|
|
(d)
|
Within 60 days after Textron receives a request for review, it will review the initial determination. If special circumstances require that the 60-day time period be extended, Textron will so notify the Claimant and will render the decision as soon as possible, but no later than 120 days after receipt of the request for review.
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|
(e)
|
All decisions on review shall be final and binding with respect to all concerned parties. The decision on review shall set forth, in a manner calculated to be understood by the Claimant, (1) the specific reasons for the decision, shall including references to the relevant Plan provisions upon which the decision is based; (2) the Claimant’s right to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information, relevant to his benefits; and (3) the Claimant’s right to bring a civil action under ERISA section 502(a).
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7.06
|
Textron shall withhold from benefits paid under this Plan any taxes or other amounts required to be withheld by law.
|
8.01
|
Unless a contrary or different meaning is expressly provided, each use in this Plan of the masculine or feminine gender shall include the other and each use of the singular number shall include the plural.
|
8.02
|
No amount payable under this Plan at any time shall be subject in any manner to alienation, sale, transfer, assignment, pledge or encumbrance of any kind unless specifically approved in writing in advance by Textron or its designee. Any attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any such Benefit, whether presently or subsequently payable, shall be void unless so approved. Except as required by law, no benefit payable under this Plan shall in any manner be subject to garnishment, attachment, execution or other legal process, or be liable for or subject to the debts or liability of any Participant or Beneficiary.
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8.03
|
Notwithstanding any Plan provision to the contrary, the Board or its designee shall have the right to amend, modify, suspend or terminate this Plan at any time by written ratification of such action; provided, however, that no amendment, modification, suspension or termination:
|
|
(a)
|
Shall adversely affect the right of a Beneficiary to receive a Survivor Benefit, as described in Article III, payable as the result of the Participant’s death or action taken pursuant to Section 3.02 that occurred before the effective date of such amendment, modification, suspension or termination; or
|
|
(b)
|
Shall be made to Article IV or this Section 8.03 following a Change in Control. If after a Change in Control any claim is made or any litigation is brought by a Participant or Beneficiary to enforce or interpret any provision contained in this Plan, Textron and the “person” or “group” described in the next following sentence shall be liable, jointly and severally, to indemnify the Participant or Beneficiary for the Participant’s or Beneficiary’s reasonable attorney’s fees and disbursements incurred in any such claim or litigation and for prejudgment interest at the Prime Rate as quoted in the Money Rates section of
The Wall Street Journal
on any money award or judgment obtained by the Participant or Beneficiary. For purposes of this Plan, a “Change in Control” shall occur if (i) any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Act”)) other than Textron, any trustee or other fiduciary holding Textron Common Stock under an employee benefit plan of Textron or a related company, or any corporation which is owned, directly or indirectly, by the stockholders of Textron in substantially the same proportions as their ownership of Textron Common Stock, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act) of more than 30% of the then outstanding voting stock of Textron, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board (and any new director whose election by the Board or whose nomination for election by the stockholders of Textron 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 such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority thereof, or (iii) the stockholders of Textron approve a merger or consolidation of Textron with any other corporation, other than a merger or consolidation which would result in the voting securities of Textron outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of Textron or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the stockholders of Textron approve a plan of complete liquidation of Textron or an agreement for the sale or disposition by Textron of all or substantially all of Textron’s assets.
|
8.04
|
The Board may, to the extent permitted by applicable law, make a non-exclusive written delegation of the authority to amend the Plan to a committee of the Board or to one or more officers of Textron. The Board may, to the extent permitted by applicable law, authorize a committee of the Board to make a further delegation of the authority to amend the Plan.
|
8.05
|
This Plan shall be construed in accordance with the laws of the State of Delaware.
|
8.06
|
Nothing contained in the Plan shall be construed as a contract of employment between any Participant and any Textron Company, or to suggest or create a right in any Participant to be continued in employment as a Key Executive or other employee of any Textron Company.
|
8.07
|
Textron, the Chief Executive Officer, and the Chief Human Resources Officer may impose such other lawful terms and conditions on participation in this Plan as deemed desirable.
|
Survivor Benefit Plan for Textron Key Executives
Amended and Restated January 3, 2010
|
Page 8
|
Three Months
Ended
April 3, 2010
|
||||
Fixed charges:
|
||||
Interest expense*
|
$ | 46 | ||
Estimated interest portion of rents
|
8 | |||
Total fixed charges
|
$ | 54 | ||
Income:
|
||||
Income from continuing operations before income taxes
|
$ | 11 | ||
Fixed charges
|
54 | |||
Dividends received from Finance group
|
125 | |||
Capital contributions paid to Finance group under
Support Agreement
|
(75 | ) | ||
Eliminate pretax loss of Finance group
|
60 | |||
Adjusted income
|
$ | 175 | ||
Ratio of income to fixed charges
|
3.24 |
*
|
Includes interest expense on all third-party indebtedness, except for interest related to unrecognized tax benefits, which is included in income tax expense.
|
Three Months
Ended
April 3, 2010
|
||||
Fixed charges:
|
||||
Interest expense*
|
$ | 71 | ||
Estimated interest portion of rents
|
8 | |||
Total fixed charges
|
$ | 79 | ||
Income:
|
||||
Income from continuing operations before income taxes
|
$ | 11 | ||
Fixed charges
|
79 | |||
Adjusted income
|
$ | 90 | ||
Ratio of income to fixed charges
|
1.14 |
*
|
Includes interest expense on all third-party indebtedness, except for interest related to unrecognized tax benefits, which is included in income tax expense.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Textron Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
April 30, 2010
|
/s/ Scott C. Donnelly
|
|
Scott C. Donnelly
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Textron Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
April 30, 2010
|
/s/ Frank T. Connor
|
|
Frank T. Connor
Executive Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
April 30, 2010
|
/s/ Scott C. Donnelly
|
|
Scott C. Donnelly
President and Chief Executive Officer
|
|||
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
April 30, 2010
|
/s/ Frank T. Connor
|
|
Frank T. Connor
Executive Vice President and Chief Financial Officer
|
[SEAL]
|
/s/
|
Terrence O’Donnell
|
|||
Terrence O’Donnell
|
|||||
Executive Vice President,
|
|||||
General Counsel and Corporate Secretary
|
|||||
Attest:
|
/s/
|
Ann T. Willaman
|
|||
Ann T. Willaman
|
|||||
Assistant Secretary
|