Exhibit 10.3

 

JPMorgan Chase Bank, National Association

P.O. Box 161

60 Victoria Embankment

London EC4Y 0JP

England

 

October 25, 2011

 

To: Textron Inc.

40 Westminster Street

Providence, RI 02903

Attention: Chief Financial Officer

Telephone No.:    (401) 421-2800

Facsimile No.:     (401) 457-3533

 

Bond Hedge Amendment and Termination Agreement

 

This letter agreement (this “Bond Hedge Amendment and Termination Agreement”),
subject to certain conditions set forth herein, (i) amends the terms and
conditions of the transaction (the “Base Bond Hedge Transaction”) entered into
between JPMorgan Chase Bank, National Association, London Branch
(“Bank”), represented by J.P. Morgan Securities LLC (f/k/a J.P. Morgan
Securities Inc.), as its agent, and Textron Inc. (“Counterparty”), pursuant to a
letter agreement dated April 29, 2009, entitled Convertible Bond Hedge
Transaction (as amended, reformed or modified prior to the date hereof, the
“Base Bond Hedge Confirmation”) and (ii) terminates the transaction (the
“Additional Bond Hedge Transaction” and together with the Base Bond Hedge
Transaction, the “Bond Hedge Transactions”) entered into between JPMorgan Chase
Bank, National Association, London Branch (“Bank”), represented by J.P. Morgan
Securities LLC (f/k/a J.P. Morgan Securities Inc.), as its agent, and Textron
Inc. (“Counterparty”), pursuant to a letter agreement dated April 30, 2009,
entitled Additional Convertible Bond Hedge Transaction (as amended, reformed or
modified prior to the date hereof, the “Additional Bond Hedge Confirmation” and
together with the Base Bond Hedge Confirmation as amended hereby, the
“Confirmations”).  Any capitalized term used herein with respect to any Bond
Hedge Transaction but not otherwise defined shall have the meaning assigned to
it in the Confirmation for such Bond Hedge Transaction.

 

1.                                      Amendment of Base Bond Hedge
Transaction.  Effective on the date hereof:

 

(A)                             Notwithstanding anything to the contrary in the
Base Bond Hedge Confirmation, the parties agree that, for the avoidance of
doubt, any Convertible Notes (or any portion thereof) purchased by Counterparty
pursuant to the tender offer that expired on October 12, 2011 shall be
disregarded for all purposes under the Base Bond Hedge Transaction (including
calculation of any amount in respect of any termination of the Base Bond Hedge
Transaction under the Agreement, the Equity Definitions or otherwise); and

 

(B)                               The definition of “Number of Options” in
Section 2 of the Base Bond Hedge Confirmation is hereby amended by amending and
restating the first sentence thereof in its entirety to read as follows: 
“375,298 Options.”.  For the avoidance of doubt, the parties acknowledge and
agree that 8,179 Options have been exercised prior to the date hereof (including
8,172 Options that have been exercised but not settled prior to the date hereof)
and, as a result, the number of Options remaining unexercised under the Base
Bond Hedge Confirmation as of the date hereof is 367,119.

 

2.                                     Termination of Additional Bond Hedge
Transaction.  Effective on the date hereof, the Additional Bond Hedge
Transaction shall automatically terminate and all of the respective rights and
obligations of the parties with respect to such Additional Bond Hedge
Transaction shall be cancelled and terminated, and each party shall be released
and discharged by the other party and agrees not to make

 

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any claim against the other party with respect to any obligations of the other
party pursuant to such Additional Bond Hedge Transaction.

 

3.                                      Amendment and Termination Payments. In
consideration of the amendments to the Base Bond Hedge Transaction pursuant to
Section 1 above, Bank agrees to pay to Counterparty on the Payment Date an
amount in USD equal to the Base Bond Hedge Amendment Amount (as defined in
Schedule A hereto).  In consideration of the termination of the Additional Bond
Hedge Transaction pursuant to Section 2 above, Bank agrees to pay to
Counterparty on the Payment Date (as defined below) an amount in USD equal to
the Additional Bond Hedge Termination Amount (as defined in Schedule A hereto). 
For the avoidance of doubt, no additional amount shall be payable by either
party pursuant to the Equity Definitions, the Confirmations, the Agreement (as
defined in the Base Bond Hedge Confirmation) or the Agreement (as defined in the
Additional Bond Hedge Confirmation) in respect of the amendments to the Base
Bond Hedge Transaction pursuant to Section 1 above or the termination of the
Additional Bond Hedge Transaction pursuant to Section 2 above.

 

“Payment Date” means the third Currency Business Day (as defined in the 1996
ISDA Equity Derivatives Definitions) following the date hereof.

 

4.                                      Representations and Warranties.

 

(i)                                      Counterparty represents and warrants to
Bank that:

 

(a)                                Counterparty has all necessary corporate
power and authority to execute and deliver this Bond Hedge Amendment and
Termination Agreement and to perform its obligations hereunder and under the
Base Bond Hedge Transaction as amended hereby; such execution, delivery and
performance have been duly authorized by all necessary corporate action on
Counterparty’s part; and this Bond Hedge Amendment and Termination Agreement has
been duly and validly executed and delivered by Counterparty and this Bond Hedge
Amendment and Termination Agreement and the Base Bond Hedge Confirmation as
amended hereby each constitutes its valid and binding obligation, enforceable
against Counterparty in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies generally and to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (whether considered in a proceeding at law or in equity)
and except that rights to indemnification and contribution hereunder may be
limited by federal or state securities laws or public policy relating thereto.

 

(b)                               Neither the execution and delivery of this
Bond Hedge Amendment and Termination Agreement nor the incurrence or performance
of obligations of Counterparty hereunder and under the Base Bond Hedge
Confirmation as amended hereby will conflict with or result in a breach of the
certificate of incorporation or by-laws (or any equivalent documents) of
Counterparty, or any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or agency, or any
agreement or instrument to which Counterparty or (to the extent such agreement
is material to Counterparty and its subsidiaries taken as a whole) any of its
subsidiaries is a party or by which Counterparty or (to such extent) any of its
subsidiaries is bound or to which Counterparty or (to such extent) any of its
subsidiaries is subject, or constitute a default under, or result in the
creation of any lien under, any such agreement or instrument.

 

(c)                                No consent, approval, authorization, or order
of, or filing with, any governmental agency or body or any court is required in
connection with the execution and delivery of this Bond Hedge Amendment and
Termination Agreement or performance by Counterparty of this Bond Hedge
Amendment and Termination Agreement and the Base Bond Hedge Confirmation as
amended hereby, except such as have been obtained or made and such as may be
required under the Securities Act

 

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of 1933, as amended (the “Securities Act”), the Securities Exchange Act of 1934,
as amended, or state securities laws.

 

(d)                               It is an “eligible contract participant” (as
such term is defined in Section 1(a)(12) of the Commodity Exchange Act, as
amended).

 

(e)                                It is a “qualified institutional buyer” as
defined in Rule 144A under the Securities Act, or an “accredited investor” as
defined under the Securities Act.

 

(f)                                  Each of it and its affiliates is not, on
the date hereof, in possession of any material non-public information with
respect to Counterparty.

 

(g)                                There is no internal policy, whether written
or oral, of Counterparty that would prohibit Counterparty from entering into any
aspect of this Bond Hedge Amendment and Termination Agreement or from remaining
party to the Base Bond Hedge Confirmation as amended hereby.

 

(ii)                                 Each of Bank and Counterparty represents
that (a) it is entering into this Bond Hedge Amendment and Termination
Agreement, and is party to the Base Bond Hedge Confirmation as amended hereby,
as principal (and not as agent or in any other capacity); (b) neither the other
party nor any of its agents are acting as a fiduciary for it; (c) it is not
relying, in entering into this Bond Hedge Amendment and Termination Agreement or
in remaining party to the Base Bond Hedge Transaction as amended hereby, upon
any representations except those expressly set forth in this Bond Hedge
Amendment and Termination Agreement, the Agreement (as defined in the Base Bond
Hedge Confirmation), the Agreement (as defined in the Additional Bond Hedge
Confirmation) or the Confirmations; (d) it has not relied on the other party for
any legal, regulatory, tax, business, investment, financial, and accounting
advice, and it has made its own investment, hedging, and trading decisions based
upon its own judgment and not upon any view expressed (whether written or oral)
by the other party or any of its agents; and (e) it is entering into this Bond
Hedge Amendment and Termination Agreement, and is party to the Base Bond Hedge
Confirmation as amended hereby, with a full understanding of the terms,
conditions and risks thereof and it is capable of and willing to assume those
risks.

 

(iii)                           Counterparty further represents that (a) it has
consulted with and received advice from its own tax advisors regarding the tax
aspects of the Bond Hedge Amendment and Termination Agreement and the Base Bond
Hedge Transaction as amended hereby and (b) it has made its own independent
decision (I) to enter into the Bond Hedge Amendment and Termination Agreement
and remain party to the Base Bond Hedge Transaction as amended hereby and
(II) as to whether each of the Bond Hedge Amendment and Termination Agreement
and the Base Bond Hedge Transaction as amended hereby is appropriate or proper
for it, based upon its own judgment and upon advice from such advisors as it has
deemed necessary. No communication (written or oral) received from Bank shall be
deemed to be an assurance or guarantee as to the expected results of the Bond
Hedge Amendment and Termination Agreement or the Base Bond Hedge Transaction as
amended hereby.

 

(iv)                             Counterparty represents and warrants to Bank
that Counterparty is not terminating the Additional Bond Hedge Transaction or
amending the Base Bond Hedge Transaction pursuant to this Bond Hedge Amendment
and Termination Agreement to create actual or apparent trading activity in the
Shares (or any security convertible into or exchangeable for the Shares) or to
raise or depress or otherwise manipulate the price of the Shares (or any
security convertible into or exchangeable for the Shares).

 

(v)                                Counterparty represents, warrants and
covenants to Bank that Counterparty will not seek to control or influence Bank’s
decision to make any purchases or sales of Shares with respect to any amendment
or termination of any Bond Hedge Transaction under this Bond Hedge Amendment and
Termination Agreement, including, without limitation, Bank’s decision to enter
into or unwind any hedging transactions.

 

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5.                                      Opinion.  Counterparty shall have
delivered to Bank on the date hereof an opinion of counsel (including an
in-house lawyer of Counterparty), dated as of such date, with respect to the
matters set forth in Sections 4(i)(a) through (c) of this Bond Hedge Amendment
and Termination Agreement.

 

6.                                      Role of Agent.  Each party agrees and
acknowledges that (i) J.P. Morgan Securities LLC (“JPMS”), an affiliate of
JPMorgan Chase Bank, National Association, has acted solely as agent and not as
principal with respect to this Bond Hedge Amendment and Termination Agreement
and (ii) JPMS has no obligation or liability, by way of guaranty, endorsement or
otherwise, in any manner in respect of this Bond Hedge Amendment and Termination
Agreement. Each party agrees it will look solely to the other party (or any
guarantor in respect thereof) for performance of such other party’s obligations
under this Bond Hedge Amendment and Termination Agreement and the Base Bond
Hedge Confirmation as amended hereby.

 

7.                                      Waiver of Jury Trial. Each party waives,
to the fullest extent permitted by applicable law, any right it may have to a
trial by jury in respect of any suit, action or proceeding relating to this Bond
Hedge Amendment and Termination Agreement. Each party (i) certifies that no
representative, agent or attorney of either party has represented, expressly or
otherwise, that such other party would not, in the event of such a suit, action
or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that
it and the other party have been induced to enter into this Bond Hedge Amendment
and Termination Agreement, as applicable, by, among other things, the mutual
waivers and certifications provided herein.

 

8.                                      Tax Disclosure. Effective from the date
of commencement of discussions concerning this Bond Hedge Amendment and
Termination Agreement, Counterparty and each of its employees, representatives,
or other agents may disclose to any and all persons, without limitation of any
kind, the tax treatment and tax structure of this Bond Hedge Amendment and
Termination Agreement, the Base Bond Hedge Transaction as amended hereby and all
materials of any kind (including opinions or other tax analyses) that are
provided to Counterparty relating to such tax treatment and tax structure.

 

9.                                      No Additional Amendments or Waivers. 
Except as expressly amended hereby, all the terms of the Base Bond Hedge
Transaction and provisions in the Base Bond Hedge Confirmation shall remain and
continue in full force and effect and are hereby confirmed in all respects.

 

10.                               Counterparts.  This Bond Hedge Amendment and
Termination Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if all of the signatures thereto
and hereto were upon the same instrument.

 

11.                                Governing Law.  The provisions of this Bond
Hedge Amendment and Termination Agreement shall be governed by the New York law
(without reference to choice of law doctrine to the extent inconsistent with
choice of New York law).

 

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Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Bond Hedge Amendment and Termination Agreement and
returning it to EDG Confirmation Group, J.P. Morgan Securities LLC, 277 Park
Avenue, 11th Floor, New York, NY 10172-3401, or by fax to (212) 622 8519.

 

 

 

Very truly yours,

 

 

 

 

J.P. MORGAN SECURITIES LLC, as agent for JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION

 

 

 

 

 

 

 

 

By:

/s/ Jeff Zajkowski

 

 

Authorized Signatory

 

 

Name: Jeff Zajkowski

 

 

Agreed and Accepted By:

 

 

 

TEXTRON INC.

 

 

 

 

 

By:

/s/ Mary F. Lovejoy

 

Name: Mary F. Lovejoy

 

Title: Vice President and Treasurer

 

 

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Schedule A

 

Amendment and Termination Payments

 

Base Bond Hedge Amendment Amount:

 

USD

60,882,663

 

Additional Bond Hedge Termination Amount:

 

USD

6,764,740

 

 

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